Industrial Activity Slow, Yet Steady
Sources: Q1 2012 Pittsburgh Industrial Market Report Highlights; CoStar
There is no corresponding amount of good or bad news for the Pittsburgh industrial market, which has remained strong and steady during an uncertain US economy. The biggest challenge our region faces is inventory. This can be favorable during harsh economic times, or frustrating in a healthy economy. In comparison to other nearby markets to the East and West, Pittsburgh’s aging warehouses often lack modern amenities, very few industrial options are new, and there is a shortage of pad ready sites as well as quality bulk space, in terms of 200,000 SF or greater. As Pittsburgh’s available industrial inventory continues to shrink, additional spec development and build-to-suit activity is necessary to satisfy the increasing demand for space, or we risk opportunity loss as projects move to other markets.
Pittsburgh is positioned between recovery and expansion in the industrial market cycle and typically focuses on space segments that range from 10,000 – 30,000 SF, 30,000 – 60,000 SF and 60,000 SF+. While Pittsburgh has weathered the economic storm and our vacancy rate is healthy, the real story is that there is a need for additional well-located Class A inventory. At a time of growing demand, a lack of new supply and little construction, there is a dwindling number of Class A industrial buildings of more than 100,000 square feet available.
“Colliers International | Pittsburgh is extremely bullish on the Pittsburgh industrial market,” said John Bilyak SIOR, CCIM, Principal at Colliers International | Pittsburgh. “The market drivers, which include the energy, technology, education and medical communities, are sustainable and are not going anywhere. Pittsburgh has completely transitioned from the heavy manufacturing of our roots and emerged as a modern value added manufacturing and technology leader.”
Within the past year, UPMC, Cellone’s and Mod Cloth have absorbed a good portion of available space, further tightening an already tight market. Tenants who typically sign lease deals for shorter periods of time, are finding that inventory challenges are allowing Landlords to gain leverage, forcing their hand toward longer lease terms or rising rents.
“Pittsburgh is not historically a build-to-suit market,” said Patrick Tracy SIOR, Vice President Industrial Brokerage | Pittsburgh, “but with the lack of available product, and continued strong demand drivers, it will be interesting to see if there is an increase in build-to-suit activity.”
Nationally the industrial sector is poised for long-term growth. Those primarily feeling gains and investor interest are coastal markets with international port access, where tenant activity is on the rise for warehouse accommodations.
Posted on June 8, 2012, in Economy, Industrial and tagged Industrial outlook, Pittsburgh Commercial Real Estate, Pittsburgh Industrial Market Report. Bookmark the permalink. Comments Off on Industrial Activity Slow, Yet Steady.