Recognized as a source for Downtown residential development, COO and President Lucas Piatt affirmed the demand for more condominiums in Pittsburgh’s epicenter.
Read the 2016 Pittsburgh Post-Gazette story by Mark Belko here and below.
With one unit on the market for a cool $6.99 million, at least one local developer thinks it might be time to start building condominiums again Downtown.
Apartments have been going up faster than umbrellas in a rainstorm for much of the past decade, but Lucas Piatt, president and chief operating officer of Millcraft Investments, said he senses a “pent-up demand” for condos and other for-sale units Downtown.
At a developers forum sponsored by the Pittsburgh Downtown Community Development Corp. this week, Mr. Piatt cited statistics showing that there were only 34 for-sale residential units available in the Golden Triangle, the Strip District, and parts of Uptown and the lower Hill District.
He found that to be shockingly low. The numbers included condominiums, townhouses and a smattering of single-family houses with prices ranging from $89,000 to $6.99 million for a 6,000-square-foot condo at the Residences at Three PNC Plaza that takes up the entire 19th floor.
“So we do need some more condo projects in Downtown. If someone could deliver those condos in that $250,000 range, we think they would sell like hotcakes all day long. The challenge is, can you do it, can you build it for that?” Mr. Piatt said.
Millcraft entered the Downtown market a decade ago with a condo project, erecting 65 units in its redevelopment of the former Lazarus-Macy’s property. But it switched to building apartments in the former G.C. Murphy store and State Office Building redevelopments Downtown.
The developer, in partnership with McKnight Realty Partners, toyed with the idea of building condos as part of the redevelopment of the former Saks Fifth Avenue store but ended up settling on about 100 apartments.
Because of the project complexities and the cost of new high-rise construction, “The condos and their necessary square footage sizes made the required sales prices too high for our comfort level,” Mr. Piatt said.
Nonetheless, Millcraft is looking at “multiple sites” for condos, including Downtown and other neighborhoods. While new construction could be difficult because of the costs, an adaptive reuse is “definitely possible,” he said.
For the condos that have been built, Millcraft has seen a “tremendous amount of appreciation.” At Piatt Place, for example, “We were struggling to get $350 a square foot. Now it’s well over $400 to $450,” Mr. Piatt said.
Another who sees a need for more for-sale units Downtown is Lori Hummel, a sales associate and condo specialist for Howard Hanna.
She said some people in the market for condos have been buying lower-priced units at Gateway Towers, gutting them, and making them “absolutely gorgeous.”
“There’s such a pent-up demand,” Ms. Hummel said. “At this point, we’re saturated with rentals and we really need condos.”
She believes there’s a market for condos selling as high as $1 million. The Residences at Three PNC Plaza, where condos started at half a million dollars, has been sold out for two years, she noted.
Ms. Hummel has been marketing the 19th floor unit owned by a local tech company executive. He combined three units he bought several years ago into one but left it in raw form.
The unit initially was offered at $4.9 million in March but increased to $5.5 million and then $6.99 million as it was finished out. Ms. Hummel said she had a number of offers for the unit even in its unfinished state. But now that it has been completed, the owner might take it off the market and keep it for himself, she said.
One who has a more measured response on the need for more for-sale units is Jack Benoff, the Philadelphia developer who has done two highly successful condo projects in the Strip and one Downtown.
He said apartments cost the same to build as condos but have higher profit margins and make more sense economically. Financing condos also continues to be difficult after the Great Recession, he said. And it is hard to find properties at affordable prices with built-in or nearby parking.
Mr. Benoff said he’s not sure there’s a need for 80 to 100 more condos in and near Downtown. As for pent-up demand, “I honestly don’t know. I think there’s a pent-up demand for Downtown and great neighborhood living. Whether it’s condos or apartments, who knows?”
Mark Belko: [email protected] or 412-263-1262.