Pittsburgh Industrial Snapshot – Q4 2017
The seven-county Pittsburgh region posted a 4.1%-increase in average weekly wages from 2016 to 2017, surpassing the 3.5%-average of its benchmark peer cities, according to the U.S. Bureau of Labor Statistics. This wage growth coupled with a 1.0 basis point year-over-year decline in unemployment shows progress in Pittsburgh’s efforts to become more competitive in attracting and retaining a talented workforce, a cause it has struggled with for more than two decades. The region received a substantial boost within the international transportation sector with the opening of CSX’s 70-acre intermodal facility just west of the City of Pittsburgh. The $850 million project improves supply-chain flow and reduces transportation costs by connecting Pittsburgh with 40 other markets using double-stack cars. Global Trade Magazine named Pittsburgh on its list of best cities for global trade, specifically citing its intermodal capabilities.
Though year-end 2017 vacancy was down 0.3 basis points from the same period 2016, both leasing activity and construction deliveries also declined. Construction completions for Pittsburgh’s industrial sector reached just over 1.4 million square feet (msf) in 2017, while leasing activity for the year hit 2.5 msf, down 240,000 square feet from 2016. In similar fashion, rental rates dipped slightly from an average rate of $7.84 per square foot (psf) triple net (NNN) in Q4 2016 to $7.58 psf NNN at year-end 2017.
On the positive side, Shell Chemical Appalachia, LLC has completed the required infrastructure improvements and commenced construction on its $6 billion petrochemicals complex in Potters Township, Beaver County submarket, northwest of the Pittsburgh International Airport.
In Pittsburgh’s North submarket, Elmhurst Group and the Regional Industrial Development Corporation have partnered to develop the Heights at Thorn Hill, which will add 135,000 sf of flex and office space to the Thorn Hill Industrial Park in Cranberry Township, Butler County, where the vacancy rate is just over 2.0% and the average asking rate for flex space is the region’s highest at $16.17 psf. Phase I – a 60,000-sf flex building – is scheduled to deliver in Q3 2018.
Changes in vacancy and rental rates will be minimal and will have little impact on the overall market in 2018. New construction projects should surpass 2017 levels but net absorption will slowView Attachment