All of a Sudden, Pittsburgh Multifamily Trades Increase in Velocity


One on Centre is a 264-unit project by Greystar that also serves as student housing for the University of Pittsburgh.

After a brief increase in the overall vacancy rate in the Pittsburgh region in 2017, the market has rebounded nicely and is back in the 4 to 5 percent range. But what has been more eye-opening is the increased velocity in the acquisition market that has investors from outside of Pittsburgh more focused on the Western Pennsylvania market than ever before.

Multifamily Sales Market

Multifamily sales in the Pittsburgh region over the last 10 years have been rather anemic.  Sales velocity was slow due to various factors, including the reluctance of long-time local ownership groups to sell a property in a market where few options existed for a 1031 tax-deferred exchange transaction.

There was also very little new construction to attract outside capital. In general, not much attention was paid to the Pittsburgh metro. However, developers recently had an epiphany and noticed that there was much old multifamily product scattered throughout the region, and that the time was right to break ground on new projects.

Gregg Broujos, Colliers International

Now that a significant amount of new construction projects have been delivered over the last six or so years, Pittsburgh has become a target for many investment firms from outside Western Pennsylvania. Some of the firms and their recent acquisitions can be found in the accompanying table.

Capitalization rates continue to trend downward with no end in sight. The reported cap rates for some of the above-referenced transactions range from 5 to 5.9 percent — the days of a mid-6 to 7 percent cap rate for quality product are long gone.

Investors from outside of Pittsburgh are learning about the region’s solid market fundamentals, as well as its vibrant and re-energized CBD and highly educated population.  Western Pennsylvania’s economy continues to diversify and gain the attention of all types of investment firms as they see those fundamentals improve.

New industries that have seen growth include healthcare and life sciences, advanced manufacturing, energy, financial and business services, education (University of Pittsburgh and Carnegie Mellon University) and technology, artificial intelligence and robotics. Further fueling the Pittsburgh sales market is the widely available debt at historically low rates and financial firms that are incredibly anxious to make loans in this region.

Multifamily Rental Market

RealPage has reported a fourth-quarter 2018 multifamily occupancy rate of 96 percent in the Pittsburgh region. However, revisiting 2016-2017, the occupancy rate dipped to a reported 89 to 90 percent due to the thousands of new units that flooded the market over the prior 18 months.

White Realty Advisors has reported that more than 4,500 units started to come on line in 2014-2015, with the East End market leading the way with 1,304 new apartments. The City of Pittsburgh proper leads the region’s suburbs as younger workers flock to the amenities, including an exploding independent restaurant scene, brew pubs and specialty distilleries.

The younger demographic is also attracted to new construction in the city, which had not been widely available just seven years ago. This group is drawn to the tight geographic boundaries of the city proper, where they can utilize ride-sharing services, public transportation, and the numerous bike lanes that blanket the 58.3-square-mile area that is Pittsburgh.

The vacancy rates in the city have been reported in the 3.3- to 6.6-percent range. New multifamily construction is led strongly by local developers, in opposition to the acquisitions completed by firms outside of Pittsburgh. Oxford Development, Walnut Capital, Massaro, Trek Development, Q Development and Red Rocks are among the most active developers with new construction and adaptive reuse multifamily projects.

Oxford has experienced tremendous success in the Strip District, a funky, trendy and wildly popular neighborhood bordering the CBD. Oxford’s Landings project has achieved full stabilization and the company’s Stacks project a few blocks away will offer an additional 400 units.

Walnut Capital’s Bakery Living projects in the East Liberty/Larimer neighborhood were a stunning success and beat projections on both lease-up and rates. As for new construction activity from firms based outside of Pittsburgh, Milhaus Development, GHB Capital, Trammell Crow and NRP have some exciting projects underway.

Also, Trammell Crow’s $70 million, highly anticipated Glasshouse project on the South Side at Station Square will feature 319 units. Glasshouse will cater to those seeking active lifestyles — the property is situated on the bike trail along the Monongahela River with a direct connection to the Great Allegheny Passage, which leads to Washington, D.C.

Occupancy rates as of the fourth quarter of 2018 are listed below for various submarkets, according to

• Central Pittsburgh: 96.4 percent

• Oakland/Shadyside: 95.9 percent

• East Pittsburgh: 97.3 percent

• South Pittsburgh: 95.4 percent

• West Pittsburgh: 97 percent

• North Pittsburgh: 94.7 percent

• West Pittsburgh/Fayette County: 96.7 percent

— By Gregg Broujos, regional principal, Colliers International. This article first appeared in the May 2019 issue of Northeast Real Estate Business magazine. 

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