Pittsburgh Mayor Bill Peduto says that when he first moved into his East End home, if the wind was just right, he could walk out his front door in the morning and smell cookies baking at the old Nabisco plant on Penn Avenue.

“Now when I wake up in the morning, I smell innovation,” he says.

The mayor joined executives from Walnut Capital and other community leaders on Thursday to ceremonially break ground on the next phase of office space in Bakery Square 2.0, just across Penn Avenue from its original installation.

The new office building will encompass 218,000 square feet of usable space over six floors on the site formerly occupied by Reizenstein Middle School, which the city closed in 2006. The first of two planned office spaces in the new development, it’s projected to cost $120 million and scheduled to open in the spring of 2016.

Google has already agreed to lease about one-third of the first building, according to Walnut Capital. When both structures are complete, they’ll amass some 425,000 square feet of LEED-certified office space.

Bakery Living, the development’s residential component, will open its first 175 rental units in June. A total of 350 apartments are planned along with 52 for-sale townhouses.

“It’s an amazing thing that’s happening here,” says Allegheny County Executive Rich Fitzgerald. “East Liberty was a word nobody wanted to use a couple of years ago.”

Peduto says he thinks the new development will have a positive impact on some of the surrounding neighborhoods which remain distressed.

“Our job is to make sure that as these developments happen, we create ladders of opportunity to the other communities that haven’t seen it yet,” he says, citing interest from four different developers wanting to launch projects in Homewood and $30 million in federal grant money being siphoned toward green housing in Larimer and other parts of East Liberty.