PITTSBURGH (AP) – Six years ago, Kathy Wallace and her husband did something unusual in this former steel town: They sold their suburban home and moved downtown where few condos existed, there was no grocery store, and nearly everything closed at 5 p.m.

Now, thousands of others have joined the Wallaces, staking their posts between skyscrapers and office buildings in new condos and lofts as demand for downtown living here is on the rise.

While bigger cities like Miami and Phoenix struggle with mass foreclosures and stalled housing projects, Pittsburgh is enjoying something of a renaissance as developers pour some $4 billion into its downtown.

Roberta Brandes Gratz, author of two books on urban development, including “Cities Back from the Edge: New Life for Downtown,” said Pittsburgh’s development is “really genuine” and leads to long-term success.

“Those cities that leveled a major portion of their downtown for a single mall have more of a problem in this economy and for the next at least five years,” Gratz said. “The reality is that Pittsburgh is something of a model.”

The city once described by author James Parton as “hell with the lid lifted,” has construction on nearly every downtown corner. Thousands of people snake around scaffolding hanging off buildings – many of them 100-year-old structures being restored rather than demolished – rushing past detour signs and road blocks.

All the bustle will eventually lead to thousands of square feet of retail space including a new YMCA, a light-rail extension, a new hockey arena, a slots casino and a $5 million renovation of Market Square, a historic courtyard-type area ringed by restaurants, bars and coffee shops.

“The courtyards, the urbanity, the feel on the streets, that whole energy,” Wallace says, standing behind the granite island in her kitchen in the condo she moved into in December, floor-to-ceiling windows across the room overlooking Pittsburgh’s teeming Penn Avenue.

“It’s new. It’s an emerging neighborhood. It’s never existed before, it makes it even more fun,” she adds.

Since 2001, when Pittsburgh began actively working to bring residents downtown, the population has more than doubled, from barely 2,500 in 2000 to 5,174 in 2008, according to the U.S. Census Bureau.

Currently, there are almost 1,500 occupied downtown units, not including student apartments. Within five years, that number is expected to rise to nearly 2,700, only including projects already planned, said Patricia Burk, vice president of housing and development at the Pittsburgh Downtown Partnership.

In cities such as Miami, Las Vegas and Phoenix, homes have lost more than 20 percent of their value since 2006, and new construction has largely come to a standstill.

Here, however, developers say despite the shaky economy they have no qualms about building more units because they are selling what they have either on schedule or – in some cases – far faster than expected.

Lucas Piatt of Millcraft Industries is developing thousands of square feet of retail space in and around Market Square and planning another large “green” project nearby.

Of the 60 high-end, rooftop condo units in his first project, Piatt Place, 34 of the condos that range in price from $345,000 to $2 million are already under contract, he said.

In Market Square, there is a waiting list of at least 345 people for 46 lofts, Piatt said. The company will likely have a lottery to dole out the prized units that start at $700 a month for a one bedroom to up to $3,000 for a two bedroom with a study, he added.

Still, Piatt says he has to be creative to find financing for his plans now because of the recession. He has invested a lot of his own equity into projects and is trying to ensure he has space leased or sold before construction begins.

“I think the stars are aligned right now for Pittsburgh. You have so much development right now and so many people doing so much,” Piatt said.

“It’s organic, that’s what’s cool about it,” he added. “You don’t have one developer coming in from New York and building a mall and I think that’s the way to make it sustainable.”

Mayor Luke Ravenstahl believes residents must move downtown before more retailers will move in, so he has taken steps aimed at attracting them.

For example, a 10-year abatement program launched in July 2007 means condo buyers don’t have to pay real estate taxes on the first $250,000 of their purchase, saving them up to $6,500 a year. In downtown, 241 units are taking advantage of the program.

Paris to Pittsburgh is a matching grant program that encourages restaurants and businesses to spruce up their facades and offer outdoor seating, one of the many amenities urban dwellers are seeking. And the city is also offering loans to turn upper-floor building space into lofts.

“I’m a firm believer that the downtown area is the core of the region and really the core of the city and for far too long that core has been a business hub,” Ravenstahl said.

Just a few decades ago, Pittsburgh was written off as a has-been, a former steel town that would never be the center of business and industry it once was. Famed architect Frank Lloyd Wright advised to “abandon it.”

But now the city is home to large universities, research hospitals and a more diversified economy. Ravenstahl and others say since Pittsburgh didn’t fully enjoy the boom years it isn’t going bust now.

“We don’t have the hangover because we didn’t go to the party,” Piatt said. “It’s pretty solid.”

And that is why Christopher Pretsch, a portfolio manager at Staley Capital Advisers Inc. who knows a bit about investing wisely, has bought a condo in Piatt Place.

Pretsch relocated to the Pittsburgh suburb of Cranberry from New York after the Sept. 11 attacks, but moved downtown two years later. At the time, there weren’t many downtown condos so he rented a unit at the Heinz Lofts, an apartment complex in the former ketchup factory – he lives on the floor where Worcestershire sauce was once made.

The complex is across the river from the Strip District, a downtown-area neighborhood with an eclectic mix of mom-and-pop specialty grocery stores and restaurants. Over the years, Pretsch has seen downtown develop and people make better use of its amenities, from shows to bars.

“Five years from now,” he said, “downtown Pittsburgh is going to look dramatically different than it looks now.”

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