Saturday, May 19, 2007

another condo downtown?

It may not seem like a big deal but the news that the state office building Downtown could be sold has some interesting ramifications. If sold outright to a private developer, the building would represent a noticeable increase in taxable property value for the city and school district. The current nominal assessment of 8 million dollars translates into a quarter million per year in taxes in city, county and school district revenue.

Of course the question is going to come up whether a developer needs some level of incentives or abatement to invest in such a project. Because this is being sold by a government entity the issues are a little different. One way or the other the value of incentives or a tax abatement should be capitalized into the value of the building itself. So the question of whether or not an incentive is needed is almost irrelevant, it just comes down to whether the state or the city takes the loss. Without an incentive, the value of the building goes down (thus hitting the state in its sales price). If there is an incentive, the building should sell for more (helping the state but socking local governments with lost revenues). How will all that work out?

Then there is an interesting question over what will happen to the building and its employees. The views from the upper floors of the state office building are as good as they come Downtown. If it becomes condos they will put pressure on the other high end condos downtown. And remember the haranguing over the glut of office space downtown? Between UPMC taking up a large footprint in the Steel building and this, the condition of the Downtown market could shift significantly. The story says 800 or so workers in the building. At a conservative 200 sq. feet per worker that could comes out to 160K square feet of new demand for office space. That makes it equivalent to the space UPMC just put into Downtown.

1 Comments:

Anonymous Anonymous said...

On a related note... any speculation on where the state will relocate these offices? They cited a need for increased access (parking)... do they stay downtown or do they relocate to say... McKnight Road?

Sunday, May 20, 2007 9:37:00 PM  

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