Shrinking cities with appreciating rents at Pacific Standard magazine.
Theme: Ironic demographics and gentrification.
Subject Article: "Developers Turn Former Office Buildings Into High-End Apartments: In Cleveland and Other U.S. Cities, Rents for Residential Units Rise Amid Sluggish Office Demand."
Other Links: 1. "Who likes Pittsburgh? The answer shows up in low office vacancy rates."
2. "Real estate notes: Views on Pittsburgh apartment market."
Postscript: I am at the "Reinventing Older Communities: Bridging Growth & Opportunity" conference in Philadelphia today. This morning, I toured an urban neighborhood attempting to revitalize. Missing from the discussion is an understanding of how migration impacts community and economic development. I figure that's why gentrification pressure in dying Cleveland is so surprising. At best, the demographic analysis is superficial. Sometimes the analysis is just wrong. I'm angling to make migration a part of the reinventing older communities conversation.
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In Milwaukee, there are three office towers in development in downtown with a combined floor area of 1.5 million square feet (the largest being a 550-ft $450 million tower for Northwestern Mutual). An article in the Milwaukee Business Journal on the new office construction noted that one reason it was occurring now is that the supply of old industrial buildings suitable for adaptive reuse was running low, following the conversion of an estimated 5 million square feet of such buildings to office use over the past 25 years. At least an equal amount of industrial building space has been converted to residential use.
Milwaukee is claimed by many to be a slow growth (or "dying") rust belt city. Last time I checked, Denver hadn't built a major new office tower in nearly 20 years.
So basically, Milwaukee's a rust built city that has run out of rust ("old vacant factories"), and now must resort to construction of new office towers to meet the demand for Class A office space. Even more remarkable, this is occurring in an era where office technologies have in nearly all cities, reduced the need for office space for a large number of administrative support or backroom functions.
Similar story for downtown residential. Projects in some instances are 70% preleased. There are at least 2,000 residential units in development at the moment in the downtown market (or immediately adjacent neighborhoods).
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