Pittsburgh’s Condo Conundrum: Mixed History, Opinions Shadow First New Concentration Since ’09

Our agent Racheallee Lacek was recently interviewed for an article by the Pittsburgh Business Times, weighing in on condominium development in Pittsburgh.

Read the full article here or below:


It was an offer Kathy Wallace just couldn’t refuse.

A residential real estate agent for Keller Williams Realty, Wallace was selling the 38-unit Smallman Place condominium project in the Strip District two years ago when she and her husband decided to buy one of the units for themselves.

The Wallaces had made a deposit and begun building it out when, out of left field, they were propositioned for the unit.

Wallace recalls how she and her husband initially said no before getting another unsolicited bid she says “was so crazy that I told them that for their sake, they should put an appraisal contingency” into the sales agreement to protect themselves as buyers.

The couple sold the condo and now are looking to buy another new unit, this one on the South Side.

More than just an example of what appears to be pent-up demand for residential condos in Pittsburgh, the sale eclipsed $400 a square foot, a ceiling that previously had not been reached in the trendy Strip District.

For Wallace, her experience, as well as brisk sales of new projects she represents, including the McCleary School Condos in Lawrenceville (four units remain out of 25) and the Bloomfield Lofts (12 sold, six are available), would seem to indicate a desire for more condos in Pittsburgh.

“From Day One, I have never felt we had a enough product, nor a good variety of product,” she says. “I have so many people that I’ve talked to over the years that are still showing interest. People get very, very frustrated that there isn’t product to buy.”

That may be changing as Pittsburgh again finds itself on the brink of a condo moment, modest as it may be.

Unlike other property types in the region, residential condos inspire a distinctly divided mix of true believers and reluctant skeptics.

Put Racheallee Lacek, a sales associate for Piatt Sotheby’s International Realty, among the former.

“I think any new construction project with the right team and the right idea, with a really good location [and] with the right price points … it’s going to sell,” she says.

Lacek and others on the sales team at Millcraft will be marketing a new 87-unit condo project called Lumiere Residences as part of the redevelopment of the former Saks Fifth Avenue property downtown.

“When you see our presales begin,” she pledges, “our phones won’t stop ringing.”

But ask Ralph Falbo, chairman of real estate company Ralph A. Falbo Inc., how he views the market and the answer is markedly different.

“I don’t see a rush for condos,” he says.

Falbo’s view of Pittsburgh’s condo market comes from his experience spearheading the development of 151 First Side, the first major condo development in downtown in more than 40 years when it opened a decade ago.

“I know there’s a perception that residential rents have gotten so high that people are saying maybe I should just buy because mortgage rates are still low,” he says. “But I don’t see a lot of people wanting to change into permanent residency in a condo. I see more people wanting to rent apartments because they don’t want to be tied down to long-term debt.”

New wave, long drought

These differing points of view soon will be tested.

A month ago, Boston-based The Davis Cos. was chosen by the board of the Pittsburgh Parking Authority — working with the Pittsburgh Cultural Trust — to redevelop the garage at Ninth Street and Penn Avenue downtown into a project that would include as many as 180 condos in the Cultural District. The development is expected to cost as much as $175 million.

It followed the May announcement by a joint venture of Millcraft and McKnight Realty Partners to build the Lumiere Residences as the second phase of the Saks Fifth Avenue redevelopment, a plan that recently added two floors, bringing the unit count from 70 to 87.

Other new condo projects include a 17-unit building from tech entrepreneur Francois Bitz called Penn 23 in the Strip District; a 39-unit project by Solara Ventures in Squirrel Hill; HHF LLC’s 12-unit St. Casmir Church redevelopment on the South Side; and a development already built on Butler Street by Alphabet City Co. that originally was to rent 15 units but now is selling them.

These projects are, in part, inspired by a concern that Pittsburgh’s apartment boom is adding too many units than can quickly be absorbed.

But they also come as new condo development has been all but dormant in Pittsburgh.

“This will be the first new concentration of condos in downtown since Three PNC Plaza,” says Jeremy Waldrup, president and CEO of the Pittsburgh Downtown Partnership, of the multipurpose building developed by PNC Financial Services Group Inc. that included 29 condos when it opened in 2009. “The condo market is still a big question mark. We just don’t have the product history.”

In its 2017 midyear report for different property types, the Pittsburgh office of Integra Realty Resources notes 2,000 rental apartments have been built in the region in the past year, with 3,000 or more under construction and nearly 8,000 in the planning stage.

Yet, Paul Griffith, senior managing director of Integra’s Pittsburgh office, observes there isn’t enough condo development in Pittsburgh to even justify its own report.

“Pittsburgh has just always been a really, really tough condo market,” he says. “When the rest of the country is on a condo boom, [local developers] never really enter it until it’s winding down everywhere else.”

The Pittsburgh Downtown Partnership offers a measure of just how few new condos have been added to the supply in and around the Golden Triangle, putting the total at 43 since 2013 in a market adding apartments by the hundreds.

The PDP puts the total number of residential condos in the greater downtown area at only 866, or less than half the total of apartments Integra reports Pittsburgh added in just the past year.

Look at any Pittsburgh neighborhood that’s experienced new development in the past 15 years and there’s likely at least one condo proposal that died for one reason or another.

For example, two landmark buildings in East Liberty now successfully redeveloped, the Ace Hotel and Walnut on Highland apartments, once were planned to be turned into condos. A site in Squirrel Hill on which developer Herky Pollock now plans to build an apartment building up to 10 stories once included condos and a hotel. And in the Strip, the New Federal Cold Storage building still awaits redevelopment as apartments after being considered for condos nine years ago.

The case for new condos

Lynn DeLorenzo, a partner with South Side-based Tarquincore LLC who has worked with a number of the major apartment developers in the region, says she has been awaiting a new wave of condo development here.

“I think when condos come into a market, they just make the market stronger,” she says. “You have to vertically integrate different product types to make a stronger market.”

Helen Hanna Casey, president of Howard Hanna Real Estate Services, the region’s largest residential real estate firm, sees demand from two groups: empty nesters and young adults without families.

The older set, she says, is used to owning its homes, but wants to right-size. The younger group already is acclimated to the luxuries of new-apartment living.

Hanna Casey estimates a demand for roughly 2,500 condo units throughout the region, and expects more to come.

“I think you’re going to see a lot in the next two years,” she says. “The question is will there be great differentiation in the units to appeal to different markets.”

Buyers acknowledge a limited supply of condos from which to choose. That reality drives home the unique proposition of what condos offer and underscores their investment potential.

Ed Shriver, a principal for downtown-based Strada Architecture LLC, and his wife recently traded in their suburban home along the Parkway West for a condo downtown after their two daughters left the nest.

Giving up his daily commute for a short walk to the office, Shriver estimates the condo cost 15 percent to 20 percent more than what their house sold for — he did not divulge the price — but notes the unique context of where he’s living now.

“… We bought a house effectively on the river at the Point in Pittsburgh,” he says. “How many houses are there in the suburbs? Tens of thousands. How many condos on the river at the Point are there? Right now, there’s about 400.”

Justin Kline, an associate who works in investment sales at commercial real estate company Colliers International, is viewing Pittsburgh’s condo market as a 31-year-old first-time home buyer who grew up in Lawrenceville and lives in Shadyside.

Kline is hopeful for a new supply of condos that might offer a buying opportunity in a market of often fast-escalating prices for single-family homes, which he also continues to consider. Seeing downtown as priced primarily for empty nesters, he views the Strip as both a place to live and invest.

“My thought was even if you’re buying a two-bedroom at $400,000, the Strip will be more of a live-work-play environment and right now the only option is to rent,” he says. “Capital appreciation is almost inevitable.”

Condo caveats

Even among Pittsburgh condo developers, there is a lingering doubt about the local market.

Jack Benoff, principal of suburban Philadelphia-based Solara Ventures, stands out as one of Pittsburgh’s most successful condo developers, completing and selling out three projects to date, two in the Strip District and one downtown. He soon will begin marketing his newest project in Squirrel Hill.

Yet, he emphasizes not to overestimate the market here.

“It’s evolved, but it’s so small and nascent that it’s evolving very slowly,” he says. “As long as someone is doing a small project in a good neighborhood, there’s a need.”

It’s an understanding Benoff has gained after fighting to get financing for his initial projects that were completed during the Great Recession. He is quick to remember local bankers being incredulous at the idea of lending him money and people telling him he was crazy when he started what is now the Otto Milk Lofts, which would successfully sell out.

Years later, after succeeding with two condo companion projects on Smallman Street totaling about 80 units, Benoff scoffs at the recent memory of meeting someone in town who called him “the Condo King of Pittsburgh” for a level of success he sees as modest in scale.

“That’s kind of embarrassing, don’t you think?” he asks.

Falbo also expresses ambivalence about condos in Pittsburgh, and does so after helping to create the market for them with 151 First Side, his 19-story, 80-plus-unit building.

A champion of downtown living, Falbo recalls the project’s many challenges, including a fire during construction, the bankruptcy of the firm building it, not to mention the recession during which it was developed.

With all that, 151 First Side still has a few units that have never sold, including its $2 million penthouse. And Falbo says the development team has only made a little money from it.

“The only way I would do another one again is if I had a presale of at least 60 percent of [units] with a nonrefundable deposit,” says Falbo, adding 151 First Side was marketed with a 35 percent presale and refundable deposits.

“It’s too risky,” he adds. “It’s too tough.”

The financial risks and rewards obviously vary greatly for condos. As Benoff and Falbo both point out, a developer needs to sell all the units for a project to be fully profitable.

Walnut Capital Partners, prolific in developing apartments, built the Metropolitan Shadyside on Neville Street in the East End, only for it to take five years to sell out. The firm hasn’t built another condo since, despite continuing to actively pursue new development.

The Carlyle, a downtown condo conversion of around the same vintage as 151 First Side, also has not sold out.

Such mixed results can make the property type challenging to finance, say some.

Condos also come with added layers of complication for buyers, who typically take on monthly fees to maintain their buildings. Tax abatements, often critical for condo buyers and developers, can add to the complexity.

Yet even skeptics agree there is a market for the right product in the right place. Falbo expects the Davis Cos. project will have good prospects if it goes forward, as does Intergra’s Griffith.

“I do think within the housing market overall there is a percentage of people who would buy and pay for a new condo,” he says. “I just don’t think the market is real deep.”

Nor is the market deep for housing inventory in general, say condo proponents such as Lacek and Hanna Casey. In fact, the National Association of Realtorshas characterized the market as in a shortage crisis.

While it remains to be seen how many buyers will turn to condos, Hanna Casey says she expects the demand is strong.

“I don’t go to a dinner party where somebody doesn’t ask ‘where are we going to go?’” she says.

We’re Hiring: Marketing and Communications Intern

Piatt Sotheby’s International Realty is seeking a Marketing Intern for the ­­­2017 fall semester. The ideal candidate will be a junior or senior, and have a widespread interest in all facets of marketing, including advertising, digital marketing, graphic design, and event planning. You will be working with three staff members, learning about a variety of marketing tasks and gaining real world experience in a fast-paced environment. This internship is currently being offered as unpaid/for college credit.

Piatt Sotheby’s International Realty is a real estate firm in Downtown Pittsburgh, offering residential home buying and selling services and world-class marketing. A new affiliate of Sotheby’s International Realty®, we are quickly growing our marketing efforts. Learn more about us at piattsothebysrealty.com and on our social media channels.

Duties may encompass:

  • Graphic Design and Printing
    • Utilizing Adobe Creative Suite (InDesign, Photoshop) to update print collateral (e.g., postcards, booklets, fact sheets)
    • Printing and maintaining in-house print materials, ensuring quality and quantity
    • Delivering and maintaining collateral at some properties
  • Writing and Blogging
    • Creating well-written and relevant blog content
    • Creatively and appropriately utilizing links, images, and tags to enhance the blog
    • Proofreading all print collateral and property listings to meet standards
  • Social Media
    • Researching, brainstorming, and assisting to create relevant and interesting content and campaigns for Facebook, Twitter, and Instagram
    • Uploading YouTube videos as needed
    • Monitoring pages for interactions (comments, messages, reviews) and reporting them to management for action
    • Collecting data and creating reports for specific initiatives, campaigns, or properties
  • Email Marketing
    • Utilizing MailChimp to draft email marketing campaigns
    • Collecting data and creating reports for sent campaigns
    • Updating lists and subscriber lists
  • Event Assistance
    • Setting up and breakdown of booths or materials
    • Taking high-quality photos to be used for website and social media
    • Assisting with the distribution of postcards and invitations
  • Public Relations
    • Drafting and proofreading press releases
    • Assembling media kits
  • Government Affairs
    • Writing meeting notes and minutes
    • Assisting with layout and one-sheet design
    • Assembling database of local officials with contact information

 

Preferred Skills: Experience with Adobe Creative Suite (InDesign, Photoshop); basic graphic design knowledge; experience with WordPress and writing blogs or articles; excellent writing, grammar and proofreading skills; valid driver’s license and vehicle

How To Apply: Email Bailey Sherrier, Director of Marketing, at  bsherrier@sothebysrealty.com – send your resume, cover letter, and any relevant portfolio items no later than by end-of-day on September 7 2017. Candidates will be emailed to schedule an interview time.

Hours Per Week: 15

Office Location: 260 Forbes Avenue, Suite 1525, Downtown Pittsburgh

Office Hours: Monday-Friday, 8:30 a.m. – 5 p.m.

Dress Code: Business casual

Meet Our Team: Conrad Waite

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Born and raised in Pittsburgh, Conrad Waite has been working in real estate since 2011. With bartending and restaurant experience, Conrad prides himself on his people skills and customer service. Make sure to congratulate him on his upcoming wedding!

What is a favorite or unique home you have sold?
We sold a house on Morewood Avenue in Shadyside in three hours for over one million dollars. It had been redesigned by Tasso Katsales and was formerly a horse stable. It was, hands down, one of the most incredible houses I have ever been inside.

What is your best advice for sellers?
Listen to your agent! Our job is to make your lives easier. Whether you want the most money, or the quickest sale, we will listen to your needs and give you recommendations based on them. Sometimes doing just a few small things can make a big difference in selling your house.

What is your best advice for buyers?
Use an agent! Buyer agency is the best deal in the world. The seller is paying for you to have an expert on your side! While it’s good to have an agent that is familiar with the areas where you are looking, the most important thing is to have an experienced agent that can protect you throughout the transaction.

What is your strongest real estate skill?
My people skills are what set me apart as an agent. That includes the customer service skills I bring to my clients as well as my negotiating skills throughout a transaction. On more than one occasion I have had other agents tell me that they encouraged a seller to work with my buyer, because of my reputation and previous experience with that agent.

What do you love most about Pittsburgh?
We are a city of neighborhoods! Plus, for our size, we are one of the most culturally rich and diverse cities in the world. When people came to Pittsburgh, they settled in areas with others of the same heritage –that is how we ended up with such distinct neighborhoods. Watching all of these neighborhoods grow and change over time has been awesome! Plus, from museums, to sports, to food, to the arts and theater, Pittsburgh has a tremendous amount to offer.

What is one of your hobbies?
I do my best to read whenever possible. I am always searching for good fiction books, and really enjoy books on business, from culture and strategies to biographies to the history of successful companies; I find it all very interesting and informative.

Where can we find you on the weekends?
When I’m not showing houses, during the fall and winter, you can normally find me coaching hockey. In the spring and summer, I like to golf, and spend as much time with my fiancée as possible.

What’s something we may not know about you?
I was a musical theater geek as a kid, and I’ve acted in a number of movies filmed in the Pittsburgh area.


View Conrad’s associate profile here.
Email: cwaite@sothebysrealty.com

Piatt Sotheby’s International Realty Sponsors Pittsburgh Vintage Grand Prix

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Piatt Sotheby’s International Realty will be the exclusive real estate agency sponsoring the 2017 Pittsburgh Vintage Grand Prix, and the official sponsor to the “Downtown Parade and Plaza Display” on Wednesday, July 12 at 11:15am.

The parade begins in Station Square and will make its way into Downtown. A live band, CBS radio, and a special live art performance will welcome the parade into Market Square for an 11:15am press conference.

Speakers at the press conference include Mark Jennings, Piatt Sotheby’s International Realty’s Broker, Michael Schindel – PVGP Race Committee, and Councilman Corey O’Conner.

“Piatt Sotheby’s International Realty is positioned to be a driving force in the growing Pittsburgh luxury real estate market – further highlighting downtown Pittsburgh as an ideal place to call home,” said Lucas Piatt, owner of Piatt Sotheby’s International Realty. “The Pittsburgh Vintage Grand Prix is a classic summer time tradition in the City of Pittsburgh and we are honored to take part in this year’s events.”

Teaming up with Ron Lewis Automotive, Piatt Sotheby’s International Realty will also feature two 2017 Alfa Romeo Guilia sports cars at the lunch time kick off to race weekend.

Later that evening cars will be displayed on the Roberto Clemente Bridge for the Tune Up Party at Atria’s. The car display on the bridge is free to the public.

During race weekend, agents will be at the Lamar VIP Pavilion. Race weekend at Schenley Park is free to the public.

For a full list of event details, please visit http://www.pvgp.org, and for more information on Piatt Sotheby’s International Realty and to see all our listings please visit www.piattsothebysrealty.com.

Pittsburgh Market Featured in “Perspectives”

Pittsburgh is featured as one of the focus markets in the latest edition of Perspectives, a Sotheby’s International Realty®  quarterly newsletter designed to provide insights into the global market and network.

“Pittsburgh is a city on the rise,” says Mark Jennings, managing broker. “We’re emerging from the ashes of the steel industry into a robust epicenter, recently named one of the six top cities to start a business.”

Read the entire 2017 Second Edition issue of Perspectives here.

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Meet Our Team: Kate Balzer

 

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A native of Hickory, Pennsylvania, Kate Balzer began her real estate career thirteen years ago in Las Vegas. Now back in the Pittsburgh region, Kate serves Southwestern Pennsylvania and the beautiful rolling hills of Washington County.

What is your proudest moment in real estate?
Coming to work for Piatt Sotheby’s International Realty — seriously!

What is a favorite or unique home you have sold?
My favorite house that I have sold was a custom home in Peters Township. It had a hibachi table in the kitchen, and overall was a great, quality home.

What is your best advice for sellers?
It is imperative that a seller’s home has good curb appeal, neutral paint, is de-cluttered, and priced to sell.

What is your best advice for buyers?
It is best to be pre-approved ahead of time to know exactly what you can afford. Have your financials in order, and if you love the home, put in an offer! Don’t delay!

What is your strongest real estate skill?
My strongest real estate skill is negotiation. It’s essential to both buyers and sellers.

What is your favorite Pittsburgh restaurant, and why?
Le Mont because of the view, food quality, and all-around atmosphere.

What is one of your hobbies?
I love to bike ride on trails around the city.

Where can we find you on the weekends?
You can find me showing housings, at an open house, or watching my kids play sports.

What’s something we may not know about you?
I love to sky dive.


View Kate’s associate profile here.
Email: kbalzer@sothebysrealty.com

Meet Our Team: Todd Kilgore

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Todd Kilgore grew up in Mansfield, Ohio, but now lives on the North Side with his family. Todd is a skilled buyer and seller agent, and is versed in single-family homes, new construction, and historic homes.

What is your proudest moment in real estate?
Last year, I was entrusted to sell the home of very close friends. Honesty and integrity are essential to building my real estate business, and while it wasn’t an easy process, we maintained open communication and closed with a significant profit for my sellers.

What is a favorite or unique home you have sold?
The most unique home I’ve sold involved a gut rehab project that included two spiral staircases. I love working with developers that have a unique vision for homes that were built over 100 years ago.

What is your best advice for sellers?
The market will dictate the true value of a home if it is marketed correctly.

What is your best advice for buyers?
I try to preach patience with buyers and trust your initial gut feeling on a home. Generally, you’ll know pretty soon if this property is your “home.”

What is your strongest real estate skill?
Communication is essential. I think a face-to-face meeting is very valuable.

What do you love most about Pittsburgh?
I’m not a native Pittsburgher. When we moved here in 2006, we fell in love with the people and walkability of the city. Also, being an outdoor enthusiast, there are more outdoor activities in Downtown Pittsburgh than in Denver (my home for 10 years).

What is one of your hobbies?
I started skiing when I was just 5 years old, and can’t wait until my daughter and I can share a ski lift ride in the winter.

What’s something we may not know about you?
My wife and I named our daughter after a song from our favorite band, Widespread Panic.


View Todd’s associate profile here.
Email: tkilgore@sothebysrealty.com

Meet Our Team: Shannon Kosko

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Shannon Kosko, a native of Brighton Heights, comes to our team after starting in real estate in 2015 after owning her own salon.

What is your proudest moment in real estate?
Selling a beautiful home that had no parking.  It was a real challenge…but it was worth it.

What is your best advice for sellers?
De-clutter your home.  You’re selling a lifestyle and you want the buyer to want that lifestyle.

What is your best advice for buyers?
Do not settle for something you don’t love!

What is your advice to other agents?
Don’t forget about your clients after the closing. It should be the start of a relationship, not the end.

What is the best place that you visited thus far, and why?
Bermuda. It’s gorgeous; the weather is amazing and the people are so nice.

What is your favorite Pittsburgh restaurant, and why?
I love Hyde Park because they know us there and treat us so well. I also love the atmosphere and the food!

What’s something we may not know about you?
My sisters and I had a personal shopping business and did weekly segments on KDKA!


View Shannon’s associate profile here.

Meet Our Team: Garrett Freund

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Garrett Freund (pronounced “friend”) has been working in real estate since 2009, with his roots in Dallas. The native Pittsburgher since moved back and has been working for clients here for the past two years.

What is your proudest moment in real estate?
I helped a client buy a house, who was sure she’d never be able to.

What is your best advice for buyers?
Make a list of the most important home features to you, and stick to it.

What is your best advice to other agents?
Listen to your clients and treat other agents with respect. We’re all in this together.

What is your strongest real estate skill?
Understanding what my clients want.

What is your favorite Pittsburgh restaurant, and why?
Piccolo Forno in Lawrenceville! Go and see for yourself; you won’t be disappointed.

What is one of your hobbies?
I love working out.

Where can we find you on the weekends?
Working, showing clients homes!

What’s something we may not know about you?
I’m the youngest of five siblings by 14 years!


View Garrett’s associate profile here.
Email: gfreund@sothebysrealty.com

Meet Our Team: Pamela Tracy

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Pamela “Pam” Tracy, once a chemical engineer, has been working in real estate since 2011. As a Downtown condo owner and Senior Real Estate Specialist, Pam is an excellent buyer’s and listing agent with expertise in city living, relocation, and downsizing.

What is your proudest moment in real estate?
My proudest moment was seeing my client, a refugee from Iraq, receiving the keys to the home he purchased for his family. They had searched for over two years through fifty houses, looking for a home that could accommodate their large family, have first-floor living for their elderly parents, be near a public transit stop, and was affordable. We spent so much time together and became like family. I learned so much from them and was honored to help them find a home in their new country.

What is a favorite or unique home you have sold?
Of all the homes I have sold, my favorite is a charming stone Tudor in Mt. Lebanon. Set on a cul-de-sac, it’s old world charm combined with the park-like yard, gardens, waterfall and ponds provided a private sanctuary in the midst of suburbia.

What is your best advice for buyers?
Find a knowledgeable real estate agent who you respect and like. While you can go onto various websites to see properties and learn about the process, no one knows your market like local agents, and their knowledge is vital. You should like him or her because you are going to be spending a great amount of time with them over a period of a few months. In addition to that, obtain pre-approval before looking at homes.

What is your advice to other agents?
Treat your clients as if they were your family. Educate yourself beyond the licensing requirements to better serve them.

Where are you originally from?
I was born in upstate New York, but moved to the greater Pittsburgh area when I was in 4th grade, so I consider Pittsburgh my home.

What do you love most  about Pittsburgh?
While I love the city and all that it has to offer, the people are what I love most about Pittsburgh. Warm, friendly, kind, helpful, hardworking, innovative and authentic, Pittsburghers, both original issues and long-time transplants, are truly what makes this city so wonderful.

What is one of your hobbies?
I love to read; my taste in reading is varied, but I generally read non-fiction.

What is the best place that you visited thus far, and why?
While I love beaches and tropical locations, the best place I have visited is Rome. It is so vibrant and engages all of your senses. It is part of the reason I wanted to move Downtown – to be able to walk everywhere on a daily basis.


Connect with Pam Tracy on LinkedIn here. View Pam’s associate profile here.

Email: ptracy@sothebysrealty.com