The Magic Number: $1400 / by EpicDevelopments

908 Penn Ave 
Five years ago the Downtown living landscape was a much different place.  There were the a couple condominium buildings and you could count the number of apartment buildings on one hand.  But seemingly overnight, that's changed.  Firms like PMC, Millcraft, and others seem to be snatching up buildings right and left turning what were once Class B and C office into upscale urban dwellings.  Take a look belong at the long list of building currently under agreement/construction in Downtown (which almost exclusively are being built by out of towners, another sign of strength in PGH market):

  • 526 Penn Ave, 20 Units ; PMC
  • 711/713 Penn Ave, 34 Units; Foris Property Group
  • 819, 821 and 823 Penn, 30 Units; Trek Development
  • 907/909 Penn Ave, 28 Units; Penn Renaissance
  • 908 Penn Ave, 35-40 Unit; PMC
  • Alcoa Building, 241; PMC
  • Robin Building, 100 Units; PMC
  • 123 7th Street, 40 Units; Red Rocks Group
Yet why the boom all the sudden?  Its not as though there were not vacant spaces before that would have been better served as residential.  The answer in part is due to the magic number, $1400. When average rents for apartments hit $1,400 in the Golden Triangle, the tipping point swayed from unfeasible to financially feasible in terms of conversion.  This coupled with other market trends such as renewed interested in urban lifestyles, job growth/relocation, overall market rent increases, and raising incomes (though modest in PGH)  have all played a role in this micro Downtown boom.  

And it's cyclic with fringe benefits to non-Downtown dwellers.  There are more people living Downtown supporting amenities and restaurants, which results in investment to be made in more amenities/restaurants (see previous post of restaurants on the way, many Downtown), which then intern fuels the demand for more residential units.  Its a winning scenario for a robust Downtown.  And while there area other market factors at play here; interest rates, a hot multi-family market, etc; the magic number that makes many of these models cash-flow is $1,400.  
Robin Building, Photo from
526 Penn Ave