Rebuilding a Historic Structure That Has Good Bones

Walnut Capital of Pittsburgh, and its partner, Lionstone Investments of Houston, TX, the owner/developer of the PAA, said its rehab aims to emulate the core values of the athletic club: “The continued benefit of the mind, body and spirit, by restoring the beauty of its exterior, updating its fitness and wellness facilities and refreshing the iconic lobby and Grill Room,” with an ultimate goal “to ensure the longevity of the PAA for generations.”

Todd Reidbord, president of Walnut Capital, notes the building went up in the first decade of the 1900s, built by real estate developers and civic-minded people who wanted to have a landmark athletic club in the University of Pittsburgh area.

“They actually went to New York to look at the New York Athletic Club and said, ‘we have to do it bigger and better,’” says Reidbord. Since Pittsburgh at the time was at the height of its prosperity as a steel capital of the world, that got accomplished, he says.

The six-story building (with added mezzanine space) was built by designer Benno Jannsen and developer Franklin Nicola, who was one of the founding members of the club. (Strada Architecture is the architect this time around.)

“They had a swimming pool that was on the third floor, suspended on a steel structure. That was unusual for the time,” he says. “They had large basketball and squash courts on the upper floors. They had large living rooms and dining rooms on the first floor. They also had rooms where people could sleep overnight.”

But, “as the economy changed, it didn’t seem to attract the elite anymore. It was a slow death,” says Reidbord. “They tried to hang on. They tried to take mortgages out at some point and raise money by other methods, but in the end, they just couldn’t keep it going.”

Athletic Club Remains

PAA went through a bankruptcy, and Walnut Capital/Lionstone got involved in 2016 and bought the structure in 2018. The building went for $11.5 million through the bankruptcy sale. The athletic club retains space on the lower level of the building. “On a limited basis, the club will continue to exist,” Reidbord says.

Claudia Robinson, senior vice president of Community Development Banking at Bank of America, Washington, DC, says the project received both State and Federal Historic Tax Credits, with Bank of America’s equity investment of $7.5 million in the project. Dollar Bank provided the debt. “We’ve been focusing a lot on Pittsburgh,” she says. “The bank has invested in three major buildings in the city the past two years.”

Other Pittsburgh projects Bank of America has invested in are the Title Commonwealth Building, a market-rate residential project currently under construction, and 5051 Centre Ave., being developed by Wexford, which is being turned into a “wet lab” facility for cancer, immunology and transplant research with University of Pittsburgh Medical Center as the tenant in a conversion of an old Ford assembly plant.

“There are fantastic buildings in Pittsburgh, with beautiful bones,” she says. With Historic Tax Credits involved, “It’s preserving history. And environmentally, it’s better to reuse buildings than to knock them down. One-third of all landfill is construction material.

“The tax credit project is a combination of working with the public sector and the private sector. Pittsburgh has a large supply of old buildings that can be renovated and readapted for the 21st Century.”

New Commercial Office Space

While most of the grandeur of the original first floor of the PAA will be preserved, with the potential addition of restaurants, the upper floors are being turned into commercial office space, reflecting a changing economy.

“It’s been a challenge, but we think we’ve accomplished it,” says Reidbord, whose firm has done four or five historic rehabs now in Pittsburgh.

 “The economy of Pittsburgh is rebounding significantly,” Reidbord says. “We’re now a university, medical and knowledge-based economy,” with research and technology driving the market.

“It’s just about done,” Reidbord says of the PAA. Exterior lights have been installed to illuminate the building at night. “It’s a spectacular building.”

In a bit of serendipity, Walnut Capital decided to add a terrace to the design, but as it turned out the firm found an original rendering of the PAA that showed a terrace was originally planned but not built.

“We’re adding that back in. We think that’s a spectacular opportunity, to have a terrace overlooking the university grounds.”

“These kinds of projects and this specific type of credit have become a real focus for us,” says Robinson, noting that the connection with the university and the city ties it all together. “We’re hoping to do another one with Todd.”

Reidbord noted many historic rehabs are of small buildings, but the size of this one was an exception. “The opportunity to have a large footprint and a large presence is exciting for us.”

While the historic rehab is bringing the building into the 21st century, putting in new wiring, new elevators and two stairwells, it is obvious some of the old traditions of the PAA are being carried on in the new edition. “Tom Price, the lead architect and principal at Strada, had his wedding reception there,” Reidbord adds.

Sources:
Todd Reidbord, President, Walnut Capital, Pittsburgh
treidbord@walcap.com

Claudia Robinson, Senior Vice President
Community Development Banking, Bank of America
Washington, DC
claudia.robinson@bofa.com