EQT Corp. is significantly downsizing its presence in the 32-story building Downtown that bears its name. By next month, it will account for only about 15% of the space in the Pittsburgh office tower.
The company has hired Burns Scalo Real Estate to sublease 257,000 square feet of space in EQT Plaza, a move that will take the oil and gas producer — the largest in the country — from 15 floors to five.
The company simply has “too much space,” said EQT spokesman Mike Laffin.
EQT’s total employment has gone from more than 2,000 at the end of 2017, after it acquired Canonsburg-based Rice Energy Inc., to about 650 today.
That includes the spinout of EQT’s pipeline business with close to 800 employees and several rounds of layoffs. The latest, in September, shed about 200 employees from the company two months after Toby Rice succeeded in a shareholder takeover of EQT and became its CEO.
Mr. Rice, who is effective at staying connected to the landowners where EQT leases and drills — most of whom are in Washington and Greene counties — has hinted that the company is likely to de-emphasize its connection to the city of Pittsburgh in the coming years.
That has called into question EQT’s sponsorship of cultural events Downtown and fueled speculation that the driller might be looking to move its headquarters closer to Southpointe in Washington County.
Mr. Laffin said the company isn’t searching for a new home base now.
“We’re committed to staying in the Plaza until at least 2024,” he said. That’s the year EQT’s current lease expires.
Like virtually every other oil and gas company in the U.S., EQT is being forced to cut costs wherever possible to weather a prolonged period of low natural gas prices and Wall Street’s cutting off the cash spigot.
Its stock price has tumbled by 55% over the past six months, and the company is trying to sell off assets and interests in its gas production to raise $1.5 billion to pay down debt.
Only about 300 employees work at EQT Plaza, Mr. Laffin said Wednesday.
The company is moving at a fast pace to re-arrange the set up on the five floors it plans to keep so that it is more open and conducive to collaboration. For example, there are now common areas with white boards for jotting down ideas, Mr. Laffin said, an arrangement favored by Mr. Rice and his brothers when they ran Rice Energy.
In 2009, EQT transferred its headquarters from the North Shore to the Golden Triangle under previous ownership. In a statement on hiring Burns Scalo to sublease the Downtown space, Jim Scalo, president and CEO of Burns Scalo Real Estate, said his company “has a long-term track record performing for energy industry clients.”
“We developed and own the former headquarters for Rice Energy in Southpointe and have a positive relationship with many of their former staff members that are now at EQT,” he said.
Last April, EQT hired the CBRE real estate firm to sublease two floors of space, more than 46,000 square feet in all, in the building. At the time, a spokeswoman tied the decision to excess capacity as a result of the company’s November 2018 upstream and midstream separation.
But David Koch, a CBRE executive vice president who was marketing the space, said his company no longer is trying to sublease the two floors. However, it is marketing the 20th floor, held by Equitrans LP, for sublease, he said.
Dan Adamski, senior managing director of the Jones Lang LaSalle real estate firm, said the energy producers and ancillary service providers that helped to make Pittsburgh the top commercial real estate market in the country for several quarters during the recession have been “steadily reducing their footprint in the region for the last several years due to low natural gas pricing.
“This economic reality, combined with the ability to work more digitally and remotely with today’s technology, motivates and enables a company like EQT to optimize their footprint,” he said.
The EQT downsizing, Mr. Adamski said, mirrors national and local trends in which square footage per employee has been steadily decreasing as companies seek to minimize their real estate costs, often the second-largest expense after labor.
Local companies that have reduced their real estate footprint while increasing headcounts include BNY Mellon, Buchanan Ingersoll & Rooney, and JLL.
“Regardless of the reason, these rightsizings are contributing to the soft market conditions Downtown with vacancies reaching a 10-year high,” Mr. Adamski said.
“This increased competition, in addition to the frenzy of development and leasing activity in the fringe submarkets such as the Strip District, is forcing Downtown landlords to become much more aggressive in their pricing as they seek to cannibalize a stagnant tenant base,” he said.
Mark Belko: mbelko@post-gazette.com or 412-263-1262. Anya Litvak: alitvak@post-gazette.com or 412-263-1455.
First Published: February 5, 2020, 9:58 p.m.
Updated: February 5, 2020, 10:23 p.m.