Pittsburgh development is (mostly) booming. What to know now and what to expect next

Pittsburgh is experiencing a building boom worth billions.

About 80 large construction projects are in the works or have been proposed in the city, according to Tribune-Review research and data from construction analyst firm Tall Timber Group. About half are under construction. The projects range from office space and multi-use retail to hotels and affordable housing, from hospitals and grocery stores to upgrades to athletic facilities and apartments or condos.

The ventures occupy various parts of the city but are concentrated in the Strip District, Oakland, Downtown, Uptown, Lawrenceville, Shadyside and East Liberty.

“The most noteworthy thing in terms of current trend or counter-trend is the fact the concerns about escalating inflation — which were legitimate and delayed projects — has not dampened construction activity as much as people expected it to,” said Jeff Burd, founder of Tall Timber Group.

Todd Reidbord was a bit more reserved in his assessment.

There is growth but at a slower pace than what other cities are seeing, said Reidbord, president of Shadyside-based developer Walnut Capital. He said Pittsburgh’s development growth is more “slow and steady” and doesn’t experience the wild swings other cities do.

“I was in Atlanta, and they start building their next housing project when their last is 80% occupied,” Reidbord said. “We wait until our housing projects are 100% occupied.”

In Durham, N.C., for example, there are 2,200 housing units under construction in downtown alone. That’s more than double the housing under construction throughout Pittsburgh.

Burd said 1,000 new housing units are expected to start this year and another 3,000 to 4,000 are planned for 2023 and beyond. According to Burd, there was $5 billion in investment for construction projects, both housing and commercial, in 2021 throughout the seven-county metro area — a regional record for one year. Most of that investment was concentrated in Pittsburgh.

Burd said he expects 2022 to finish slightly under that figure, but recent commercial building announcements — particularly massive projects slated for Oakland — should increase activity in 2023 and thereafter.

“The residential side has slowed down, but on the commercial side, things have picked up,” Burd said, adding that “2023 and 2024 should be years that test the project management skills of a lot of contractors.”

Where’s hot?

The Strip District has the most projects under construction, with eight large construction projects, most of them multi-unit housing. According to an annual report from community group Strip District Neighbors, there was $723.5 million in active construction projects in 2021 in the Strip District and more than $200 million more in announced projects.

There is also a mixed-use housing project — Brewer’s Block at the former Iron City Brewery site — that sits at the edge of the neighborhood.

The Strip District saw an influx of residents — more than 1,200 people — from 2010-2020, and it appears that trend is continuing. Strip District Neighbors said the neighborhood’s population increased by more than 2,500 residents as three apartment and condo buildings opened in 2021.

The next hot spot is Oakland, Burd said, and it’s going to be larger than what the city has seen before.

“The Strip, and by the river in Lawrenceville, that is all going to pale in comparison to Oakland,” Burd said. “We are talking millions of square feet.”

At least a dozen $100 million projects are in the pipeline for Oakland, Burd said. That includes university housing, research centers, athletic facility upgrades and major hospital projects, all of which have survived supply-side shocks because of covid, labor shortages and rising construction costs from inflation.

The biggest is UPMC’s 17-story Presbyterian hospital tower along Fifth Avenue. The $1.5 billion project is the largest health care project underway in Pennsylvania and the largest in Pittsburgh’s history.

The University of Pittsburgh, Carnegie Mellon University and Carlow University also have projects planned, Burd said. He expects to see those have large impacts on the neighborhood’s business district.

“Most of Forbes and Fifth avenues will become 15- to 20-story buildings all along this corridor,” he said.

Walnut Capital is planning a 13-acre development called Oakland Crossings with a mix of market-rate and affordable housing, green space and a grocery store near Boulevard of the Allies.

Walnut Capital’s Reidbord said the universities and medical institutions are driving construction demand, and he expects more projects to follow.

“We are very bullish on Oakland,” Reidbord said.

With the hospital jobs and university expansions will come the demand for housing, he said.

Oakland is the second-biggest job center in Pittsburgh and the third largest in Pennsylvania. Reidbord said, historically, Oakland housing has been relegated to single-family homes of longtime residents and older multi-unit buildings for students.

That could change.

“People are coming from all over for jobs in Oakland, and those are the folks that want better housing,” he said.

Oakland Crossings has faced community pushback. The Oakland Planning and Development Corporation has been vocal about its belief that the development is usurping the community’s vision for the neighborhood. But that hasn’t stopped the momentum.

In June, city council approved new urban center mixed-use zoning for parts of Oakland that will allow developers increased height limits on buildings.

Where’s not?

Of the about 80 aforementioned construction projects, none was in the city’s South Hills or Hilltop neighborhoods. Only a handful of projects are south of the Monongahela River.

The far edges of the South Side are seeing some action.

Station Square has seen apartment projects and the Highline office building over the past few years. The mostly vacant mall site has garnered interest from developers. And Big Spring Spirits broke ground in July to bring a distillery, public market place and event space to the area.

At and around the SouthSide Works, redevelopment is underway, and an apartment complex recently opened. Another apartment complex overlooking the Mon has been proposed.

But aside from a proposal for apartments on Grandview Avenue in Mount Washington, notable development projects are nowhere to be found further south.

Affordability

Pittsburgh, like most bigger American cities, has struggled with housing affordability. Rents have increased, and officials have decried the lack of subsidized, affordable units. A 2016 task force commissioned by former Mayor Bill Peduto stated Pittsburgh faced a shortage of 17,000 affordable units.

The city has added more units since, but it still faces rising rent costs that could be contributing to the exodus of city residents, particularly Black residents. The city lost about 10,000 Black residents between 2010-20, with many moving outside the city but remaining in Allegheny County, according to census figures.

Brandon Mendoza, executive director of NAIOP Pittsburgh, the local branch of the Commercial Real Estate Association, said the city needs to do more to increase the supply of affordable housing.

There are seven large, affordable housing projects under construction in the city. From those projects, 264 subsidized, affordable units are being built. More affordable units are in the pipeline, but the scope is limited.

“How do we get people to build 500 affordable units a year?” Mendoza said.

To address this shortage, Pittsburgh has created inclusionary zoning districts where developments in Lawrenceville, Bloomfield and Polish Hill must include 10% of its units as permanently affordable. The Builders Association of Metropolitan Pittsburgh has filed a lawsuit over that requirement.

Mendoza said that initiative should lead to the creation of affordable units, but he said city council should offer incentives such as tax-increment financing (TIFs) and expedited zoning approval for affordable projects. A carrot approach, he said, might be more effective than a stick.

One neighborhood that might provide relief is Downtown. It has three large projects under construction — two with housing elements — and three large housing projects proposed.

Mendoza is hopeful that a push from the city and Downtown community to convert vacant office space into affordable housing will take hold. The city and Allegheny County have launched a $9 million pilot program aiming to spur these conversions.

“There is plenty of return on investment options,” Mendoza said, “for converting some of our Downtown offices.”