Industrial Snapshot – Q1 2015
Capital investments in the Pittsburgh region totaled $2.3 billion in 2014, according to the Pittsburgh Regional Alliance. Of the 274 regional business investment deals recorded by the economic development organization, seven out of ten were for expansion or retention of existing companies.
Advanced manufacturing led the region’s five key industry sectors with 68 business attractions, expansions or retentions, representing $450.2 million in capital investment. Despite reporting a loss of jobs in Q1 2015, the manufacturing sector has been the most active sector in terms of transactions for six of the past eight years, with an impact of more than 10,000 jobs created or retained.
Though Pittsburgh saw an increase of 4,600 jobs in March, the region has fallen behind its average gain of 10,000 during the same period over the past five years. Unemployment within the region remained virtually unchanged, ending the quarter at 5.3%, edging closer to the national average of 5.5%. On the positive side, construction jobs were up by 2,800 positions, 1,100 jobs ahead of hiring in the same period in 2014.
High-tech and R&D lead Q1 occupier activity
The Brookings Institution ranked Pittsburgh 45th out of the 100 top metros for employment within advanced industries such as R&D and Science, Technology, Engineering and Math (STEM). With more than 103,000 professionals currently working in these fields in the region, leasing and user sales within the high-tech and advanced manufacturing sectors has gradually increased for the past five years. User sales activity in the Pittsburgh industrial market topped 1.1 million square feet (msf) in Q1 2015, a 91.7% increase year-over-year from Q1 2014. Aerotech Designs, a manufacturer and online purveyor of bicycle clothing, purchased two industrial facilities formerly owned and occupied by the Pittsburgh Post-Gazette on Pittsburgh’s North Side, Greater Downtown submarket. The company will consolidate its operations into approximately 60,000 square feet in the two buildings, which the company chose because of their proximity to the City’s riverfront bicycle trails. With 25 current employees, the company hopes to expand to 100 in the new location.
Uber Technologies, Inc. has partnered with Carnegie Mellon University (CMU) to build a robotics research lab that will focus on constructing self-driven cars. The Uber Advanced Technologies Center will be developed near CMU’s National Robotics Engineering Center in Lawrenceville. The Center also will occupy space within two neighboring buildings. The University of Pittsburgh has signed 15-year leases for three energy-related labs for its Swanson School of Engineering and incubator space for up to six innovation projects. The University plans to take occupancy of its new space at the Energy Innovation Center in Pittsburgh’s Hill District neighborhood in Q3 2015.
Though the overall vacancy rate is virtually unchanged year-over-year, asking rental rates in existing properties are expected to remain lower for 2015 in anticipation of the 1.5 msf of proposed speculative construction scheduled to break ground in the next 24 months.View Attachment