What’s Driving Pittsburgh Multifamily?
- Sep 23, 2021
The Pittsburgh multifamily market has had a rough start to the year, but the uptick in development is hinting at a potential recovery route. As of August, the metro had 3,647 units underway, Yardi Matrix data shows, with an additional 7,130 units in the planning and permitting stages.
To find out more about multifamily development in Pittsburgh and where things could be headed, Multi-Housing News reached out to P. Christopher Dirr, senior vice president of development with The NRP Group. The company has a total footprint of roughly 1,200 units across Greater Pittsburgh, including projects under construction.
With an extensive background in project management, strategic planning, development and structured finance, Dirr details why partnerships with local authorities are essential and reveals what is driving growth in the most-active areas of the metro.
The first half of this year recorded an uptick in multifamily development, hinting at a potential recovery from the effects of the pandemic. Do you think this will continue into the later part of the year?
Dirr: Yes. In its development nationwide The NRP Group is experiencing significant demand for its multifamily rental communities. This trend is also very evident in the Pittsburgh region. We do not see this demand abating anytime in the near future.
What factors would you say are the most important to ensure the market recovers in a stable manner?
Dirr: The most critical component to market recovery in a stable manner is predictability. The city of Pittsburgh, county of Allegheny and Commonwealth of Pennsylvania are critical partners in ensuring continued development progress with no disruption. They have been tremendous in working through the development approval process and continue to work with us to ensure that construction and unit delivery proceeds in a timely fashion.
People are looking forward to the return to a new normal, whatever that new normal becomes. As NRP does its part to contribute to this normalization it continues to work diligently with its development partners to attempt to anticipate evolving needs and stressors.
With our traditional development partners, we have worked to remain adaptable to addressing the constraints created by COVID-19, such as implementing social distancing guidelines, enhancing and continuously disinfecting our buildings, and continuing to utilize technology in new ways, such as virtual touring of buildings with prospective residents and touchless leasing processes.
The city is continuing to attract tech talent, faring relatively well among similar markets. How do you foresee this impacting multifamily development?
Dirr: The demand for multifamily communities in Greater Pittsburgh has been created and cultivated by multiple factors that have only been exacerbated by the COVID-19 pandemic. Education and health care drive economic growth in multiple markets nationwide. Pittsburgh is a great example of the success of this formula.
The educational institutions in Greater Pittsburgh cultivate dynamic talent that continues to innovate truly transformative technology and medical advances that have the potential to positively impact society. These innovations attract others from outside the area, who want to be engaged in these positive impacts. Success nurtures success.
For housing options, these employees look for cutting-edge designs and finishes, a plethora of amenities and conveniences, a “cool” place to live and maximum flexibility. Our developments in Pittsburgh have been well-received by these demographics. In turn, our design, location and amenities have been well-received by empty nesters seeking similar amenities without the maintenance and capital requirements associated with homeownership.
How have affordability rates fared in conjunction with rising construction costs and other similar factors?
Dirr: We continue to be significantly challenged by commodity and labor cost and availability. We are hopeful that commodity pricing will moderate over time. However, a continued looming issue will be the availability of cost-effective labor. Things are fragile and in a delicate balance. Rising costs will be exacerbated to the extent that interest rates rise, which would have a significant negative impact on our ability to initiate new development.
What areas of the metro are experiencing heightened activity and why?
Dirr: We have seen continued significant multifamily housing resident interest in areas that surround high employment centers. This includes the Strip District, Lawrenceville, Shadyside, East Liberty and Oakland in the city, and suburban submarkets including, but not limited to, Cranberry and the Parkway West Corridor. These areas have driven considerable interest from institutional investors.
As available property in these neighborhoods becomes increasingly challenging to locate, we’ve observed interest start to expand in adjacent previously tertiary areas, including smaller developments in Uptown and the Hill District. Up to this point, this has been realized with smaller developments and those that are more affordable. Time will tell whether or not this expands to include a greater number of institutional investor-designed properties.
How did demand for high-end development evolve this year?
Dirr: We are extremely busy, but always challenged to identify the next opportunity. When we conceived Edge1909 as Phase I of the multifamily development in the Strip District’s master-planned Riverfront Landing, we envisioned that its 365 plus or minus units would satisfy market demand for the foreseeable future. However, leasing velocity and interest were outstanding, which prompted us to accelerate the implementation of Phase II – The District. In October, we will occupy the first units in this 440-unit community that complements our vision at Edge1909.
Along with the upscale for-sale townhomes developed at Riverfront Landing by Laurel Communities, these 800+/- multifamily units contribute to a new vibrancy in Pittsburgh’s beloved Strip District neighborhood. We expect that other mixed-use commercial, retail, rental and for-sale residential developments will be similarly embraced across the region.
What has The NRP Group been focused on so far this year in the markets it is present in?
Dirr: The NRP Group is a national multifamily housing developer with a mission to create exceptional rental housing opportunities for individuals and families, regardless of income. We have evolved our disciplined approach in multifamily housing to benefit the communities in which we are located. This enables us to provide a tailored approach to the needs of the specific communities and resources available therein. In Pittsburgh, this has translated to responding to the need for market-leading multifamily communities.
Other markets have made available significant resources to promote affordable housing, and we have responded to those needs and resources.
The state of Texas, for example, has passed legislation to encourage the development of affordable housing. The city of Charlotte, N.C., has made significant financing resources available from general revenue receipts to encourage developers to produce more affordable housing. The breadth of our experience allows us to respond to the continuum of multifamily housing needs in communities.