PITTSBURGH (KDKA) – High-end, luxury apartments in Pittsburgh, which typically command top dollar prices, are now going for a fraction of the cost.
KDKA Investigator Andy Sheehan looks into what’s driving prices down and how can you get one of them.
It’s been a building boom that’s changed the face of neighborhoods. Luxury apartment buildings soaring upwards, creating new meccas for a new class of urban professionals.
Now, that boom is petering with oversupply – too many units for too few prospective tenants.
“I think there’s a temporary glut of rental units. It’s definitely a renters market,” said Todd Reidbord, of Walnut Capital.
It was bound to happen. Answering the demand for upscale living, developers built an astounding 4,590 luxury apartment units in the city in just the last five years.
Now, vacancy rates are climbing while demand is dwindling. With another 2,080 units currently under construction, incentives like a free month’s rent are being offered to lure a shrinking pool of prospective tenants.
“Now, they go from building to building and play one against the other to see how they can come out ahead,” said Reidbord.
It has become a renter’s market, where prospective tenants could play one building against another and as more units come online, the sweeter those deals are likely to become.
“It usually increases from there. You get two months free rent, two months parking, they start giving away amenities that support the properties,” said Paul Griffith, of Integra Realty Resources.
Hiring at tech firms, PNC, hospitals and universities fueled the growth of luxury apartment buildings, but it seems now that demand has been satisfied.
Griffith says there are an additional 6,000 units in the pipeline that won’t be built unless there’s a fresh new round of job creation.
“I believe that’s the answer. We need a steady increase in job in order for these units to be absorbed,” he said,
“These are some of the most desirable units you see in our whole portfolio,” said Reidbord.
A two-bedroom two-bath apartment in the Highland Building in East Liberty can still command a monthly rent of $2,450 a month. Despite the oversupply, Walnut Capital’s Reidbord believes demand will pick up again for those and more moderately priced apartments.
“I am very, very bullish on Pittsburgh. I think there’s continued growth. UPMC’s building two new hospitals. Pitt is investing over $1 billion dollars. We’re seeing corporations relocate from the suburbs into here,” Reidbord said.