PITTSBURGH, Pa. – United States Steel Corp. has pulled out of a deal to build its new world headquarters as part of an ongoing $440 million redevelopment of the former Civic Arena site by the NHL’s Pittsburgh Penguins.
Thursday’s decision comes almost exactly a year after company, team, local and state officials announced the plans at the Consol Energy Center, the Penguins new arena. That arena sits across the street from the site where a team-controlled subsidiary planned to break ground on the new headquarters and complete the project before U.S. Steel’s lease expires at its current downtown location.
The announcement comes two days after the steelmaker reported a third-quarter loss of $173 million, more than four times worse than analysts had forecast. U.S. Steel’s stock has dropped nearly 61 per cent this year, from $26.59 per share to $10.39 on Thursday — down 67 cents for the day.
The company didn’t explain the move in a brief statement.
“We can confirm that U.S. Steel will not be moving into a new headquarters building at the site of the former Civic Arena,” the statement said.
U.S. Steel’s headquarters will remain at the 64-story U.S. Steel Tower downtown, the city’s tallest building, until its lease expires in September 2017, the company said, declining to comment further about its future in the city.
A New York investment firm bought the skyscraping headquarters building for $250 million in April 2011. A year later, U.S. Steel announced it would likely move out.
The 2012 company announcement prompted Pittsburghers to wonder whether U.S. Steel — perhaps the city’s most iconic company — would follow Alcoa out of town or greatly reduce its presence, as happened when ketchup-maker H.J. Heinz Co. moved production out of the city years before being sold to Berkshire Hathaway and 3G Capital last year. Heinz headquarters remain in Pittsburgh.
Mayor Bill Peduto said upon taking office last year that he met U.S. Steel CEO Mario Longhi and promised, “I will not be the mayor that lost U.S. Steel.”
On Thursday, Peduto and Allegheny County Executive Rich Fitzgerald issued a statement that talked about the future of the Penguins’ mixed-use development, but didn’t address U.S. Steel’s future.
“While we’re sorry to hear of the decision by U.S. Steel, this is simply a pause button in the commercial development of the 28-acre site,” Peduto and Fitzgerald said. There is “continued interest in the commercial development as it remains one of the most desirable sites in all of western Pennsylvania.”
Penguins Chief Operating Officer Travis Williams said U.S. Steel’s decision wasn’t surprising given recent reports about the company’s finances, but said it won’t impact the team’s ability to redevelop the site.
Under the original plan, the U.S. Steel headquarters was to occupy 250,000 square feet in a 268,000 square-foot building — along with a steel museum to chronicle the city and company’s role in the industry — with the rest being retail shops. Other parts of the development will include housing and office space.
The Penguins didn’t exist when the Civic Arena was built in 1961, but have borne the civic burden of that development since moving into that building as an expansion franchise in 1967. The redevelopment is meant to reverse blight created when some 8,000 residents were relocated to build the original arena, which effectively cut off the rest of the city’s Hill District from Pittsburgh’s downtown economic engine.
This story deletes incorrect 50-year-term for U.S. Steel’s lease.