Pittsburgh Industrial Snapshot – Q4 2018
According to Reuters, 2014 marked the first time the number of private sector jobs in science and research and development (R&D) in the Pittsburgh region exceeded those in the iron and steel mills. By the close of 2018, there were 41% more jobs in R&D than at the mills, according to the Pennsylvania Center for Workforce Information and Analysis, further solidifying the economic shift in Western Pennsylvania from heavy to advanced manufacturing. The demand for high-tech and laboratory space has led to new development in nearly all submarkets of the Pittsburgh region, including the Parkway West corridor where site work on the Airport Innovation Campus has begun. The 195-acre site adjacent to the Pittsburgh International Airport will offer office, laboratory and advanced manufacturing space complemented by retail and restaurants upon its completion in 2023.
Though year-over-year overall industrial vacancy and leasing activity were virtually flat at the close of 2018, the market experienced a 373% increase in net absorption during the same period, spurring a substantial boost in new construction as a result. Up more than 180% year-over-year, new construction projects totaling nearly 900,000 square feet (sf) broke ground in 2018. Among the latest projects released in fourth quarter 2018 was a 100,000-sf build-to-suit manufacturing facility for APEX International. The company, which manufacturers anilox, glue set and metering products, purchased a 12.95-acre parcel in the Alta Vista Business Park, Washington County submarket on which to construct its regional headquarters. Scheduled for completion in Q3 2020, the new building will house corporate offices, manufacturing and R&D operations.
Average asking triple net rental rates also saw year-over-year increases across all sectors in 2018, with warehouse/distribution space seeing a nearly 5% increase from $5.55 per square foot (psf) to $5.81 psf in fourth quarter 2018.
Leasing activity in 2019 will keep pace with the past 24 months, as current speculative construction projects near completion. A lack of available Class A manufacturing product will drive further demand for build-to-suit opportunities in this sector, particularly among occupiers serving the natural gas and polymer industries.View Attachment