Downtown Pittsburgh apartments filling up
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Four months after the first resident moved in, Market Square Place Downtown is posting a no vacancy sign.
Developer Millcraft Industries has leased all 46 apartments in the former G.C. Murphy store and adjacent properties, including one overlooking Market Square that rents for $3,000 a month.
"I think it just solidifies our opinion that Downtown is the next new hot residential area," said Lucas Piatt, Millcraft executive vice president.
Market Square Place, which straddles Fifth and Forbes avenues, isn't the only new apartment development Downtown to fill up quickly. The Century Building on Seventh Street leased all 60 of its studio, one- and two-bedroom apartments over three months last year.
The speed at which the units have leased suggest a strong demand for Downtown apartments with moderate rental rates. Those at Market Square Place lease from $750 to $3,000 a month, with an average of about $1,400. Rates average $718 to $1,370 a month at the Century Building, though some income-restricted units lease for as low as $565 a month.
"I would believe I could fill three more Century buildings if I had the right property and could deliver the right price," said Bill Gatti, president of Trek Development Group, which owns and developed the property.
Mr. Piatt said Millcraft was able to lease all of the studio, one- and two-bedroom apartments at Market Square Place without offering much to entice people into the units.
"We worked with some people maybe on parking or a couple hundred off the first month rent, but not much," he said. "I would say we received the asking price 99 percent of the time."
Patty Burk, Pittsburgh Downtown Partnership vice president of housing and economic development, said both projects were an "indication of demand for Downtown living."
At the end of 2009, apartments in the greater Downtown area that includes the North Shore and Strip District had a 93 percent occupancy rate, she said.
At Market Square Place, a lot of those leasing apartments are young professionals, although there are some older residents as well, Mr. Piatt said. The majority work Downtown.
Mr. Gatti said 70 percent of those renting at the Century Building were age 35 or younger. He added the two main groups of tenants were in the 21 to 35 or the late 50s to early 60s age groups with few in between. One interesting demographic at the Century Building is that none of the tenants have children.
"That's when you'll know the Downtown housing market has hit critical mass, when it starts to appeal to families," Mr. Gatti said.
While the new apartments are filling up, sales of pricey condominiums Downtown have not gone as well.
Millcraft has 40 of about 60 condominiums under contract at Piatt Place, the converted Lazarus-Macy's department store building at Fifth Avenue and Wood Street. Prices range from $300,000 to $1.5 million.
At the Carlyle at Wood and Fourth Avenue, 32 of 60 units have been sold, most in the $350,000 to $370,000 range. Units run from $270,000 to $2.2 million for a 6,000-square-foot penthouse on the 22nd floor. At Three PNC Plaza on Fifth, eight of 27 high-end units with prices starting at $500,000 have closed or are in the process of being sold, including a 23rd-floor penthouse that went for $2.5 million.
Some attribute the slow sales to the fact that the economy has made it difficult to get mortgages.
"It's a different market," Mr. Piatt said. "Condos right now are going through a little more difficulty when it comes to financing."
Both he and Ms. Burk see some positive signs. Developers have pre-sold more than half of the 56 condos under construction at the former Otto Milk building in the Strip District, Ms. Burk said.
And Mr. Piatt said interest in the Piatt Place condos was "really strong right now with more prospects than we have seen in a very long time." Interest also has surged in the condos at the Carlyle, in part because of the availability of tax credits, said Janna Sandleitner, director of sales.
Nonetheless, apartments appear to be the hot real estate Downtown these days. Mr. Gatti said he was looking at properties in the Golden Triangle for another apartment project. And Millcraft is thinking about converting part of the recently acquired former State Office Building near Point State Park into apartments.
"Everything I'm hearing about now, it's all rental," Ms. Burk said.
First Published April 20, 2010 12:00 am