Friday, October 06, 2006

inexpensive downtown housing....

... is NOT an oxymoron. Consider the current Downtown Market Survey just released by the Pittsburgh Downtown Partnership et al.

Last week there was this PG piece which focused on the new downtown housing coming online. There was a lot of gnashing in that article about how expensive the new units were which made them unaffordable to the very people that some want to attract downtown... namely young workers.

Yet, the market survey confirms something that I was thinking while reading the PG piece. The new units going in downtown are really quite expensive for the Pittsburgh market, but there is a healthy market of available condos at places like Gateway center and Chatham Tower. Both had condos that were on the market for almost a year and at reasonable prices: Chatham Tower had one unit sell for $38K in the last quarter, Gateway Tower had one for $77K. So there ARE moderate (actually really cheap compared to most cities) downtown condos available. The existence of these units at the same time as these new developments are said to be pre-leasing at a healthy pace is evidence that the market for the two differnt units are very different demographics. i.e. if the people buying the new units wanted just to live downtown, these existing units would have been bid up in price some time ago.

and yes.. I know some of the units in those two buildings are small. But I lived in Manhattan for a while. I remember looking at an apartment once that was well under 300sf and could only fit a murphy bed. Yet, that is the housing for young professionals in some cities. I bet the smallest condos in these buildings are twice that in sq. feet... and there are some fairly large units in these buildings as well.. also at prices that come in a fraction of the new units in question. So even that market seems to lack som substituability.

and just to connect some dots when it comes to Henry George again. One group definitely hurt by the shift away from the two tiered tax were condo owners downtown. Especially condo owners in large buildings such as these. That is becasue condo units in large buildings use a very very small footprint of 'land'. The chatham units actually have ZERO assessed value for land. Thus a land tax winds up immpacting these owners far less than if you tax them on the value of the condo as a whole. Just some trivia though it was interesting that you didnt see any downtown condo owners assocation (does one exist?) come out in favor of the SPlit tax when the brief debate leading to its demise erupted a few years ago. There is a reason for that I will save for a future post.


Blogger Jonathan Potts said...

I was in a Gateway Center condo a couple of years ago. I don't know how much the owner paid, but it had plenty of living space for him and would have been pretty comfortable for a couple as well.

Friday, October 06, 2006 2:10:00 PM  
Blogger Amos_thePokerCat said...

Hmm, the PG article says the average rent is $1.34/sqft. Page 1 of the pdf has it as $1.21 in Q1, and $1.23 in Q At $200/sqft for Piatt Place, either owners are going to get a huge premium rent, or lose money, if they try to rent it out.

Lots of interesting facts in the pdf.

2006 Downtown Market Survey
Market Trends Analysis

Total Units Pittsburgh Metro 84,306
Occupied Units Pittsburgh Metro 78,147
Average Regional Effective Rent $732

Market Rate Rental Trends
* Historically metro occupancy peaked in the 3rd quarter of 2001 at 78,800
occupied units.
• Downtown rents average $662 higher than the Region as a whole.

Wow. $732 regional average, vs. $1394 dawh-tawh average. 90% premium for living down town. Amazing. Of course, the regional average would fall if you excluded downtown units, so it would be even a greater premium.

Not saying it is a good or bad thing. I always am a big believer in "You pays your money and you takes your choice.", assuming no .GOV subsidy. I wonder if other areas have a premium this big.

Friday, October 06, 2006 6:02:00 PM  
Blogger Jonathan Potts said...

I seem to recall that the Piatts are seeking state subsidies, though they may not be getting anything for their first project, in the former Lazarus building.

Friday, October 06, 2006 9:28:00 PM  

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