SouthSide Works comes to life with new owners and lots of new attractions

SouthSide Works is coming to life.

With new leasing announcements, new development, and a focus on local and lifestyle, the property’s new “inside outside” perspective is activating greenspace, connecting the trail to town center, and bringing new opportunities to one of Pittsburgh’s oldest neighborhoods.

The tenant mix at SouthSide Works remained diverse and exciting- from office tenants like Amazon, General Dynamics, and American Eagle to a mix of local and national retail tenants like Shop 412, The Cheesecake Factory and REI.

New property owners Somera Road are currently developing the new Town Center concept which will include all seasons outdoor food and beverage concepts, a stage for live performances, and the addition of greenspace and stylish common areas. The plans also include development of the property’s expansive green spaces with the addition of a dog park—complete with a food and beverage stop for a refreshing romp with your furry friends, a children’s playground, and several public art activations.  Somera Road has currently dedicated $37 million to property updates and enhancements on all fronts.

In addition to this exterior evolution, the old cinema is being converted into innovative office space, aptly named Box Office. The plans convert the theater space to 77,000 square feet of class A steel and glass and will offer prime office space geared toward companies looking to find a home in Pittsburgh or expand their current footprint.

Somera Road’s vision for the development adds an estimated 500 people to the daily traffic on the property, offering an added incentive for its new retail tenant mix. Add in the proximity to the trail and riverfront, large open-air patio overlooking the property, and new outside amenities and Box Office is a work-campus opportunity tailor made for post-2020 life.

The property will also be safely activating community programming and special pop-ups starting with the 2020 Holiday Season. The property is also swapping out the old holiday tree for more experience-based holiday lighting dubbed The Light Garden. The Light Garden is set up for seasonal selfies or family photo opps and will be active through January.

2021 will also bring additional development projects and leasing announcements. Somera Road is planning to develop a multi-family riverfront residential and office project that not only opens up the Monongahela Riverfront to future property residents and professionals but to the community at large.

With 230 multi-family units and 200,000 square feet of waterfront office space planned, the ownership group is focused on taking advantage of the beautiful downriver city view while preserving the integrity of the natural riverfront surroundings.

Innovative programming and partnerships are also on the menu at SouthSide Works in 2021.  Look for announcements and highlights coming soon.

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SomeraRoad will ‘immediately’ renovate Overland Park campus after acquisition from Lexington Realty

Colliers International will start overseeing a 26.2-acre office campus in Overland Park that recently changed hands and underwent a rebranding.

SomeraRoad Inc. hired Colliers to manage 5200 Metcalf Ave., a five-story building just south of Interstate 35 with nearly 300,000 square feet of leasable office space.

SomeraRoad, a New York-based commercial real estate debt and equity investment firm, bought the property in late July from Lexington Realty Trust, a New York-based REIT focused on single-tenant commercial properties, for an undisclosed sum.

5200 Metcalf was left vacant in December 2018, after then-Missouri Gov. Eric Greitens lured Swiss Re to One Kansas City Place in Downtown with $20 million in incentives. Cargill also moved out in late 2018 when it consolidated its area offices in Olathe.

In 2019, Lexington Realty Trust’s lender foreclosed on 5200 Metcalf, after the New York-based REIT reportedly had not made payments on the building’s loan since Swiss Re’s departure.

As of June 30, 2020, Lexington had an outstanding aggregate principal balance of $50,525 for nonrecourse mortgage loans secured by 5200 Metcalf and a second office property in Boca Raton, Fla., its latest quarterly report shows.

5200 Metcalf — now rebranded as Summit52 — no longer is in default, foreclosure or receivership and is “ripe for repositioning,” SomeraRoad Vice President Basel Bataineh said in a Monday release from Colliers.

Summit52 offers flexible floor plates with as much as 78,000 contiguous square feet on a single story. The building could accommodate users as small as 4,000 square feet or serve as corporate headquarters for a single tenant occupying its full 300,000 square feet.

SomeraRoad also immediately is slated to begin renovations of the lobby, café, conference facilities, fitness space and multiple outdoor patios, according to Colliers’ release. The current 679 parking spots could be expanded to as much as 1,622, leasing materials show.

“Our new ownership team is well-capitalized and ready to do deals,” Bataineh said in the release. “We know the greater Kansas City market well, and we are excited to transform Summit52 into a modern workplace destination just like we have done with the 3Y and Lightwell buildings” — the firm’s previous two office acquisitions in the metro area.

Ross Simpson and RC Jensen will lead Colliers’ leasing team for Summit52.

Colliers’ Kansas City office’s Management Services Group oversees a portfolio of more than 8 million square feet of third-party commercial real estate investments.


NYC developer taps Nashville for second office

Somera Road underway with work in The Gulch

Somera Road Inc. will open a second headquarters in mid-July in Nashville, a move that comes as the New York-based commercial real estate firm continues to gain a presence throughout Music City

A release does note the location of the future office.

Somera Road’s primary headquarters will remain in New York City. However, two key senior team members of the company — Jonathon Reeser, vice president of acquisitions and Joe LeMense, vice president of construction — will relocate to Nashville to co-head the office. The two will soon be hiring additional employees to bolster the local presence.

Somera Road’s Nashville portfolio includes the Voorhees/Downtown Antique Mall site on Eighth Avenue South in The Gulch (read here), WeHo Crossing (read here) in Wedgewood-Houston, 501 Great Circle Road in MetroCenter (home to Nashville-based JumpCrew; read here) and PINS Mechanical Co. in the North Gulch. The company plans to soon announce future projects for Wedgewood-Houston, Germantown and East Nashville.

“Nashville is a perfect second headquarters as we continue to grow our foothold and development pipeline in [the city],” Ian Ross, Somera Road managing principal, said in the release. “Nashville’s proximity to other focal markets with active projects such as Memphis, Louisville, Kansas City and Indianapolis is an added perk.

“The markets we invest in offer an unparalleled value proposition to both employees and employers, offering a lower cost of living and a higher quality of life in forward-thinking, hyper-connected live-work-play environments,” Ross (pictured) added. “Nashville was a natural choice for our HQ2, as it simply reinforces our firm’s primary investment thesis over the past five years.”

Somera Road garnered headlines in mid-March when it announced it had offered a $17 million property purchase and leaseback package as an alternative to the Watkins College of Art and Belmont University merger announced in late January (read here). That effort did not materialize.

The announcement of the future Nashville co-headquarters follows Somera Road’s launch of a division focused on ground-up development. Andrew Donchez, formerly with Boca Raton, Florida-based Mill Creek Residential, will oversee the division as vice president, head of development. Donchez is expected to spend some time in Nashville given Somera Road’s multiple projects in the city.


NY developer moves executives to Nashville, teases future projects

Jul 1, 2020, 12:35pm CDT

A real estate developer from New York is so smitten with Nashville that it’s opening a permanent office in mid-July — and tipping its hand about where its next projects will occur.

Somera Road Inc. announced that three employees will move from New York to Nashville, to elevate what had been a part-time office into a full-time operation. Two of those three transplants will jointly lead the Nashville office: Joe LeMense, the company’s vice president of construction, and Jonathon Reeser, vice president of acquisitions. Somera Road will look to hire three additional employees in Nashville, for what it’s dubbing a “second headquarters.”

Somera Road illustrates how quickly so many out-of-state developers have become smitten with the city’s growth, prospects and vibe. Somera Road joins a growing group going as far as opening an office in the city.

Somera Road sealed its debut investment less than three years ago, buying a former Gibson Guitar warehouse in the Gulch. Today, it’s home to two entertainment concepts, Pins Mechanical Co. and 16-Bit Bar+Arcade. Somera Road’s other developments include revitalizing an industrial building in Wedgewood-Houston, spending $18 million to buy an office building in MetroCenter, and paying $30 million at the end of 2019 for 2.6 acres of land near the Gulch on Eighth Avenue South, including the Voorhees Building.

Ian Ross, founder and managing principal of Somera Road, said Nashville sits in the “pole position” of all the markets the company invests in (referring to the most favorable spot to begin a car race).

“Nashville’s proximity to other focal markets with active projects, such as Memphis, Louisville, Kansas City and Indianapolis, is an added perk,” Ross said in a statement. “These cities allow for increased productivity, improved retention and a happier and more fulfilled workforce – allowing people to embrace some of the American Dream elements that have become out of reach in high-cost gateway cities.”

Somera Road said new projects will “be announced shortly across Wedgewood-Houston, Germantown and East Nashville.”

“In addition to being a thriving city with a diversified employment base, Nashville’s location is ideal for us as we continue to expand our platform, located within a two-hour drive or flight to the majority of our portfolio,” Ross said. “And most importantly, our team and our families have fallen in love with the city.”

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Introducing: Andrew Donchez – VP of Development

The Somera Road team is excited to welcome Andrew Donchez to our ranks. Andrew will serve as Vice President of Development, overseeing all aspects of Somera Road’s ground up multi-family & mixed-use development platform. Andrew will lead the acquisition, underwriting, design, entitlement, construction and operations of ground up development projects for Somera Road.

Prior to joining Somera Road, Andrew worked for Mill Creek Residential Trust, where he served as VP of Development, overseeing all development activities in the Northeast. At Mill Creek, he was involved in and led the development of a diverse pipeline of development projects, totaling over 1,400 residential units and exceeding $600MM of total development value throughout New Jersey and New York.

Andrew brings over 15 years of experience developing ground up, residential, commercial and mixed-use projects. Prior to joining Mill Creek, Andrew was a Development Executive for RXR Realty where he helped build the residential development platform and oversaw the development of 1,453 residential multifamily apartments with total development values of over $700 million. Andrew helped lead the team that reshaped the downtowns of suburban Westchester County, New York through innovative transit-oriented projects and a pioneering public/private partnership with the City of New Rochelle. The innovative Master Development partnership entitled over 10 million square feet of by-right development potential and secured the acquisition of parcels entitled for over 4 million square feet of development potential.

Prior to his tenure at RXR, Andrew was a Senior Project Manager for Toll Brothers, Inc. in Westchester, New York and began his career as a Development Associate at Ashley Development in the Lehigh Valley, Pennsylvania.

Somera Road is also excited to announce the hiring of Sam Schifman as an Associate supporting Acquisitions and Asset Management. Sam joins Somera Road from Equus Capital Partners where he most recently supported the asset management and disposition of their suburban office product.

Please join us in welcoming Andrew and Sam to the Somera Road team.

To see the whole team please visit Somera Road .

‘Recession proof’ retailer to open in North County

Despite the pandemic, one national retailer is making plans to expand in St. Louis.

Dollar Tree (NASDAQ: DLTR), which has more than 60 locations throughout the region, has signed a long-term lease for roughly 11,000 square feet at Village Square in Hazelwood, the once-defunct shopping center that New York-based Somera Road Inc. bought in late 2018. Terms of the Dollar Tree lease were not disclosed, but the retailer is expected to open this summer.

“Dollar Tree is a recession proof business. Their low price point attracts a variety of shoppers, and they are positioned to excel in both good and challenging economic times,” said Michael Ervolina, senior associate at Somera Road.

In addition to Dollar Tree, Axes Physical Therapy and civil construction firm Millstone Weber, which is working on the Interstate 270 project, also signed new leases at Village Square. Concentra urgent care also signed a long-term extension of its lease at Village Square. The leases follow the more than $1 million Somera Road has invested in facade improvements to the property at Lindbergh Boulevard and Interstate 270.

Ian Silberman of Location CRE and Rob Goltermann of DCM Group represented Somera Road in the leases.

Although the pandemic hasn’t impacted the center’s leasing, it has led to Somera Road to pause its grant program that would have given free rent and startup capital for small businesses and entrepreneurs. Over 200 applicants applied but the final “Shark Tank” event that would have determined the winners has been postponed until it is safe to hold the event publicly, Ervolina said.

Retail space in north St. Louis County leases for $10.87 per square foot on average, the lowest across the St. Louis metro area, according to the latest available data from Newmark Grubb Zimmer.

Somera Road acquired the property from special servicer LNR Partners in late December 2018 for $2.3 million according to data from Reonomy. At the time, Village Square was appraised for $4.2 million but owed more than $18 million on its mortgage.

By Steph Kukuljan  – Reporter, St. Louis Business Journal

Apr 27, 2020, 2:15pm CDT

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Retail has been on life support — coronavirus could pull the plug

“One in 4 jobs are retail related. If you want to save the U.S. economy, you need to focus on the retail industry,” said one analyst.

With hundreds of thousands of stores closed nationwide, the coronavirus pandemic is accelerating dramatic changes across the retail industry that had been underway well before the viral outbreak hit the U.S., according to analysts.

“Retail has been on life support,” said Ian Ross, principal of the commercial real estate investment firm Somera Road. “Dozens of these companies were on the verge of financial collapse, and I have a hard time believing they’re not going to collapse because of this.”

Over the last few weeks, dozens of retailers have announced furloughs. Macy’s put the majority of its roughly 130,000 workers on furlough. Kohl’s, JCPenney and Nordstrom temporarily closed all of their stores and put their workers on furlough, about 300,000 people.

Mall operators Simon Property Group, Westfield and Taubman Centers have announced temporary closures in response to state-mandated shutdowns of nonessential businesses.

Even digitally savvy companies have buckled. The online beauty shop Glossier closed its retail stores, Rent the Runway laid off all its retail employees and the fashion company Everlane laid off or furloughed about 200 of its workers.

“Nobody wants to cut people out of their company,” said Allen Questrom, the former CEO of Macy’s, Neiman Marcus, Barneys New York and JCPenney. “The key is to stay alive so the company can come back into business.”

However, in a highly competitive business with slim margins, the impact of the virus is broadening the gap between which companies may be viable after the pandemic is contained and which may not survive, said Linda Tsai, a real estate investment trust, or REIT, analyst who covers retail with Jefferies Financial Group.

Full coverage of the coronavirus outbreak

Companies that have gone through bankruptcy proceedings, such as Sears, are clearly on the shakiest ground, while stores in higher-income areas and retailers with low debt will likely bounce back faster from the impact of the virus and any potential recession, Tsai said.

Over the last few years, the retail industry has been rocked by a wave of bankruptcies as retailers rush to right-size their businesses. Most recently, Forever 21 and Barneys New York filed for bankruptcy, along with retail chains like Payless ShoeSource and Modell’s Sporting Goods.

“Big companies with the ability to weather a storm like this can go on for a while without income and can come back strong,” said James Cook, director of retail research for the commercial real estate service firm JLL. “A lot of retailers who have gone through private equity and mergers or acquisitions that have saddled them with a lot of debt can’t coast for very long without some kind of restructuring.”

Mall operators that house the retailers are also scrambling to preserve cash. The mall owner Macerich cut its dividend by 33 percent. Westfield cut its dividend in half. Weingarten, which operates open-air shopping centers with mainly grocery and essentials tenants, drew down a $482 million line of credit, citing an immediate need for liquidity.

“It may take time for damage to unfold,” said Anna Lai, a REIT analyst with S&P Global Ratings.

Some mall operators and retailers had already been short on cash and high on debt before the pandemic hit, according to S&P Market Intelligence reports. Mall-based companies, including Belk, Neiman Marcus and J.Crew, are on the S&P’s watch list for default, with triple-C credit ratings. That could create major challenges for malls after the virus is contained, according to the company.

“I think the malls will face near-term pressure, but longer term, they could face pressure to lower rent but also occupancy pressure if some of these retailers do not survive,” Lai said.

At this moment of crisis, all options are on the table, said David French, senior vice president of government relations for the National Retail Federation. Retailers are discussing their lease terms with their landlords to find temporary relief on rent and are asking their lenders to ease their debts, he said.

The mall operator Taubman recently told its retail tenants that it expects all of its tenants to meet their lease obligations but that it is willing to discuss any financial challenges and help them with a type of payment plan.

“Liquidity is a massive issue, and there is no one silver bullet,” French said. “If you’re not making sales, you’re running out of cash.”

The retail and shopping mall industries have joined the melee of hamstrung sectors to plead for financial relief from the Trump administration as it rolls out a $2 trillion stimulus program.

The National Retail Federation asked the administration in a letter last month to consider offering retailers government-backed loans and relief from certain tax obligations. The International Council of Shopping Centers, a trade association representing malls, including Simon Property and Kimco Realty, argued in a letter to the Trump administration last month that shopping malls could crumble without business interruption coverage for retailers, restaurants and landlords. The organization argues that without ensuring the stability of its tenant base’s roughly $1 trillion in secured and unsecured debt, the shopping center industry will be at risk.

“One in 4 jobs are retail related,” said Tom McGee, CEO of the International Council of Shopping Centers. “If you want to save the U.S. economy, you need to focus on the retail industry. It’s foundational to the economy and foundational to the community.”

As retailers resort to furloughs and close stores to manage costs, retail workers are left without incomes.

Nayeli, a former JCPenney employee in Santa Ana, California, who asked that her last name not be used, has been unemployed for about a month. She considered a job at Costco to continue to help her parents make rent and buy groceries, but her dad said he’d rather pick up extra shifts at his job manufacturing airplane parts than risk her being exposed to the coronavirus.

“I was concerned because I helped my parents with rent and groceries, and I was like, ‘What am I going to do?'” she said. “Although JCPenney isn’t doing well as a company, they should offer some sort of pay. Imagine people who just rely on that paycheck. How are they going to pay the bills, you know?”

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Somera Road Reintroduces SouthSide Works

The Somera Road team is proud to announce our newly acquired controlling interest in SouthSide Works – Pittsburgh, PA, a mixed-used development located on Pittsburgh’s South Side Neighborhood. As the new owner and operator we are excited to reintroduce the project with a renewed vision, plans for re-development and plans for new development. In total, Somera Road will invest over $37 million in capital improvements including an adaptive-reuse conversion of a former cinema into a modern 77K sf, open floor plate, creative office space called, “The Box Office”.

We are also deep in planning of the construction of a new multifamily development which includes 230 Class-A apartments on developable waterfront land controlled by the venture.  Somera Road’s SouthSide Works will be a wholistic re-envisioning of what a modern live-work-play community should look like along the riverfront of one of America’s fastest growing, most exciting cities. Our goal is to integrate the best that Pittsburgh already has to offer with Somera Road’s specialty – adding new thinking, an entrepreneurial approach, and creative innovation.

PBT - Somera Road introduces $100 million revision in strategy for the SouthSide Works