Pittsburgh Multifamily Report – Spring 2019
Apartment demand is fueled by young professionals looking for modern, well-located rental units in the city’s central neighborhoods.
Pittsburgh rent evolution, click to enlarge
The metro’s new economic layers are attracting young professionals looking for modern, urban apartments close to their jobs. This is leading to demographic expansion in Pittsburgh’s central neighborhoods, fueling housing demand. The 1,140 units expected to come online this year should be absorbed rapidly, as downsizing Baby Boomers are also looking for well-located units in areas such as North Oakland and the Hill District.
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Employment growth dipped, in line with nationwide trends, as Pittsburgh added only 6,400 jobs in the 12 months ending in February. Gains were led by education and health services (3,500), a Pittsburgh staple, followed by mining, logging and construction (3,300). Several employment sectors contracted, including trade, transportation and utilities (-1,400 jobs) and manufacturing (-900). Further layoffs are expected, as pharmaceutical giant Bayer Corp. will be closing its Robinson campus, losing roughly 600 employees and 100 contractor jobs.
Despite a slow start to the year for multifamily transactions, Pittsburgh continues to provide opportunities for investors attracted by high returns, with acquisition yields as high as 9.0 percent for value-add deals. With housing demand steady in the context of relatively low levels of new supply, we expect the average Pittsburgh rent to rise 2.0 percent in 2019.
