Downtown office space is a 'shell game' (Pittsburgh, West Mifflin: real estate market, homes)

[tyovan4]

An interesting article, with a very telling quote:

As one of Pittsburgh’s biggest law firms hunts for new space, its timing could be impeccable.
...
That’s particularly true given that the amount of empty space in Downtown’s top office towers and skyscrapers is at its highest point in a decade.
...
Mr. Bonime said one reason for all the empty space in Downtown is that more firms are moving into fringe markets like the Strip District, the North Shore, the East End and the South Side.

At the same time, there aren’t many out-of-town companies moving into Pittsburgh.

“It’s a shell game. Everyone’s sort of moving around and there hasn’t been anyone new to the market in the core of the central business district that really needs space,” he said. “It’s cannibalization.

“Basically, there’s not the organic growth in Pittsburgh that would support all the space.”
...
Should K&L Gates opt for the Strip or another fringe market, it does not portend well for the Downtown real estate market, Mr. Adamski said.

“If they leave the central business district, it’s another crushing blow to a submarket that is already struggling with the highest vacancy rate in 10 years,” he said.

https://www.post-gazette.com/busines...s/202002250065

I think that this is also the problem that we're seeing with vacancies on the South Side - though we are in a building boom and a redevelopment boom in this city, it does feel like a shell game. We're not actually growing. Lawrenceville becomes popular for nightlife, so South Side suffers. We're not seeing the rise of places like Lawrenceville for nightlife in addition to places like the South Side, we're seeing the rise of Lawrenceville nightlife in lieu of South Side nightlife.
And now we're seeing the same thing with office space... we're not seeing the rise of office space in the Strip or North Shore in addition to maintaining current downtown office space, we're seeing the rise of office space there in lieu of downtown office space.

While Pittsburgh is unquestionably gentrifying, it is also unquestionably not growing.
Pittsburgh has been playing a shell game.

[svband76]

Not a "game" so much as businesses following trends.

Now every law office wants to be in the newly remodeled Union Trust Building. While the lobby is "hip", many of the upper floors have been gutted. Kind of ugly, with exposed duct work, hollowed out floors, etc etc blah blah. All the historical character gone. Just following trends. Kind of silly.

[SteelCityRising]

I mean this isn't a surprise to anyone, is it?

Even on the suburban front Chevron just announced they are either massively downsizing or downright closing their Moon Township facility.

I initially thought PNC was stupid for not building their new HQ's tower taller; however, given that BoA and CHASE are now here as well and are biting into their market share that may have been a smart decision after all.

As more employers leave Downtown high-rises to new low-rise "campus-like" settings in the Strip, Hazelwood, Lower Hill, South Oakland, South Side, NoVA Place/North Shore, etc. in the coming years I just foresee the vacancy in Downtown high-rises increasing.

Yes, Pittsburgh is gentrifying. You can see it with the proliferation of BMW's over the past decade on neighborhood streets. No, Pittsburgh isn't growing, though.

[Independentthinking83]

Originally Posted by tyovan4

An interesting article, with a very telling quote:



I think that this is also the problem that we're seeing with vacancies on the South Side - though we are in a building boom and a redevelopment boom in this city, it does feel like a shell game. We're not actually growing. Lawrenceville becomes popular for nightlife, so South Side suffers. We're not seeing the rise of places like Lawrenceville for nightlife in addition to places like the South Side, we're seeing the rise of Lawrenceville nightlife in lieu of South Side nightlife.
And now we're seeing the same thing with office space... we're not seeing the rise of office space in the Strip or North Shore in addition to maintaining current downtown office space, we're seeing the rise of office space there in lieu of downtown office space.

While Pittsburgh is unquestionably gentrifying, it is also unquestionably not growing.
Pittsburgh has been playing a shell game.

Thanks for the post. I wrote the same things in previous posts. Unsurprisingly I was attacked for pointing out the problem. Unsurprisingly there aren’t many responses on this thread. Pittsburgh has become a fact denying city. If you post something not fitting narratives you are attacked in return. Meanwhile you or I didn’t write any of these articles. But we become bastardized for doing so. I think you are much like me where we believe the city and region can do better. Most others don’t provide anything constructive. It’s like the old grandpa yelling at clouds. Shooting the messanger but not wanting to acknowledge or tackle problems.

[Charley Barker]

It's not very complicated. It's simply development without growth. Haters gonna hate . . . Lovers gonna lover . . . And developers gonna develop. There's lots of capital investment floating around as is normal towards the end of any business cycle, which means that you'll see this continue until banks and institutional investors pull back.
But even without growth, people are attracted to shiny new things in new places!

[Independentthinking83]

Originally Posted by Charley Barker

It's not very complicated. It's simply development without growth. Haters gonna hate . . . Lovers gonna lover . . . And developers gonna develop. There's lots of capital investment floating around as is normal towards the end of any business cycle, which means that you'll see this continue until banks and institutional investors pull back.
But even without growth, people are attracted to shiny new things in new places!

You know you’re right. If the same thing happened with single family homes you would see prices of existing drop significantly. I think there is a pent up market for new single family homes in Pittsburgh and surrounding areas. Priced 250,000-450,000.

If there was growth this would probably be happening, but people are grossly overpaying for existing construction in our region. New construction needs to happen anyway.

And a lot of buildings downtown are older and badly needing updated. It will just be a shuffling around with no immediate end in sight.

[eschaton]

This article is specifically talking about a "shell game" in downtown office space due to growing demand on the fringe. It is not saying there isn't significant real growth on net in the city as a whole - just that Downtown itself is stagnant. Which seems clear enough given how many residential conversions of under-utilized space downtown are still going forward.

Of course, much of the real growth in office space in the fringe markets is being driven by relocation from the suburbs, so I guess that is a shell game as well.

[Independentthinking83]

Originally Posted by eschaton

This article is specifically talking about a "shell game" in downtown office space due to growing demand on the fringe. It is not saying there isn't significant real growth on net in the city as a whole - just that Downtown itself is stagnant. Which seems clear enough given how many residential conversions of under-utilized space downtown are still going forward.

Of course, much of the real growth in office space in the fringe markets is being driven by relocation from the suburbs, so I guess that is a shell game as well.

What businesses are relocating from the suburbs?

[SteelCityRising]

Originally Posted by eschaton

Of course, much of the real growth in office space in the fringe markets is being driven by relocation from the suburbs, so I guess that is a shell game as well.

Correct. I mean there's a post on the City vs. City sub-forum right now profiling the nation's Top 100 counties by population in terms of job growth over the past six years. Allegheny County (Pittsburgh) is literally near dead last in terms of job growth in both raw numbers and percentage according to that thread. Marothisu, who is a statistics whiz, compiled the information, so I trust his contributions.

It is what it is. We have a lot of "Spin Doctors" on here (both positive and negative). It seems like during the 2010's Pittsburgh has become safer, better-educated, more Asian, more affluent, and more "fun". At the same time, though, it DOES seem like we've stagnated in terms of job growth. It seems like we have a stagnant population that is just shifting to becoming more skilled/better-educated and -paid by existing employers.

[eschaton]

Originally Posted by Independentthinking83

What businesses are relocating from the suburbs?

Off the top of my head?

1. Bombardier moved its 500-person white-collar workforce from West Mifflin into the Strip District.

2. Philips is consolidating all of their white-collar office space (1,250 jobs - mostly North/East of the city) into Bakery Square

3. United Healthcare moved about 400 jobs from Bradock Hills into NOVA Place.

4. Wabtec moved its corporate headquarters to the North Shore from Wilmerding.