Pittsburgh – November 2022 Key Take-Aways
Kelly McGovern, Frost Brown Todd, host: Kelly is an associate at Frost Brown Todd. The firm is in 14 cities, in 8 states and is a full-service law firm, with a sizable finance and commercial real estate practice group. Excited to host REAL Professionals Network.
Todd Pifer, AdVenture Development LLC: We’re primarily a retail company but dabble in multifamily and industrial. We’re based in Pittsburgh and Raleigh, N.C. Here we have McCandless Crossing and we’re starting a project, McCandless Square, a little farther north. In Raleigh, we have “McCandless Crossing” on steroids, with an industrial edge to it and a food hall, the first that is on an interstate versus a downtown location. It’s doing really well, especially now with traffic on I-95. We’re bullish on everything; we’re not stopping; moving along when we can find money.
Leah LaFramboise, Frost Brown Todd LLC: In this office we do a lot of real estate, a lot of finance work; Jason Ott and I do a lot together. We have 150 attorneys in real estate – I’m licensed here and in West Virginia. If we haven’t done it in this office, we can figure it out. We also have a title agency. Currently, things we’ve seen; I was at a conference in Orlando two weeks ago, with other attorneys, and the 1,200 people there were happy, forward-thinking, not concerned; they’re developing things and leasing things. It was more positive than I thought it would be.
Jason Ott, Frost Brown Todd: Works on real estate, private equity, venture capital. Most of our clients — you may read about everybody sitting back, but most are moving forward.
Eric Kimbel, Frost Brown Todd: Construction lawyer; I help write contracts and with project execution. Some years, it’s 80 percent drafting; other years, litigation. National subcontractors are seeing a slowdown; my PE clients are shifting into bonds as interest rates go up, but there’s still stuff going on.
Carlos Ainsworth, Dollar Bank: We do financing for anything involving real estate, improvements, or construction. If it’s got a mortgage, we’ll touch it. Outside of the prime rate, interest rates dropped a little last week, so if you want a loan, try to close it this week.
Greg Boyd, NexTier Bank: We’re fortunate to be a small, privately owned bank and we do participation work with Dollar Bank. Interest rates have made our life really tough. We’re getting deals done, in some cases, but they’re getting tougher to do. People are becoming more conservative and a little more uneasy with the political elephant in the room that’s haunting a lot of activity. All these deals over the past three or four years at 3 and 4 percent interest rates are slipping up and not cash flowing as well. We don’t have any major problems that have surfaced but the lights are flashing. I think things will get tougher before they get better.
Adarryl Dreher, Cushman & Wakefield: Our business is moving; we’re still getting a lot of calls, seeing activity. On the multifamily side, things are slowing down a little, but from the industrial and office side, we’re still getting activity.
Bryan McCann, Colliers: We’re seeing temporary pressure with long-term optimism. Developers of multifamily and office [projects] are active and betting as soon as they get out of the ground, all this [economic trouble] will be behind them. With interest rates, there’s some pressure, but outside Pittsburgh, groups have money earmarked for our market; it’s just a matter of when will they deploy it? Ohio is starting to come to play, with policies, and Cleveland is coming into play, only an hour or so away from us.
Dennis Davin, JLL: We’re looking at the long game. I get involved in many things as a “free agent” with brokers in the office and specialize in site selection activities. Some big corporations are looking at options, and we’re trying to locate them in the Pittsburgh region.
Brian Kelly, Integra Realty Resources: With interest rates at 5 and 6 percent, it’s better than when I entered the market and it was 8 or 9 percent, but we’re ending up where it should be, I think. Downtown housing has doubled in the past few years; it’s pretty active.
Stuart Coppedge, Desmone Architects: We’re doing really well right now. Working in eastern Ohio, where we just opened an office in Cleveland and have a significant office project in Youngstown, which I like to call the “smaller, scruffier version of Pittsburgh-five-years-ago.” Part of our plan is to expand into West Virginia; we’re doing some work in Wheeling and Morgantown now. We’re helping to put together the capital stack; it’s becoming a way we’re doing business. We’re getting better at it so we’re not as deep in the hole when it starts to take off, working with engineers and other partners who are getting paid on back end. We’re not the developer, but we’re helping to put it all together. Jim Ambrose now has his own firm, working in Ohio, Pennsylvania and West Virginia and that model he helped to build will really pay off for us in the long run.
Patrick Cersosimo, Apartner Multifamily Capital: We’re multifamily investment specialists, always growing, always looking for opportunities. The bulk of our portfolio is in Sun Belt states, but we’re always evaluating markets, including Pittsburgh. It’s the start of a cooldown period, which is good – any time we see a crazy surge in rental rates, like that which ran for 12 to 18 months, it can cause havoc in valuations. That’s starting to slow down a little, which is good.
Chris Kujawa, PDDM Solutions: We’re a nationwide construction management firm and we have an in-house civil engineering department. Mostly, what we’re seeing, clients in industrial and commercial are steady; multifamily and single family, no updates. In redevelopment, we’re seeing an increase in [repurposing] large office buildings.
John Watt, Valbridge Property Advisors: People are still closing land deals, building subdivisions. Nationwide, builders are protecting their backlog. There’s a 10 to 15 percent drop in home market sales, but not much decline in home prices. Pittsburgh didn’t go crazy “up” and we don’t see it going crazy “down.” Rural market activity is as strong as ever, lots of transactions. Cap rates are marginally higher, but not [matching] the interest rate climb. That might spread more as people realize that the rates won’t come back down immediately, or down as far as they were. Look to the end of 2023 or 2024 for this shift to occur.
Jamey Noland, PenTrust: We’re funded largely by unions, the state; we do heavy construction job creation for union labor. Several states around us are utilizing the incentives and things to foster economic development, and Pennsylvania is kind of behind on that, in both programs and utilization. Almost every development in Cleveland, for example, has an energy component, or CDBG grants are something being utilized. We look forward to creating growth, getting people to utilize some of what’s available out there.
Gene Boyer, Burns Scalo Real Estate: We have about 3 million square feet under roof, class A office. We’re bullish in office, even though it’s changing as we know it. Our recent projects include The Riveria and The Vision in the Strip District. We see the trend moving to hyper-amenitized, functioning buildings. Quality businesses need amenities to attract talent. We recently broke ground on Diamond Ridge, which will be three commercial towers with 300 market-rate multifamily units; we’re pre-leasing already.
Recent Comments