Monthly Archives: May 2015
The first quarter of 2015 ended with an overall vacancy rate of 8.1% with net absorption totaling a positive 127,251 square feet for the quarter. Sublease space increased during this period ending with 307,784 square feet available. Rental rates finished up $19.84 representing a decrease of 4% adjusted for all classes of available space.
The Class A office market recorded net absorption of a positive 130,773 SF. The Class B office market recorded net absorption of a positive 38,875 SF. The Class C office market recorded net absorption of a negative (42,397) SF. Net absorption for Pittsburgh’s Central Business District was positive 19,408 SF.
Major Lease Transactions: Chevron Corporation executed a lease for 120,000 SF at Cherrington Corporate Center, Building 700 and CA Technologies executed a lease for 22,143 SF at Foster Plaza 9 in the Parkway West Market. Gateway Health Plan executed a lease for 20,298 SF at the Chamber of Commerce Building in the Central Business District.
OUR CRE WORLD IS FLAT: LEVEL OCCUPANCY RATES, DECLINING ASKING RATES – BUT HEY, WE’LL TAKE IT
The OFFICE MARKET in the Pittsburgh MSA slipped from an overall vacancy rate of 8.0% in 4Q 2014 to the current 8.1% in 1Q 2015. This compared to a higher vacancy rate of 8.3% one year ago. Absorption in the first quarter of 2015 was 127,251 SF, while deliveries totaled 298,256 SF and 1,691,989 SF was under construction in 1Q 2015. The overall asking rate in the first quarter was $19.84 PSF, compared to $20.15 in 4Q 2014 and $19.22 in 1Q 2014. As for the CLASS A market, the asking rate dipped 3.4% to $24.65 PSF in the first quarter, from the 4Q 2014 rate of $25.52 PSF, while the asking rate one year ago was $24.34 PSF. Class A absorption was 130,773 SF for the quarter, while we saw deliveries of 207,000 SF and 1,610,000 under construction. The Oakland submarket continues to lead the way with a 0.1% vacancy rate and an asking rate average of $31.79 PSF. The North submarket remained strong at 3.1% and $24.04 PSF, along with the CBD at 6.3% and $25.90 PSF. The Greater Downtown market was also impressive with vacancy at 4.1% and an average rate of $25.09 PSF. The CLASS B space saw no movement from 4Q 2014 vacancy rate of 8.8%, which is better than the 9.0% we saw one year ago. The 1Q 2015 asking rate was at $18.66 PSF, 11 cents better than the previous quarter, and 36 cents better than 1Q 2014. Class B absorption came in at a tepid 38,875 SF; deliveries at 91,256 SF; and 81,899 SF under construction. Oakland and Monroeville Class B space experienced a 2.4% vacancy rate, with Oakland tallying a $17.62 PSF asking rate and Monroeville a strong $19.86 PSF rate. Greater Downtown remained strong in the B space with an 8.3% vacancy and $21.40 PSF rate. Class C space suffered with a negative 42,397 SF absorption figure, and a 7.2% vacancy rate at a $14.86 PSF average rate.
Click here to see the full Q1 2015 Pittsburgh Investment Newsletter.