Pittsburgh’s Office Slump Is Driving a Shift to Housing

When Oxford Development secured Apple as a tenant in its new office building in 2015, the Strip District was still known for sprawling warehouses and quirky mom-and-pop shops.

“The market was really looking at it saying, ‘Wow, if Apple’s picking the Strip District, what are we missing?’” said Joe Tosi, executive vice president of the company’s brokerage and leasing affiliate Oxford Realty Services.

In the years between Apple’s move to the Strip and the pandemic, Tosi said Oxford alone developed some 360,000 square feet of commercial office space in the neighborhood.

Oxford planned to expand on that by adding up to six new office buildings and two residential buildings along the riverfront. Then the pandemic set in.

“The questions we had, the questions our tenants had, the questions the lenders had: Are we going to keep the office open? What are we going to do? Who’s coming back to the office?” said Tosi.
Three of those office buildings — 75 Hopper Place and the two-building development The Stacks — survived the pandemic and have been completed. Oxford is now considering replacing the remaining three office buildings with two residential buildings, reflecting a real estate market where, overall, building new housing is a lower-risk venture in the region. “Multifamily was one of the projects that, as we were kind of fighting our way through the pandemic, was still looked on favorably,” Tosi said.

Across the city, roughly 17% of available office space remains vacant. With few incentives to build more office space when so much lies unused, developers and those who shape the city’s built environment are shifting their efforts toward building more housing. It’s a welcome sign to residents who want their office-heavy neighborhoods to feel more like a community. And market experts say more residential development will relieve the city’s housing shortage and could eventually revive its office market.

Why Commercial Building Flatlined

Developers are following a citywide trend that’s become starker over time: Fewer and fewer commercial office spaces have been under construction each year since the pandemic. And real estate brokerages such as Newmark and Cushman & Wakefield estimated late last year that Pittsburgh saw no new construction of office buildings over the course of an entire calendar year.

That’s because builders are waiting for employers to lease what already exists, real estate experts told Pittsburgh’s Public Source. Over the last few years, several companies have moved to newer spaces with better amenities, such as fitness centers or restaurants. Others have downsized to accommodate a new reality in which about 18% of Pittsburghers work from home.

“In some ways, in their effort to bring workers back into the office, employers are competing against what many perceive to be the best place to work,” said Ed Lawrence, director of research and business development at Colliers Pittsburgh. “The home office.”

Development company Walnut Capital revealed at a City Planning Commission meeting in January that its planned 14-acre expansion of Bakery Square would include far less office space than the 1.5 million square feet it previously proposed. Instead, the company is considering more housing and retail.

Last January, the owner of 1501 Penn Ave., where the former Wholey’s cold storage facility once stood, requested zoning changes that would pave the way for a parking lot — not the 21-story office and retail building proposed in 2019. “It was a vastly different world at that time,” explained Tom Sabol, a co-founder and partner of the New York-based AM Group, at a recent Zoning Board of Adjustment meeting.

Pittsburgh isn’t unique: Across the United States last year, office demolitions and conversions outpaced new construction for the first time in decades, according to an estimate by CBRE. But certain aspects of Pittsburgh’s culture and built environment have made it more difficult to rebound, said some experts.

Adam Viccaro, senior vice president at CBRE, contrasted Pittsburgh’s office market with New York City’s “bustling” environment as a point of comparison. There, the return-to-office process was well underway by March 2022. Meanwhile in Pittsburgh, large employers like PNC and BNY Mellon announced plans within the last year to increase the number of days employees come into the office.

As office construction largely came to a halt, residential housing went on an upswing. The Greater Pittsburgh region distributed an estimated 5,946 permits for construction of privately owned residential units in 2025, according to the U.S. Census Bureau, up from 5,412 the year before. In 2019, the region distributed only 3,984 permits for the same purpose.

The shift has played out differently in two adjacent — but very different — neighborhoods: Downtown and the Strip. The former is seeing the beginnings of a publicly funded shift from offices to residences, while the latter settles into a rhythm different from its roots.

Can Downtown Go From ‘Ghost Town’ to Home?

The pandemic exacerbated the longstanding lack of variety Downtown. The city’s central business district is almost entirely composed of offices.

With vacant buildings and few amenities or housing options in between the office towers, Downtown felt like “a ghost town” during the pandemic, said John Valentine, who leads the resident-focused group Downtown Neighbors Alliance.

Places that you might expect to find in a neighborhood, such as a flower shop or privately owned wine store, still don’t exist Downtown, he said. Affordable childcare is also hard to come by, he said.

“There are so many things that we could be doing, that we’re working on,” Valentine said. “If you build a house, you’ve got to build a foundation first, right?”
Local government agencies and community organizations such as the Urban Redevelopment Authority (URA) recognize that, and in the last several years have made efforts to significantly increase Downtown’s population. In practice, that has meant funding the complicated and expensive conversions of vacant skyscrapers and old government buildings into residential buildings.

It’s an expensive venture because of the significant changes that have to be made, said Tom Link, the URA’s chief development officer. In an office building with at most a few bathrooms per floor, he said as an example, you’d have to create new bathrooms for multiple units.

The conversions are expensive on their own, but setting aside affordable units creates an even larger financial gap for developers. To address that, the state and city have increasingly dedicated money toward these projects via the URA and Housing Authority of the City of Pittsburgh (HACP).

“That delta has to be filled with sources that can help bridge that gap between cost and value to allow projects to happen. And that’s a common theme in these office-to-housing conversion projects that we work on,” Link said.

Michael Polite, senior vice president of development at the Boston-based firm Beacon Communities, said the city’s intentionality about affordability sets it apart from other cities.

Beacon is currently developing three residential conversions Downtown — 901-903 Liberty Ave., 120 Cecil Way and First and Market — using a mix of funds from entities including the URA and HACP. Each project includes affordable units.

“Downtown is gonna have a place for folks for a wide range of incomes,” Polite said. “We will know that because it’s being created right from the jump. You can think of other cities where, because of their dynamics, the market-rate stuff just flew ahead.”

The Strip District Finds a New Balance

On a recent Thursday, Ashley Weber bounced between the cash register station that sits in the middle of Reyna Foods Inc. and the deli case that sections off the kitchen from the rest of the store.

Weber, who both lives and works in the Strip, said she keeps herself busy as the manager of the Mexican-inspired wholesale and grocery store, even when there are lulls. After the pandemic, she noticed a shift in when those downtimes would occur, with an increase in business on weekdays and a slowing of once-crushing weekend business.

“I used to kind of bring a book sometimes during the week” she said, but now, “I’ll bring a magazine and I won’t even read it after three days.”

She isn’t sure if that change is due to more people living in the Strip District or because people have changed their daytime routines due to remote work. In any case, more people coming to the area has translated into additional benefits for her as a resident. One major convenience is the increasing number of eateries that open their doors on Sundays and Mondays, Weber said, and an overall less-deserted feel during the week.

Geoff Campbell, an architect and the community development chair for Strip District Neighbors, said he has noticed a difference in weekday activity, too. Coffee shops, for instance, serve people throughout the day now, he said.

“Over the last few years, there’s been a nice growth of residential in general,” he said. “That was the piece we were always missing to have a healthy balance.”
As more amenities and housing units are introduced to office hubs, developers like Tosi are confident that the office market will become viable again.

“As a guy that leased office buildings for Oxford, I’d love to see us build another office building,” he said. “Eventually, the market will be in a position where all of the new flight-to-quality has been absorbed, and we’re going to be faced with the question of: What now?”

This story first appeared in Pittsburgh's Public Source. Read the original here.