The Post-Gazette’s Mark Belko wryly notes that “it’s a great time to be a building owner or landlord in Pittsburgh’s Golden Triangle.”
The reference comes in his latest report on the continuing slide in the occupancy rate in the Downtown office market. That, in a climate of tenants still cutting back on space “and where asking rates are propped up by big concessions.”
The Jones Long LaSalle (JLL) real estate firm pegs the latest overall office vacancy rate at 20.5 percent. That’s up 9.1 percentage points since 2015.
As the P-G further notes:
“For Class B buildings, older ones with fewer amenities, the vacancy rate is even higher — 25.2 percent. So-called ‘trophy’ properties — newer buildings with the best amenities — fare the best, with an 18.4 percent vacancy rate.”
Stubbornly languishing fallout from the pandemic is being blamed (never mind that anemic occupancy rates pre-dated COVID-19 shutdowns).
And it’s only fanning the flames of those who argue the “solution” is to convert such excess space into housing (including provisions for “affordable housing” that, in reality, serve as a governor on housing development and make what is developed more expensive).
As we’ve repeatedly noted, if there’s a true market for such conversions, go for it. But there remains far too much talk that building owners should be subsidized by taxpayers because of the extreme financial risk that such conversions, especially in older office buildings, present.
One more time class:
If building owners/developers are not willing to risk 100 percent of their own capital in pursuit of profit because the market is signaling such projects are not economically sound, that’s also a clarion call to political leaders to not raid the taxpayer kitty in a warped and parallel-universe attempt to somehow make them so.
It’s that simple. It’s that fundamental. That out “leaders” so steadfastly — and arrogantly — refuse to accept it is a continuing public policy tragedy.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
