Labor’s Capital Reshaping Pittsburgh, London, Cities Around the World
In the heart of Pittsburgh’s Strip District, union pension funds are the stimulus for a $105 million redevelopment project that will revamp the largely vacant 1600-foot-long, 157,237 square-foot Pennsylvania Railroad Fruit Auction & Sales Building and surrounding area. Landon Butler’s original MEPT Fund (Multi-Employer Property Trust), a core fund with assets of $10 billion, is the lead investor. MEPT is now a part of BentallGreenOak (BGO) and together they have been named by Global Real Estate Sustainability Benchmark (GRESB) as the most sustainable real estate fund in North America.
BGO MEPT is co-investing with the ERECT Funds, a regional construction trades RE fund which has made over 100 investments in the tri-state region. ERECT was the lead investor in the seminal Armstrong Cork Factory project in the mid-2000s that has led to the economic revitalization of the entire Strip District area, which spans 20 blocks along the Allegheny River.
Photo Credit Next Pittsburgh
On Smallman Street, the iconic Produce Terminal building was formerly a hub for the regional wholesale produce industry. Before that, the site housed glass manufacturing and steel mills according to Pamela Austin, site developer McCaffery’s Senior Project Manager. McCaffery hopes this once vital area of the city will again become a hub for innovation as a commercial, people-centric destination.
As per the company’s agreement with the Urban Redevelopment Authority (URA), the Terminal project will:
Allocate at least 40,000 square-feet of the space for locally-owned businesses.
Establish creative and mixed-use office/retail space which will include a market area featuring a rotating roster of local chefs and cuisine, bars, and brewpubs with outdoor dining.
Provide improved access to the riverfront.
Rehab a second building at 1600 Smallman, which is scheduled to be complete in June 2020, followed by the reborn Strip District Terminal in August of 2020.
At London’s King’s Cross Central Regeneration Project, what was an underused industrial wasteland and derelict rail terminal was transformed largely by workers’ capital, reshaping a large part of the city in the process. The venture began in 2000 and was the largest city renewal project in Europe to date. It aimed to revitalize 67 acres of brownfield land and was funded by the BT Pension Scheme, (BTPS) managed by Hermes, a pioneer in responsible investment. BTPS is the largest private sector pension scheme in the UK with almost 300,000 members and approximately £50bn of assets.
Today King’s Cross is a mixed-use, urban regeneration project in central London that is also a major transport hub for the city.
Located on the site of important rail junctures and industrial facilities, the redevelopment continues and involves both the restoration of historic buildings and new construction. Principal uses on the site include 3.4 million square-feet of office space, 2,000 residential units (which includes 500 affordable housing homes, 250 homes dedicated to: shared equity, homebuy purchase, and key workerhousing, while another 650 units are for student accommodation) 500,000 square-feet of retail and leisure space, a hotel, and even a university. In 2018 it was the home of the UK’s first Green Loan Principles loan for the development of an office building. That building will join 3 BREEAM Outstanding buildings at the site.
The revival of Pittsburgh’s Strip District would not have been possible without the 2003 investment by the ERECT Fund in the McCaffrey-driven renovation of the former Armstrong Cork Factory located on Railroad Street in the Strip District section of the City. Sitting vacant since 1974, the factory had become an eyesore and health hazard for the community. The Cork Factory Lofts and parking garage were officially opened in May 2007 and today are at full capacity. Environmentally, the project led to the clean-up and remediation of a polluted and dangerous abandoned building, as well as asbestos-removal. Armstrong proved out a demand for urban residential living and other amenities provided by local small businesses.
Further benefits from the project are felt throughout the Strip District neighborhood and the City of Pittsburgh. Soon after opening, the project led to a construction boom in District. Major technology companies, some connected with CMU’s robotics, AI, and autonomous vehicle industry growth, have opened shop. These once abandoned factories were once the home of Andrew Carnegie and the industrial innovators of the 19th and 20th centuries. They are now symbols of an up-and-coming neighborhood and a city fighting for sustainable renewal.
For the City of Pittsburgh, these projects furthered brownfield development and the revitalization of other dead buildings. And in a symbiotic connection between Pittsburgh and London, locally-owned Federated Investors invested in Hermes, which is now guiding Federated with its long history of responsible corporate governance and sustainable real estate. The effects of these new projects on union and local employment have been vast.
As we said in Up from Wall Street: The Responsible Investment Alternative (2009: Cosimo), workers’ capital has been reshaping cities for decades (and for up to 150 years in some European cities). Up made the case that there are strategic and responsible investment paths that have the capacity to rebuild our economy and infrastructure, reinvigorate our cities, and create the advanced, sustainable jobs of the future. The assets in retirement accounts and mutual funds, insurance companies, universities, hospital and foundation endowments, college savings funds, and others trusts—in effect, our money--can turn our economies around, if we manage those assets responsibly.
In dramatic form, responsible capital stewards are building and turning around not only affordable and multi-family housing, commercial properties, and essential industries. They are investing billions of dollars in renewable energy, efficient transportation, and community infrastructure projects. Thus, capital stewards are ensuring that investment streams are flowing to critical economic needs and essential opportunities in a responsible way. In other words, responsible capital stewards are investing in a responsible future—our future—and investing in a vision of the economy that’s more humane and sustainable.