Real estate notes: Views on Pittsburgh apartment market
Two views on Pittsburgh’s apartment market were recently reported.
• CBRE, a major commercial brokerage firm, said the region’s rental vacancy rate of 3.1 percent was among the lowest in the nation and well below its historic average of 4.85 percent. It listed the Shadyside-Oakland market as the strongest in the region with a 1.8 percent vacancy rate and an average rental rate of $1,224 per month. The strong performance of the market has created a resurgence of investor interest from local, regional and national buyers seeking best-in-class assets and value-added opportunities. Low-cost acquisition financing has contributed to a slight decompression in capitalization rates. The report said major revitalization and redevelopment efforts have brought job growth and real estate opportunity to the market. Steady local economic growth continues to drive renter demand, while emerging job opportunities in the medical, financial, energy and technology fields will encourage more college graduates to remain in the city, further expanding the rental pool. By 2019, with employment expected to grow by 88,900, the new supply (of apartment units) is expected to average 961 units per year while vacancy rates are expected to reach 3.9 percent and overall average rental rates are forecast to rise to $1,168 per month.
• NerdWallet, a San Francisco company that offers financial recommendations on personal finances, said there are several reasons that Pittsburgh’s rise in rent is outpacing New York City’s. Pittsburgh has a lower cost of living than New York City, which has consistently been expensive. A rise of $120 per unit in Pittsburgh is a larger percentage than a rise of $196 in New York City. While New York has been an economic superpower for the past century, burgeoning cities such as Pittsburgh are growing incredibly quickly, becoming economies that can compete with tech giants such as New York City and San Francisco. Google recently signed a lease to expand its Pittsburgh offices, and Carnegie Mellon’s Robert Mehrabin Collective Innovation Center counts Apple, Disney and Intel Research Lab as its tenants. Pittsburgh’s growing industries are a factor in the city’s rising rent prices, and the city’s status as a budding tech hub has attracted workers. The presence of several high-quality universities in Pittsburgh (which steadily churn out educated job seekers each year, many of whom stay in the city), a comparatively low cost of living for a big city and the presence of other growing companies have attracted businesses to the area as well. In the future, residents will likely see a rise in rent prices to correspond with future economic growth.
• Walnut Capital plans to expand its apartment development in the East Liberty area with the purchase of the buildings originally scheduled for the Odeon Theater. Gregg Perelman, managing partner at Walnut Capital, said he hopes to complete acquisition of the property at the corner of Penn and Highland avenues owned by East Liberty Development Inc. before the end of the year. The initial plan calls for 60 apartments and 15,000 square feet of retail. The site is next to Walnut Capital’s Walnut on Highland (the former Highland Building), a 117-unit apartment with retail that is fully leased, Perelman said. The retail includes Patron Mexican Grill and Great Clips. Parking would be provided by the 183-space garage next to Walnut on Highland.
• The U-Haul Center on Thursday will seek Pittsburgh Zoning Board of Adjustment approval to install a 204-square-foot mounted business ID sign for U-Haul at 1200 (1212) Western Ave., Manchester, whose property is owned by Amerco Real Estate Co. The Board also will be asked by JMAC Architects to approve a new three-story single-family dwelling with rooftop deck above the second floor, plus a three-car integral garage, at 1500 Bingham St., South Side Flats. Property owner is Kondaveeti Ravi.
• A May opening is scheduled for the Homewood Senior Station, a 41-unit apartment for low-income seniors 55 or older, located on North Homewood Avenue in Homewood, adjacent the East Busway. The four-story building will include first-floor commercial space to be developed by Operation Better Block Inc., headed by Jerome Jackson as executive director. The Pittsburgh Urban Redevelopment Authority at its March meeting approved a grant of up to $400,000 to OBB for the development of 524 Café, a coffee-type shop in about 2,000 square feet, on the first floor of the building where OBB, working with Urban Innovation 21, has created the Homewood Senior Station Small Business Grant Program. The first floor will have about 2,700 additional square feet of retail space. Owner of the building is Homewood Senior Station LP. R.K. Mellon Foundation in 2011 awarded the URA a $400,000 grant for the cafe.
— Sam Spatter