America's Fastest-Recovering Cities

Diversified industry and relatively stable housing give residents in these metros a measure of economic security.

Francesca Levy, Forbes.com

Though Omaha, Neb., seems second-rate to some, Warren Buffett may have been on to something when he chose it for the headquarters of his massive holding company, Berkshire Hathaway. According to our research, the city has hit upon a formula to weather the economic downturn better than any other in the country.

While no region has escaped the recession, in Omaha, three Texas metros, a handful of Northeastern manufacturing bases and select southern cities, diversified industry and relatively stable housing fundamentals have provided local residents with comparatively secure standards of living.

Full List: America's Fastest-Recovering Cities
Omaha has had a healthy 1.3% gross metropolitan product (GMP) growth in the past year, and a low foreclosure rate (only one in every 3,246 housing units is in foreclosure), but it sails to the top spot on our list because of its unemployment rate: At 5%, the lowest of the metros we surveyed. Omaha's economy is less dependent on manufacturing than other Midwestern cities, and is boosted by a strong agriculture sector and growing biofuels industry. And while the city has a big stake in the financial industry--a factor that nearly spelled ruin for metros like New York--it doesn't specialize in the types of institutions that took big risks and chased exotic financial structures. Instead, it's home to roughly 30 insurance companies and regional banks like Mutual of Omaha.

Lone Star Luck
In No. 2 city San Antonio, home to four military bases, and Austin, our third-ranked city and the state seat of government, municipal jobs supplement Texas' robust energy sector. In Dallas (No. 6), it's a thriving tech industry that buffers it from energy highs and lows. Although Houston (No. 8) is invested mostly in oil, it has diversified its energy industry beyond oil rigs into refining and chemicals manufacturing.

What's more, the state's housing prices never ascended to the unsustainable levels the rest of the country hit at the peak of the housing bubble. Thus, it didn't crash as hard. These factors have toughened the local economy against a recession that is inextricably tied to real estate.
"Texas didn't have as big of a boom," says James P. Gaines, research economist at the Real Estate Center at Texas A&M University. "So we're not having anywhere near the kind of bust."
Behind the Numbers

To form our list, we ranked the 100 largest Metropolitan Statistical Areas--geographic entities that the U.S. Office of Management and Budget defines and uses in collecting statistics--in five categories: unemployment rate, GMP (a measure of the size of a city's economy), foreclosures, home prices and sales rates.

We ranked September unemployment rates (the most recent available by metro) using data from the Bureau of Labor Statistics; the percentage of a metro's homes in foreclosure with September data provided by RealtyTrac; and the change in GMP between the first and second quarter of 2009 from the Brookings Institution's MetroMonitor. We also included the second-quarter 2009 year-over-year change in Freddie Mac's Conventional Mortgage Home Price Index--a measure of housing price inflation--and the average days on the market for properties currently on sale (to measure sales rates), using data from Zillow.com. We then averaged the scores for each measure to arrive at an overall ranking.

While there is no foolproof method for resisting recession, a common thread in thriving cities is an economy fed by multiple industries. Former Northeastern industrial hubs like Pittsburgh, and Rochester, N.Y., while they may not seem the likeliest models of economic health, have been able to supplement industrial sector decline with a boost from public-sector jobs that have pumped up the economy even as the private sector declined. They land in the fourth and seventh spot on our list, respectively.

But Rolf Pendall, associate professor of city and regional planning at Cornell University, warns that for upstate New York, this promising news may be temporary.

"We've had government spending plugging the gap," he says. "But it's hard to say what's going to happen in the next two years if government spending has to get withdrawn a lot, as it might."

Pittsburgh's GMP grew .8% between the second quarter of 2008 and 2009, consistent with the .8% national average. Home prices there remained relatively stable while those in other cities plummeted because the area's prospects still seemed dim during the housing bubble and speculators looked elsewhere.

"These metros have been so troubled for so long," says Pendall, "that people didn't develop irrational exuberance about the prospects in their housing markets."

Cities where home prices that don't fluctuate wildly are particularly well-positioned to ride out this recession, because they were spared the domino effect of foreclosures, lost jobs and lost productivity. In San Antonio and Austin, quick sales rates (homes in these cities spend 54 and 73 days on the market respectively compared to a 100-day national median) and home prices that fall above the national average--Austin's median home price in September, for example, is a healthy $240,000, 7% higher than the average for the top 100 metros, according to data from Zillow.com--indicate that they escaped the perilous zeal for building, and lending, that swept the rest of the country between 2001 and 2007.

There's a lesson to be learned from these cities, some of which aren't economically thriving, but all of which are well-equipped to emerge from the recession in a similar position to where they started. Rather than chasing rising home prices or apparently plentiful jobs in one-industry towns, families looking for long-term economic stability should seek spots where industry is diverse and housing price shifts are benign.

Top 5 Fastest Recovering Cities
1. Omaha-Council Bluffs, NE-IA Metro Area
2. San Antonio, TX Metro Area
3. Austin-Round Rock, TX Metro Area
4. Pittsburgh, PA Metro Area
5. Harrisburg-Carlisle, PA Metro Area

NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region CLICK HERE

NAI Pittsburgh Commercial Leases 6,150 SF at the Lone Oak Technology Park Located in Sewickley, PA

Sewickley, PA - (December 14, 2009)

NAI Pittsburgh Commercial is pleased to announce the 6,150 SF lease signing of Two Men and a Truck at the Lone Oak Technology Park located at 2 South Avenue in Sewickley, Pennsylvania.

Edward R. Lawrence, Associate and Victor J. Yates, Associate, of NAI Pittsburgh Commercial, represented Lone Oak Technology Park in the transaction. AJ Pantoni, Advisor and Kim Ford, Managing Principal of CresaPartners represented Two Men and a Truck.
The owners of the park are currently in discussions with an architect about the proposed construction of a new 55,000 SF flex building on the Site in 2010.

NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region CLICK HERE

Retail Property Being Converted to School

Developer Pays $2.3M for 110,000-SF Building

Genstein Limited Partnership has purchased the 110,000-square-foot retail building at 1500 Yost Blvd in Pittsburgh from Guardian Construction Management. The developer paid $2.3 million, or $21 per square foot.

Conversion of the building for education has already begun. Propel Charter Schools signed a 15-year lease for 42,000 square feet to establish an elementary school. This will be its sixth location. Propel Charter Schools intends to open for the fall semester and plans on opening a high school at the same location the following year.

The building, built in 1970, sits on 11.3 acres and had been home for Nordstrom and Wal-Mart as temporary tenants over the last two years.

Paul Horan of NAI Pittsburgh Commercial represented the buyer and the new tenant. Jeremy Kronman, Christina Bucciero and Courtney Lynn of CB Richard Ellis represented the seller.

NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region CLICK HERE

ULI: Commercial real estate market will hit bottom in 2010

Pittsburgh Business Times - by Tim Schooley

When a commercial real estate forecast begins with slides of the Roadrunner being chased by Wylie Coyote, it’s not hard to see through to the bottom of the cartoon canyon to understand what the fall represents.

That was Charles DiRocco’s approach to presenting the Urban Land Institute’s report on the Emerging Trends in Real Estate for 2010 in a breakfast hosted by the ULI’s Pittsburgh chapter at the Rivers Club Wednesday morning.

With the residential real estate market bottoming out in 2009, DiRocco said that in 2010 the “commercial real estate is going to hit to bottom as well.

It was a road show DiRocco, Pittsburgh native who is one of the ULI’s principal researchers, has presented in cities throughout the country, serving as the messenger of what’s largely been a bad news market for commercial real estate everywhere.

DiRocco’s gallows approach didn’t sugar coat ongoing trends that suggest a business environment for commercial real estate he expects will be worse than the recession of the early 1990s. The ULI’s larger report expects real estate value declines will average more than 40 percent below previous highs of mid-2007.

With values sinking so much, DiRocco expects real estate development has largely ground to a halt for the new year as well as perhaps a few years to follow.

Richard Moody, a local economist who also participated in the breakfast discussion, emphasized that financing for any new development will remain difficult.

“If you want to see if a banker has a good sense of humor, go and ask him for a construction loan,” Moody said.

The Pittsburgh area has proven to be relatively well-positioned to withstand any fall out in commercial real estate, both men said.

DiRocco said Pittsburgh’s standing has improved over other metros in the past year by not seeing the precipitous drops in value experienced elsewhere. A panel discussion suggested that many late-cycle buyers of 2005 through 2007 could find themselves struggling with foreclosures and workouts given the burden they’ve taken with high sales prices, weakening occupancy and commercial mortgage-backed securities (CMBS) coming due.

Nick Matt, a managing director in the Pittsburgh office of HFF Inc., said it will be difficult for the banks to negotiate a wave of property falling back into their possession.

“Right now, the servicers are inundated,” he said, seeing the process as far more complicated than in the past due to the way commercial mortgage debt has been packaged into CMBS. “We’ve never been through this on the CMBS side.”


NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region CLICK HERE

Report: Pittsburgh's office rents off slightly year-over-year

Office rental rates in Pittsburgh were down slightly year-over-year, according to a report by CB Richard Ellis Group Inc.

The city saw a 1.1 percent year-over-year decline in average rental rates, the report found. As of Sept. 30, the average rent for Pittsburgh office space was $22.61 per square foot.
Boston's central business district led the Americas on the report, with a 33.9 percent drop in average rental rates.

Average office rents worldwide declined 7.7 percent in the fiscal year ended Sept. 30, according to the report, with rents down in 131 of the 179 major cities CB Richard Ellis tracks. Nearly 50 markets have seen double-digit declines. Tops among cities seeing declines was Kiev (down 64.6 percent) and Singapore (53.4 percent).

Other large drops include a 41 percent decline in Hong Kong, a 39 percent decline in Abu Dhabi and a 35 percent decline in Moscow.

New York retained its rank as the most expensive North American market, with Midtown rents of $68.93 per square foot. New York’s rents rank 24th globally.

London’s West End, where rents declined 17.8 percent during the period studied, is the world’s most expensive market, at an average of $184.85 per square foot.

Tokyo, Hong Kong, Moscow and Paris follow London among the world’s most expensive office rental markets.

The Washington Business Journal and the Boston Business Journal, both affiliated publications, contributed reporting.

NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region CLICK HERE

Conveyor Belt Manufacturer Fenner Dunlop Americas has Relocated Corporate Headquarters to Pittsburgh

Strategic location is cited as value-add by one of the newest companies to join the region’s energy economy supply chain

(PITTSBURGH – November 30, 2009)

Fenner Dunlop Americas, a wholly owned subsidiary of Fenner, PLC, a UK public company, has moved its corporate headquarters from the suburban Atlanta community of Scottdale, Ga. to Pittsburgh.

Leasing 15,000 square feet of office space in the Omega Corporate Center in Robinson Township (Allegheny County), Fenner Dunlop is now strategically located – a critical consideration during the site selection process, according to company officials.

“We wanted to be close to our North American belting product manufacturing facilities in both Ohio and Canada, as well as to key locations in our newly acquired service businesses – including Conveyor Service Corporation in Blairsville, Pa. (Indiana County), which we acquired last year – and major customer regions,” said Cassandra Pan, president of Fenner Dunlop Americas. “Operating from Pittsburgh puts Fenner Dunlop at the heart of its North American business, allowing for optimal business management. We’re close to where it’s all happening and closer to our customers.”

The headquarters relocation is expected to create approximately 40 jobs including several executives relocating from Atlanta and several new local hires. In addition to the efforts of the local commercial real estate firm NAI Pittsburgh, other development partners including the Pennsylvania Department of Community and Economic Development, Allegheny County Economic Development and the Pittsburgh Regional Alliance worked collaboratively in support of this business investment win.

Founded in 1861 in the UK, the company primarily manufactured leather belting. Today, Fenner Dunlop has operations across Europe, North and South America, Australia, China, India and South Africa and attributes much of its substantial growth to a number of major acquisitions over the last 30 years.

One such acquisition occurred in 2001and resulted in the formation of Fenner Dunlop Conveyor Belting Worldwide, which comprises the company’s core business of manufacturing conveyor belts and related products and services.

Fenner Dunlop provides total conveyor belt solutions to the coal and hard rock mining industry for surface and underground mines worldwide. As such a provider, the company is now integrated into the Pittsburgh region’s energy economy, which comprises innovation leadership and supply chain expertise across traditional and alternative energy sectors. One of these sectors is coal—a fossil fuel found in ample supply in the Pittsburgh region, where public and private R&D abounds to advance clean coal technology. CONSOL Energy Inc., world-headquartered in Washington County, is the largest producer of high-Btu bituminous coal in the United States and a major customer of Fenner Dunlop.

“Fenner Dunlop conveyor belts and the steel structures on which the belts ride are the principal ways that CONSOL moves coal from its mines. We have literally hundreds of miles of Fenner Dunlop belting in our mines, as well as overland belts. These allow CONSOL to meet its customers’ demands for coal - a fuel staple now and for the future,” said CONSOL Energy CEO Brett Harvey, who also chairs the Pittsburgh Regional Alliance Partnership. “CONSOL Energy is pleased that one of its major vendors has made the decision to join the almost 800 energy-related companies that call the Pittsburgh region home,” said Harvey.

“During the recent Pittsburgh [G-20] Summit, President Obama hailed Pittsburgh for its transformation to a model 21st-century economy. That economy includes leadership related to energy—both traditional and alternative. Our innovative edge, coupled with a historic expertise in manufacturing, is amassing a diverse and robust energy supply chain in the region. For that and other reasons, companies like Fenner Dunlop have strategically selected southwestern Pennsylvania – a place gaining recognition as the nation’s new energy capital. From Pittsburgh, these companies are operating to supply the resources, products and components that will ultimately influence the delivery of energy – not only domestically, but globally – in efficient and more sustainable ways,” said Allegheny Conference on Community Development CEO Dennis Yablonsky.

With the mining industry as a primary customer, Fenner Dunlop also recognizes that the Mine Safety and Health Administration’s Pittsburgh Safety and Health Technology Center in Bruceton, PA – just south of Pittsburgh – played a part in the company’s relocation decision. “Nationally and internationally, conveyor belt fire safety in underground mines is a critical concern. Fenner Denlop is at the forefront of belt fire safety and believes it’s strategic to be close to the organization that is uniquely influencing standards compliance around our core business,” said Fenner Dunlop President Cassandra Pan.

While Fenner Dunlop’s conveyor belting operations are largely reliant on the mining industry, the company has also developed a range of belting-related products including moving walkways, parcel handling, plasterboard forming belts, stable matting and agricultural equipment. More information is available at http://www.fennerdunlopamericas.com/.

NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region CLICK HERE