How 'Steel City' avoided Detroit's destiny
PNC Financial's market outlook at the close of 2010 reported: "Not only did Pittsburgh avoid the worst of the recession, but the city's several educational institutions and large array of healthcare-related employers greatly steadied the local economy."
In addition, such industrial and technology powerhouses as Westinghouse and Google have committed to Pittsburgh, hiring thousands of employees. Meanwhile, the city is also attracting the myriad firms looking to drill for natural gas in the East Coast's Marcellus Shale Formation.
More workers mean more people filling up apartments.
New multifamily building in Pittsburgh has always been conservative, especially over the last 20 years, but demand has begun to outpace supply, said George Ratiu, an economist with the National Association of Realtors.
"The multifamily vacancy rate for Pittsburgh has been historically low," Ratiu said. "Vacancy rates broached double digits around 1999 and had been steadily declining over the past two decades."
A little bit of catch-up is in order. According to PNC's numbers, on a national basis, permits for multifamily dropped 60.5 percent in 2009. For the same year, multifamily permits slipped just 10 percent in Pittsburgh. Last year, multifamily permits nationally were dipped 2.6 percent. In Pittsburgh, multifamily permitting was up slightly, by 0.6 percent.
For 2011, PNC estimates multifamily permits for the country should be up 21.2 percent. In Pittsburgh, multifamily permits could jump by as much as 55.2 percent.
Unlike in the Sunbelt, not all of these new units will be suburban, garden apartments.
"The downtown is changing," said Dye. "It used to be in downtown, you rolled up the sidewalks at night, but there's been a lot of condo development downtown."
Murrer tells me the story of a local developer who converted an old, vacant dairy into loft-condos. The company, called Solara Ventures LLC, has been so successful that for two months running it was the third-best Pittsburgh developer in terms of number of residential units sold.
Over the past three decades a lot of capital has poured into the Southeast to build new apartment complexes. This was because a lot of people from the northern environs moved south. However, there are still pockets in the Midwest and Northeast where the exodus was not nearly so pronounced and are doing quite well. In 2010, the Pittsburgh market caught the attention of a lot more investors because there is real opportunity for developers who want to be where the recession is already history.
From a high-technology and natural resources point of view, Dye said, "The economy of western Pennsylvania could start looking like the economy of Texas."
Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade," has been ranked as a top-selling real estate investment book for the Amazon Kindle e-reader.
|Contact Steve Bergsman:|
|Letter to the Editor|
What's Your Home Worth?
NAR: Realtors are ready for TRID
3-D home of the day