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John Morris

" We're constantly hearing developers complain that construction costs are just as high in Pittsburgh as they are in New York and Chicago, but rents don't come close. Which supposedly explains why the developments just can't happen without public assistance at various levels."

Wouldn't this be an important area to study too? Why does it cost so much to build and renovate in most cities. There are obvious traffic and logistical factors as well as environmentail issues but I really don't think that explains it to well. Basically, the subsidies are needed to compensate for and hide the huge regulatory costs imposed by the government and unions as well as the parking garage fetish. These costs are never to be questioned because it would expose the fact that government is the main reason for urban decay.

"that it is basically IMPOSSIBLE to do high-end development without other subsidies from state and local sources?" Well, that raise another big issue -- wouldn't it make more sense to have promoted or at least allowed organic development by other groups like artists and more price sensitive residents? Why does the area have to be taken straight to high end with no stops in between? There was in fact a nice artist building, torn down in uptown for the new arena and there is one downtown that has artist residents and studio and rehersal space for bands. A little bit further up in uptown are several artist's spaces including the one that hosts the Gist Street reading series which packs standing room only crowds.


Jonathan Potts

I agree John--I don't understand the obsession, beyond pure elitism, for making Downtown a high-end enclave.

It's also a good question about construction costs. The obvious answer is regulation and unionism, although it seems to be Chicago and New York are big union towns as well.

Sam M

I agree that the question of construction costs is an important one.

But to reiterate, I would assume that people refurbing old buildings in the Strip would face the same cost constraints facing people refurbing buildings in the Fifth-Forbes corridor. Same unions. Same regulators.

So how come the people who did the Cork Factory didn't need to suck at the state/local teat like Piatt and PNC?

Are they building crappy buildings? Cutting corners? The places are pretty expensive. So I doubt it. Seems like they are direct competition for PNC and Piatt, actually. Same market. Same charges for rent.

Can someone explain?

A cynic might note that the Cork Factory developer is from Chicago. The other two are not. They are local. Does that have something to do with it? Connections? Or are the Piatt/PNC projects inherently more expensive or less marketable? If so, why build them? Why not build on the periphery of downtown. In places like the Strip. Which, apparently, need less government support.

Sam M

And to John's point about "going upscale" versus going after another market:

Doesn't matter.

At least not according to the developers. Do a search at the Post-Gazette for "Piatt." And look at what he has to say about such things. In fact back in December, the Piatt's switched their plan. The Murphys building will now be for "middle income" types. To wit:

"Even the most ardent booster of Downtown living admits the market needs units that middle-income earners can afford. Millcraft imagines rates at the Murphy building to suit folks in the $40,000 to $50,000 income range -- in other words, the elusive young professional."
http://www.post-gazette.com/pg/06341/744193-192.stm

I did not hear anything about returning the subsidies. Why? From another PG story:

"The difficulty in most cities is that it is too expensive to develop market rate housing to make it affordable for young people or teachers or government workers without some kind of city subsidies or assistance," said John McIlwain, senior fellow for housing at the Washington D.C.-based Urban Land Institute. Without incentives, developers tend to gravitate toward building more expensive units Downtown because it is the only way they can make money.
http://www.post-gazette.com/pg/06267/724535-53.stm

Huh. Weird. So the high end condos need lots of subsidies because there is something special about that market. Same with workforce housing. Except when someone is building workforce housing, the developer says that going high-end would have made money, but they are doing something nice for the city. So how about some subsidies?

So which kind of downtown housing requires special subsidies? Whatever kind they are building.

But again, I agree with John. I would much rather see this happen on a small scale with real people. But that ship, as they say, has sailed.

Or sunk.

John Morris

I think the main explanation is that the kind of semi legal, organic and bottom up development such as what happened in Soho and Tribecca would not have tended to to favor large developers and would not have worked well for politicians in terms of providing big ribbon cutting events.

I have in fact personally talked to people who wanted to do small renovation projects who were told that the buildings required elevators or some other thing that made the cost prohibitive.

I would tend to say that the Piatts are in general a very bad choice, in that they are not developers with a strong experience in real urban markets.

san antonio apartments

I agree with Jonathan, It's also a good question about construction costs. The obvious answer is regulation and unionism, although it seems to be Chicago and New York are big union towns as well.

-sam

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