PITTSBURGH | Development Rundown II

[BrianTH]

These are from the Planning Commission presentation:









It isn't groundbreaking, but I think it actually fits the context really well.

[Private Dick]

^ Unexpected greatness. I'm liking it!

Love the configuration with the alley entrance on Cherry Way.

Hopefully, we can get something on that surface lot across the street. Such potential along Ft. Pitt Blvd... I'd love to see some type of buffer designed... I envision a mini version of Manhattan's westside hwy/Hudson River Park.

[JVC]

Originally Posted by BrianTH

I'm looking forward to that Fort Pitt hotel even if it is modest. That corner of Downtown has such potential.

Speaking of new hotels . . .

http://buildingpittsburgh.com/2015/09/18/of-interest-rates-and-the-casino-hotel/

from the article:
"Thursday’s announcement that the Federal Reserve voted 9-1 to leave interest rates untouched at their September meeting means that a) confidence in the global economy isn’t strong, and b) financing for construction and development will continue to be done in an environment of historically low cost of capital."

Originally Posted by Evergrey

There's many reasons why a restaurant may close that are not related to "this city's going to hell".

the city is clearly not going to hell (though there are some parts of wilkinsburg that look like hell) - the city is experiencing a cheap money speculative real estate bubble that will eventually burst because "the economy isn't strong" which is why after seven years of expansion/recovery the fed is still not able to raise interest rates which is completely UNPRECENDENTED

yes, it's exciting to walk through east liberty and see two cranes swinging around, but when the party's over parts of the east end are going to look like chinese ghost cities

[SWPA]

I think this may have been discussed before on here, but I'll bring it up again. I wonder if a traffic circle/roundabout/rotary would be feasible at the big intersection between Baum and Centre at Roup St. and Negley Avenue? It's kind of a mess with very short blocks, traffic lights, left-turning traffic and a confusing bend on Negley that merges southbound with Roup before the intersection with Centre.

I always ponder as I'm sitting at this intersection stuck in traffic if there's enough room to do something like this. There's a cute new circle in Waterford, near Erie, that doesn't take up a lot of space. I wonder if it would make sense for this intersection? All the traffic on Baum, Negley and Roup would have to be funneled into it. Centre would be the problem, since it's a bit too far south to be included.

[haimon]

Originally Posted by JVC

from the article:

yes, it's exciting to walk through east liberty and see two crains swinging around, but when the party's over parts of the east end are going to look like chinese ghost cities

I have to disagree. There is definitely a point where supply might pass demand, but there is real growth happening in the city. I work in Squirrel Hill, and meet people who have moved here from other cities on a daily basis.

There's a ton of dated and substandard housing in the city. Do you think young professionals, grad students, and wealthy foreign students, who are transient but plentiful in the East End would not choose a new construction housing over a dilapidated building on Morewood Ave?

[Evergrey]

The loss of nonstop destinations from PIT is coming fast and furious now.

Delta is dropping our Cincinnati flight (along with Cincinnati flights to Grand Rapids and Richmond)

PIT will now have zero flights to the nation's 7th most populous state.


http://www.bizjournals.com/cincinnati/ne...es-flights-from-cvg-to-these-cities.html

...

Flying to Pittsburgh on Delta from CVG is now impossible to do in a manner that makes geographic or financial sense. A check of Kayak.com for flights to Pittsburgh from CVG leaving on Wednesday, Oct. 7 and returning on Friday, Oct. 9 with one stop shows that in all but one case, travelers have to connect to Atlanta to reach Pittsburgh. Delta did offer one CVG flight to Pittsburgh that connects through LaGuardia International Airport in New York, but it involved a 3 hour, 16 minute layover.

...

Local passengers comprised less than half of the passengers to Pittsburgh and Grand Rapids, according to CVG data, with 20 a day on average flying to Pittsburgh and 15 a day flying to Grand Rapids. Twenty-eight passengers a day flew to Richmond.

Delta also slashed flights using 50-seat regional jets out of Detroit, Minneapolis, New York-JFK and Atlanta, according to CVG. By using larger jets, Delta has, on average, seven more seats per departure to Nashville, Chicago, Kansas City, Newark, Hartford and St. Louis.

...

The cuts are part of a long trend of Delta reducing its once-robust hub at Cincinnati/Northern Kentucky International Airport. Delta’s public relations representatives continue to assert that CVG is still a hub for the airline.

[Austinlee]

Originally Posted by haimon

I have to disagree. There is definitely a point where supply might pass demand, but there is real growth happening in the city. I work in Squirrel Hill, and meet people who have moved here from other cities on a daily basis.

There's a ton of dated and substandard housing in the city. Do you think young professionals, grad students, and wealthy foreign students, who are transient but plentiful in the East End would not choose a new construction housing over a dilapidated building on Morewood Ave?

Exactly. So much of the existing housing inventory, both apartments and houses are very dated and/or substandard. We need fresh new options. That will entice more people with money to move into the city and also put market pressure on rental owners to fix their buildings up or else sit vacant who previously got away with deferred maintenance and substandard quality.

[Austinlee]

The Holiday Inn on Ft Pitt Blvd looks awesome for that location. Handsome building that will blend with its immediate surroundings. Cheers.

I've always loved this back alley intersection on foot. Neat area:

[BrianTH]

Originally Posted by Private Dick

Hopefully, we can get something on that surface lot across the street.

Yep. I'd also like to see something done with the surface lot along First at Smithfield, although that would likely have to be a modest project since it is just the width of an historic commercial building.

And then there is the Graphic Arts building--whatever happened to Palcic's plan to turn it into apartments?

[BrianTH]

Originally Posted by Austinlee

Exactly. So much of the existing housing inventory, both apartments and houses are very dated and/or substandard. We need fresh new options.

Indeed. As I see it, it all goes back to the fact that our overall flat population hides the dynamic where many older people are passing away or moving to retirement areas, and being replaced by younger, better-educated working adults. And not surprisingly, that incoming doctor taking a job in Oakland or Shadyside doesn't really want to move into Grandma's remuddled house out in the Mon Valley. And we are talking about several thousands of these very different people swapping place like this per year.

So, apartment builders and house-flippers (in strategic locations) are doing great business.

[JVC]

Walnut Capital sells off two suburban shopping centers
http://www.bizjournals.com/pittsburgh/ne...tal-sells-off-two-suburban-shopping.html

positive spin on the news: focusing on "development throughout the city"

likely reality of news: bit off more than they can chew in the city and need to liquidate assets

they say the highland building is near full occupancy but in the evening during the week only about 1/4 of the apartments are illuminated

[Austinlee]

Originally Posted by BrianTH

So, apartment builders and house-flippers (in strategic locations) are doing great business.

As in any city even declining ones like Detroit. The trick is to carefully study the demographics and the house sales reports to see which neighborhoods are experiencing faster appreciation year over year.

[Wave]

Also the eds & meds/institutional nature of the residents who are fueling the higher end apartment leasing in the east end are far more recession proof than, say, the finance-heavy sector in lower manhattan or the tech sector fueled boom in places like Seattle and the bay area (though of course other factors may or may not be at work in each unique sub-market).

The rental demand in the city (east end, southside, downtown & oakland particularly) has been massive still, with occupancy rates remaining high in those areas, but of course there is ultimately a ceiling to this growth at some undetermined rate of development growth. I think we are far away from that.

Originally Posted by BrianTH

Indeed. As I see it, it all goes back to the fact that our overall flat population hides the dynamic where many older people are passing away or moving to retirement areas, and being replaced by younger, better-educated working adults. And not surprisingly, that incoming doctor taking a job in Oakland or Shadyside doesn't really want to move into Grandma's remuddled house out in the Mon Valley. And we are talking about several thousands of these very different people swapping place like this per year.

So, apartment builders and house-flippers (in strategic locations) are doing great business.

[photoLith]

They aren't going to tear down that historic beautiful 5 story building on that same lot for the Holiday Inn right? Just that one story 50s building I hope.

[BrianTH]

Originally Posted by Wave

The rental demand in the city (east end, southside, downtown & oakland particularly) has been massive still, with occupancy rates remaining high in those areas, but of course there is ultimately a ceiling to this growth at some undetermined rate of development growth. I think we are far away from that.

Exactly. It is not a question of how much we can build, but how fast. Are we building way too fast for the market to absorb? I see no evidence to support that conclusion in the market statistics.

And really, we are not building THAT fast. It is exciting to see this level of activity after many years of stagnation, but this is just what is normal when you have modest growth in the target market.

[BrianTH]

Originally Posted by photoLith

They aren't going to tear down that historic beautiful 5 story building on that same lot for the Holiday Inn right? Just that one story 50s building I hope.

Correct (I assume you are referring to Fort Pitt Commons, which is very much staying). Only the building in the foreground here is going (in fact gone):

https://www.google.com/maps/@40.4363749,...q7khltSIKIRAg!2e0!7i13312!8i6656!6m1!1e1

Aside from the possibility it could have been a little taller, this is nifty project all around. It isn't tearing down anything of historic value, it is replacing a surface parking lot, it is going to add nighttime residents in a corner of Downtown which could use more, and the design (including that side courtyard) is quite contextual, as you can see when you turn that Streetview a bit:

https://www.google.com/maps/@40.436374,-...lygePkOcG4btg!2e0!7i13312!8i6656!6m1!1e1

[DKNewYork]

Originally Posted by Austinlee

Random thought; I think FNB is a prime candidate to move from the outskirts of the CSA to downtown Pittsburgh which would be the logical place to move to take advantage of the centrally located pool of bank workers. They seem to be a shrewd, growing company and in my unbiased opinion should build a signature tower downtown or anchor one of the couple of towers announced (Oxford's tower on Smithfield or the "Monongahela Tower" on Ft Duquesne Blvd).

Their current HQ is strangely located in a Lowe's parking lot in Hermitage, PA.

Given Kennametal, a logical thought or wish. A year or two ago, when FNB opened its regional office on the North Shore, the bank president spoke about basing certain divisions here (wealth management was one) so the bank could attract desired employees who were not thrilled with the thought of living in Hermitage. That should result in greater FNB employment in Pittsburgh, which is great. But FNB would be smart to leave all back office operations in Hermitage (it's less expensive to operate up there). So I am not sure that the numbers of employees here would warrant construction of a new building. But maybe someday. It is one of the fastest growing banks in the Northeast.

[Evergrey]

Originally Posted by BrianTH

Correct (I assume you are referring to Fort Pitt Commons, which is very much staying). Only the building in the foreground here is going (in fact gone):

https://www.google.com/maps/@40.4363749,...q7khltSIKIRAg!2e0!7i13312!8i6656!6m1!1e1

Aside from the possibility it could have been a little taller, this is nifty project all around. It isn't tearing down anything of historic value, it is replacing a surface parking lot, it is going to add nighttime residents in a corner of Downtown which could use more, and the design (including that side courtyard) is quite contextual, as you can see when you turn that Streetview a bit:

https://www.google.com/maps/@40.436374,-...lygePkOcG4btg!2e0!7i13312!8i6656!6m1!1e1

I'm looking forward to Grille 435.

[WillyC]

Well good news, the bike change between Craig and Neville isn't turning out to be as bad as I thought it would. The changes as listed on the post gazette article didn't do a very good job of explaining the third middle lane. Traffic has backed up a little further down Baynard, but near as much as I thought.

Bad news, as much as I skip over JVC posts, he is right that the music is about to stop when it comes to the economy. Most, but definitely not all, of this development has been fueled by the expansionary effort of the Fed. I've mentioned as much from conversations in the local bank community over the past year about this coming to an end, and it seems that many outside banking are starting to realize it too. I hope most of these projects actually get a shovel in the ground as they are hard to stop at that point. We really need these buildings for the city to grow after the coming recession. However, he is just trolling when saying it is going to look like a Chinese ghost city. Thats not going to happen. Rents will fall and someone will live there.

[BrianTH]

Commercial lenders don't like low rates because it compresses their margins. So they have been predicting imminent disaster for years now, inaccurately as it turns out:

http://krugman.blogs.nytimes.com/2015/09/19/rate-rage/

Here is an independent calculation of the risk of recession based on empirical factors. As it turns out, they suggest the risk of recession remains low:

https://www.economy.com/dismal/indicators/releases/usa_recession

Edit: A few more useful links . . .

Calculated Risk has been as accurate as anyone in predicting broader economic trends, and specifically called the housing bubble/bust and subsequent recovery. As documented there, multi-family housing starts recovered well (but now may be leveling off), but single family homes recovered slowly (but now may be accelerating):

http://www.calculatedriskblog.com/2015/09/comments-on-august-housing-starts.html




Some of that is behaviorial, with the housing bust persuading people to rent rather than own. But a lot of it is just demographics:

http://www.calculatedriskblog.com/2014/12/housing-demographics-for-renting-and.html

Specifically, there has been an age shift in favor of the youngest adults:



As Calculated Risk explains, things are starting to turn back, however, and around 2020 we reach a re-crossing point. Until around then, though, apartment starts should continue to be strong.

Of course all this is national--locally, we are on our own demographic track, with an even more extreme shift toward young adult share. And ours may last longer.