PITTSBURGH | Development Rundown II

[BenM]

Originally Posted by BrianTH

Slows news day as we get a LONG article about efforts to brand the local technology sector with some catchy name:

http://www.post-gazette.com/business...s/201709220029

Long story short, obviously Roboburgh is the correct answer (although I would also accept Future Birthplace of Skynet).

Have you seen the movie Pacific Rim? Pittsburgh is the future birthplace of the Jaegers.

[BrianTH]

Originally Posted by Don't Be That Guy

I think the absence of Fox Chapel, Sewickley, and USC from that list has more to do with those places already being at the top of the market for this region, and from what I'm hearing anecdotally, the demand for 5,000sf million dollar suburban homes has really dropped. There are more baby boomers in Fox Chapel looking to downsize than millennials that can afford that kind of house, especially since it's probably still rocking 90's mauve wallpaper and pickled wood cabinets.

I'm sure it is a demand-side effect, but I am not so sure it is driven by lack of means among potential buyers.

Generally speaking, average household incomes have been trending up in the region, and at lot of that is being driven by the fact various professional-class job categories have been experiencing relatively strong growth. These are the households that potentially could be looking at the Fox Chapels and Sewickleys of the region, so why is demand for housing in those areas not keeping pace with this underlying increase in professional-class households?

I think part of it is just what you said--depreciation is a real thing, and there is a well-known effect where there tends to be a large period of time between when a house is contemporary and when it becomes historic, such that in that period it is merely old/dated.

But I also think this is in part an outgrowth of changing lifestyles and preferences. The core area is getting both more fun and more safe with every passing year. People are valuing shorter commutes, particularly ones which don't require them to put down their smartphone. And so on.

For a bit of evidence to support this hypothesis, I would note that both Squirrel Hill and Mt Lebanon are still on the hot list. I'd suggest there is still demand for expensive homes in these areas in part because they have the right sorts of walkable amenities, and decent public transit, and otherwise short commutes. Of course they have also slipped out of the merely old category and into the historic category, but I don't think that is the whole explanation.

What struck me about the Mon Valley was the one year increase in Duquesne and the other Mon towns. There is very little happening down there, so even one real estate transaction that's significantly larger than the already extremely low norm could easily throw the statistics.

That could contribute, but if you look at the turnover rates for those zipcodes, they tend to be pretty substantial, in like the 3.5-5% range. Duquesne, for example, was 3.8%. Braddock was actually all the way up at 6.3%.

Now to be sure, probably hidden in all these statistics is homes not being resold but instead being abandoned, or otherwise depreciating while sitting vacant. Still, I'd say there is enough of a pattern here to keep an eye on.

As for the usual suspects in the City, there is still enough housing in need of renovation to keep fueling these increases. North Point Breeze, southern Highland Park/East Liberty and sections of Morningside will continue to see these year over year increases until the existing stock of updated homes becomes constrained. There is definitely a price ceiling for move-in ready houses in each of those neighborhoods.

I do think increasing incomes will likely provide some underlying support for home prices increases in the established East End neighborhoods, but otherwise I agree a lot of these apparent price increases in these neighborhoods is being driven by renovation.

[dfiler]

The zip code data is interesting, thanks!

I believe there is a trend back to urban living now that city centers are no longer crime ridden. Much of that had to do with lending incentives that pushed wealth out of cities in the 20th century. Because wealth was also racially tied, we ended up with a racial/economic divide that has taken many decades to reverse. City centers were on a downward spiral for decades with almost no investment in new construction or even upkeep. Not that race caused crime or poverty, but rather segregation tended to keep inner city neighborhoods in an economic tier because reintegration was required to bring in wealth.

But the phenomenon has thankfully reversed in many cities, most notably in Manhattan and the surrounding burrows. Pittsburgh is behind NYC in that trend but not behind the national average.

One thing that sets Pittsburgh apart is that we have a lot of underutilized housing stock. So the zip code data is instructive but there's more to the equation. I'm not sure that data can accurately capture the difference in renovating an almost abandoned building vs renovating one that was still quite livable.

This isn't meant to criticize the data. Rather, just pondering the difficulty in making comparisons. I live in Wilkinsburg so the distinction hits close to home. Combined with the extremely high property taxes in Wilkinsburg, house valuation means something entirely different here.

[edited to clarify a couple points on this rightfully sensitive subject]

[BrianTH]

Originally Posted by dfiler

One thing that sets Pittsburgh apart is that we have a lot of underutilized housing stock. So the zip code data is instructive but there's more to the equation. I'm not sure that data can accurately capture the difference in renovating an almost abandoned building vs renovating one that was still quite livable.

This isn't meant to criticize the data. Rather, just pondering the difficulty in making comparisons. I live in Wilkinsburg so the distinction hits close to home. Combined with the extremely high property taxes in Wilkinsburg, house valuation means something entirely different here.

That's absolutely true, and one of the reasons I compared 1 year to 5 years numbers for the same zipcodes. That is at least something of an apples to apples comparison, and where the 1 year increase is a lot higher than the 5 year increase, I think that at least tentatively indicates increasing demand.

But what is actually happening on the ground is undoubtedly very different depending on which of these zipcodes you are talking about. For example, pretty obviously, deeply distressed neighborhoods can have much bigger apparent value increases thanks to things like flipping. Again, it would say something interesting if flippers were starting to do more projects in some of these zipcodes, but the resulting apparent value increases wouldn't mean all the properties in those zipcodes were suddenly worth the same percentage more, absent significant investment in renovation.

Indeed, there might be a limit on exactly how many houses could be renovated and sold per year. But depending on the dynamic, that maximum pace could in fact increase over time (there can be positive feedback loops as distressed neighborhoods enter reinvestment cycles, just as there were negative feedback loops when they went through disinvestment cycles).

A final, related thought: although many, many people hate this idea, this is part of why we should do regular reassessments, no more than every three years or so. Everyone reads that as increased taxes, but what it really does is allow you to convert new investments into lower tax rates, and then lower tax rates encourage more new investment. And if you do the assessment right, people whose houses haven't increased a lot in value get tax breaks as a result.

But again, good luck selling that idea to most people around here.

[BrianTH]

Puke-inducing article about Continental's efforts on the North Shore:

http://www.post-gazette.com/business...s/201709270145

A lot of patting themselves on the back, which is ironic given what, say, Oxford has accomplished at Three Crossings in a small fraction of the time.

This is also typical Steelers-favoring nonsense:

Continental is in “very serious discussions” with representatives for Steelers quarterback Ben Roethlisberger about opening a restaurant within the building’s 21,000 square feet of retail space, said Barry Ford, president of development in Pittsburgh. “We think they’d be a great addition here for us and we’re trying to get a lease done with them and hope to have something formal to tell you soon, but I don’t at this point,” he said.

But worst is this:

With work set to start on the new office building, Continental has one last parcel left to develop — lot 4 adjacent to the Hyatt Place Hotel and PNC Park. The site, about three acres, is bordered by Mazeroski Way, West General Robinson Street, and North Shore Drive. At one time Continental had considered building a $65 million apartment complex there. But apartments now are out in favor of some other type of development, said Frank Kass, Continental’s chairman. “It will be some combination of office, possibly hotel, lots of restaurants, and [an] entertainment venue, and a completely different streetscape than there is now,” he said.

At the beginning, Continental and the sports teams swore they would do apartments. That's important because this is all right next to a T stop, and just across from Downtown, and apartments in such locations are vital to TOD and ultimately housing affordability.

But they just kept dragging their feet. And it is not a mystery why: hotels, restaurants, and entertainment venues are great for the sports teams. Offices are OK, because at least those folks are gone in evenings and on weekends. But residents are potential rivals for parking during event times, and we can't have that!

Continental and the sports teams even used whining about parking to get the public to build them another parking garage. They again promised that once it was built, they would finally build apartments. But now they are reneging on that promise too.

Again, by way of contrast, Oxford built its own parking and apartments at Three Crossings. Somehow all of Continental's excuses didn't apply to them.

The only good thing about this article is that with this final broken promise, Continental will finally be done. Good freakin' riddance.

[GeneW]

Originally Posted by BrianTH

Puke-inducing article about Continental's efforts on the North Shore:

http://www.post-gazette.com/business...s/201709270145

A lot of patting themselves on the back, which is ironic given what, say, Oxford has accomplished at Three Crossings in a small fraction of the time.

This is also typical Steelers-favoring nonsense:



But worst is this:



At the beginning, Continental and the sports teams swore they would do apartments. That's important because this is all right next to a T stop, and just across from Downtown, and apartments in such locations are vital to TOD and ultimately housing affordability.

But they just kept dragging their feet. And it is not a mystery why: hotels, restaurants, and entertainment venues are great for the sports teams. Offices are OK, because at least those folks are gone in evenings and on weekends. But residents are potential rivals for parking during event times, and we can't have that!

Continental and the sports teams even used whining about parking to get the public to build them another parking garage. They again promised that once it was built, they would finally build apartments. But now they are reneging on that promise too.

Again, by way of contrast, Oxford built its own parking and apartments at Three Crossings. Somehow all of Continental's excuses didn't apply to them.

The only good thing about this article is that with this final broken promise, Continental will finally be done. Good freakin' riddance.

I realized that Continental is the Post-Gazette's landlord so maybe they don't want to piss them off but that is one ridiculously fawning article

[BrianTH]

Originally Posted by GeneW

I realized that Continental is the Post-Gazette's landlord so maybe they don't want to piss them off but that is one ridiculously fawning article

I should probably just let it go, but this is how things go so wrong around here sometimes. It is bad enough we just give out these land development rights to sports teams as one of their bribes to keep them here. But then oversight is given to these obscure appointed public authorities no one pays attention to, and those officials just let them continually break their deals. And then the press comes along and ignores all that, writing fluff pieces instead.

You'd think SOMEONE in the press would, I don't know, want to try to hold these people accountable. But I guess that spirit is dead.

[themaguffin]

At the beginning, Continental and the sports teams swore they would do apartments. That's important because this is all right next to a T stop, and just across from Downtown, and apartments in such locations are vital to TOD and ultimately housing affordability.

But they just kept dragging their feet. And it is not a mystery why: hotels, restaurants, and entertainment venues are great for the sports teams. Offices are OK, because at least those folks are gone in evenings and on weekends. But residents are potential rivals for parking during event times, and we can't have that!

Continental and the sports teams even used whining about parking to get the public to build them another parking garage. They again promised that once it was built, they would finally build apartments. But now they are reneging on that promise too.

Wow they suck.

[BrianTH]

The Even Hotel in the former Kaufmann's/Macy's has gotten financing:

http://www.post-gazette.com/business...s/201709280124

This project has taken a while, but it is well-worth doing it right.

[BrianTH]

A couple more possible sites for Amazon have emerged, the former Parkway Center Mall location, and an assemblage of South Side sites starting with River Walk and the eastern part of Station Square that supposedly add up to 98 acres:

http://www.post-gazette.com/business...s/201709280045

Not sure that first one will be very appealing given the setting, although it is convenient for combined Downtown and airport access.

I think the second, on the other hand, could compete with ALMONO given the proximity to Downtown/Oakland combined with an already-thriving neighborhood and even a T station:

On the South Side, McKnight has been talking to property owners and developers, including Trammell Crow, about assembling a tract that would include the east side of Station Square and adjacent spaces. McKnight is redeveloping part of the former Pittsburgh Terminal Warehouse into creative office space and public green space in a project dubbed the “Highline.” As much as 510,000 square feet could be available. Trammel Crow is planning a 319-unit apartment complex on the east side of Station Square.

Izzy Rudolph, McKnight president of development, said the assemblage “checks every box Amazon has asked for in existing amenities, access, and visibility.”

Can't argue with that--site-wise, it seems to be exactly what Amazon wants. Whether they would really consider Pittsburgh as a city remains to be seen.

[Don't Be That Guy]

Originally Posted by BrianTH

A final, related thought: although many, many people hate this idea, this is part of why we should do regular reassessments, no more than every three years or so. Everyone reads that as increased taxes, but what it really does is allow you to convert new investments into lower tax rates, and then lower tax rates encourage more new investment. And if you do the assessment right, people whose houses haven't increased a lot in value get tax breaks as a result.

But again, good luck selling that idea to most people around here.

Well here's one person that doesn't hate that idea.

I don't see how the property assessment system in Allegheny County, or even the state is even constitutional. School districts and municipalities are going hard on appealing the assessments of new purchases effectively shifting the tax burden onto new residents. Residential property values need to either be assessed regularly and fairly or scrapped in favor of another funding stream.

[BrianTH]

Originally Posted by themaguffin

Wow they suck.

They sure do.

[AaronPGH]

The South Side idea is actually pretty great, and one I didn't think of. Lots of undeveloped land all along there.

I could also see a potential T line that runs the whole length of it, possibly even jumping the river to Almono?

[BrianTH]

Originally Posted by Don't Be That Guy

Well here's one person that doesn't hate that idea.

I don't see how the property assessment system in Allegheny County, or even the state is even constitutional. School districts and municipalities are going hard on appealing the assessments of new purchases effectively shifting the tax burden onto new residents. Residential property values need to either be assessed regularly and fairly or scrapped in favor of another funding stream.

Yeah, it is odd because it should really be a broad coalition in favor reassessments. New purchasers get hurt, and so do long-term owners who are paying higher tax rates than they should. Who benefits is just long-term owners who have seen well-above-average appreciation, such that even with a post-reassessment tax decrease, they would see a net increase in their own taxes paid.

But maybe that is not so odd, because that category happens to include a lot of well-connected businesses and wealthy individuals. And they both lobby public officials and also try to scare everyone else about what reassessments would mean.

You're right, by the way, that this is illegal under the PA Constitution, which is how the last reassessment got done in Allegheny County (by court order). But it is such a long, uncertain, and expensive process to bring such litigation that I am not sure when it will happen again.

My only real hope is that some day the long-promised property tax reform will occur at the state level, and regular reassessments will be include in that bill. But I am not holding my breath.

[BrianTH]

Originally Posted by AaronPGH

The South Side idea is actually pretty great, and one I didn't think of. Lots of undeveloped land all along there.

Same. In retrospect, it is really the perfect idea. I guess if I had thought about it, I would have wondered if they could get together all the different property owners to support a sufficiently large pitch. But it sounds like that (hypothetical) question has been answered.

I could also see a potential T line that runs the whole length of it, possibly even jumping the river to Almono?

I wouldn't be against it, but that would be really expensive, particularly if you wanted it to have its own right of way (and if you did it streetcar-style, it would be pretty slow). I don't want to be a broken record, but this is precisely where an aerial gondola project would shine, because you could give it a dedicated ROW, including over the river to ALMONO, for cheap, and do it very quickly too. And from ALMONO you could then pop up the hill into Squirrel Hill and Oakland, and bingo-bango, you have a straight ride from the Universities to Amazon.

[eschaton]

It could be worse...Butler County hasn't had a reassessment since 1969.

Although Cranberry would have seen growth regardless due to the intersection of 79 and 76, the tax structure of Butler County has helped exurban growth up there dramatically. Essentially because people are taxed on 1969 values for property, and not the modern values, the system subsidizes new construction, and results in ridiculously over-inflated tax bills for the declining rural parts of the county (basically everywhere besides the Cranberry/Adams area). This in turn means when taking taxes into account it's cheaper to pay mortgage+taxes in Butler County than the North Hills, and also inflates the size/cost of new construction in Butler County - resulting in a number of bad policy outcomes for everyone (except people living in greater Cranberry I suppose).

[BrianTH]

Random thought: I sure hope these different groups understand their pitches to Amazon should all be purely positive, and should not involve criticizing (even indirectly) other local possibilities.

Because if any one of these sites is picked, it will undoubtedly create an ecosystem of demand that would benefit the "losing" sites too.

[BrianTH]

Another thought for perspective--I just did a quick estimation, and if you take absolutely everything between Carson and the river from the Smithfield Street Bridge to the 10th Street Bridge, then everything between Muriel and the river from 10th Street to 16th Street, then everything between Wharton and the river from 18th to 22nd, you get about the right number of acres:



That might not be exactly what they have in mind, or even very close, but it gives you an idea of the scale they are talking about.

[BrianTH]

This is potentially a very big deal--the PA Supreme Court has reversed the lower court (and quite a bit of precedent) to hold that the PA Constitution's education clause ("The General Assembly shall provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth.") creates an actionable right:

http://www.post-gazette.com/news/edu...s/201709280138

Prior courts had decided that disputes under this clause were a "political question" that had to be hashed out in the legislature. But although the Supreme Court did not decide the merits of this case, it did now decide that the courts might be able to determine violations and enforce remedies.

We'll see where this goes, but ultimately it could lead to a significant leveling of the playing field in the state.

[themaguffin]

Former Westinghouse world headquarters is Monroeville's bid to lure Amazon

Erosenko believes the site at 4350 Northern Pike — once one of the Westinghouse pieces bolstering Monroeville's economy — has what the Seattle-based tech behemoth is looking for. Amazon said in its request for proposals it is looking for 500,000 square feet that is within 30 miles of a population center, about 45 minutes from an airport, near major highways or roads and has access to mass transit.

Monroeville officials said: We got that and more. The Westinghouse property is on 138 acres, has 503,000 square feet of office space and parking for 2,100, according to a real estate listing.

On one level, yes, it's a lot of land with office space ready to use. On the other hand, it's far from the airport. I guess technically with Amazon's limits, but far nonetheless.

Also, transit? I'm for presenting all options, but this one is pretty uneven.