The Pittsburgh office market continued its steady growth during the third quarter with increased absorption and an unchanged vacancy rate of 8.4%. The average asking lease rate was up over last quarter to $19.97 per square foot, an increase of 0.7%. Class “A” space continues to be in strong demand, especially in the CBD where the vacancy rate is 6.84% and large blocks of space are scarce. Suburban class “A” space has a higher vacancy rate of 9.1%, with large vacancies in the Cranberry, Monroeville and Parkway West submarkets.

Lease rates have general held steady or increased over the quarter. Overall, asking lease rates for the CBD are $21.84 with suburban asking lease rates coming in at $19.20. The average lease rate for the entire market is $19.97, which represents a healthy increase over the average rate of $18.79 quoted at this time last year.

Absorption for the quarter was 404,283 square feet, the largest amount since fourth quarter 2012. The largest transactions during the quarter were Express Scripts’ lease for 70,000 square feet and EQT’s lease of 30,000 square feet at Zenith Ridge Two. It is anticipated that absorption should continue to be positive for the near term although new deliveries may hold the occupancy rate in check. A number of new projects are on the drawing board, but not many will be built on a speculative basis, and those that are built speculatively will be relatively small. With the exception of the Gardens at Market Square (159,000 SF), the most speculative construction is under 100,000 square feet.

Click here to see the full Q3 2014 Office Market Report.