Trends in Pittsburgh's Urban Multifamily Market 2018
Over 10,000 millennials have moved to Pittsburgh since 2011. Regional employment gains are now exceeding that of the nation at 1.6% year-over-year. This combination of millennial population and employment growth is supporting a rise in multifamily development.
Until recently, Pittsburgh was very undersupplied in new stock: the average age of an urban Pittsburgh apartment building was nearly 70 years old before the construction boom started in 2015, one of the oldest inventories in the Midwest.
More urban multifamily units have been developed in the past three years than in the previous 15 combined. Nearly 1,000 new units delivered in 2017, and a pipeline of 2,371 units are expected to deliver over the next two years, with more breaking ground.
Absorption fundamentals for new, Class A multifamily assets in Pittsburgh are strong and will remain strong in 2018, but Class B and C property will face challenges due to clear tenant preference for new product. Supply additions will likely peak in 2018, which will lead to rent growth softening across all classes, but Class A product will still maintain historically high rents
Multifamily sales volume in the Greater Pittsburgh market hit a 5-year high in 2017. Pittsburgh has traditionally been a market dominated by private buyers, but the buyer landscape has diversified. Cross-border and institutional investment was on the rise in 2017. CBRE Research expects greater sales volume for Class B properties in 2018.
The urban multifamily neighborhoods of South Side (7%), Strip District & Lawrenceville (4%), and Oakland (4.5%) have witnessed the strongest population growth since 2010. In response to this increase in population, over half of all units under construction are in these three neighborhoods.