Pittsburgh area building too many higher end apartments (Washington, Bloomfield: low income, real estate)

[gg]

I think this is exactly what is going on in our city. I have been alluding to it for a while now, but I think this article sums it up. Watch the rents drop in two years.

http://www.usatoday.com/story/money/...mpty/88621454/

[Goinback2011]

They can always put the imported refugees in the empty units.

[gladhands]

I think Pittsburgh's high end developments will be okay. First and foremost, they aren't ultra-high end, they're just high end for Pittsburgh. Secondly, there aren't a lot of nice apartments in the tier below our new construction. I'd be more worried if there were a lot of nice 1br units in the $900-1200 range. To be honest, there are enough medical residents and fellows alone to rent these units. Most of these people know they'll only be here 3 to 5 years, and want nice apartments close to the hospitals.

[eschaton]

1. That article is about national trends, not Pittsburgh trends. It focuses pretty heavily on LA in particular, which is a city very unlike our own (very multi-nodal in terms of job concentration, all the dense areas near Downtown are low income, etc).

2. Even in Pittsburgh, very few of the new high-end apartments are being built in Downtown. Downtown is full of PMC properties rehabs, but these are hardly high-end housing.

[Moby Hick]

Say it does happen? What's the worst case? Some real estate investors lose money, a banker cries, and some of the crappier apartments in nicer areas become unrentable. Those are mostly cut-up houses and could be converted back to single family.

[eschaton]

Originally Posted by Moby Hick

Say it does happen? What's the worst case? Some real estate investors lose money, a banker cries, and some of the crappier apartments in nicer areas become unrentable. Those are mostly cut-up houses and could be converted back to single family.

I think the latter bit is inevitable now that there is a building boom going on in Oakland. Between the new 389 unit SkyVue, that new student-marketed apartment building on the corner of Center and Craig (700 beds, somewhere between 300-400 units) and that building to be constructed on Forbes where the Arby's is now (197 units with 489 beds) there will be a lot more housing in Oakland for students. This should result in areas like far south Oakland, Squirrel Hill, Bloomfield/Friendship, and even Shadyside becoming a bit less attractive for student rentals - meaning hopefully some of the student slumlord places will get redeveloped.

[bradjl2009]

This article literally has nothing to do with Pittsburgh, and I have never heard of anyone having a problem renting out these new apartments being built.

[selltheburgh]

I sort of agree, but the rents will drop 10-15%, not drastically.

Also, in that article, this sets most cities apart from Pgh's $1100-2500 high end rents:

in large cities such as Los Angeles, Washington and Chicago. In Los Angeles, about 5,500 apartments have opened downtown the past 3 ½ years, with typical rents of about $6,500 a month, and the district’s overall vacancy rate has climbed from 4.5% to 9.9%, according to CoStar data.

[gladhands]

Originally Posted by selltheburgh

I sort of agree, but the rents will drop 10-15%, not drastically.

Also, in that article, this sets most cities apart from Pgh's $1100-2500 high end rents:

in large cities such as Los Angeles, Washington and Chicago. In Los Angeles, about 5,500 apartments have opened downtown the past 3 ½ years, with typical rents of about $6,500 a month, and the district’s overall vacancy rate has climbed from 4.5% to 9.9%, according to CoStar data.

THIS.

I know we all hem and haw about the shortage of high paying jobs, but there will never be a shortage of residents and fellows making 55-65k (many of whom are married/cohabitating) who don't want to live more than 15 minutes away from their hospitals. There's a market for these apartments.

[selltheburgh]

Originally Posted by gladhands

THIS.

I know we all hem and haw about the shortage of high paying jobs, but there will never be a shortage of residents and fellows making 55-65k (many of whom are married/cohabitating) who don't want to live more than 15 minutes away from their hospitals. There's a market for these apartments.

Most of the medical residents that I've rented to make about 45k, but they have deferred payments and they know they are going to have a very good income in the future, so some live off of student loans on top of their income. They are the best tenants because they are never home, don't complain about much, and keep their apartments pretty nice. Fellows earn more. Researchers, programmers, nurses, etc are all in the demographic that can afford the nice new apartments.