Monday, January 07, 2013

Rent R us

Of note in Bloomberg today: "...Pittsburgh, where rents are at their highest in more than a decade."  Anyone have the underlying report?

In itself the writeup is curious in what it omits, but it raises the spectre of a bigger conundrum.  Most benchmarking of cost of living differences between regions mostly come down to housing costs.  Similarly, real estate costs are a big part of business costs.  So does this all mean Pittsburgh's advantage in cheaper real estate has its days numbered? 


Anonymous BrianTH said...

From the article:

"In the fourth quarter, greater Pittsburgh office rents after landlord concessions climbed 1 percent from the previous three months, compared with 0.8 percent for the U.S."

That does imply that if this trend continues indefinitely, eventually Pittsburgh may not have relatively cheap real estate to offer. However, depending on the current magnitude of the difference, it might take a LONG time to catch up at that rate, and it might not catch up with all (or even most) of its closest competitors, and of course there is no guarantee this trend will continue indefinitely.

Still, very long term, it makes sense that Pittsburgh real estate would converge on more typical pricing (relative to its closest competitors), barring an idiosyncratic local economic disaster/sustained-malaise. But my point is that convergence could take quite a while.

Tuesday, January 08, 2013 12:44:00 PM  
Anonymous Anonymous said...

The housing overhang created by the exodus of big steel is just about done. What isn't occupied has been torn down. The mills are torn down. Manufacturing replaced with service and distribution industries. With the 50% decline in city population from 1950 not stabilized and growing for the first time we are at the budding stages of the possibility of real growth. Business tax reform is still needed to create real growth inside the city limits, and inside the county, but Pittsburgh could become a real destination if anchors like google can attract enough associated businesses to move in. Right now all they are doing is making it near impossible for startups to attract sweat equity help because their benefits and pay are so out of line with the local market. Should help housing though if it can be sustained. The overall picture is more complicated that it first appears....

Tuesday, January 08, 2013 8:37:00 PM  

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