Walnut Capital Partners has leased most of the remaining first-floor space in Bakery Square to the Software Engineering Institute of Carnegie Mellon University, the latest validation of the East End neighborhoods of Larimer and East Liberty becoming a branch campus for the city’s university district in Oakland.
Walnut Capital announced Wednesday that it had reached an agreement
ago for SEI, which will take 38,000 square feet of office space at
Bakery Square. SEI will join such other local institutions as the University of Pittsburgh Medical Center’s Technology Development Center
and the University of Pittsburgh, which operates an office for its
School of Health and Rehabilitation Sciences and its Masters of Science
in Prosthetics and Orthotics Program, along with the building’s predominant tenant, Google.Paul Nielsen, director and chief executive officer of the SEI, noted the lease represents an expansion for the institute, whose main office is on Fifth Avenue in the heart of Oakland.
”While our main headquarters will remain in the Oakland section of Pittsburgh near the Carnegie Mellon University campus, we look forward to opening up additional space at Bakery Square,” said Nielsen, in a prepared statement. “The extra space there will help us prepare for the anticipated growth of our programs in software engineering and cybersecurity.”
Also nearby on Penn Avenue is Chatham Eastside, an expansion of the instution’s larger campus nearby on Fifth Avenue, bringing the presence of three universities to a stretch of Penn Avenue that would have seemed highly unlikely 10 years ago.
The institute has 500 employees and in addition to its Pittsburgh headquarters it has offices in Los Angeles, Arlington, Va., and Frankfurt Germany. While no projections were provided on how many people would work at SEI's new office, a 38,000 square foot lease projects to 190 people base on a formula of five employees per 1,000 square feet.
The SEI was established in 1984 at CMU by the Department of Defense as a federally funded research center. It works with various government agencies, academia and industry on a variety of software engineering activities. The institute is active in the areas of cyber security, process management and research and development.
In 2010, the US government extended its contract with SEI through June 2015 with a value of $584 million.
Todd Reidbord, president of Walnut Capital, described the lease as another example of the project's ability to draw on the strengths of the city's universities, institutions and high tech partners. Jeremy Kronman and AndrewMiller of CBRE represented Walnut Capital in the lease while Keefe Ellis represented SEI. Downtown-based Strada LLC will design the space for SEI.
The prospect of the SEI establishing an office at Bakery Square bodes well for the surrounding neighborhoods as well for the potential for Bakery Square II, which Walnut Capital plans to expand across Penn Avenue on a school property to be redeveloped into a major mixed-use development comprising office space and apartments.
“I think you’re seeing East Liberty transforming itself into a branch of the Oakland tech community and there’s certainly room for other areas to do the same,” said Councilman Bill Peduto, whose district includes portions of East Liberty.
Walnut Capital, whose financial partner on the development is RCG Longview Fund, expects to soon begin construction on Bakery Square II in January and projects it will be occupied in the summer of 2014.
Gregg Broujos, managing director of the Pittsburgh office of Colliers International, expressed surprise at the first floor space not renting out as retail, “because everyone thought that retail would fly off the shelf.”
He expects that Walnut Capital filling its remaining space intended for retail should bode well for other East Liberty developers such as Steve Mosites and Ed Lesoon, who have been working to lease empty store fronts at the same time that the SEI will further the revitalization of the area.
“It just continues to bolster all the development going on there,” he said.
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