NORTHEAST SNAPSHOT, AUGUST 2006
Pittsburgh Industrial Market
Throughout the Pittsburgh industrial sector, development is cautious, focusing mainly on serving the distribution segment of the market. Several major distribution facilities are underway, while others are in the planning stages. Currently, the rental rates for newer industrial space in the “shell” distribution category ranges between $4.50 per square foot triple-net leased and $5.50 per square foot triple-net leased; the rates are slightly higher for flex space. Further, older space throughout the market leases for a small amount less for distribution or flex space, while older manufacturing facilities run at significantly lower rates. The vacancy rate across the board in Pittsburgh is approximately 12 percent; however, this figure is misleading since it includes several older manufacturing buildings that are likely to be torn down and/or redeveloped into non-manufacturing uses. The availability rate for newer and higher quality properties is significantly lower.
Several major industrial developments are underway in the market, including Imperial Business Park in Allegheny County, Westgate Business Park in Beaver County and Starpointe in Washington County. In addition, projects are planned for both the Airport corridor and along the Turnpike in Beaver County. The majority of new development across the Pittsburgh market is occurring both of the latter areas, due to the general demand for distribution space.
Though the Pittsburgh industrial sector is not seeing any major tenants dominating space across the board, several major leases were signed recently, adding significant absorption. Pitt-Penn Oil signed a lease for 80,000 square feet on Nixon Road in Cheswick; Rue 21 leased 35,000 square feet at 800 Commonwealth Drive in Cranberry; Scott Electric took 54,000 square feet on Avenue B in Youngwood, Westmoreland County; and Chelsea Building Products renewed for significant space at Trafford Commerce Center, inking a 240,000-square-foot deal.
In the future, the Interstate 79 corridor should see a fair amount of activity, as it continues to attract the most prospects, especially in the areas located just outside Allegheny County. In addition, there is strong demand for sites and buildings that can be purchased by users, as the supply of available space for acquisition is limited.
— Robert Blackmore is vice president with CB Richard Ellis in Pittsburgh.
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