Bakery Square Welcomes Philips to Bakery Office Three

Mark Belko | Pittsburgh Post Gazette

Philips Sleep and Respiratory Care will join Google, Carnegie Mellon University and other high-profile tenants at Bakery Square in the East End.

The Murrysville-based company announced Thursday that it had reached an agreement with developer Walnut Capital Partners to acquire 200,000 square feet in the new $30 million, nine-story office building being built at Bakery Square 2.0 in Shadyside.

It represents another big catch for Walnut Capital, which had been in talks with Philips for some time about anchoring the 300,000-square-foot development.

The move brings a lot of jobs. Philips plans to relocate about 1,250 employees to the new headquarters, including those now at Schenley Place. The company employs more than 1,700 people in the region.

“Following the successful relocation of 125 associates to a new, custom-designed space in Oakland’s Schenley Place in 2017, Philips identified Bakery Square as the best option to meet the space and location needs of this final step in its phased strategic relocation program,” the company stated in its announcement.

The company plans to keep its manufacturing, distribution and service associates and facilities at the current Westmoreland County locations.

Todd Reidbord, Walnut Capital president, said the Philips relocation represents the final piece of the puzzle for the popular 20-acre development that straddles both sides of Penn Avenue in Larimer and Shadyside.

“It embodies the kind of transformation that can occur through thoughtful public-private partnerships that build catalytic spaces near our city’s top-notch universities and hospitals,” Mr. Reidbord said in a statement.

“Ten years after breaking ground, more than 2,500 employees will soon call Bakery Square the place they work, play and for many — live. We’re more energized than ever to make strategic investments in the East End and Oakland innovation corridors that attract national and international tenants,” he said.

In its statement, Philips said it had been seeking to locate its employees closer to nearby universities like Carnegie Mellon and the University of Pittsburgh, the UPMC medical centers, research partners and other innovation leaders in the region.

“Working in close proximity to these organizations will enable Philips to incubate partnerships and, ultimately, accelerate its ability to develop new solutions to drive the future of health technology,” it stated.

Dan Adamski, the Jones Lang LaSalle managing director who served as site selection consultant for Philips, said the relocation is part of a national urbanization trend by companies seeking to attract and retain young workers.

“These millennials are highly educated, and since they often have multiple job opportunities, they can seek work environments that are highly amenitized, feature ample natural light, boast good indoor air quality and provide ready access to public transportation,” he said.

With the growth of Google, Uber, Amazon, and SAP in Pittsburgh, the Philips’ decision “further reinforces Pittsburgh’s well-deserved reputation as a great place for the world’s leading companies to do business,” Mr. Adamski said.

The Philips move, Mr. Reidbord added, fits well with everything else going on at Bakery Square, which also is home to Autodesk and Pitt’s human engineering research labs, prosthetics and orthotics program and labs.

Walnut Capital hopes to break ground on the new building in October. Philips could take occupancy in fall 2020.

The developer has yet to begin marketing the other 100,000 square feet of space available, Mr. Reidbord said, although prospective tenants have approached the company.

Jeremy Kronman and Andrew Miller of the CBRE real estate firm represented Walnut Capital in the deal with Philips.

Walnut Capital recently reached an agreement with the city to build the nine-story structure at the site after the zoning board of adjustment had rejected the proposal.

As part of the deal, the company agreed to fund $245,000 worth of public improvements in the area to be done by the city.

They involve $100,000 for renovations to Mellon Park baseball field, including a scoreboard, dugouts, outfield drainage and ADA accessible bleachers; $75,000 for general Mellon Park improvements, including lighting, walkways and paths; $50,000 for upgrades to pedestrian safety along Penn between the Village of Eastside and Bakery Square Boulevard intersections; $10,000 to the city Urban Redevelopment Authority to support community development and planning in Larimer; and $10,000 for landscaping improvements along Festival and Hailman streets in Shadyside.

Bakery Square’s gain will be Murrysville’s loss.

Jim Morrison, the Murrysville manager, said he was disappointed with the decision to relocate. The municipality, he said, had worked with Philips for months to try to find the company a new home there.

“We feel that we have a good community here. We have a lot to offer. Obviously, they believe it will be better for their business and their personnel to be in the city,” he said..

While saddened that Philips will be moving its administrative offices to Shadyside, Mr. Morrison was pleased that it decided to keep its manufacturing operation in Murrysville. He is not expecting a significant loss in revenue from the move since Philips will continue to hold the same real estate in the municipality.

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