Downtown Population increased 25% since 2000 (Pittsburgh, Liberty: lofts, condo, live in)

[BrianTH]

Originally Posted by pman

as long as the rents are high enough to justify the cost I don't know that they have to keep going higher as there's plenty of room to expand supply..of course, we'r talking averages here. there's no reason there can't be very high end places that set city records and "affordable luxury" at $1200-1400/mo..in fact, it's going to take both to meet the goals we've set for the city.

There are a few reasons I expect Downtown rents to increase on average--not dramatically, but fairly steadily for years to come.

For one thing, current market rents aren't actually quite high enough to allow the financing of developing new units Downtown. That problem is being addressed with various subsidies, which I'm OK with, but I expect developers to gradually increase rents in order to rely less on subsidies (many of which come with strings of one sort or another attached).

For another, I expect unusual growth on the demand side as Downtown continues to become a more attractive residential area, fuel costs go up, the more urban-oriented younger generations increase their share of Downtown's workforce, more baby boomers become empty-nesters, the Downtown universities keep expanding their student bodies, and so on.

Meanwhile, vacancy rates across the core area are low as demand for rentals has been increasing for all these reasons, and many of the well-established potential competitors to Downtown (e.g., Shadyside and Squirrel Hill) are much more capacity-constrained. I do expect new units to start filling in and expanding the alternative options (in places like East Liberty, the North Side, and so on), but establishing those alternatives is going to take some time, particularly in the current financial markets.

Finally, rents in Pittsburgh tend to be a little sticky, meaning any demand-driven rent increase is likely to be spread out over some number of subsequent years.

[Denton56]

Originally Posted by RestonRunner86

Right now what does Downtown offer that would justify someone paying 100%-200% more than they would pay for a comparably-appointed apartment in another neighborhood within an easy walk of Downtown? That is what I'm saying here. I'm going to stay put in Polish Hill in my upscale loft for $550/month. To put things into perspective for those of you in NoVA this would be like 1-BR rents in Rosslyn going for $2,000/month while 1-BR rents in Ballston (walking distance) would be going for $800/month. Who would pay an additional $1,200/month to save a 25-minute walk (and why?)

Why ask me? Ask the people who are willing to pay those amounts to live downtown. Obviously a lot of people see the advantages that you don't see.

[Denton56]

Originally Posted by BrianTH

There are a few reasons I expect Downtown rents to increase on average--not dramatically, but fairly steadily for years to come.

For one thing, current market rents aren't actually quite high enough to allow the financing of developing new units Downtown. That problem is being addressed with various subsidies, which I'm OK with, but I expect developers to gradually increase rents in order to rely less on subsidies (many of which come with strings of one sort or another attached).

For another, I expect unusual growth on the demand side as Downtown continues to become a more attractive residential area, fuel costs go up, the more urban-oriented younger generations increase their share of Downtown's workforce, more baby boomers become empty-nesters, the Downtown universities keep expanding their student bodies, and so on.

Meanwhile, vacancy rates across the core area are low as demand for rentals has been increasing for all these reasons, and many of the well-established potential competitors to Downtown (e.g., Shadyside and Squirrel Hill) are much more capacity-constrained. I do expect new units to start filling in and expanding the alternative options (in places like East Liberty, the North Side, and so on), but establishing those alternatives is going to take some time, particularly in the current financial markets.

Finally, rents in Pittsburgh tend to be a little sticky, meaning any demand-driven rent increase is likely to be spread out over some number of subsequent years.

One additional reason, mortgage interest rates will continue to rise, making renting even more attractive as it becomes more expensive to buy.

[rhondee]

Originally Posted by BrianTH

Meanwhile, vacancy rates across the core area are low as demand for rentals has been increasing for all these reasons, and many of the well-established potential competitors to Downtown (e.g., Shadyside and Squirrel Hill) are much more capacity-constrained.

I could see more happening on the North Side area of Deutchtown/Troy Hill with respect to housing and revitalization as it is in such a prime location.

Allegheny Angel was right about this area- he is so ahead of his time! He should start his own real estate prospecting and developing business!

[pman]

Jos. A. Bank... is moving from its current location at 527 Smithfield St., Downtown, to Market Square and Fifth Avenue this spring.

The new location will be in the building now called Market Square Plac

Read more: Jos A. Bank clothing store changing locations

[BrianTH]

Interesting. Of course this raises the issue of what will take their current space, but they are creating a nice little clothing district down there.

[Blackbeauty212]

Refesh my memory - where's Jos A Bank is it the one in the Oliver Builder accross from Saks or is it on 6 AV across Smithfield from Burlington's

Ones Brooks Brothers the other is Jos A Bank, I just can't remember which is where...

[greg42]

Jos A. Bank is in the Oliver Building presently.

[nova00]

I am new to the area. And I have recently been looking to invest in some property in downtown Pittsburgh. I was shocked to see how cheap some of the buildings are going for..as low as $30/sq. ft. on places like Penn Avenue. I am from a small town 60 miles north and this about the same pricing?? Can anyone enlighten me. Also, Many of the buildings for sale have very high vacancy rates. I was told that Downtown Pittsburgh is a rather viable/thriving market and was wondering why so many vacancies?? I must be missing something...

[BrianTH]

Originally Posted by nova00

I am new to the area. And I have recently been looking to invest in some property in downtown Pittsburgh. I was shocked to see how cheap some of the buildings are going for..as low as $30/sq. ft. on places like Penn Avenue. I am from a small town 60 miles north and this about the same pricing?? Can anyone enlighten me. Also, Many of the buildings for sale have very high vacancy rates. I was told that Downtown Pittsburgh is a rather viable/thriving market and was wondering why so many vacancies?? I must be missing something...

The vacancy rates we are talking about are typically just for spaces actually being marketed. Just a guess, but you are likely looking at buildings where most or all of the upper floors aren't currently being marketed (and may not have been for a long time, and may be in pretty bad shape).

In such a case, you are buying an opportunity to turn those upper floors into marketable space--almost like buying an empty lot, but in this case you are buying empty floors. Such a project will likely take a significant investment in addition to the purchase price in order to succeed. Incidentally, if you are interested in this path, the Pittsburgh Downtown Partnership has some programs specifically designed to help out such projects.