WORLD PROPERTY CHANNEL ®

Downtown Pittsburgh is hot.  Construction cranes dot the skies. Energy-oriented corporations hunt for office space.  Sales of buildings are moving quickly.  Office rents are among the lowest in the country.

All this is happening in a Northeastern U.S. city that lost 100,000 steel mill jobs in the 1980s.  Pittsburgh continues to struggle with sagging local tax revenues but newly-arrived companies are betting the city is the place to be as the national economy struggles to improve, reports The Wall Street Journal.

Energy companies, moving in to develop Marcellus shale-gas projects, are stoking office demand, the newspaper reports. Employment is growing in medicine, education, financial services and computer software.

The city's biggest bank, PNC Financial Services Group Inc., plans to build a 40-story tower to help house its growing staff.

CB Richard Ellis Inc. projects that office rents in Pittsburgh will rise an average of 7.5% this year, compared with an average of 2% for the top 52 office markets in the U.S.

Pittsburgh's attractions for employers include Carnegie Mellon and other universities, as well office rents that remain low by national standards.

The WSJ reports that CBRE expects annual office rents this year in Pittsburgh to average $18.69 a square foot, compared with a national average of $26.18. Pittsburgh's vacancy rate for offices this year is expected to average about 10%, compared with 16% nationally.

"Despite a weak national economy, Pittsburgh is looking more prosperous," according to the WSJ.

The local government transformed downtown's Market Square, known until recently for drug dealing, into a European-style plaza where vendors sell flowers and goat cheese. Nearby, a glossy new bar, Andy's, pays homage to former residents Andrew Carnegie and Andy Warhol.

More out-of-town investors are shopping for deals in Pittsburgh.  Among the properties on the block: PPG Place, a complex of six spiky glass buildings, owned by affiliates of Hillman Co.

While Pittsburgh has recovered from the loss of more than 100,000 steel-related jobs in the 1980s, problems remain. City government is struggling with pension burdens and a small tax base because much of the city is occupied by universities and other nonprofits that don't pay property levies. Most downtown workers live in the suburbs and pay little into the city's tax coffers.

Low housing costs help employers recruit people away from the coasts. The median home price in the five-county Pittsburgh metro area was about $113,000 in this year's first quarter, or 30% below the national level, according to RealSTATs, a Pittsburgh data tracker, according to the WSJ.

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