Industrial Snapshot Q2 2014
Though the region experienced virtually no jobgrowth in 2013, the Pittsburgh metro hasadded 10,700 jobs between June 2013 and June2014. Employment in the region rose to1,175,200 in Q2 2014 and unemployment fell to5.6%, down 1.4 percentage points (pp) from the same period 2013.Average wages in the market rose 1.8% over the previous year to$49,170. Expectations for further job growth remain high as ShellChemicals signed 10 third-party contracts related to its proposedethane cracker in Monaca, Beaver County submarket, signalingforward motion toward the execution of its sale agreement on thesite.
LEASING ACTIVITY SENDS MIXED MESSAGES
Despite lagging behind year-to-date (YTD) leasing activity in 2013 bymore than 15%, 2014 has brought Pittsburgh one of the largest lease transactions it has seen in recent years. Cenveo, Inc., a Stamford, CT based company that purchased competitor National Envelope out of bankruptcy earlier this year, announced that it would leave its 450,000-square foot (sf) facility in Scottdale, Fayette County, upon lease expiration later this year to move into 300,000 sf at the 2.8-milion square foot (msf) RIDC Westmoreland Industrial building in Mount Pleasant. In addition, BFG Supply Company leased 176,000 sf at 460 Nixon Road in Northeast Pittsburgh submarket, and SDC Nutrition leased 60,000 sf at 170 Industry Drive in the Parkway West.
Transactions in the 50,000-sf to 100,000-sf range continue to driveleasing activity in the Pittsburgh market while prospects seekingspaces of 200,000 sf or greater struggle to identify viable options. Infact, only 13 class A and class B warehouse/distribution facilities ofmore than 200,000 sf with the preferred 30′ ceiling heights existwithin the region, and the vacancy rate among these properties as ofQ2 2014 is 0%.
SPECULATIVE CONSTRUCTION CENTERS ON FLEX
The Elmhurst Group announced that it would move forward with the construction of a sister project for its fully-leased flex property at Thorn Hill Industrial Park. The building will consist of 48,400 sf of speculative flex product and will finish the 26-acre project near the entrance to the park. The company also plans to construct a 50,000-sf warehouse at its development near Pittsburgh International Airport.
Oxford Development Company announced plans to build up to100,000 sf of speculative flex and office space near the new Thermo Fisher facility. The company has not determined whether it will construct one or two one-story buildings.
The stability of Pittsburgh’s commercial market, low cost-of-living and accessibility to major roadways and rail is expected to continue drawing attention from major warehouse/distribution users; but,without the construction of new speculative product in excess of 250,000 sf, Pittsburgh will fail to meet this demand and will miss further opportunities for economic development.View Attachment