The developers who created Bakery Square now have a plan to help turn Pittsburgh’s Oakland neighborhood into the innovation hub that city, university and civic leaders envision.

Walnut Capital will buy the Jewish Federation of Greater Pittsburgh’s headquarters at 234 and 242 McKee Place in a deal expected to close next year. Terms were not disclosed, but Adam Hertzman, the Federation’s director of marketing, says the organization had offered the property for sale for $4 million.

“We went through an extremely thorough and competitive bidding process to identify the best strategic partner,” Hertzman says.

Walnut Capital president Todd Reidbord says the company plans to demolish the two buildings and build an office center that’s attractive to tech companies.

A recent report by the Brookings Institution noted that Pittsburgh must invest in more than just research at the University of Pittsburgh and Carnegie Mellon University to secure its place as a world-class global innovation city. The report cited Oakland, the city’s “second Downtown,” as a logical location for an innovation hub.

“We’re committed to providing visionary solutions to help catapult the growth of neighborhoods and companies to positively impact Pittsburgh,” says Reidbord. “We believe strongly that Oakland is one of the world’s top innovative mini-cities and that the need for more infrastructure to support its ever-increasing research and startup population is key to its continued growth.”

Wanda Wilson, executive director of Oakland Planning and Development Corp., says she will meet soon with Walnut Capital’s principals to talk about their plans. “I look forward to a robust and iterative process with Walnut Capital,” she says.

With $1.2 billion in research between the two universities, Walnut Capital’s concept and the Murdoch family’s proposed eight-story office building in a lot at Forbes and Coltart avenues are evidence that Oakland is on its way to becoming an innovation district, says Rebecca Bagley, Pitt’s vice chancellor for economic partnerships.

“We as a university, and we as a region, need to have more capacity for startups, early-stage companies and companies that want to do research and development with the universities or want to be close,” Bagley says. For tech companies especially, she says, “there’s an advantage to proximity to each other and to the intellectual capital of our students and our faculty.”

With more than 60 full-time employees to support its fundraising, planning and programming, the Jewish Federation has outgrown the 14,000 square feet that it occupies, says Hertzman. Walnut Capital agreed to give the organization three years to relocate, but the Federation is already looking for a centrally located building to lease.

“It’s in both our interest and Walnut Capital’s interest for us to look quickly for a new location, but the time frame does give us great flexibility,” says Hertzman. “We are very excited about the move. We have an opportunity to move to a modern office that probably will be all on one floor and a setup that is more conducive to collaboration and innovation.”

As part of the agreement, Walnut Capital offered the Federation the right to preserve certain building elements such as stained-glass windows from 242 McKee Place, a house donated by the Rudolph family when the organization began to outgrow its first building.

“We are grateful that Walnut Capital recognized the desire for historic preservation even in a building without a historic designation,” Hertzman says.