The Greater Downtown / Fringe market continued to be the center of both leasing and development activity within the Pittsburgh region at the close of 2018. Total leasing activity within this submarket was just under 500,000 square feet (sf) at year-end, while new construction projects increased to more than 600,000 sf.
Though year-over-year overall industrial vacancy and leasing activity were virtually flat at the close of 2018, the Pittsburgh industrial market experienced a 373% increase in net absorption during the same period.
Completion of current construction projects is expected to boost fourth quarter 2018 leasing activity and subsequently, improve net absorption for the first half of 2019. Overall rental rates within the warehouse/distribution and manufacturing sectors will continue to rise as developers respond to increased demand for higher clearance heights and more energy-efficient construction.
Relocations and tenant right-sizing, particularly within the CBD have led to negative YTD net absorption of 339,000 sf and an increase in vacancy of nearly 100 basis points (bps) this quarter. Law firms and professional service organizations are moving to more open, modern floor plans resulting in smaller requirements. As a result, landlords have undertaken substantial capital improvements to accommodate these users, driving up the average asking rental rates across all classes.
Pittsburgh’s unemployment rate dropped to 4.5% in Q2 2018, its lowest point since the 1970’s while adding nearly 13,000 new jobs to the region during the same period. Information technology and robotics led the region as the most active sectors for business deal and job creation, according to PitchBook-NVCA Venture Monitor. Investors poured $26.8 million into 18 local tech firms in Q2 2018, up 33% over the same period in…
Productivity enhancements and substantial capital investments helped drive growth within the manufacturing sector up 2.0% in Q2 2018 over the same period 2017. According to the Allegheny Conference’s Business Investment Scorecard, manufacturing and advanced manufacturing were second only to information technology and robotics in capital investment and job creation in 2017, posting $165 million in investments and 1,335 new jobs. Watt Fuel Cell Corporation, based in Mount Pleasant, Westmoreland County,…
The number of new construction projects breaking ground in Q1 2018 was up 13.2%, even though the overall vacancy rate dropped 110 basis points (bps) year-over-year. Developers continue to focus on the Greater Downtown submarket for a variety of speculative office and mixed-use projects.
With more than 5.2 million square feet (msf) of industrial leasing activity recorded over the past 24 months, it was no surprise that net absorption in Q1 2018 was nearly double that of the same period 2017. Few speculative projects remain vacant within the Pittsburgh region, and though construction starts year-to-date lag those of the same period 2017, several new developments were announced.
Though year-over-year construction completions within the office sector ended 2017 down 13.1% from 2016, posting just shy of 800,000 square feet (sf) of new inventory, new development announcements dominated the news cycle throughout the second half of the year.
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.