Q4 2014 Pittsburgh Retail Market Place
Local Market Update
The Pittsburgh retail market continued to remain strong during the fourth quarter of 2014. Vacancy rates decreased slightly to 3.7% from the previous quarters 3.8%. Total inventory as of the fourth quarter was 135,697,548. Lease rates remained relatively steady with an average of $12.20 per square foot across all class types, which was a very slight decrease from the previous quarter. Total absorption during the quarter was 165,683 square feet. The market continues a four year trend of improving, both in terms of the occupancy rate and lease rates.
Top quality space remains difficult to find. Those national tenants who are searching for class “A” space with full stop light access have few options. Competition for the best locations is fierce, with restaurant uses aggressively pursuing opportunities. A number of smaller restaurant concepts, and fast casual tenants, are looking for similar type spaces – end cap locations with prime visibility and access. Tenants will either have to be very aggressive in pursuit of these top locations, or settle for less desirable in-line spots. Larger tenants have few options for existing big box anchor positions.
Some bigger tenants may find relief soon in the form of closed Bottom Dollar stores. Aldi’s completed its purchase of Bottom Dollar’s locations in the market and has proceeded to close these stores. Bottom Dollar’s 20 Western Pennsylvania locations may prove to be good options for junior anchor tenants looking for desirable locations. While a number of Bottom Dollars stores are in lower income areas, a few are in high traffic locations. Without substantial new construction, these closed stores may offer some release for prospective tenants.
While demand for space continues to be high, the market has not reacted with much new construction. As of the fourth quarter, only 128,000 square feet of new space is under construction. With most quality centers at or near capacity the time seems opportune for developers to consider either new projects, or the redevelopment of obsolete properties.