What area is your expertise?
The Greater Pittsburgh Metropolitan Area and Western Pennsylvania.
What trends do you see presently in multifamily development in your area?
The Greater Pittsburgh MSA is a very stabilized and historically steady market. There are high barriers to entry, modest but steady rent increases, strong occupancy and limited concessions are offered to tenants.
Who are the active multifamily developers in your area?
The recent active developers in the Greater Pittsburgh MSA include Lincoln Properties and Continental.
Please name one or two significant multifamily developments in your area. What impact will these projects have on the market?
The Cork Factory located in the “Strip District” on the river front in Pittsburgh. This project was recently developed into 297 luxury apartments from a vacant warehouse. The Cork Factory is a tremendous success in terms of lease-up time and achieving record high rents. This project, along with The Encore on 7th, represent the two newest apartment communities built in the City of Pittsburgh in more than 30 years. The Encore on 7th was built from the ground up by Lincoln Properties. The community contains 151 luxury rental units and was completed in 2006.
Where is the majority of development taking place? Why is this area doing well?
The majority of development has historically been in the suburbs where the availability of land exists. There has been a recent surge of condo and multifamily development in the Central Business District (CBD). Within the past 2 years Downtown Pittsburgh has increased its number of residential units by approximately 50 percent.
What area do you expect to be the next big development market? Why?
We would expect that development will continue in the Northern suburbs due to the new Westinghouse Facility being built in Cranberry.
What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing?
In Moody’s third quarter report they rated Pittsburgh 100 points out of a possible 100 points for the multi-housing market. Currently all submarkets are doing relatively well as far as leasing activity.
Please give a measure of apartment vacancy rates.
The overall apartment vacancy for the Greater Pittsburgh MSA for third quarter 2007 was 6.1 percent. The strongest submarkets as far as occupancy were in the East and in the City.
Please give a measure of condo sales activity in the area.
Pittsburgh has not been a big condo conversion town. Most of the condo activity is in new construction and is occurring Downtown, Shadyside and Squirrel Hill markets. The activity is strong.
What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in the next year?
Low interest rates create an environment for individuals to qualify for loans and purchase homes, which has a negative effect on the occupancy of apartment buildings. As interest rates rise, we would expect to see occupancy in apartment buildings to continue to increase.
What is the status of job growth/(un)employment rates and what bearing will it have on the multifamily market?
Historically job growth has been flat, but we have seen a recent increase in jobs and expect that trend to continue. Unemployment rates in Pittsburgh are doing better than the national average.
Submitted by Cynthia Kamin , senior vice president of CB Richard Ellis in Pittsburgh. Posted 02/07/08.
Cynthia Kamin