With the rise in remote work during the pandemic, headlines across the country spelled doom for downtown business districts.

Business districts, including Downtown Pittsburgh, were hit hard by the pandemic, with office spaces emptying out because of covid concerns and small businesses that normally serve Downtown workers closing.

Yet, Jeremey Waldrup, CEO of the Pittsburgh Downtown Partnership, said there are 50 development projects worth over $2.5 billion in the works for Downtown and its vicinity. The difference for these projects, compared to ones before the pandemic spells a subtle but noticeable, shift in development priorities for the Golden Triangle.

According to data compiled by PDP, residential projects are increasing and residential housing unit occupancy remains high.

Additionally, Downtown has recovered about 85% of its visitors compared to pre-pandemic levels, with trendlines projecting an eventual full recovery. Meanwhile, only 36% of employees have returned Downtown for work, compared to pre-pandemic levels.

What kind of buildings and projects Pittsburghers might see will likely be different from the Downtown of the past.

Waldrup said conversions of many of Downtown’s older buildings are likely. Many older structures are office buildings, and their layout and amenities aren’t as attractive anymore for modern companies. These low-amenity office buildings make up over 40% of the office marketplace in Downtown. Waldrup expects more of them to continue to be converted into market-rate and high-end housing, and possibly for sectors like higher education.

“Pittsburgh was fifth in the nation among downtowns in terms of real estate dedicated to offices,” said Waldrup. “The need to further diversify the uses of Downtown spaces and to increase housing makes sense.”

PDP data shows about 1,000 new residential units are set to come online through the conversion of underutilized properties.

The continual growth of Downtown housing projects follows a residential explosion in the neighborhood. According to census figures, the Central Business District added 1,848 residents between 2010 and 2020, the most additional residents of any Pittsburgh neighborhood. Figures for 2020 show that Downtown houses 5,477 residents, making it one of the most populated residential neighborhoods in the city.

Following that residential growth is the growth in restaurants and small businesses. Caitlin Fadgen of PDP said Downtown has welcomed 20 new businesses, even through hardships of the pandemic.

“And all those new restaurants only support a growing residential market. It is really difficult to get a dinner reservation, you have to be ready right as they open their reservation books,” said Fadgen, noting the popularity of Downtown as an entertainment district. Market Square saw more than 373,000 visitors and the Cultural District saw over 364,000 visitors in December 2021, about 89% and 85% of pre-pandemic levels, respectively.

Target is set to open a store at the former Kaufmann’s building this year, which Waldrup expects to include a small grocery component to supply Downtown residents.

But one area Waldrup said Downtown is missing is affordable and subsidized housing units. Waldrup said only about 7% of Downtown units are considered affordable. According to a 2019 study from the National Community Reinvestment Coalition, Downtown gentrified significantly since 2010, with average home prices tripling there from $80,000 to $240,000 and its average incomes doubling.

“We would like to see more affordability brought into Downtown. Converting office buildings to affordable housing will not be cheap, so we need the federal government to step up and provide funding,” said Waldrup, adding that Downtown is a good candidate for affordable housing because residents there have great access to public transit and many can live without a car.

Billions of dollars for affordable housing have been included in Democrats’ efforts to pass the Build Back Better bill, but the legislation has stalled.

Local development firm Millcraft Investments has proposed a massive $475 million development — complete with housing, retail, a marina and Ferris wheel — just outside of Downtown in the Chateau area of Pittsburgh’s North Side. Lucas Piatt, CEO of Millcraft Investments, said the quick rebound of leisure activity in and around Downtown is fueling changes to the area.

“Everyone knows that the pandemic has changed how we do things and is driving markets in different ways. We’re still seeing a hot real estate market,” said Piatt. “Culturally, we’re seeing a drive in leisure that is helping the comeback of the hotel and hospitality industries, where we’re seeing increased average daily rates.”

The future of residential growth

Residential growth isn’t just confined to the Golden Triangle. Populations in nearby neighborhoods have exploded as well. The Strip District grew nearly 200% since 2010, and Allegheny Center in the North Side grew 52%. A new 260-unit housing structure was just announced near PNC Park on the North Shore, just across the river from Downtown.

Waldrup said the residential growth of neighborhoods should only help keep Downtown a strong job center, not weaken it, as walk-to-work rates should increase. Before the pandemic, Downtown was home to about 150,000 jobs, the second largest business district in Pennsylvania.

“Ultimately, the near neighbors strengthen the core,” said Waldrup. “We see that as healthy competition, and it creates a stronger and greater Downtown.”

But that office space is going to look different than traditional office space. With the rise in remote work, and its popularity among many employees, Waldrup said companies are looking to trophy-class office space, the highest quality offices that include several amenities. The focus has shifted from large office space with few amenities to smaller office space with several perks. Currently, Downtown office space is 15% trophy class, and 36% is Class A, another high-end class. Waldrup expects those office spaces to increase.

“Tenants looking for trophy class space are up, and with that we have seen some firms downsize in spaces,” said Waldrup. “They are looking for offices with common areas and big lounge areas, and even gyms attached. The movement is at the high end.”

Piatt agrees, and said Downtown’s office occupancy rates won’t stay down permanently and they will stabilize over the next few years. He expects more Downtown offices will have significant amenities to attract workers that could grow tired of the home office.

“Over the next year, we really need to focus on developing great environments and invest big in storefront experiences and inner-building experiences in areas like health and wellness, food and beverage and recreation for people in the Downtown central business district to return to,” said Piatt.

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