Downtown Pittsburgh experiencing growth in housing market

Jeremy Waldrup believes Downtown Pittsburgh will emerge better from its latest transformation to a place with less commerce and more housing.

“The fundamentals of Downtown are extremely strong,” says Waldrup, who as president and CEO of Pittsburgh Downtown Partnership, interacts with business owners, residents, visitors and policymakers. “People want to live in walkable neighborhoods and they love the accessibility that Downtown provides to cultural and sporting events. Working from home will make that more appealing to some. They want the opportunities to get out in the city and experience meeting new people.”

Several large housing projects are planned or underway in the Golden Triangle — the latest, 254 apartments proposed for the former GNC headquarters — but like many downtown centers post-Covid, the neighborhood is struggling to come back. Its daily user level, measured by cell phone pings, remains well below 2019 statistics, Waldrup says — about 77,000 people now, compared to 137,000 a day before the pandemic.

“I think it’s going to be a challenge for every downtown to deal with this new normal of decreased workers,” he says. “I know we joke that Mondays and Fridays are very slow in Downtown these days, and I think that’s very likely to stay for a while.”

The number of employees and visitors coming Downtown might never return to pre-pandemic levels because “working from home has changed the way people react with coming into the office,” Waldrup says. At about 66%, Pittsburgh has some of the highest rates of commercial office space as a percentage of total real estate Downtown — fifth in the country behind Boston, San Francisco, Washington, D.C. and Chicago.

“About 40% of our office space is historic stock, so these are turn-of-the-last-century buildings that are absolutely beautiful, but many of them moving forward will no longer need to be commercial offices,” says Waldrup. “It’s a real opportunity to begin to make Downtown more resilient and diversified. We think residential is an important component for that.”

Luxury apartments in the former Kaufmann’s store, now the Kaufmann’s Grand on Fifth, are 100% full with a waiting list. On July 17, Target opened a 22,000-square-foot department store with a full-service grocery there. That will complement smaller grocery sections in Downtown’s five drugstores and the DGX on Wood Street, as well as the Market St. Grocery, which opened in 2015.

Earlier this month, Mayor Ed Gainey and Allegheny County Executive Rich Fitzgerald announced the city, county and state will create a $9 million pilot program aimed at increasing the supply of affordable workforce housing, starting with a $2.1 million allocation of American Rescue Plan Act funding to the Urban Redevelopment Authority of Pittsburgh (URA). The state is ponying up $3 million.

“As the market has changed over the past few years, including changes to the office market, we must also adjust,” says Fitzgerald. “The residential market in Downtown and the surrounding areas remains strong and it only makes sense to transition to that need. This effort also invests in the continued vibrancy of Downtown, which is the heart of our region.”

Guidelines for the Downtown Conversion Pilot Program are still being developed, Gainey says, but the goal is “to improve the vitality of Downtown Pittsburgh by converting a portion of the vacant commercial office space into mixed-income developments that include affordable and workforce housing.”

Already, about 7,000 people live in the Golden Triangle in 4,100 units — about 94% occupancy, says Waldrup. “We have added about 1,600 units in the last six years or so, and occupancy rates are as good as or better than they were pre-Covid,” he says.

Developing so-called “workforce housing” means creating affordable living spaces for young professionals and those in the retail, restaurant, theater and other service industries. About 62% of those working Downtown make less than $70,000 a year, says Waldrup. The program would provide a subsidy to developers to offer at least 10% of units at reduced rent for a set period of time.

New York-based real estate company Victrix LLC will convert the GNC building on Sixth Avenue to apartments, with first-floor space for retail and a rooftop deck. According to the plan that Strada Architecture submitted to the Pittsburgh Planning Commission, Victrix will keep the entire shell of the 14-story building designed by architect Daniel Burnham and rebuild the interior over about 15 months. GNC moved its headquarters to the Strip District in June.

With that development and others, “over 800 units are in the pipeline right now to be built Downtown,” says Waldrup.

Other developments recently announced include the City Club Apartments at the former YWCA of Pittsburgh building on Wood Street — 300 apartments in a 20-story tower. Developed by Indovina Associates Architects, the plan includes a two-story restaurant, a health club and a rooftop pool — 10 % of those apartments will be earmarked as affordable housing.

“It’s a great reuse of that space,” says Waldrup.

And earlier this year, Washington, D.C.-based Douglas Development announced its plan to develop 139 apartments in a long-abandoned building on Fort Duquesne Boulevard that was home to Easter Seals of Pennsylvania.

“We do think there’s an environmental component to all of this as well,” says Waldrup. “You’re using existing real estate, underutilized real estate, and if you’re a two-car family moving into Downtown, you might get rid of one or both cars. There are opportunities for public transportation, plus Uber, biking or walking.”