Industrial Snapshot Q4 2014

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ECONOMIC OVERVIEW

Despite ranking 253rd out of the 300 largest metros worldwide in employment and economic growth for 2014, Pittsburgh had several significant wins for the year. The Brooking’s Metropolitan Policy Program also listed Pittsburgh as one of only a few U. S. metros to have fully recovered from the recession, and a study released by IHS Global Insight predicts that Pittsburgh will add 18,727 jobs in 2015 – a 1.6% increase over the previous year. Several Q4 announcements by regional companies indicate that prediction may be a good one. Universal Electric is nearly doubling its footprint, adding 81,000 square feet (sf) of manufacturing space to its current 89,000-sf facility in Washington County. The company expects to create 58 new jobs over the next three years, while Dynamics, Inc., a manufacturer of intelligent battery-powered payment devices and platforms, has doubled its employment from 100 to 200 in the last six months and plans to hire at least 50 more.

Manufacturing poised for growth in 2015

After decades of losses in its manufacturing sector, Pittsburgh has set a course to revive its industrial base in 2015. The focus has shifted from the steel industry to high-tech and light manufacturing, including growth in both local start-ups and international super powers. General Electric will start construction on a new $32-million advanced manufacturing facility in Findlay Township, a part of the metro’s Airport Corridor. The company will initially create 50 jobs in mechanical, electrical and software engineering fields when it opens in Q3 2015. Leedsworld, Inc. has executed a lease for the first phase of a new 240,000-sf warehouse to be constructed on 28.11 acres at Westmoreland Business and Research Park, Westmoreland County. Plans are in place to double the size of the facility, which would bring the company’s occupancy at the park to more than 800,000 sf.

Gerome Manufacturing, a Fayette County-based manufacturer of custom sheet metal products celebrated the opening of its new $9-million, 150,000-sf facility. State-of-the-art equipment and an enhanced work environment are expected to contribute to the company’s success in attracting new global and local customers.

Drop in leasing stabilizes vacancy rate

Leasing activity in 2014 was nearly 1.0 million square feet less than one year prior, down 28% year-over-year. As a result, rental rates dropped 13.5% year-over-year and the vacancy rate stabilized, reflecting no change from year-end 2013. Though the challenge to identify options for users requiring more than 250,000 sf remains, leasing activity within the warehouse/distribution sector should recover in 2015 as 645,000 sf of space currently under construction is delivered to the market.

OUTLOOK

Home to eight of 2014’s Fortune 500 companies, Pittsburgh has emerged as a diversified global business center. Investors and business leaders from around the world have taken notice of the market’s stability and qualified workforce which should lead to growth across all industrial sectors, positively impacting leasing activity and rental rates in 2015.

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Author: Edie Hartman

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