NORTHEAST SNAPSHOT, JUNE 2006
Pittsburgh Retail Market
Throughout the Pittsburgh retail market, several significant trends are occurring. On the development side, some recent trends include restaurants, drug stores, gas station/convenience stores and banks remaining in the highest new unit growth segments; mixed-use developments with retail, residential and/or office space retaining their popularity; mall and retail developers seeking restaurant users to generate traffic within their projects; retail construction flourishing surrounding Wal-Mart locations; and continuing suburban sprawl as well as further redevelopment of older urban properties. Other trends that are occurring in the area involve increasing energy and construction costs; increases in land prices due to scarcity of prime development land; increasing rent, land rent and property sale prices in high demand trade areas; and high occupancy rates in active retail trade areas. Furthermore, discount and higher-end retailers both continue to thrive, and a high amount of capital in commercial real estate continues to effect strong retail investment sales with low cap rates.
Suburban growth will continue to strengthen Pittsburgh’s submarkets and shift shopping patterns somewhat in certain areas. However, development with the most potential impact is the new urbanism — the planned redevelopment of the central business district (downtown Pittsburgh) and its fringe shore areas, along with continued redevelopment on the eastern end of the city in East Liberty/Shadyside, which now is becoming known as “Eastside.” Both the CBD and Eastside were vibrant shopping districts in the past, and the new wave of mixed-use development (retail, residential and office) has the potential to revitalize these urban cores into bustling areas where people live, work and shop. In addition, urban areas between downtown and Eastside, including the Baum Boulevard/Central Avenue corridor, Oakland, Uptown/SoHo also will see continued development and redevelopment.
Retail development is occurring in many areas of Pittsburgh: the CBD, Cranberry, Wexford, Butler, Robinson, North Huntingdon, Greensburg, Uniontown, Eastside and Washington. A combination of retail demand and an undersupply of quality retail; residential growth and a healthy housing market; stable consumer confidence; quality demographics; strong consumer spending; and low interest rates all are significant factors driving retail construction. Developers such as Continental Real Estate, Paradise Development, Millcraft Industries, Faison Enterprises, Walnut Capital, Praxis Resources, Castlebrook Development Group, Premier Properties, ECHO Developers, Cedarwood Development, Oxford Development Company and Pinpoint Real Estate Co. have been very active in the market.
With more than 2 million residents retaining substantial spending potential, flourishing communities and strong retail demand, the greater Pittsburgh retail market will likely experience additional retail development, complete with high occupancy and increasing rents, strong retail sales, and new retailers continuing to enter the market.
— David Glickman is vice president — retail group for Grubb & Ellis Company in Pittsburgh.
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