Pittsburgh is experiencing a building boom worth billions.
About 80 major construction projects are underway or have been proposed in the city, according to research from Tribune-Review and data from construction analyst firm Tall Timber Group. About half are under construction. Projects range from office space and multi-use retail to hotels and affordable housing, from hospitals and grocery stores to sports facility upgrades and apartments or condos.
Businesses occupy various parts of the city but are concentrated in the Strip District, Oakland, Downtown, Uptown, Lawrenceville, Shadyside and East Liberty.
“The most remarkable thing in terms of the current trend or counter-trend is the fact that worries about escalating inflation – which were legitimate and delayed projects – have not dampened construction activity as much than people expected,” said Jeff Burd, Founder of High Rise Lumber Group.
Todd Reidbord was a bit more reserved in his assessment.
There is growth but at a slower pace than other cities are experiencing, said Reidbord, president of Shadyside-based developer Walnut Capital. He said Pittsburgh’s development growth is more “slow and steady” and doesn’t experience the wild swings of other cities.
“I was in Atlanta and they started building their next housing project when the last one is 80% occupied,” Reidbord said. “We expect our housing projects to be 100% occupied.”
In Durham, North Carolina, for example, there are 2,200 housing units under construction in the city center alone. That’s more than double the homes under construction in Pittsburgh.
Burd said 1,000 new homes are expected to start this year and another 3,000 to 4,000 are planned for 2023 and beyond. According to Burd, there was $5 billion in investment for construction projects, both residential and commercial, in 2021 in the Seven Counties metropolitan area — a regional record for one year. Most of these investments were concentrated in Pittsburgh.
Burd said he expects 2022 to end slightly below that figure, but recent commercial construction announcements — particularly massive projects planned for Oakland — are expected to boost activity in 2023 and beyond. .
“The residential side has slowed down, but on the commercial side things have picked up speed,” Burd said, adding that “2023 and 2024 are expected to be years that will test the project management skills of many contractors.”
Where is hot?
The Strip District has the most projects under construction, with eight major construction projects, most of which are multi-unit housing. According to an annual report by community group Strip District Neighbors, there were $723.5 million in active construction projects in 2021 in the Strip District and more than $200 million more in announced projects.
There is also a mixed-use housing project – Brewer’s Block on the former site of the Iron City brewery – which sits on the edge of the neighborhood.
The Strip District has seen an influx of residents – over 1,200 people – from 2010 to 2020, and it looks like this trend will continue. Strip District Neighbors said the neighborhood’s population grew by more than 2,500 with the opening of three apartment and condo buildings in 2021.
The next hotspot is Oakland, Burd said, and it will be bigger than the city has seen before.
“The Strip, and down by the river in Lawrenceville, it’s all going to pale in comparison to Oakland,” Burd said.
At least a dozen $100 million projects are in the works for Oakland, Burd said. This includes university housing, research centres, modernization of sports facilities and large hospital projects, all of which have survived supply-side shocks due to covid, labor shortages and rising construction costs due to inflation.
The tallest is UPMC’s 17-story Presbyterian Hospital tower along Fifth Avenue. The $1.5 billion project is the largest ongoing health care project in Pennsylvania and the largest in Pittsburgh history.
The University of Pittsburgh, Carnegie Mellon University and Carlow University also have projects planned, Burd said.
“Most of Forbes and Fifth Avenues will become 15 to 20 story buildings along this corridor,” he said.
Walnut Capital is planning a 13-acre development called Oakland Crossings with a mix of market-priced and affordable housing, green space and a grocery store near Allied Boulevard.
Walnut Capital’s Reidbord said universities and medical institutions are driving construction demand, and he expects other projects to follow.
“We’re very optimistic in Oakland,” Reidbord said.
With hospital jobs and expanding universities, will come the demand for housing, he said.
Oakland is Pittsburgh’s second largest employment center and Pennsylvania’s third largest. Reidbord said that historically, housing in Oakland has been relegated to single-family homes for longtime residents and older multi-unit buildings for students.
That could change.
“People come from all over for jobs in Oakland, and they’re the ones who want better housing,” he said.
Oakland Crossings faced pushback from the community. The Oakland Planning and Development Corporation has expressed its belief that the development usurps the community’s vision for the neighborhood. But that didn’t stop the momentum.
In June, the city council approved new inner city mixed-use zoning for parts of Oakland that will allow developers to increase building height limits.
Where is not?
Of the approximately 80 aforementioned construction projects, none were in the city’s South Hills or Hilltop neighborhoods. Only a few projects are south of the Monongahela River.
The far edges on the south side see some action.
Station Square has seen apartment projects and the Highline office building in recent years. The mostly vacant mall site has attracted interest from developers. And Big Spring Spirits led the way in July to bring a distillery, public market and event space to the area.
In and around SouthSide Works, redevelopment is underway and an apartment complex has recently opened. Another apartment complex with a view of the Mon has been proposed.
But apart from an apartment proposal on Grandview Avenue in Mount Washington, notable development projects are nowhere to be found further south.
Pittsburgh, like most major American cities, is struggling to find affordable housing. Rents have gone up and officials have denounced the lack of subsidized and affordable housing. A working group 2016 commissioned by former mayor Bill Peduto said Pittsburgh faces a shortage of 17,000 affordable housing units.
The city has added more units since, but it still faces rising rental costs that could contribute to the exodus of residents from the city, especially black residents. The city lost about 10,000 black residents between 2010 and 2020, many of whom left the city but remained in Allegheny County, according to census figures.
Brandon Mendoza, executive director of NAIOP Pittsburgh, the local branch of the Commercial Real Estate Association, said the city needs to do more to increase the supply of affordable housing.
There are seven major affordable housing projects under construction in the city. From these projects, 264 subsidized and affordable housing units are being built. More affordable units are in the works, but the range is limited.
“How do you get people to build 500 affordable homes a year?” Mendoza said.
To address this shortage, Pittsburgh has created inclusive zoning districts where developments in Lawrenceville, Bloomfield and Polish Hill must include 10% of its units as permanently affordable. The Builders Association of Metropolitan Pittsburgh sued for this requirement.
Mendoza said this initiative should lead to the creation of affordable units, but he said the city council should offer incentives such as tax increase financing (TIF) and expedited zoning approval for projects. affordable. A carrot approach, he said, might be more effective than a stick.
One area that could provide relief is downtown. It has three major projects under construction – two with housing elements – and three major housing projects proposed.
Mendoza hopes the city and downtown community’s efforts to convert vacant office space into affordable housing will come to fruition. The City and County of Allegheny has launched a $9 million pilot program aimed at boosting these conversions.
“There are many ROI options,” Mendoza said, “for converting some of our downtown offices.”