Category Archives: Economy

Q4 2020 Industry Market Reports

Click here to view the Q4 2020 Office Report.

Click here to view the Q4 2020 Retail Report.

Click here to view the Q4 2020 Industrial Report.

Shadow Space: What is it and What does it Indicate?

One definition of “shadow” is as follows: a reference to proximity, ominous oppressiveness, or sadness and gloom.

It is a common misconception that the term “vacant space” or “vacancy rate” is an indicator of all the space available in a given market or property.  “Vacancy” simply refers to space that is not leased.  However, “available space” or “availability rate” is a more accurate indicator of all the space available or will be available soon.  The difference between vacant and available space is often referred to as “shadow space.”  Shadow space is space that is currently occupied but is still being marketed for lease.  The tenant does not have to physically occupy the space, they simply must be paying rent and have a lease on the space.  A recent example of this is marked by Dollar Bank having announced they will be moving from Gateway Center to 20 Stanwix Street.  The owner of Gateway Center knows of this upcoming vacancy and of its availability in the future, i.e. “shadow space.”  This is different than sublease space in that shadow space can be directly marketed by the landlord.

At the end of Q3 2020 there was 4,402,254 square feet (SF) of available space either for lease or sublease in Pittsburgh’s Central Business District (“CBD”). Of this square footage, 3,731,808 SF is vacant.  The difference of 670,446 SF is shadow space.

The amount of shadow space can be an indicator of economic conditions.  Similar to sublease space, if there is more shadow space available, it is a sign that current tenants do not plan on renewing their leases or are downsizing.  Typically, this is due either to a reduction in business or a downsized workforce. 

At the end of 2019, the CBD had 684,308 SF of shadow space available. The availability was significant and represented 16.8% of all the available space on the market. Yet, as COVID-19 emerged over the next six months, the amount increased by a staggering 32.3% to represent 19.9% of the available space at 905,231 SF.

Going forward, as the COVID-19 pandemic continues, more shadow space is expected to come onto the market.  At the same time, some of this space will turn vacant.  It is very hard to predict or track shadow space because, by definition, the space is occupied.  Just like any other market indicator or statistic, the variables are very fluid.  Availability numbers are not to be confused or deceived by vacancy statistics.  The true story lies in a vital combination of simple vacancy rates and the often overlooked yet very critical shadow space.

Q3 2020 Industry Market Reports

Click here to view the Q3 2020 Office Report.

Click here to view the Q3 2020 Retail Report.

Click here to view the Q3 2020 Industrial Report.

Paul Horan Serves as Panelist on “Coffee with CoreNet”

CoreNet, an organization with a mix of Corporate Real Estate Executives and service providers, hosts a monthly discussion within their Pittsburgh chapter, “Coffee with CoreNet,” a discussion of current real estate trends in the market.

During this month’s installment of “Coffee with CoreNet”, held yesterday August 18th, our very own Paul Horan (Principal | Office Brokerage) had the opportunity to serve as a panelist and provide his expertise on the current state of the Pittsburgh office market pre and post COVID 19. Horan, a founding member of CoreNet’s Pittsburgh chapter, has over 30 years of commercial real estate experience and specializes in leasing office product, representing both owners and tenants.

Yesterday’s presentation also featured Jeremy Waldrup, President & CEO of Pittsburgh Downtown Partnership as the moderator and Jim Winter, Senior Director of Corporate Services/Commercial Brokerage at Hanna Langholz Wilson Ellis as another panelist.

The discussion centered around the state of the Downtown Pittsburgh commercial real estate market and how working from home is impacting lease structure, rental rates, and marketing efforts.

“Going in to 2020 all of us here at Colliers International | Pittsburgh were positive about the market,” stated Horan, “Our team was projecting a lot of transactions and thankfully during the first quarter, we were able to successfully conclude a number of those.”

While leasing in submarkets such as the Central Business District have slowed, opportunities have emerged in suburban office submarkets.

“Companies that have a major presence in town have the opportunity to turn to suburban satellite offices, so employees do not have to rely on public transportation or sharing an elevator,” said Horan.

These trends coincide with what tenants are looking for during a time when a majority of their employees continue to work from home. However, Horan does not see this as a permanent trend and believes Pittsburgh’s CBD will bounce back, “Long term, Pittsburgh should fare well based on the diverse drivers of our economy continuing to flourish.”

To view this month’s full installment of “Coffee with CoreNet”, please click here.

For more information on CoreNet, please click here.