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Q4 2014 Pittsburgh Investment Newsletter
RETAIL MOVE OVER! OFFICE MARKET SHINES IN 4TH QUARTER; INDUSTRIAL SOFTENS SLIGHTLY
Office Market Sees Big New Construction Numbers
The Office Market in the 4th quarter saw an 8.1% overall vacancy rate, improving from the 3rd quarter’s 8.4% rate, with a positive absorption rate of 868,224 SF. Better yet, the overall asking rate when from $19.97 PSF in Q3 to $20.61 PSF, a 3.2% increase. Two new buildings were delivered totaling 556,643 SF, with another 2,324,245 SF under construction. Two of the high profile projects under construction include the 800,000 SF Tower at PNC Plaza and 250,000 SF at Zenith Ridge III. Notable office leasing transaction include: UPMC Health Plan, represented by Colliers International in Pittsburgh, taking 140,967 SF at Heniz 57 Center, and Wesco International Charitable Foundation’s 82,018 SF at Commerce Court in Station Square. Two new buildings were delivered in the quarter with 186,000 SF at 1 Southpointe Boulevard and 174,000 SF at the Wexford Medical Mall, both of which are 100% occupied. For the quarter, Class A space improved to a 7.6% vacancy and $26.56 PSF in asking rates; Class B space had an improved 8.7% vacancy rate and an $18.57 PSF rate; and Class C space saw the vacancy decrease to 7.5%, with a $14.49 PSF asking rate. The overall CBD vacancy rate improved to 9.2% in vacancy, while the Suburban market continued to improve and ended with a 7.7% vacancy rate.
Click here to see the full Q4 2014 Pittsburgh Investment Newsletter.
Q4 2014 Pittsburgh Industrial Market Report
Q4 2014 Static Finish to the Year
The fourth quarter of 2014 finished without the anticipated flourish that it was trending toward. Vacancy actually crept up three basis points from 7.2% to 7.5% while absorption for the quarter experienced a negative 591,656 square feet. This is the largest negative quarter since 2009 and all others, with the exception of the second quarter of 2014, were positive. Even with the market giving back close to 600,000 square feet in the fourth quarter and 300,000 square feet in the second quarter, the year end absorption number was still a rosy 675,000 square feet.
At least a portion of the negative absorption in the fourth quarter of 2014 can be attributed to American Eagle officially bringing their 440,000 square foot distribution facility in Thorn Hill Industrial Park to market. It would be remiss not to credit a portion of the slow down to the sudden and unexpected drop in oil prices with prices under $60.00 per barrel, and for a brief time under $50.00, suddenly uncertainty spread into the previously teflon-coated energy sector. While this is anticipated to be a minor blip on the radar, it is fully expected to bleed into the first quarter of 2015, negatively impacting deal volume although not necessarily slowing advancement of projects by larger players in the sector.
Deals of significance in the fourth quarter include the sale of 367 Morganza Road, a Colliers International | Pittsburgh listing, in Washington County to National Rubber. The 65,700 square foot building traded at $52.00 per square foot. Edward Marc Brands leased 50,000 square feet in the Lawrenceville section of Pittsburgh and R&N Steel Manufacturing leased 70,000 square feet at 3401 Grand Avenue on Neville Island. Evidence of the trend noted on the back page of this report, 6500 Hamilton Avenue a 60,000 square foot multistory building in the red hot east side sold for $14.00 per square foot. The new owner plans to convert the former warehouse building to a higher and better use.
Evidence of the trend noted on the back page of this report, 6500 Hamilton Avenue a
60,000 square foot multistory building in the red hot east side sold for $14.00 per square
foot. The new owner plans to convert the former warehouse building to a higher and
better use.
Click here to see the full Q4 2014 Pittsburgh Industrial Market Report.
colliersinternationalpittsburgh.com 