Pittsburgh Industrial Snapshot – Q4 2016

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The Pittsburgh region gained approximately 4,400 new jobs between December 2015 and December 2016, amounting to a 0.4% increase year-over-year but still falling short of the 1.7% benchmark average. Manufacturing and construction jobs are expected to rebound over the next 24 months in response to the announcement that all federal, state and local approvals have been granted for the construction of Shell’s ethane cracker plant in Beaver County. Both sectors have suffered steady declines over the past several quarters while educational and professional services have experienced growth.

Market Overview

Vacancy rates continued to fall across all industrial sectors, ending Q4 2016 with an overall vacancy of just 5.7%, down 1.1 percentage points from the same period in 2015. In response to the plunging vacancy, asking rents jumped a dramatic 36.6% year-over-year to $7.84 NNN per square foot Q4 2016.

Demand continues to build for energy-efficient warehouse/ distribution facilities offering a host of amenities including cross-dock configuration, wide column spacing and energy-efficient mechanical systems. In response, regional developers Al. Neyer and Burns & Scalo have ramped up construction in the region’s Airport Corridor to meet the growing interest for speculative projects. Neyer, who built a 300,000-square-foot (SF) distribution facility at Clinton Commerce Park for Berlin Packaging, has extended its agreement with the Airport Authority to develop 40 adjacent acres into three pad-ready sites capable of holding up to 850,000 SF of light industrial space with an estimated cost of $40 million. In nearby Fairywood, Burns & Scalo projects a Q3 2017 delivery for its 320,000-SF Fairywood Logistics Center, while Ashley Capital, LLC, is now marketing its 316,374-SF speculative warehouse/distribution project known as 200 Solar Drive which was delivered to the market in Q4 2016.


Energy tenancy in the region, which dropped to 3.0% in Q4 2016 versus a 15.0% market share just four years prior, should gain traction in the coming months as Shell’s cracker plant comes online and changes in environmental and trade policies take shape under the new administration. Pittsburgh’s industrial market is well-diversified and appropriately positioned to weather the ebbs and flows of various business sectors. Continued interest in the region is expected by e-commerce retailers looking to better meet the on-demand needs of their customers and downline plastics manufacturers seeking to streamline northeast distribution chains in anticipation of Shell’s future cracker.

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Author: Nicole Montecupo

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