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Old 02-19-2014, 09:50 AM
 
2,290 posts, read 3,809,294 times
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Quote:
Originally Posted by airwave09 View Post
In addition to the approved Oakland Portal projects, there's also this: Apartments, offices part of $30M Oakland redevelopment - Pittsburgh Business Times
and this:

Schenley Place | Elmhurst Group
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Old 02-19-2014, 09:51 AM
 
Location: Pittsburgh
225 posts, read 322,310 times
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There are no less than six proposed office buildings for Oakland, but only one-two may be built on spec.

As I said before the main issue is that the lease rates for new construction run $35-$40 per square foot. Most tenants in this market have been paying less than $20/SF for the last 30 years. Lenders for new construction generally require a building to be 40% pre-leased prior to breaking ground. In our market that is an extremely difficult thing to do.

So when the question is asked, "why hasn't Oxford started construction", its because they can't get financing for a 400,000-600,000 sf tower without having a prior commitment from a tenant for at least a couple hundred thousand square feet at rates that are 30% above what anybody else has ever paid in Pittsburgh. Typically there are only a couple leases of 200,000 SF + that are consummated in the entire market in any given year.

Very few developers will roll the dice on a project like that without a commitment from a tenant.
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Old 02-19-2014, 09:57 AM
 
Location: Pittsburgh, PA (Morningside)
14,361 posts, read 16,879,345 times
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Quote:
Originally Posted by markson33 View Post
There are no less than six proposed office buildings for Oakland, but only one-two may be built on spec.

As I said before the main issue is that the lease rates for new construction run $35-$40 per square foot. Most tenants in this market have been paying less than $20/SF for the last 30 years. Lenders for new construction generally require a building to be 40% pre-leased prior to breaking ground. In our market that is an extremely difficult thing to do.

So when the question is asked, "why hasn't Oxford started construction", its because they can't get financing for a 400,000-600,000 sf tower without having a prior commitment from a tenant for at least a couple hundred thousand square feet at rates that are 30% above what anybody else has ever paid in Pittsburgh. Typically there are only a couple leases of 200,000 SF + that are consummated in the entire market in any given year.

Very few developers will roll the dice on a project like that without a commitment from a tenant.
I guess then the logical question is why haven't downtown rents risen to higher levels than they are currently? Is it because so many areas are tied up in long-term leases?
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Old 02-19-2014, 11:00 AM
 
3,291 posts, read 2,741,534 times
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Quote:
Originally Posted by zman63 View Post
In columbus you can actually see growth all around. Pittsburgh is a different story. You only have a few pockets growing and changing.
dude, show us all of the skyscrapers being constructed in downtown columbus.
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Old 02-19-2014, 11:18 AM
 
Location: Pittsburgh
225 posts, read 322,310 times
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Quote:
Originally Posted by eschaton View Post
I guess then the logical question is why haven't downtown rents risen to higher levels than they are currently? Is it because so many areas are tied up in long-term leases?
If you are a 5,000 SF tenant in downtown (a typical size) there are still plenty of options. You might have to pay more to stay in your current space, or you can downgrade your space and pay what you have been paying in the past. There is absolutely no reason why you would have to pay $30+/SF.

Where the vacancy rate really starts to impact the market is when you get into the bigger tenants - over 20,000 SF. Then your choices are limited, but there are still options. Enough so that the landlord's have to remain competitive.

The market is fluid too. Thinks look rosy and then Heinz dumps 270,000 SF. That puts downward pressure on the market. If US Steel leaves the tower it would have a significant impact on the market that could last for a few years.
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