Before it became one of the hottest neighborhoods in Pittsburgh,
Lawrenceville was once a blighted community. So much so that
Pittsburgh Magazine described it as “a blue-collar neighborhood
more down-and-out than up-and-coming.”
As economically depressed communities tend to be, it was
overtaken by the usual markers: overgrown weeds, busted side-
walks, boarded-up storefronts, vacant
residences, poverty and run-down hous-
ing stock. And stretching for blocks, there
were obsolete steel mills and factories,
marks of the
prosperity, turning to rust and decay.
Now, Lawrenceville is the epicenter
of “Robotics Row,” a strip of robotics-focused businesses spanning a stretch
of about two miles that is quickly becoming the area’s new economic pillar. Some of these firms, which need large amounts of
space and light manufacturing capabilities, have repurposed
and reclaimed the vacant facilities of the past.
The demand for such tech-flex industrial space is now so
strong that it far outstrips supply. Restaurants and other businesses and support services that want to be in these tech companies’ orbits have also contributed to the influx of jobs and people
into the community. This repopulation has naturally been a
boon to the residential market, creating demand for both new
and rehabbed housing.
Neighborhoods like Lawrenceville and small secondary cities are
often overlooked, especially in juxtaposition to nearby hot central
city locations. The story of how Lawrenceville accomplished this
transformation is something others should consider; it offers guideposts to real estate investors looking for the next regional hot spot.
How do we identify these diamonds in the rough? And what
steps can be taken to help polish them? It’s a mix of tangible and
intangible assets that makes a location attractive. Tangible attributes
might include community “anchors” such as a research university,
teaching hospital or major tech or manufacturing company that
attracts and trains talent, as well as a legacy workforce with a relevant
skillset. There also needs to be some semblance of place—an older
downtown or business district that’s walkable, buildings with good
bones and housing stock that can be rehabbed into cooler space.
In the case of Lawrenceville, its proximity to Carnegie Mellon
University and other institutions gave it a competitive edge, translating the academic genius of Carnegie Mellon faculty into commercial applications with corporate partners that eventually resulted in
spin-off companies that made their homes in Lawrenceville.
Another player: The Regional Industrial Development Corp. of
Southwestern Pennsylvania. A private nonprofit with an entrepreneurial vision of economic development, the RIDC saw that the
beginnings of a vibrant industry and community transformation
could become stunted by a lack of
suitable commercial real estate.
That presented an opportunity to
create homes for businesses of the
future by redeveloping the obsolete industrial sites of the past,
which in turn led to investments in
facilities including the Heppenstall
Steel Mill and Geoffrey Boehm
Intangible assets are also crucial
and include the facilitation of a
certain type of community vibe.
While difficult to define, this “X”
factor captures the authenticity
and sense of place that cannot be
long history as a walkable indus-trial/residential neighborhood
gave it a character that can’t be
faked. Even its new buildings
reflect the industrial history of the
place. Lawrenceville provides an interesting answer to what has
become a major debate in real estate today: do people follow jobs,
as it has been presumed for decades, or do jobs follow people?
Do you invest in hard assets—buildings, infrastructure and land
use policies that facilitate development—or do you invest in community amenities—bike lanes, parks and recreation—that the
workforce is looking for? The answer, of course, is both.
Donald F. Smith Jr. is president of the Regional Industrial Development
Corp. of Southwestern Pennsylvania. He may be contacted at dsmith@
ridc.org. The views expressed here are the author’s own and not those of the
ALM Real Estate Media Group or its publications.
How to Spot a Region’s Next Emerging Hot Spot
By Donald F. Smith, Jr.
reporting great growth in the past year, which has convinced
more members to enter the commercial industry,” relates NAR
chief economist Lawrence Yun.
It found that the median gross annual income for commercial members hit an all-time high of $150,700 in 2017, up from
$120,900 in 2016. The median sales transaction volume in 2017,
among members who had a transaction was $3.87 million, an
increase from the median sales volume of $3.5 million in 2016.
NAR reports that the median dollar value of sales has also
steadily risen since 2013 to its peak of $602,500 for all commercial
members in 2017, up from $543,500 in 2016. For leasing brokers,
median volume came in at $705,500, up from $538,500 in 2016.
Brokers and brokers’ associates reported the highest annual
gross income of $186,900 and $139,700, respectively, while sales
agents reported $104,600, an increase from $81,300.
Commercial members with less than two years of experience
reported a median annual income of $44,000 in 2017, up from
$31,500 in 2016; and those with more than 26 years of experience
reported a median annual income of $192,600 in 2017, up from
$162,200 in 2016.
Reflecting the high pricing levels for commercial assets, NAR
found that brokers achieved these figures despite having closed
fewer deals. CRE professionals negotiated a median of seven transactions in 2017, down from eight in 2016.—Erika Morphy ◆
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