Bill Wade, Post-Gazette
	Buyers have been lined up for 20 of the 61 condos for sale at the Carlyle in the former Union Bank Building, at Wood Street and Fourth Avenue.
	Annie O'Neill, Post-Gazette
	Residents of the Encore on 7th, Downtown, can get a view across the Allegheny River toward PNC Park.

Downtown's residential renaissance is producing its first fruits.

Developers say they are having little trouble finding people willing to spend $250,000 or more to buy a Downtown condo or as much as $3,275 a month to rent an apartment.

Since opening at the end of April, the new Encore on 7th has leased 73 percent of its 151 units, with most rents ranging from $1,400 to $3,275 a month.

The Golden Triangle's newest condominium building, 151 First Side, has commitments on 43 of 80 units, with prices ranging from $250,000 to $500,000. Piatt Place at the former Lazarus-Macy's building has lined up buyers on 10 of 65 condos, with prices running from $335,400 to $634,500, in the four months the sales office has been open.

"It exceeds our expectations. We're excited about it," said Jack Piatt, chairman of Millcraft Industries Inc., the developer.

A few blocks away, at Wood Street and Fourth Avenue, the Carlyle has secured buyers on 20 of 61 condos, ranging from $236,000 to $1.2 million for a top-floor penthouse, and expects to have all sold by next September.

"I think we've done better than a lot of cities with emerging housing markets. I'm very happy with the progress that we're making," said Patty Burk, vice president of housing and economic development for the Pittsburgh Downtown Partnership.

In all, 246 condominiums are under construction or in final development stages Downtown. That doesn't take into account another 1,285 condos or apartment units being planned, including 700 in the Cultural District.

It's a whole lot of housing to add to the 1,290 rental and condo units available in the Golden Triangle. But several studies over the past five years have indicated the demand is there to match it.

They suggest the Downtown market can absorb 100 to 250 units a year, at rental levels below $1.60 a square foot (the current level is $1.34) and at sales prices of $200 a square foot, translating into a monthly rent of $1,742 for a 1,300-square-foot apartment or $260,000 for a condo of the same size.

And a recent Carnegie Mellon University study found that demand for Downtown housing among young professionals far exceeds the supply. For that category of buyer or renter, it estimated there is a need for at least 162 more units, up to as many as 2,061.

"We're very confident that the marketplace can hold and support this amount of residential Downtown [development] that's going to roll out over the next five years," said Greg Hammill, regional vice president of Howard Hanna Real Estate Services.

Howard Hanna is the marketing and sales agent for the 30 luxury condominium units being built as part of the 23-story Three PNC Plaza tower under construction on Fifth Avenue. They will sell for $500,000 or more, with some topping $1 million.

It also will handle the sale of 700 units of housing planned within an ambitious $460 million development in the Cultural District announced by the Pittsburgh Cultural Trust.

Mr. Hammill said Howard Hanna's own marketing studies have suggested that demand exists. He said the Encore, with nearly three-quarters of its units rented, is a "great indication" of demand for Downtown living.

"We're very optimistic about that market," he said.

In building high-end units Downtown, developers are primarily targeting two types of people -- empty nesters who are looking to trade their big suburban homes for smaller city units and young professionals who love city life and have the cash to afford it.

Ralph Falbo, the developer of the 151 First Side condominium project, said that research has shown that the most likely buyer of a Downtown condo is a 62-year-old single woman. But he added his buyers have run the gamut, from young professionals without children to doctors and lawyers from all age groups.

Mr. Falbo believes there's more than enough demand to support the higher end development, at least at this stage of the game.

"We're all moving ahead cautiously and not getting overbuilt. I don't think what we're looking at now is an overbuilt situation. If it is, it's not by much," he said.

But one who fears the boom could become a bust is Tom Sullivan, a commercial broker for Colliers Penn, Downtown. Unlike Mr. Falbo, he believes there are too many residential units being built in the Golden Triangle at the same time.

"There are going to be some winners and losers, depending on what type of project they have going on," he said.

He also thinks too much of the construction is high-end. He believes the demand is higher among people looking for condos in the $150,000 to $200,000 range than $350,000 and above.

"They've got to come down to earth. Too many people are shooting on the high end," he said. "People who could care less about amenities and love being in the city are younger people. A lot [of the units] are priced such that younger people can't afford it."

Incentives offered
In at least two cases, apartment developers are offering some incentives to attract renters, but Ms. Burk attributed that more to competition than any weakness in demand.

The Encore, at Seventh and Fort Duquesne Boulevard, is offering free parking to some residents, in particular those with lower-level apartments on the city side of the building.

At 930 Penn Ave., a building converted into 20 apartments, developers are offering a free month's rent to tenants, the first of whom moved in in June. So far six units have been rented, at a rate of $2,400 a month.

"Any new apartment building is going to offer concessions or enticements, especially when you've got choices," Ms. Burk said. "Tenants and residents are looking for the best deal for themselves. It's just the way it goes. I don't think it's anything to be concerned about."

At Piatt Place, Millcraft is adjusting its housing plan, scrapping expensive two-story townhouses that were to be built on top of the Lazarus building in favor of more condos, smaller in size and less expensive. Brian Walker, chief financial officer, said the change was made because the market "was crying for smaller units."

But few see such things as a concern, particularly given the apparent high demand for Downtown living.

Whatever momentum there is could be lost, though, without more amenities Downtown, such as grocery stores, laundries, dry cleaners and longer store hours, Mr. Sullivan said.

The CMU study made the same point, saying that many young professionals "are still hesitant [to] pay the rents currently being charged" Downtown because existing amenities don't meet their wants or needs. The study listed the top amenities for that group as a grocery store, pharmacies, bars and pubs, health clubs, retail stores and a movie theater.

Perhaps the biggest unfulfilled need Downtown is for more moderately priced housing. Ms. Burk said studies have found a very high demand for such housing Downtown. The CMU study found that young professionals are willing to pay $900 to $1,100 a month to live Downtown.

As a result, a group of business, civic, political and foundation officials have begun meeting to try to find ways to entice developers to build more moderately priced "workforce" housing.

"We definitely recognize the demand and the need," she said. "There's a lack of supply for workforce housing."

The problem is that building in downtowns is expensive for a number of reasons, from the red tape involved to the price of land to tougher building and fire codes. And that doesn't even take into account the skyrocketing increase in the cost of construction materials over the last year.

"The difficulty in most cities is that it is too expensive to develop market rate housing to make it affordable for young people or teachers or government workers without some kind of city subsidies or assistance," said John McIlwain, senior fellow for housing at the Washington D.C.-based Urban Land Institute.

Without incentives, developers tend to gravitate toward building more expensive units Downtown because it is the only way they can make money.

Ms. Burk said the Working Group on Downtown Housing is looking at the possibility of tax abatements or other incentives to interest developers in building more affordable housing.

Mr. McIlwain said cities such as Columbus, Baltimore, Cincinnati, Cleveland and Philadelphia are experiencing much of the same downtown housing boom as Pittsburgh. In many other cities, there's a lot of upper end housing, but also starter housing of 700 to 800 square feet geared toward young professionals.

Over the last five to 10 years, the market has been so strong "that developers by and large have been able to do pretty well" with downtown housing, Mr. McIlwain said.

He said the 246 units under or near construction in Pittsburgh are not a lot, a "first toe in the water," as he put it.

"You don't know how strong the market's going to be at first when you start doing this. My guess is that they will sell them. The question is how long it will take and will they get the asking prices or will they roll them back?" he said.

Millcraft's decision to scrap two-story townhouses for smaller, less expensive condos probably was the right move, he added.

"I think that's a reflection of conservatism on their part. They are cautious about the market. They think there's a deeper market at the lower price point, which is probably right," he said.