Energy-Driven Markets Power Office Absorption
Sources: Colliers Office Market Report | USA, Allegheny Conference, Pittsburgh Tribune-Review, Pittsburgh Business Times, National Real Estate Investor
The Energy industry has played a significant role in the economy’s gradual recovery, according to the new Colliers office market report, which shows that energy markets contributed a disproportionate percentage of total national office absorption in the last year. The dynamics of the energy industry are expected to have a growing impact on all types of commercial real estate in the coming decade.
“The Pittsburgh region is also feeling the positive effects of the Energy sector including oil and gas (Marcellus shale activity), nuclear, wind, and solar all playing a part in the continued positive absorption of office product thorough out our region,” said Paul Horan, Founding Principal at Colliers International | Pittsburgh.
The year-to-date absorption rates for Downtown office inventory in the Pittsburgh market came in at 266,000 SF, and the year-to-date absorption for Class A space in Downtown Pittsburgh was 304,000 SF. Pittsburgh’s suburban office inventory also held strong compared to year-to-date comparisons across the nation, with 742,000 SF of absorption, with 565,000 SF Class A office space.
According to an On Numbers analysis of U.S. Bureau of Labor Statistics data, the Pittsburgh region is in select company, one of only five of the top 100 major metropolitan areas in the United States to hit their highest employment levels in a decade in October 2011. The job market is healthier than at any time since the end of the Great Recession and more small businesses plan to expand the work force.
The Energy sector is fueling our regional strengths, as well as the job surge and demand for office and industrial space in Western Pennsylvania. The Pittsburgh Tribune-Review reports that two Pittsburgh-area counties are showing some of the fastest job growth in the country, and the energy sector is a big contributor, according to federal statistics and an analysis from local experts.
Washington County ranked third nationally and Butler County was sixth in job growth between March 2010 and March 2011, according to a quarterly employment report on the country’s biggest counties from the Bureau of Labor Statistics. As of October 2011, they ranked with 80,200 jobs each with growth of more than 4.2 percent. The national average was 1.3 percent growth.
The Marcellus shale gas rush has fueled much of the recent growth in Washington County. Westinghouse Electric Co.’s move from Monroeville to a Cranberry nuclear energy complex, where it has 5,000 employees, has caused most of Butler County’s growth, officials said. All of that fits into long-term trends, with new infrastructure and construction, good schools and interstate highway access, and the region’s only population growth creating booming economies, local economists said.
Pittsburgh is among the markets that have a high concentration of technology and energy firms, and this year, and it is positioned to see a different picture from the rest of the nation. The National Real Estate Investor reported at the end of December that technology and energy sectors have been experiencing strong growth, as leasing demand in such cities should begin to fall in line with supply. The outperformers include San Francisco, Seattle, Houston, Oklahoma City and Pittsburgh.
The Allegheny Conference reports that the Greater Pittsburgh region ranks among the nation’s top 25 employers in each of seven energy-related industries, including coal, natural gas, nuclear, solar, wind, transmission & distribution and intelligent building.
Pittsburgh is home to more than 700 firms in the global energy supply chain. Together they support some 105,000 jobs (directly/indirectly) and generate $13.7 billion in annual economic activity.
For more details plus 2012 office market forecasts and trends, download the new North America Office Highlights report from Colliers International.
Posted on February 21, 2012, in Economy, Office and tagged Colliers International, Commercial Development, Energy, Marcellus Shale, Office Absorption, Pittsburgh Commercial Real Estate. Bookmark the permalink. Comments Off on Energy-Driven Markets Power Office Absorption.