PITTSBURGH _ U.S. Steel Tower, the brawny downtown Pittsburgh skyscraper that rises above all others, has officially hit the market. And the bids it could attract aren't for real estate bargain hunters.
The 64-story building _ Pittsburgh's tallest _ is being marketed for sale by the real estate firm Cushman & Wakefield with hopes of obtaining an offer as high as $350 million, according to Real Estate Alert, an industry trade publication.
That would be $100 million more than New York-based owner 601W Cos. paid for the high-profile property when it bought the building in 2011.
Since taking over the 2.3-million-square-foot landmark, 601W Cos., led by investor Mark Karasick, has spent $60 million making upgrades, according to the trade publication.
The skyscraper is home to health giant UPMC and to U.S. Steel, two of the region's most well-known companies, and is currently 87 percent occupied.
UPMC, which has its name on the building, has a lease for 962,000 square-feet that runs until 2030, the trade publication stated. U.S. Steel, after backing out of a deal to build a new headquarters, occupies about 270,000 square-feet under a lease renewal that runs until 2028.
With those leases _ and others _ in place, the building's owner may be able to command a price as high as $350 million for the building, said Gerard McLaughlin, executive managing director of the Newmark Grubb Knight Frank real estate firm.
"It really depends on the leasing of the building. It's got two major tenants that are there for a long time, which I think is obviously a positive," he said.
In 2015, another large tenant, the Eckert Seamans Cherin & Mellott law firm, renewed its lease in the building for a 15-year term. According to Real Estate Alert, the overall weighted average remaining lease term is 11 years.
The property likely will attract interest from the same types of large out-of-town real estate investment companies that have been snatching up some of downtown Pittsburgh's most prestigious buildings over the past few years.
They include San Francisco-based Shorenstein Properties LLC, which bought One Oxford Centre for $148.7 million a year ago, and Raleigh, N.C.-based Highwoods Properties, which paid $179.4 million for the six-building PPG Place complex.
"It's going to have to be a big-time investor. It's a large building seeking a pretty high price," McLaughlin said.
Neither Karasick nor the Cushman & Wakefield brokers handling the sale could be reached for comment.
The 2011 purchase by Karasick and his firm wasn't without controversy. He took control of the building through a so-called 89-11 transaction that allowed him to skirt $10 million in deed transfer taxes that would have been paid to the city, the Pittsburgh public schools and the state.
That and several other similar high-profile transactions prompted a change in state law to close such loopholes.
