With the backing of private and public partners, downtown Pittsburgh is poised for revitalization, as landmark buildings transition to residential and mixed-use hubs.
$6M
$6 million dollar loan to develop market place priced residential units
253
residential units at market rate
13k
square feet of commercial space and dedicated parking
As public and private partners work together to stabilize downtown in the near-term, efforts are also underway to ensure long-term vitality. One of the challenges on the horizon for Pittsburgh’s downtown as well as downtowns across the country is the looming threat of collapse of the commercial real estate market. This is an especially big issue for downtown Pittsburgh which is heavily reliant on commercial use, while residential real estate options lag other cities. Pittsburgh is the nation’s 28th largest metro, but it possesses the fifth highest concentration of downtown office space in the United States.
As commercial real estate vacancies remain high, public and private partners are seeking creative solutions to spur development of residential real estate to ensure the future vitality not only of downtown, but the city and region more broadly. Substantial investments in forward-thinking efforts like commercial to residential conversions are getting underway.
One early example is the recently announced plan to repurpose the former GNC building on Wood Street, a project supported by the Strategic Investment Fund (SIF) - a private sector source of gap financing.With a substantial loan of $6 million, the building is on track to host 253 market rate residential units, supplemented by over 13,000 square feet of commercial space and dedicated parking.
The loan is a proof of concept resulting from a recent study that analyzed underutilized office space that could be repurposed for other needs. Lessons learned will inform future conversions not only in the urban core but in downtowns and mainstreets across the 12-county region.
Additionally, the Urban Redevelopment Authority of Pittsburgh (URA) has stepped in with its inaugural Downtown Conversion Fund loan to promote affordable housing. Hullett Properties is the beneficiary, receiving a $300,000 allocation for a $13.2 million project to breathe new life into the historic Triangle Building, located at the junction of Smithfield Street and Liberty Avenue. The project aims to provide 15 apartments, including units for affordable living, and a ground floor featuring "high-quality retail" spaces, soon to be occupied by entities like The Farmer’s Daughter flower shop. Of the 15 units identified here, three of those will be affordable one-bedroom apartments made available to people at 50% Area Median Income.
In early October, the Pennsylvania House Finance Agency announced $98 million in funding for 66 housing projects across the state. One of these projects, Wood Street Commons, is an 18-story mixed-use space located on Third Avenue in downtown Pittsburgh. Wood Street Commons will receive $2 million for the preservation of 250 units in their facility.
This broader vision for downtown Pittsburgh acknowledges the necessity to repurpose underutilized office spaces in a post-pandemic world, a conclusion being reached nationwide. David J. Malone, SIF Board Chair and CEO of Gateway Financial Group, underscores SIF's dedication to revamping commercial spaces, aiming to bolster downtown activity and boost essential sectors such as living, retail and dining.
In a recent news release, Malone said, “This is exactly the type of financing SIF exists for, aligned with our Regional Cores Investment Strategy. The conversion of this commercial property to residential will bring more people to downtown, help to catalyze investments in retail, restaurants and other amenities essential to support the growing downtown neighborhood, and will provide a valuable roadmap for future projects, not only in downtown Pittsburgh but in downtowns and main streets across the fund’s 12-county footprint.”
Financing these projects requires intricate planning and strategies. Notably, SIF's pioneering “gap” financing method ensures these projects see the light of day without fiscal hurdles. A testament to SIF's long-term vision, in partnership with entities across the region, is the impressive $171.2 million invested in 67 groundbreaking projects since the fund’s founding by the Allegheny Conference in 1996. With a new round of funding set to close by the end of 2023, SIF will be positioned to have further transformational impact across our region.
There is no single solution or overnight fix to the real estate challenges faced by downtowns, but conversion projects and the amenities and residents they attract are a promising strategy that both public and private partners are pursuing as part of defining downtown’s next act.