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PITTSBURGH (KDKA) — For years now, cranes and construction crews have filled the skies of Pittsburgh as huge luxury apartment buildings have shot up in just about every city neighborhood.
Places like Bakery Square in East Liberty, which have enticed scores of young professionals and tech workers to pay upwards of $1,500 a month on a single-bedroom apartment by providing services and amenities like a health club, a concierge and free Starbucks in the lobby.
“These become almost like their living room — the lobbies,” said Todd Reidbord, of Walnut Capital. “We have a coffee machine that’s free. We have bagels on the weekends. It’s really the social scene for the whole complex.”
Since 2012, more than 5,000 luxury apartment units have been built in the city, including 1,790 last year and 1,080 this year. they have been answering the demands of local Millennials and unattached transplants starting new careers in the city. But after five years or torrid growth, the luxury apartment boom seems to have played out its string.
“The supply has now outpaced the demand,” said real estate expert Paul Griffith.
Experts like Griffith, of Integra Realty Resources, says there are now more units than new renters, and while some 1,300 more apartments are slated for construction next year, that should be the end of it.
KDKA’s Andy Sheehan: “So the boom has ended, or it’s ending right now?”
Griffith: “I would agree with that. By the middle of next year, 2018, those units that are under construction will be complete and we’d expect to see a significant slow down at that point.”
It’s been a good run fueled by the growth in high-paying jobs in the tech sector, banking, education and health care. But short another surge in employment, even developers agree that construction will be winding down.
“If you look at the banks, if you look at some of the investments that are targeting Pittsburgh, I think everybody’s taking a little bit of a pause to see how we absorb all these units,” said Reidbord.
On a positive note, rents may now stabilize or even come down, and some buildings are already offering incentives like a free first month. What’s clear is that some 6,000 additional units that have been proposed by various developers will be on hold indefinitely.
So, while the luxury apartment boom hasn’t gone bust, it’s definitely taking a breather, and for the time being, those 6,000 units in the pipeline will be staying on the drafting table.