KDKA's Jon Delano spoke with real estate attorney Kirk Burkley about the impact the coronavirus pandemic has had on downtown Pittsburgh.
- This is "The Sunday Business Page" with Jon Delano.
JON DELANO: Good morning. I'm Jon Delano. Welcome to another home edition of "The Sunday Business Page." And our very special guest today is Kirk Burkley, who is an attorney in insolvency and real estate in downtown Pittsburgh and has been doing this for nearly 20 years. Kirk, welcome to the show. It's good to have you.
KIRK BURKLEY: Thank you. Glad to be here. Thank you for having me.
JON DELANO: You know, we are acknowledging one year of this pandemic. And I thought it was important to have somebody who knows a bit about real estate talk to us about what's happening in downtown Pittsburgh and whether there is hope for full recovery for that important part of our area. So let me just ask you right off the bat, how much did the COVID-19 pandemic hurt the downtown real estate market?
KIRK BURKLEY: The pandemic was devastating for downtown. I do think it's important to point out, though, Jon, that this actually started before the pandemic. When you look at some of the stats from the end of 2019, so right before the pandemic, vacancy was at 16.9% downtown, which is the highest it had been since 2010 and when it peaked at its lowest vacancy at 4.9% in 2013. So it did start before the pandemic. But if you look at reports now, we're looking at a nearly 20% vacancy rate in downtown. So it started before the pandemic, and the pandemic was not helpful to that trend.
JON DELANO: Yeah. It sounds like the pandemic made it worse. And I guess my question is for you, Kirk, is that looking a little better as we hopefully come to the end of this pandemic?
KIRK BURKLEY: We are seeing some bright spots, but unfortunately for downtown in particular, let me give you some other just sobering facts and data points. One is with regard to hotels. I read a stat that 38% of hotels will go through some sort of bankruptcy or foreclosure, trade this year. Hotels are not expected to get back to 2019 levels until 2024. So the hotel market is hurting.
Of course, that translates into the retail market hurting and especially downtown. We've lost a lot of good restaurants downtown-- Pork and Beans, Sharp Edge, Nola, Union Standard. A lot of restaurants that people know have closed, and the hotel market has certainly impacted that, as well as people not being downtown. So let me-- go ahead, Jon.
JON DELANO: I was just going to ask, does that translate into, aside from the bankruptcies-- and you're quite right, we've seen a lot of that in downtown Pittsburgh-- are companies moving out of downtown Pittsburgh into the suburban areas?
KIRK BURKLEY: Yes, they are. And they're doing it in a couple of different ways. Either, one, they're just moving to the suburban markets. But I think that what they're doing is actually a little bit different. Let me give you another stat. Now this is a national statistic, but it applies here as well.
The sector that has given back the most space in the pandemic, by leaps and bounds, is the technology sector. So tech companies have figured out that they can have many of their employees work from home or work from remote offices that they might scatter around the region and so disperse them out from their downtown core.
JON DELANO: Is this having an impact on the residential living in downtown Pittsburgh? Because we were really seeing really quite an increase in folks, empty nesters, both older folks and younger people, wanting to live downtown. What's the impact of COVID on all that?
KIRK BURKLEY: We really haven't seen a direct correlation to downtown living just yet. I think that will take some time to play out and see what happens. We have seen people moving out of some of the city neighborhoods and some of these suburban neighborhoods seeing increase in home prices, decrease in selling. But downtown specifically, we've not really had time yet to see the impact there.
JON DELANO: Final question, Kirk, then, are you optimistic? It would seem to me that downtown might have some really good buys, good lease rates and the like with all this. Are you optimistic that the downtown Pittsburgh area will see a comeback?
KIRK BURKLEY: I am. My firm actually just signed a long-term lease last month. So we're certainly one tenant that's signing a long-term lease. I think that there will be. But what is absolutely critical is we have to get more investment from the non-tech sector. The tech sector is wonderful but, as we've seen, it can easily move, and it can easily disperse. We need more banking, we need more energy. We need all of those sectors, and we have to make it more business friendly for them to come downtown.
JON DELANO: Well Kirk Burkley, real estate attorney in downtown Pittsburgh, thank you so very much for sharing your observations. We really appreciate it.
KIRK BURKLEY: Thank you.
JON DELANO: And thank you for watching us on this edition of "The Sunday Business Page." If you have a suggestion for a guest, get in touch with me at email@example.com. Have a great Sunday, everybody.