Transforming Downtown Pittsburgh Into a Vibrant Neighborhood
The Covid-19 pandemic accelerated two major disruptions that are hurting Pittsburgh and many other cities across the United States. First, as workers shifted to hybrid or remote work, office buildings (and the tax bases they create) emptied out; in Pittsburgh’s commercial core, this has resulted in a 60% decline in leasing activity since 2019.
Second, U.S. cities are now experiencing the worst housing crisis of the postwar era, driven by affordability and supply challenges. Today, only 47% of Pittsburgh residents own their homes – far below the national rate of 66%.
But what if there was a solution that could overcome both disruptions at the same time? That’s the idea behind office-to-residential conversions – turning vacant or obsolete office space into housing in new, vibrant neighborhoods.
In a recent Brookings Metro report series, we studied the potential for office-to-residential conversions across six case study cities, and the policy and practical lessons stakeholders can learn from each metro. Among the cities we reviewed, Pittsburgh has several distinct qualities that can help turn its collection of dated downtown office buildings into a livable, attractive neighborhood.
The small, 0.76-square-mile triangle that represents downtown Pittsburgh is awash in office buildings: 257 to be exact, compared to just 40 apartment buildings in the same area. In Q3 2024 (the most recent data available), 16% of this space was vacant – slightly lower than the national average of 19%, but a notable jump for the city’s pre-pandemic vacancy rate of 11%.
Falling commercial property values downtown have taken their toll on the city: In 2023, adjustments in the assessed value of those buildings reduced the downtown tax base by $409.9 million, leading to a revenue loss of $3.3 million, or almost 10% of what was previously collected.
That shortfall has prompted Pittsburgh and Pennsylvania’s leadership to seriously consider the task of repositioning the city’s downtown assets. To that end, the city and state have made several policy changes to streamline office-to-residential conversions, including revising the zoning code, simplifying permitting, and offering financial incentives such as tax abatements and zero-interest loans.
These changes have had an effect: Since March 2020, at least seven office-to-residential conversions over 50,000 square feet have been completed in downtown Pittsburgh, and at least seven more are in the planning process. But there’s much more to be done, and challenges that must be overcome.
Downtown Pittsburgh’s office stock is quite old, with just 2% of buildings having been built in the last 15 years. Surprisingly, older buildings with smaller floor plates are often optimal for residential conversions because it’s easier to design efficient layouts where each unit has window access. Still, developers have been challenged by the state’s requirement of two egress options in all multifamily buildings, which is particularly difficult to achieve in older buildings (an advisory committee is currently studying a modification to this requirement).
A second big issue is financing. Despite the incentives on offer, developers report struggling to finance associated streetscape improvements in addition to the cost of the actual conversion. “In other words, paying zero taxes for 10 years still doesn’t make these conversions pencil,” a stakeholder told us in an interview.
There is also disagreement on what types of housing developers should be building. Some stakeholders argue in favor of affordable housing geared toward families, while others believe the downtown should play to its strengths by focusing on studios and one-bedrooms. In a fiscal sense, conversion into condominiums might prove most beneficial to rebuilding the downtown tax base, as Pittsburgh has one of the highest condo fee transfer taxes in the country.
And then, of course, is the matter of ensuring people want to move to and live in downtown Pittsburgh. Despite the pandemic shakeup, downtown living in walkable, mixed-use neighborhoods is still broadly desirable, especially to students and younger professionals. That’s presently the core of downtown Pittsburgh’s population, where over half (54%) of residents range between ages 10 and 30, compared to 35% citywide. Downtown rents are broadly affordable without subsidy, too. But with so many office buildings lining the streets, there are few amenities and attractions to draw in new residents.
“Traditionally, [downtown] was never a place where people have wanted to live,” a Pittsburgh stakeholder told us.
In other words, Pittsburgh and other cities need to solve problems that are upstream of office-to-residential conversion, both in order to facilitate more conversions and strengthen and modernize the office market itself. Last October, Gov. Josh Shapiro announced a major plan to revitalize downtown Pittsburgh, starting with a $62.6 million state investment that helped spur an additional $600 million from the private sector and regional foundations for shovel-ready projects. The plan includes funding for public space improvements, local small business supports, arts and culture, and more to “ensure that the neighborhood is a great place to live.” It also features direct grants for residential conversion of several office buildings our report highlighted as good candidates for such efforts – in total creating or preserving nearly 1,000 units.
As office work changes across the U.S., downtowns are changing, too – and cities must adapt. Places like Pittsburgh can no longer rely on a steady cycle of 9-to-5 workers keeping their commercial cores alive. They should instead look to revitalize these places for people who need a home, a neighborhood, a community. Public, private, and civic sector leaders in Pittsburgh now have an opportunity to do so – and they shouldn’t pass it up.
