Pittsburgh Is Remade as Steal City
Downtown Pittsburgh Booms With New Construction, Rising Office Rents; ‘More and More Attractive’
Source: The Wall Street Journal
Based on its booming new construction projects and rising office rents, The Wall Street Journal recently shined the spotlight on the Steel City. The Wall Street Journal reports that the city of Pittsburgh has transformed into one of the most resilient office-rental markets in the U.S., prompting a flurry of building sales, as some longtime owners take profits.
Once a dying steel town, low office rents are one of the attractions of the revitalized “Steal City.” The article reports that energy companies, moving in to develop Marcellus shale-gas projects, are stoking office demand. Employment is growing in such areas as medicine, education, financial services and computer software. The city’s biggest bank, PNC Financial Services Group Inc., last month said it would build a 40-story tower to help house its growing staff.
Despite a weak national economy, Pittsburgh is looking more prosperous. UPMC, a giant hospital operator that grew out of the University of Pittsburgh, absorbed much of the vacant office space downtown when it moved its headquarters into the U.S. Steel building three years ago. Other big employers in or near downtown include Alcoa Inc., H.J. Heinz Co. and PPG Industries Inc. Google Inc. employs about 150 people in a converted cookie bakery near Carnegie Mellon.
The expansion of Point Park University has provided occupants for more than a dozen older buildings downtown, many that had been languishing. More than 1,000 Point Park students now live downtown.
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“For the Wall Street Journal to publish an article about how much the Pittsburgh commercial real estate market is flourishing is wonderful for our region,” said Ed Lawrence, Associate at Colliers International | Pittsburgh. “For the past twenty years, the downtown and surrounding markets in Pittsburgh have widely been known for stability and allowing investors to avoid a “boom or bust” scenario. Now, outside investors (national and international as evidenced by the recent 11 Stanwix sale) are looking at our market as a means to capitalize on heavy demand and short supply of Class A and B office space.”
Paul Horan, Founding Principal at Colliers International| Pittsburgh adds, “The strong return on investment opportunities for these investment groups remains very evident and this should be a sustained trend for years to come. Existing landlords of quality buildings downtown are well positioned to achieve higher rental rates and therefore stronger income statements on their assets.”