PITTSBURGH | Development Rundown II

[Austinlee]

Originally Posted by BrianTH

My father did something similar in retirement in the Detroit area, and it worked out well for him. It was a decent amount of work, however--but he enjoyed it.

My 12 year real estate career has been leading up to this. I've also renovated 2 houses myself so I know a few things.
I believe I would enjoy this line of work as well.

If you ever get completely sick of dealing with your own tenants, simply hire a property management company and let them handle everything in exchange for their 10% management fee. I would probably switch to that strategy after about 4-5 houses owned.

[BrianTH]

Originally Posted by Austinlee

My 12 year real estate career has been leading up to this. I've also renovated 2 houses myself so I know a few things.
I believe I would enjoy this line of work as well.

Seems reasonable to me.

I'll say based on his experience and talking to other people, the toughest part is dealing with tenant issues. You might need to learn how to evict people and so forth.

[Austinlee]

Originally Posted by BrianTH

Seems reasonable to me.

I'll say based on his experience and talking to other people, the toughest part is dealing with tenant issues. You might need to learn how to evict people and so forth.

1.) I am good at identifying undervalued neigbhorhoods
2.) I have moderate renovation skills and a network of reliable contractors who charge me fairly.
3.) I worked for property management companies for 2.5 years so I know tenants rights and the process of taking them to the magistrate.
4.) I am good at marketing and taking great pictures to get leads.
5.) I know what types of jobs and backgrounds lead to the highest tenant retention rates.

I think I'm set. Just need some capital which I am working on now.

[BrianTH]

(3)-(5) seem to cover the tenant side of things. This wasn't a dealbreaker for my Dad anyway, and he was completely new to the process.

[TBone7281]

Originally Posted by BrianTH

Oxford Development is apparently interested in the former Packaging Corp. of America (PCA) property in the Strip District (mostly behind paywall):

http://www.bizjournals.com/pittsburg...oxford-is.html

PCA vacated the location late last year:

http://www.post-gazette.com/business...ersion=pgevoke

It is apparently a seven-acre complex, and I believe this is it, between 28th and 29th, Railroad and the river. That's quite close to 3 Crossings, and yet another large, key, riverfront parcel.

Good, that's quite a dead zone.

Originally Posted by Austinlee

I think I'm set. Just need some capital which I am working on now.

That's always the rub. Sounds like a solid plan though.

One of my good friends bought a house in Millvale probably 10 years ago. When he got a new place, he didn't bother to sell the Millvale property since it wasn't really costing him all that much. He has had long term tenants ever since then. They're paying him enough that taxes/mortgage are all covered. So they're basically buying his house for him. And they take even better care of the place than he did when he lived there to boot.

[AFW523]

Downtown office rates continuing to surge.

I'll take it.

[TBone7281]

Originally Posted by AFW523

Downtown office rates continuing to surge.

I'll take it.

I wonder what the threshold would be to get a new office tower seriously considered. $30/sq ft is obviously good, but it's also a rate companies are currently willing to pay.

[BrianTH]

Fluff article about the new lofts in the former Heinz services building:

http://www.nextpittsburgh.com/city-d...950-new-lofts/

Gotta love all the steel beams:

[BrianTH]

In some cases, the tight market Downtown has pushed growth to the fringe, with the Strip, the East End and the North Shore benefitting. Since the 2014 first quarter, rents in the Downtown fringe have risen 19 percent, second only to the Oakland/​East End submarket, according to CBRE.

Leading the growth has been the burgeoning tech and robotics industry, which has settled in the Strip and the East End. Some rents there are now in the high $30s- to $40-a-square-foot range, Mr. Ackerman said.

Hmm. That sounds like it is getting to where an office tower might well make sense, if you could get those rents in that sort of format. I keep thinking a decent tower in the Lower Hill might make a lot of sense at some point--I just wish we had an ambitious developer there.

[TBone7281]

Originally Posted by BrianTH

Hmm. That sounds like it is getting to where an office tower might well make sense, if you could get those rents in that sort of format. I keep thinking a decent tower in the Lower Hill might make a lot of sense at some point--I just wish we had an ambitious developer there.

Even since they built Lot24 directly behind the building I work in, I've wondered what the chances were that we'd eventually be forced out simply due to prices. (The same with the surface lot we park in across the street.)

It never really occurred to me that the prices of the new constructions would be so high, as they aren't downtown, so it's actually worse (better?) than I imagined.

Doesn't really seem like the construction here in the Strip is slowing down, either. I just saw that there is a for sale sign up on 2528 Smallman, (granite outlet). Located HERE, right beside The Dog Stop and across the street from the second Oxford office building in Three Crossings.

[BrianTH]

Originally Posted by TBone7281

It never really occurred to me that the prices of the new constructions would be so high, as they aren't downtown, so it's actually worse (better?) than I imagined.

Same here. I guess some of those places are pretty swank, and maybe the East End universities and related communities are creating a premium that offsets the normal proximity-to-downtown pricing function you see in most cities. Still, I was also not expecting to see a "$4-" reference in that context.

Doesn't really seem like the construction here in the Strip is slowing down, either.

From an urban planning perspective, I think this is great news. This is within the already-developed footprint, core area, river-adjacent, and basically unlimited potential to be a true walkable/mixed-use area. We might need to tweak some public transportation plans, but you've got the East Busway to work with, plus pretty generous space in terms of travel lanes (at least for Pittsburgh), and even some rail lines you could potentially activate.

Looking back, I think Buncher dragging their heels for so long had basically lulled me to sleep on the Strip. But there was always the fundamental potential there for a boom dynamic, and I gather it may finally be here.

Of course usually booms are followed by busts of some sort, but I am cool with people investing a bunch of money in the Strip followed by a "bust" in the form of an extended slow down while absorption catches up. So if that is all that is likely to happen, full speed ahead.

[highlander206]

Originally Posted by BrianTH

Fluff article about the new lofts in the former Heinz services building:

http://www.nextpittsburgh.com/city-d...950-new-lofts/

Gotta love all the steel beams:

The building looks great, but for the rents quoted in the article, that kitchen doesn't look like it's of too high quality to me. I'm guessing the counter tops are granite but the cabinets and appliances don't look like they're of high quality to me.

[BrianTH]

Originally Posted by highlander206

The building looks great, but for the rents quoted in the article, that kitchen doesn't look like it's of too high quality to me. I'm guessing the counter tops are granite but the cabinets and appliances don't look like they're of high quality to me.

I'm not a fan of that style to begin with, but off hand I agree.

[Private Dick]

Originally Posted by highlander206

The building looks great, but for the rents quoted in the article, that kitchen doesn't look like it's of too high quality to me. I'm guessing the counter tops are granite but the cabinets and appliances don't look like they're of high quality to me.

You're rarely going to get high end appliances in rental apartments, even if the rents are high.

Not sure about the cabinets, but the appliances are actually pretty nice for rental apartments -- they definitely are not low level models. Some people see appliances that are not stainless steel and think that they're junk... when in fact, most stainless steel appliances that often they put in rental apartments (even high rent places) are total junk... but people think it's luxurious because oooohhh look, stainless steeeel!

[BrianTH]

Yeah, the appliances look fine for a rental. It is really the cabinets I don't like, but as admitted that is at least partially a style thing.

[photoLith]

IMG_1383 by photolitherland, on Flickr
Some progress on 350 Oliver downtown.

And they're finally repainting the other half of that apartment conversion in the Strip.
IMG_1382 by photolitherland, on Flickr

[Private Dick]

The headline is a bit misleading and unnecessary, but it's a shame that the PAA has fallen so far. It was once a pretty posh spot. It's been showing signs of neglect for a while now though. A remnant of another era, I guess... but having the water and electricity shut off for lack of payment... that's telling that there's more going on than just some financial trouble. And the fact that the little grass and shrubs that exist on the property never got cut for a few years points directly at total lack of concern by the club's management and membership.

I was there for an event a few years ago for the first time in probably 15-20 years and I was surprised at how dated and shabby the interior was (worn carpets, broken door handles, broken light fixtures, dirty walls, dirty silverware and glasses, etc.)... it was bad. Service at the bar/restaurant in the basement was basically nonexistent since there was only one old woman working (she was the only good thing about the place) and the food was inedible (they pretty much put a bloody, cold slab of fat on a plate and serve it as prime rib. All this to say, you could tell the place was going to run into the ground at any point. I'm actually surprised I didn't see a headline like this a couple years ago.

I wonder how the new hotel plans play into this situation... and if it will actually remain a private club or be purchased by Pitt? I imagine that Pitt would like to own the PAA property, especially since they own the entire lot behind it.


Pitt students forced to abandon rented rooms at Pittsburgh Athletic Association

http://www.post-gazette.com/local/ci...s/201704120067

[themaguffin]

Regarding a new tower - There has to be a big player seeking space. If many small companies are taking up space, that's great, but a developer needs a big tenet signed on to get it off the ground.

I'm not sure if one exists, look at the towers that have been talked about but ultimately are not happening - the Oxford one (the new build, not the conversion) and the Burns and Scalo one from few years ago.

Not to mention, the arena area.

[eschaton]

Originally Posted by BrianTH

It is apparently a seven-acre complex, and I believe this is it, between 28th and 29th, Railroad and the river. That's quite close to 3 Crossings, and yet another large, key, riverfront parcel.

It also includes some of the surface parking across Railroad Street - essentially everything west of the curved old railroad ROW.

Remember that the City of Pittsburgh is looking to sell their big DPW complex just upriver from here, so it might not be that long until essentially everything along the river between the 16th Street and 31st Street bridges is redeveloped. Well, discounting Consumer's Fresh Produce, but I'm not sure how much longer they will remain in their current location.

Originally Posted by Austinlee

I purchased a super cheap 2 story red brick townhouse on a cute street in Spring Hill (Yetta Avenue) in July of 2014 with the idea that with billions of investment dollars happening downtown, the strip, lawrenceville, the north shore and the northside that these (In my opinion) VERY undervalued neighborhoods on the eastern Northside as defined by me as East Deutschtown, Troy Hill, Spring Hill and to a slower degree Spring Garden, these neigborhoods are RIGHT across the bridges (16th Street Bridge, 31st Street Bridge) from billions of new construction yet the average sale price in Spring Hill for example is $35-$50 thousand. Troy Hill is actually going up and is probably at about an average sale price of $75-80k. And even rundown East Deutschtown prices have gone from around $35k to about $75-$150k as these historic old townhouses get the "down to the studs" renovations and become very desirable again.

My investment plan (Nobody copy me! ) Is to buy up to 5 or more houses in these neighborhoods over the next few years, do some moderate renovations and rent them out and get a nice portfolio of money makers for me.

I think in 5, 10, 20 and 30 years down the road these neighborhoods will be gentrified and each of my investment houses will be worth 3-5 times OR MORE in value. Retirement plan. No working for "The Man"!

I'm bullish on East Deutschtown and Troy Hill. Even the lower part of Spring Garden has potential. But Spring Hill, while very undervalued, probably has less upside because it doesn't have much in the way of a potentially walkable commercial district. That brewery will make a big difference if it gets off the ground though.

[qwho]

Originally Posted by BrianTH

Seems reasonable to me.

I'll say based on his experience and talking to other people, the toughest part is dealing with tenant issues. You might need to learn how to evict people and so forth.

Late to the party on this discussion...but this right here is why I pay 10% to my rental management company.