3 min read February 2023 — McCaffery, a privately-owned commercial real estate company, is best known in Pittsburgh for the adaptive reuse redevelopments of several historic Strip District buildings including The Terminal, The Cork Factory and 1600 Smallman. Invest: spoke with CEO Dan McCaffery about the company’s current challenges and opportunities, working with the city of Pittsburgh and his outlook and priorities for the near future.
What are your strategies to leverage opportunities and navigate any challenges?
As it relates to our challenges at The Terminal, we’re not going to be happy until we’ve created a place people want to go to every day and at any time. The Strip District, for example, is very attractive and has been one of our prime investment targets. We want The Terminal to be an exciting place to go as well, but we’ve been cautious that it’s not at the expense of the retailers along Penn Avenue. We have to be different animals. In terms of opportunities, we remain excited about the Strip. We’ve invested in apartments and condos along the river at our Brickworks site, which just received approval from the Planning Commission.
How has your experience been working with the city of Pittsburgh and collaborating with local leaders and stakeholders in your developments?
Every city has its pluses and minuses. Pittsburgh has been a pleasure to work in. With the Strip District, we had some very strained times from getting acceptance of our RFP bid up until the day we were able to begin construction. The Terminal, which anchors the Strip, is a big deal and a visual gem. It’s a single-story building with huge historic ramifications. The fact that we won the RFP did not and perhaps should not have signaled an end to the influences the city and community wanted to put on us. We didn’t get a free pass. We were watched over with careful eyes. Sometimes there was interference but that could happen in any city with a similar project because it’s a civic gem. It’s part of the history of the city.
What are the key expectations of people looking to be part of the multifamily space and how are you addressing those expectations?
The market today seems to point toward more spaces that appeal to the millennial audience. We like to have lounges where people can not only share a drink or have an event but work in open spaces. With more people working from home, do they want to sit in their studio or go to a dedicated space? These spaces are not packed but they’re always in use.
What is your outlook and what are your top priorities for the firm in the Pittsburgh market for the near term?
We’ve acquired a new site in the Strip District known as Brickworks and it’s big. That will be a challenge. We need to be careful because we don’t have a steady market due to interest rates and supply chain matters. It’s very hard to get pricing on anything. We have this site and a beautiful plan approved. We would be ready to go if we were able to secure the financing, but it’s very complicated because of the financial markets. We also own and manage the Encore Apartments downtown on the river. We’ve completed renovations of the common areas and are in the process of renovating the units and bringing it up to date. We’re very committed to Pittsburgh between the ground-up development, the in-process, value-add renovations of Encore and exploring opportunities to acquire more.
With respect to Pittsburgh itself, we took a couple of punches, but the policymakers have been supportive. We hope that with the buildings that we’re planning and the renovations of other buildings, we’ll have a similar collaboration and cooperation with the city and communities.
We’ve also recently expanded our third-party property management business in Pittsburgh. That’s an important part of the company. We are developing this arm of the business with what we call the McCaffery “touch.” How do we do something different? How do we make living in this building slightly better than anybody else? Apartment living used to be very transitory. People lived in an apartment before they bought a house. People were married earlier. Today, people live in an apartment for a longer time, so the buildings and the management of those buildings have to be better. The McCaffery “touch” is about delivering a superior resident experience and a high standard of customer service. People have to feel more ownership of the rented space. They have to feel more welcome and participate more in the rented space. The rented space is somebody’s home and we take that very seriously.
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