Industrial Snapshot – Q4 2015
Construction jobs in the Pittsburgh metro rose 9.9% over the past five years according to the U. S. Bureau of Labor, growing from 47,500 in 2010 to more than 52,000 at the close of 2015. The region ranked 11th in a national survey of metropolitan areas with populations greater than 500,000. The region’s job growth improved by 1.2% year-over-year in December 2015, though this increase failed to reach the benchmark average of 1.9%. Manufacturing and other services continued to suffer losses dropping 3% and 1.5%, respectively, during the same period.
Leasing activity for 2015 was down 12.7% year-over-year from 2014, ending the year over 2.2 million square feet (msf). Despite the decline in leasing activity, overall net absorption was up dramatically year-over-year, posting nearly 1.8 msf, a 144% jump with warehouse/distribution making up 85% of the total activity. The completions of the 305,000-square foot (sf) FedEx Distribution Center in Butler County; the 125,000-sf manufacturing facility in the Parkway West for GE; and the 420,000-sf distribution center for Gordon Foods played significant roles in the year’s positive overall absorption. Overall asking rental rates also increased 18% to $5.74 per square foot triple net at year-end.
A growing number of new projects in the region, particularly in the Parkway West near the airport should propel leasing activity and absorption rates in 2016. Among the most anticipated deliveries are Ashley Capital’s 316,000-sf warehouse/distribution facility at Chapman Westport; Al Neyer Inc.’s 252,000-sf distribution facility at Clinton Commerce Park; and, the 129,000-sf Building 4000 at McClaren Woods.
Reduced energy costs should boost manufacturing and reduce distribution costs driving greater demand within the industrial sector in 2016. Higher consumer spending and continuous growth in e-commerce operations will create new requirements for distribution and warehouse space. Developers and investors will seek housing and mixed-use conversion opportunities in outdated warehouses and data centers to meet growing global urbanization trends.View Attachment