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Pittsburgh isn't what it used to be. The region's smoke-belching steel mills are mostly gone now, and taking their place are greener enterprises — biotech, higher education, health care and, increasingly, retail development.

Despite the fact that the area lost 1.5 percent of its residents between 1990 and 2000 due in part to an aging population, real estate execs insist plenty of opportunity abounds to capture existing, high-income underserved consumers. The area's median household income is $47,546, compared to $28,000 and $31,000 medians in similar-sized markets such as Tampa and Cleveland, respectively. And unemployment hovers near the national average of 5.8 percent. In the past few years, as if making up for lost time, malls and shopping centers have sprouted in the Pittsburgh area.

At least three new major developments are in the pipeline: Mills Corp.'s Pittsburgh Mills to the northeast; Continental Real Estate Cos.' North Shore, a mixed-use project near the city's new baseball and football stadiums; and The Soffer Organization's SouthSide Works, another mixed-use development on the site of a former LTV steel mill that will eventually have 330,000 square feet of retail.

Michael Hendrickson, president of Hendrickson Retail Group, says that the five-county region's overall vacancy rate at the end of the year was about 9 percent, but that in some submarkets it was as low as 2 percent. “This is still really a very firm market,” Hendrickson says. “Per capita, it's still an under-retailed market.”

Continental recently signed Best Buy to join Target and Lowe's at the 700,000-square-foot power center component of the company's $300 million mixed-use development The Waterfront. And Continental scored a coup late last year when May Co. announced it would open a prototype of a downsized Kaufmann's department store in The Waterfront's lifestyle center portion. The 140,000-square-foot store will offer a more flexible layout, brighter lighting and express checkouts near the doors. It is one of a handful of smaller-style department stores that May is testing in its chains across the country.

Frank Kass, Continental's chairman, says that The Waterfront “on balance is doing very well.” The restaurant and power center tenants are reporting excellent results, he says, while in the town center “half of the tenants are ahead of their pro formas, and the other half are not yet where they want to be.” He wouldn't provide specifics.

Key to getting “where they want to be” is increasing daytime traffic to the mixed-use development, Kass says. The Kaufmann's, as well as the opening of the next phases of office space, will increase daytime traffic in the development by 4,000, he says, “which will improve the performance of the small retailers.”

To the east of the city, Monroeville has long been a hub of retail development — its 267,000-square-foot Miracle Mile was the largest shopping center between New York and Chicago when it opened in 1953 — and it shows no signs of slowing down. The venerable Monroeville Mall, owned by Turnberry Associates, is getting an 80,000-square-foot lifestyle addition, while locally based Walnut Capital Partners is developing a neighborhood center nearby.

Some of the city's older centers are feeling the pinch. Simon Property Group's Century III in West Mifflin had a 20 percent vacancy rate at the end of the year. Observers say that's partially because it's close to the more upscale South Hills Village, only six miles west, and The Waterfront, a 15-minute drive.

The region is not immune to the pressures that retail developers are feeling elsewhere. For example, rents have fallen at some power centers following Kmart, Ames and Phar-Mor store closings. But most enclosed malls are doing well, with firm rents and stable vacancy rates. Lifestyle and grocery-anchored centers continue to pop up around the region.

“Things have softened up, but most of our strongest trade areas are still rather firm,” says David Glickman, vice president of retail services for CB Richard Ellis Pittsburgh. “The majority of retailers are doing pretty well.”


In Frazer Township, 15 miles northeast of the city, Mills has finally gained approval for Pittsburgh Mills, its $285 million off-price value center. Construction is expected to begin soon, with completion late next year or early in 2005. A project on the site was first proposed more than 20 years ago.

Not so fortunate is the Deer Creek power center proposed for nearby Harmar. Planned by The Woodmont Co. of Fort Worth, Texas, the center has met strong opposition from environmentalists, and its outcome is still uncertain. Retailers hoping to get into Deer Creek include Costco and Home Depot.

Regionally, rents have remained firm. Hendrickson says strip and power centers are averaging between $25 and $30 per square foot for better properties and $12 to $15 for lesser ones, and overall “have held better than I thought they would.”

Rent for big-box space, though, has been falling outside the primary submarkets — sometimes into the middle- and even low- single digits in some areas, says Art DiDonato, senior vice president of real estate services at Insignia Oxford.

Still, the market continues to hold interest for big-box retailers. Tom Londres, senior vice president of Metro Commercial Real Estate, says his client Petsmart has six stores in the area “and wants to double that,” possibly in Monroeville, the North Hills and the South Hills. Target, another of his clients, has “a handful” of stores and also wants to double its presence, he says.

One lively area is grocery-anchored centers. “That's been the hot sector, the safer sector, for the past couple of years,” says Aaron Savin, vice president of Echo Real Estate Services, a former subsidiary of local grocery leader Giant Eagle. “The area has historically been underserved in every segment, including that one.”

About the only area of Greater Pittsburgh that's not doing well is downtown, which is faltering despite the presence of four department stores — May Co.'s Lord & Taylor and Kaufmann's, Federated's Lazarus (soon to become Lazarus-Macy's), and Saks Fifth Avenue. The area between the stores, centered on Fifth and Forbes avenues, is marked by rundown buildings and empty storefronts.

In February, the city hired Kravco Co. of King of Prussia, Pa., to create a retail revival plan — two years after pulling the plug on a large and controversial redevelopment plan put together by Urban Retail Properties of Chicago. Urban's $522 million plan called for a “shock and awe” approach, with 60 buildings being demolished to make way for 30 shops and restaurants, a Nordstrom, and an 18-screen cineplex. Resistance from eminent domain-shy landlords and historical site preservationists, and a tepid response from Nordstrom, led to the plan's demise. Kravco's approach will be more incremental, with in-fill developments occurring over time as current downtown businesses' leases expire.

Kravco gave the job to Midge McCauley, vice president and director of its Downtown Works division. “Right now we're looking at a concept design,” she says. That plan likely will call for the renovation of historic buildings and the razing of others “to provide enough variety of space that we should be able to put together an excellent mix of stores.” The plan will also bring in more restaurants and residential space.

To supplement the four department stores downtown, “We're looking for moderate- to better-price-point apparel for men and women, as well as accessory stores to go along with them,” she says. “To make downtown a shopping destination, the mix is going to have to be different,” she adds. “But there's a market downtown already that's underserved — the office workers need more to do.”


  • Total Metro Population: 2.34 million
  • Rate of Metro Population Growth, 2001-2007: -1.5%
  • Metro Unemployment Rate: 5.7%
  • Metro Median Household Income: $47,546
  • Metro Median Home Price 2002: $104,000
  • Metro Median Home Price Growth Over 2001: 4%


  • Vacancy Rate, Downtown Retail, 2003 estimate 20%

  • Vacancy Rate, Regional Malls, 2003 estimate 11%

  • Average Downtown Rent Per Sq. Ft.: $20

  • Average Neighborhood Center Rent Per Sq. Ft.: $12

  • Average Power Center Rent Per Sq. Ft.: $18

  • Average Regional Mall Rent Per Sq. Ft.: $25

Source: NAI Grant Street Associates


Forest City Enterprises is finding success both in Pittsburgh and its ‘burbs. The Cleveland developer's properties include Station Square on the city's South Side, which it acquired in 1994 and renovated last year at a cost of $71 million, and two in Robinson — the enclosed, 872,000-square-foot Mall at Robinson, a super-regional opened in 2001, and the nearby Plaza at Robinson Town Centre, a 489,000-square-foot power center built in 1989.

The Robinson properties are west of the city near the airport, in an area that grew rapidly during the 1990s. Both have drawn heavily from neighborhoods south of the city as well.

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