A group of experts has applied the law of supply and demand to the Downtown retail scene. And what it found could have sobering implications for the redevelopment of the Fifth and Forbes corridor.

The panel, assembled by the Washington, D.C.-based Urban Land Institute, was in Pittsburgh recently to help Point Park University plan development of its Downtown campus.

While the group urged the school to move its Pittsburgh Playhouse Downtown and to acquire two more buildings to add to its 14 properties, it came with a warning -- go slowly on street-level retail.

The reason is that the panel concluded there's just too much retail space Downtown right now. It found that the gross leasable area of retail space was oversupplied by 298,000 square feet.

That, said panelist Belinda Sward, suggests that stores and restaurants Downtown "are not all achieving a healthy or their targeted sales per square foot." Some, she added, are "at risk of potential closing."

Leigh Ferguson, the ULI panel chair, put it more precisely.

"What we're looking at is too much retail space for what appears to be the current demand," he said.

The findings could have implications for Washington County-based Millcraft Industries and others in efforts to bring more retail Downtown as part of plans to revitalize the Fifth and Forbes corridor.

Millcraft is planning about 50,000 square feet of retail space in its conversion of the former Lazarus-Macy's store into condos, offices and shops, and another 30,000 square feet at the old G.C. Murphy building, which will be home to apartments, the Downtown YMCA and shops.

There also will be ground-level retail space in the 23-story Three PNC Plaza skyscraper being built on Fifth Avenue.

Mr. Ferguson said he believes the group included the new developments in its calculations. The analysis also took into account both used and vacant retail space, including unused floors in major department stores Downtown.

Still, given the current demand, Mr. Ferguson said he would be "reluctant to create a lot of new retail" in the Golden Triangle unless it was destination retail that could be a regional draw.

Tom Sullivan, a broker with Pennsylvania Commercial Real Estate Inc. who attended the ULI presentation, said he found the panel's conclusions about Downtown retail "striking." But he added he couldn't disagree with them.

The problem Downtown, he added, is not just excess space. It's that there's "not enough good stuff."

"We have a lot of retail but it's all junk," such as discount stores, convenience stores and nail salons, said Mr. Sullivan.

Until the city is able to clean out the "bad" retail, he said, it is going to have trouble attracting high-quality retail.

Mr. Ferguson came to a different conclusion. He said he found a "good mix" of retail Downtown, ranging from national brands to the upscale to the affordable.

"The good news is that you got great retail Downtown and some very interesting retail," he said.

Michael Edwards, president and chief executive officer of the Pittsburgh Downtown Partnership, said he believes there may be too much space set aside for retail Downtown. He also thinks the retail mix could be better and must be addressed.

Mr. Edwards said the partnership is working with the Downtown Task Force to get a handle on the demand for retail in the Golden Triangle and to develop strategies based on the results.

Lucas Piatt, Millcraft vice president of real estate, said the ULI panel's conclusions would have no impact on plans for retail at the Lazarus and Murphy buildings.

He said Millcraft is looking to add the kind of destination retail Mr. Ferguson believes could be successful. Capital Grille steak house already has opened in the Lazarus building. A McCormick & Schmick's seafood restaurant will be opening later this fall.

The developer's own studies have shown that Downtown is a "good place for retail," Mr. Piatt said.

"We feel that Downtown has the potential to be a strong retail market but it has to be done right," he said.

That means attracting unique retailers not already in the local malls, getting the right mix and developing a critical mass to make the Downtown shops a destination for the region.

"We all know there's a lot of retail in the region. Downtown historically hasn't done well. But we're here to buck the trend," Mr. Piatt said.

One piece of good news in the ULI panel's recommendations for improving support for retail is increasing the number of people who live Downtown.

That effort is well under way with the completion of the 151 First Side condominium tower and plans for condos or apartments in other parts of Downtown, including the Lazarus and Murphy redevelopments and Three PNC Plaza.

Those developments, plus a number of other projects in the works, could add more than 1,000 housing units Downtown in the coming years.

"I do concur that we have to get residential Downtown," Mr. Piatt said. "That's the No. 1 priority."

The ULI also recommended that the city concentrate on strengthening and growing the Downtown work force and increasing the number of visitors through conventions, tourism and arts and cultural draws.

On the flip side, Mr. Sullivan has long advocated that the best way to improve retail Downtown is not by adding housing but by filling up vacant office space and then adding more.

Housing, he said, "is not a bad thing. It's just not the panacea for Downtown retail."