Pittsburgh Office Snapshot – Q3 2017
Median household income increased locally over the past 10-year period while the national average stayed flat, according to the U.S. Census Bureau. The City of Pittsburgh reported an increase of 18.2% from 2006 to 2016 while Allegheny County was up 8.0%. In addition, the City of Pittsburgh grew its population by more than 11,000 residents during the same period. Among the most popular city neighborhoods experiencing growth are East Liberty and Lawrenceville which topped Money Magazine’s list of the “10 Coolest Neighborhoods in America Right Now” based on a list compiled by Lonely Planet and released in Q3 2017. East Liberty is home to Google’s regional HQ, while Lawrenceville now has been dubbed Pittsburgh’s “Silicon Strip”. This Greater Downtown neighborhood has successfully positioned itself as the area’s new home for tech, landing such tenants as Uber, Robert Bosch and Microsoft in recent years. Argo AI, a company focused on self-driving car technology, and Wombat Security Technologies joined the group in Q3 2017.
Average overall asking rents in the region have settled in the $19 to $20 per square foot (psf) range for 2017. While the suburban market rents remained stagnant, CBD asking rents continued to experience incremental increases. Class A asking rents within the CBD increased 7.7% from Q3 2016 to Q3 2017 hitting $30.15 psf at the close of the quarter. Overall asking rents within the CBD also improved year-over-year, ending Q3 2017 at $26.57 psf, an increase of nearly 11.0% over the same period in 2016.
Year-over-year leasing activity in the market was down 7.2% in Q3 2017, with the suburban markets suffering the greatest drop, down 7.5%. Net absorption for the quarter was positive 120,810 sf in the CBD, but the suburban markets pulled down the market total, posting negative 171,681 sf at the end of Q3 2017.
The Airport Authority announced its plan to invest $1.1 billion to modernize the Pittsburgh International Airport by adding a new landside terminal, expanding the security checkpoint and streamlining baggage retrieval by 2023. Expected to create more than 10,000 short-term jobs and add $1.6 billion in economic activity, the Airport project coupled with the continued interest of e-commerce operators in the region should improve all metrics within the Parkway West submarket over the next several quarters.View Attachment