F E A T U R E
since the pandemic.
Jeremy Waldrup sees the conversion as a needed boost for the residential component of downtown, as well as for the troubled office market trying to rebound from the pandemic. “Taking 500,000 square feet of commercial office off the real estate rolls will help the market. It will push current tenants in those spaces into other buildings. We are seeing the flight to quality play out in the leases that expired in the last two years, not just in Pittsburgh but everywhere,” he says. Waldrup thinks the relatively low number of downtown residents has impacted the return-to-work metrics in Pittsburgh, at least when compared to other cities with more residential downtown areas. “Look at the residential makeup of Philadelphia. It has quadrupled over the last 20 years. Philadelphia is at 90-plus percent return to work, not because they have more people in the office, but because they did not lose people who worked and lived downtown.” Leonard Klehr, principal at Lubert Adler, is based in Philadelphia and saw that disparity as an opportunity when his firm looked at taking control of the redevelopment of the former Kaufmann’s into apartments. “Pittsburgh is not a foreign market to us. We know about it and think about it. The Kauffman’s development was in a distressed situation. The developer found his way to us, and it was the kind of transaction that Lubert Adler specializes in,” Klehr recalls. “We certainly had our questions about demand, especially given that the transaction took place during the pandemic. Traditional urban residential is dependent upon job growth and there wasn’t any at that point. Lubert Adler has a history of adaptive reuse in a number of cities, and we wanted to take a shot at Pittsburgh. It was behind its sister city, Philadelphia, in developing residential units downtown.” The Kaufmann’s Grand project and the conversion of the Commonwealth Building occurred during the lull in residential development in the early 2020s. Those properties now have waiting lists of prospective renters.
PMC has started work converting the former Allegheny Building on Fourth Avenue into 177 apartments. Roughly 700 units in three major projects on the verge of construction in the Golden Triangle. The Former GNC headquarters building at 300 Sixth Avenue is being converted into 254 apartments by Victrix LLC. Douglas Development has proposed 142 units in the former Easter Seals Building at 642 Fort Duquesne Boulevard. City Club Apartments are 300 units of new construction being developed
Employee data represent estimates taken Monday - Friday and exclude major U.S. holidays. Employees working in-person less than 4-days per week are counted as visitors. Source: Pittsburgh Downtown Partnership, Placer.ai.
by Jonathan Holzman at 305 Wood
Street. Another 125 units or so
Source: Pittsburgh Downtown Partnership
are proposed in numerous smaller buildings. That is the first wave of new residential. Recently, Hertz Investment Group floated the idea of converting 3 Gateway Center to 300 residential units and Rugby Realty announced it was looking for a development partner to convert the 44-story Gulf Tower into a mix of luxury hotel and roughly 200 residential units on the upper 25 floors. In announcing Rugby’s plan, Aaron Stauber referred to research that suggested that demand existed for 5,000 or more additional residential units in the Golden Triangle.
of the location. But demand for residential space continues to grow and that may provide the solution to the downtown office problem. There are 7,000 residents living in downtown in 4,100 dwelling units, most of which are rentals. That is roughly twice the number of people who lived downtown in 2000. The vacancy rate in downtown apartments is six percent. After a decade of adapting old offices and building new units – led by PMC Property Group from Philadelphia and the Piatt Organization (then Millcraft) – developers cooled on the CBD. That has changed
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