The industrial and entrepreneurial hive of Pittsburgh’s Homewood neighborhood, 7800 Susquehanna is a 100,000 square-foot industrial space that was purchased and rehabilitated by Bridgeway Capital, a Community Development Financial Institution (CDFI). Nineteen of the space’s 23 tenants are for-profit fabrication companies. While there are no hard-and-fast rules on the types of tenants that Bridgeway leases to, chief strategy and development officer Matt Madia said they wanted a high number of manufacturers in the building because of the job and training benefits they provide. “We look much more favorably on someone who is making something or could be expected to create jobs, and someone who is going to activate the space,” said Madia. “If they have a reasonable ability to hire from the neighborhood or train for the neighborhood, or hire from other neighborhoods⁠—that’s our screen.”

Bridgeway Capital found a high level of job impact coming out of 7800 Susquehanna in their first employment report. Those 23 tenants are providing 110 jobs to Homewood and surrounding neighborhoods. To Madia, that justifies the investment they made in the previously under-utilized space.

“We’re willing to make the investment because it’s so high impact,” said Madia.

The project is the first of its kind for Bridgeway Capital, and marked the launch of their real estate portfolio. 7800 Susquehanna is breaking even for the first time since it opened in 2015, according to Madia. Now Madia and his co-workers are planning on purchasing a two acre space adjacent to 7800 Susquehanna to redevelop into another industrial/manufacturing space. ORIGINS, Bridgeway’s new entrepreneur support program, is also influencing how space will be delegated inside 7800 Susquehanna. They’ll be subdividing out 750-square-foot spaces for African-American makers and manufacturers that are looking for their first business space. They’re doing this work because it’s what residents want, and entrepreneurs need. “The community has been really supportive of that,” said Madia. “They still want manufacturing activity as long as it has a jobs focus.”

Q&A

Why does manufacturing matter to Bridgeway Capital?

The potential to create good-paying technical jobs for the community.

Does Bridgeway Capital have a history of manufacturing development?

No.

How did Bridgeway Capital develop capacity for a manufacturing real estate project?

Bridgeway Capital’s former CEO Mark Peterson had connections with a developer with experience in multi-tenant spaces, who was a key strategic partner. They also expanded their board to bring on a couple new board members with a background in managing real estate portfolios.

Is there a history of manufacturing in the neighborhood?

Yes. 7800 Susquehanna used to be a manufacturing facility up until the 1970s.

How important is it to maintain fabrication activity in 7800 Susquehanna?

There is no explicit rule preserving the building for manufacturing uses. “That tenants have relationships with the community is our main focus,” said Madia.

Who were the key players within Bridgeway Capital that helped make this project happen? Bridgeway Capital’s former CEO was a key decision maker on all day-to-day decisions with the building. Madia led the fundraising side. Scott Langill, CFO, collects rent from tenants and has also been key in strategic planning for the building.

Has there been any focus on inclusion and equity when selecting tenants?

Madia said they happily consider any small business, though he notes that there aren’t a lot of local businesses in the predominantly African-American community that surrounds 7800 Susquehanna in need of the type of space they offer. Overall, they select tenants for their job creation or job training potential.

Is Bridgeway Capital involved in workforce or other initiatives outside of property management? No, but there are two workforce training non-profits that are tenants at 7800 Susquehanna.

Is Bridgeway Capital involved in creative placemaking work that involves tenants, the building, and residents from the neighborhood?

Nothing to date but this is something they’re interested in pursuing. Bridgeway Capital recently turned 7800’s first floor into a 1,500-square-foot space called the Sarah B. Campbell Enterprise Center that will provide Homewood businesses and residents free access to WiFi, computers, and printers. Design for the space will be produced by tenants and people in the neighborhood.

Any focus on inclusion and equity in programming that connects community with tenants or the building?

Bridgeway Capital works to be respectful of the heritage of the neighborhood and tries to maximize the project’s benefit to residents. to residents. To do this, they work with neighborhood groups like Operation Better Block, and local churches like Bethany Baptist Church and Bible Center Church, to inform residents and invite their feedback on 7800 Susquehanna’s programming and development plans. Bridgeway Capital also finds opportunities for small businesses from the area to be contractors on the building.

Is the project breaking even or profitable?

For the first time since it opened Bridgeway Capital is now breaking even on 7800 Susquehannah. Madia said the project would not have been possible without philanthropic support from the Richard King Mellon Foundation.

Are there opportunities for non-tenants to interact with the building and the manufacturers inside?

Yes, primarily through job-training provided by tenants.

Have market pressures made it more difficult to achieve any of the original mission goals of this project?

No.

What are partners doing to ensure manufacturers can afford to remain in the building even if market dynamics change in the surrounding neighborhood?

Affordability is part of 7800 Susquehanna’s mission. Leases are built such that rent goes up a quarter a square foot every year. They offer long leases—five years each—with two options to renew, for a potential total of 15 years. Lower rates are offered to early tenants and non-profits.

Did Bridgeway Capital receive assistance from local government?

Yes, in the form of grants.

What is the zoning designation of the parcel on which the building is located?

Industrial.

Were any zoning variances needed for this project?

Bridgeway received a parking variance by designating bike parking and installing bike racks.

Was there protective industrial zoning?

No.

Were there any permitting issues?

No.

How many tenants are in the space?

23.

What types of tenants are present?

Small manufacturers, designers, woodworkers, ceramics companies, hardware, some apparel manufacturers, a pharmaceutical company, and nonprofits like job training organizations.

How many tenants are businesses?

19

How many are production businesses?

19

How many jobs are supported by this project?

110

How are tenants selected?

Tenants submit an application and go through a credit report. They must show “some record of success” and have a community component to their work, according to Madia.

Are there opportunities for on-site equipment sharing?

No.

What is 7800 Susquehanna’s capital stack?

To develop the project, Bridgeway Capital received $2 million in state grants, an $800,000 grant from the U.S. Department of Health and Human Services’ Office of Community Services Community Economic Development program, and $2 million in New Markets Tax Credits. Bridgeway Capital used two grants totaling $4 million from the Richard King Mellon Foundation, and $1.6 million of its own capital to finance the purchase and do initial renovations.

Did Bridgeway Capital incur any legal expenses for the New Markets Tax Credits transaction? If so, how much?

Transaction costs totalled $285,000, most of which were legal expenses like hiring a tax attorney. Additionally, Bridgeway Capital had to pay a fee of three percent of the total New Markets Tax Credits acquisition provided by the Urban Redevelopment Authority, which amounted to $240,000.

What was the total cost of bringing 7800 Susquehanna online?

Nearly $15 million.

What square footage options do tenants have?

Tenants occupy spaces ranging between 850 sq. ft. to 20,010 sq. ft.

What is the rent per square foot?

$6-$8.50.

How long are the lease terms?

Five years, with the option of a five-year renewal.

How do you approach subdividing large spaces for multiple tenants?

First tenants that come in on a floor choose their floor plans, and other tenants that come in later fill spaces around. Tenants are responsible for their own fit out.

Is there an opportunity for tenants to take an ownership stake in the building?

No.

Who were key stakeholders helping with community outreach?

Richard King Mellon Foundation and Operation Better Block. Richard King Mellon Foundation provided funding and identified local issues to address. Operation Better Block engages and educates residents, and provides job training.

Are those stakeholders still actively involved?

Bridgeway Capital is actively involved with Operation Better Block on the next phase of the building, which will place pedestrian and bike paths on 7800 Susquehanna’s property to reach a public transit node.

Total square feet?

150,000 sq. ft.

This case study was originally published by Urban Manufacturing Alliance in 2019 as part of “All About the Jobs: Eight Mission-driven Industrial Developers on How Their Spaces Anchor Manufacturers and Support Local Economies,” a project developed in partnership with Local Initiatives Support Corporation (LISC) and students at the Albany Law School Community Development Clinic.