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Pittsburgh again ranks No. 1 nationwide for apartment occupancy

Wednesday, Aug. 26, 2009
 

A year ago, many Pittsburgh apartment landlords put up a "no vacancy" sign.

That's when the city was ranked No. 1 for the highest occupancy rate in apartments nationwide by M/PF Research, a Texas firm that tracks rental markets.

The signs are not as common today, but apartment owners still have few vacancies. And Pittsburgh, for the second year, was ranked No. 1 with the highest rental occupancy rate among big cities nationwide as of June 30.

The city's apartment buildings have an occupancy rate of 96.6 percent, a full percentage point below its top position in mid-2008, but still the best by a fairly sizable margin, said Greg Willett, M/PF vice president, research and analysis.

"Pittsburgh simply is losing fewer jobs than most other metro areas, so the housing market is holding up better. Furthermore, Pittsburgh is one of just a handful of markets nationally where rents are still increasing," Willett said. "Rents went up 1.3 percent during the year that ended June 30, reaching an average of $860 per month."

Broken down by type, average rents are $535 for efficiency units, $779 for one-bedroom units, $907 for two-bedroom units and $1,181 for three-bedroom units, Willett said.

Downtown and neighborhoods in the fringe area of the Golden Triangle are prime examples.

At least 12 apartment buildings Downtown — with more than 1,000 units combined — have mid- to high- 90 percent occupancy levels, owners said. Some are at 100 percent, with the average monthly rent in the $1,200-plus range, with few exceptions.

One is Century-on-7th, the former Century Building, which Trek Development Inc. has converted into 60 apartments. The rental rate at Century-on-7th is below the average of other buildings, with some units renting in the $500- to $600-range, while the remainder range from $800 to $1,500.

Century-on-7th is one of two recent new apartment projects — the other being the Market Square Lofts at Market Square Place — being built by Millcraft Industries Inc. of Washington, Pa.

When they open, both should be at 100 percent occupancy, owners said. Trek Development received enough applications to fill the 60 units at Century-on-7th. Millcraft received applications from 700 people for the 46 units at Market Square Place, which will open in November.

"We are doing credit and criminal checks and plan to have enough tenants to fill up the 46 apartments," said Lucas Piatt, Millcraft's vice president for development.

He said the success of the Market Square Lofts, as well as local economic conditions, will dictate the future of his company's other Downtown projects. One is the State Office Building, which Millcraft is purchasing for $4.6 million and plans to convert to apartments or condominiums. Millcraft expects to complete the purchase next year.

Typical of today's apartment dweller is Tom Bianco, 33, who sold his house in McCandless and recently moved with his 100-pound dog, Sadie, into the Cork Factory apartments in the Strip District.

"The Cork Factory is like a paradise spot in the city because it is pet-friendly and, for me, convenient to my office in Fox Chapel, which has cut my commute time," said Bianco, an insurance agent.

The 297-unit Cork Factory is nearly full — at 99 percent occupancy — like other smaller buildings in the Downtown area.

Among them are the 20 units at 930 Penn Ave., the six-unit building at 945 Liberty Ave. and the three units at 947 Liberty. The 151-unit Encore-on-7th is at 97 percent and the 117-unit Penn Garrison on Penn Avenue is 98 percent. The 242-unit Pennsylvanian reports 95 percent occupancy.

About 369 of the 1,000 Downtown units are in three buildings developed using federal funds and traditionally have high occupancy levels and lower rentals. They are the Roosevelt Arms (former Roosevelt Hotel) with 191 units; Midtown Towers (former Keenan Office Building) with 90 units; and May Building, with 88 units.

The high occupancy rates attracted out-of-town investors this year, when both the 241-unit Penn Towers in Wilkins and the 291-unit Westpointe Apartments in Robinson were sold.

"Out-of-town investors still are interested in local apartment buildings, but they are now getting more competition from local buyers," said Cynthia Kamin, senior vice president, CB Richard Ellis/Pittsburgh, a Downtown commercial real estate company.

In the past, 70 percent of the buyers were from out of town. Today, they constitute 50 percent, she said.

Patty Burk, vice president of housing and economic development for the Pittsburgh Downtown Partnership, tracks residential activity Downtown and its fringe area. She said there are 2,200 housing units Downtown and 3,897 in fringe areas, including rentals, condominiums, student housing and other private homes and other housing types.

 

 
 


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