One of the best compliments to give Pittsburgh is that it doesn’t look like what it is—an aging steel town. The city’s architects did well in locating the famed mills of Steel Valley out of view of the downtown skyline, an uncommon feat along the Rust Belt. The city shows lots of history but surprisingly little of that history. More recently, Pittsburgh has also done well in the quick evolution of its economy following the sharp decline in manufacturing beginning in the 1970s. Once a manual-labor stalwart, Pittsburgh now proudly pitches itself as a hub for “eds and meds,” short for education and medicine. Those two sectors, as well as the government, now dominate the local economy. That transformation has brought relative stability to the city’s employment and real estate markets. Pittsburgh’s unemployment rate, at 7.4 percent, is nearly two percentage points better than the U.S. average, and its single-family prices have nearly returned to pre-recession levels. As such, the metro’s apartment market ranks among the nation’s healthiest.
High on Occupancy
At the midpoint of 2011, Pittsburgh placed high in the national rankings for apartment occupancy and annual effective-rent growth. So high, in fact, that—by reputation, at least—it seems like the oddball in the group. At 96.7 percent, Pittsburgh tied Miami for the fourth spot in the national occupancy rankings, behind only San Jose, Calif.; New York; and Minneapolis/St. Paul, according to data from MPF Research. For annual same-store rent growth, Pittsburgh placed seventh, at 6.1 percent. And if one were to exclude the five major Pacific Northwest markets, Pittsburgh would rank second, behind only Austin, Texas.
Unlike Austin, of course, Pittsburgh is not exactly a growth market. The success of the apartment sector here does not trace to huge demand. Since the start of 2008, Pittsburgh has absorbed fewer than 1,000 units, on net. Instead, stability has been the key. Occupancy here never fell much, dropping as “low” as 95.6 percent, a mark hit several times, most recently in March 2010, according to MPF Research.
Pittsburgh avoided a sharp drop in occupancy thanks to its dependence on comparatively stable sectors such as health care, education, and government. (Plus, there was no real estate bubble here.) And the latest buzz is the discovery of natural gas deep below western Pennsylvania land in the expansive Marcellus Shale, which has spurred the birth of a new core industry.