By Donald F. Smith, Jr.
Whether a company is established or in its early stages, location decisions are often made based on several factors, such as a site’s proximity to a highly skilled, well-educated workforce and to other businesses that allow for synergies and a dynamic business ecosystem, as well as the property owner’s ability to accommodate evolving needs.
In Pittsburgh, which is in the midst of an economic renaissance, a unique development entity, the Regional Industrial Development Corporation of Southwestern Pennsylvania (RIDC), has been a valuable tool. RIDC is not an arm of government, but a private, nonprofit entity both mission-driven and entrepreneurial.
Many regions around the country, like Pittsburgh, have experienced a loss of heavy industry, leaving behind large, obsolete and environmentally compromised buildings and campuses. These properties sit idle because, for most for-profit developers, the cost of redevelopment would make them unprofitable. The model RIDC follows in the Pittsburgh region, however, has proven effective in breathing life back into these properties, creating attractive corporate locations and providing enormous benefits to local communities.
Our experience with the Lawrenceville Technology Center is a case in point. RIDC took ownership of Heppenstall Steel’s former 14-acre industrial site in 2002, which was also later occupied in part by a chocolate manufacturer. According to Pittsburgh Magazine, the urban community where the property resides was “once a blue-collar neighborhood more down-and-out than up-and-coming.” Since then, that site has undergone a tremendous transformation and the surrounding community has become one of the hottest neighborhoods in Pittsburgh.
The nonprofit advantage
RIDC can shoulder highly speculative projects with significant upfront costs, partly due to our nonprofit status. We can take a longer time horizon and be more flexible in our view of profitability. The size and diversity of our portfolio enable us to make decisions that may not be the most profitable in the short term, but in the long term, allow us to balance our need to be economically successful with our desire to be a catalyst for the community’s overall economic improvement.
We acquired the Lawrenceville property with the vision of creating an urban technology park. Surrounded by universities that were commercializing cutting-edge research and development, we felt that such a project could become a desirable business location, as well as an anchor for the community.
The remediation process required the design and installation of vapor barriers and restrictions on the withdrawal of groundwater under the property. And all buildings to be razed needed to be remediated prior to demolition.
Today, the section of the site that formerly housed a chocolate factory has been renovated into a multi-occupancy, office/high-tech manufacturing facility, and the 71,000-square-foot building is now home to some of Pittsburgh’s fastest-growing firms, including RedZone Robotics, nanoGriptech, Helomics and HEBI Robotics. The former Heppenstall building—a 30,000-square-foot heavy industrial, high-bay facility—was recently built out for Carnegie Robotics, a spinoff of the nearby National Robotics Engineering Center (NREC).
There are now more than 230 jobs in the Lawrenceville Tech Center, and we are looking forward to the arrival of Caterpillar’s Pittsburgh Automation Center, which is expected to begin occupancy soon.
Projects like this one are what help make Pittsburgh attractive, especially to new-economy businesses. And even though RIDC is a nonprofit, it pays property taxes, as part of an approach that puts us in a good position to also work with local governments on issues related to site planning that will be important to future occupants.
Utilizing a model along these lines would give communities a tool for becoming more attractive to the companies that are driving our economy into the future and, at the same time, address the daunting challenges they face because of unused industrial properties that are hindering their own revivals.
Donald F. Smith, Jr., is president of the Regional Industrial Development Corporation (RIDC) of Southwestern Pennsylvania.