December 2011: Pittsburgh Office Market Highlight
Source: Northeast Real Estate Business Magazine
Contributed by Paul Horan, Founding Principal
Colliers International | Pittsburgh
These are exciting times for Pittsburgh’s Central Business District’s (CBD) office market. Pittsburgh’s CBD Class A office market is experiencing a very favorable vacancy rate of 7 percent. The high levels of occupancy have been driven by strong growth within the banking, medical, energy and technology sectors, along with nearby abundant natural resources such as Marcellus Shale. PNC Corporation is breaking ground for its second $400 million office building in recent years, which is touted to become the “greenest building in the world.” PNC’s new building will be a true complement to the historic and evolving Market Square District, which has undergone a major landscape renovation, creating a beautiful area for outdoor dining, music and green space for people to enjoy.
Accompanying PNC’s new office buildings, Millcraft Industry has begun the transformation of the former State Office building into a 218-unit luxury apartment building. This is their second major CBD project in recent years, having completed and leased a 180,000-square-foot office building known as Piatt Place. Plans are currently evolving within Pittsburgh’s development community to retrofit the historic Henry W. Oliver Building. Additional CBD developments include a mixed-use project comprising a 175-room Hilton Garden Inn, 100,000 square feet of new office space and 35,000 square feet of new retail space along Forbes Avenue.
Elmhurst Group, which owns 2.5 million square feet of space in western Pennsylvania, is planning several new developments throughout the Pittsburgh region. As Bruce Longenecker, vice president of the Elmhurst Group, says, “The Pittsburgh market continues to buck the trend.”
At present, Pittsburgh’s CBD is comprises approximately 41 million square feet of office space. Year to date, the market has absorbed 1.2 million square feet of space, at an average rental rate of $20.50 per square foot. The continued strong demand for Class A office space has driven some tenants to consider retrofitted Class B buildings.
Major investment sales have been very strong. “Pittsburgh is now being viewed as a primary investment market by national and international investors,” said Paul Horan, Founding Principal at Colliers International | Pittsburgh.
Recent sales include:
|PPG Place||$179.4 million||$179|
|30 Isabella Street||$39 million||$170|
|11 Stanwix Street||$66.7 million||$154|
|US Steel Tower||$250 million||$107|
Leading institutions contributing to the strength of Pittsburgh’s market include Carnegie Mellon University, The University of Pittsburgh and a strong Foundation Community. The University of Pittsburgh Medical Center (UPMC), a recognized leader in transplant surgery and cancer research and treatment, has leased 500,000 square feet of office space at US Steel Tower and announced the creation of a new $394 million cancer research center next to the Hillman Cancer Center in Pittsburgh’s exploding East End.
Despite the national real estate trend, Pittsburgh continues to thrive with strong demand and continued optimism for the future. Gregg Broujos, Managing Director and Founding Principal at Colliers International | Pittsburgh adds, “As strong as 2011 was, we are extremely optimistic about an even more robust 2012 here in Western PA.”
Posted on December 27, 2011, in Economy, Office and tagged Central Business District, Northeast Real Estate Business magazine, Office market, Pittsburgh Commercial Real Estate. Bookmark the permalink. Comments Off on December 2011: Pittsburgh Office Market Highlight.