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U.S. Steel Tower might no longer be for sale

Darrell Sapp / Post-Gazette

U.S. Steel Tower might no longer be for sale

Six months after going up for sale, U.S. Steel Tower — the sturdy Downtown skyscraper that stands above all others — might not be changing hands after all.

According to real estate sources, 601W Cos., the New York-based owner, is seeking an equity partner as part of a recapitalization rather than an outright sale of the 64-story building, Pittsburgh’s tallest.

That marks an apparent change of direction for 601W Cos., which in January marketed the Downtown landmark for sale through the New York office of the Cushman & Wakefield real estate firm.

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At the time, it was seeking as much as $350 million for the skyscraper, according to Real Estate Alert, an industry trade publication. That’s $100 million more than the firm paid for the 2.3-million-square-foot building at 600 Grant St. in 2011.

Since taking over the skyscraper, 601W Cos., led by New York investor Mark Karasick, has spent $60 million making upgrades.

The tower’s current occupancy is a 93.5 percent, according to the Jones Lang LaSalle real estate firm.

It could go even higher before the end of the year. Pittsburgh health system UPMC plans to add another 52,911 square feet in the building by Dec. 1, bringing the total square footage it occupies to 961,572.

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U.S. Steel, after backing out of a deal in 2015 to build a new headquarters at the former Civic Arena site in the lower Hill District, has about 270,000 square feet in the tower under a lease renewal that runs until 2028.

Two years ago, another large tenant, the Eckert Seamans Cherin & Mellott law firm, renewed its lease in the building for another 15 years. In January, the overall average remaining lease term was 11 years, according to Real Estate Alert.

Kevin Donner, a Cushman & Wakefield broker who has been handling the U.S. Steel Tower listing, could not be reached for comment Friday.

One local real estate broker said he would not be surprised if the building has been pulled from the market. He said it was not attracting very strong interest and he was not aware of anyone being close to the point of buying it.

The 2011 purchase was not without controversy. Mr. Karasick’s firm took control of the structure through a so-called 89-11 transaction, allowing it to skirt $10 million in deed transfer taxes. The law has since been changed to close such loopholes.

Mark Belko: mbelko@post-gazette.com or 412-263-1262.

First Published: August 5, 2017, 4:00 a.m.

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The U.S. Steel Tower.  (Darrell Sapp / Post-Gazette)
Darrell Sapp / Post-Gazette
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