Office demand has kept construction crews hard at work across the metro. In 2014, 748,000 square feet of office space was delivered, with an additional 1.8 million square feet under construction at year’s end.
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JLL Pittsburgh Office Insight
1. Office employment sectors waver in 2014
According to the most recent estimates from the BLS, total non-farm
employment in Pittsburgh stood at ~1.2 million payrolls, representing an
annualized increase of 9,100 jobs or 78 basis points. Meanwhile, unemployment
decreased 1.7 percentage points year-over-year to 4.3 percent. Office-using
employment sectors in Pittsburgh have contracted in recent months, recording
an annualized net loss of 1,100 jobs across the metro. The professional and
business services sector recorded the largest gains, adding an annualized 900
jobs, however these gains were largely overshadowed by declines in the
government sector, where employment decreased by 1,400 jobs year-over-year.
Office employment trends (12-month change)
Source: JLL Research
U.S. Steel headquarters announcement to disrupt CBD fundamentals
U.S. Steel announced it will build a new headquarters in downtown Pittsburgh.
Clayco, which is acting as developer on the project, expects to break ground by
September 2015 and complete the build within 22 months. The five-story building
will total 268,000 square feet, with U.S. Steel occupying 250,000 square feet.
The facility will also include a steel museum and retail space. When construction
is completed, about 800 employees will relocate from 425,000 square feet at the
U.S. Steel Tower. U.S. Steel will lease the headquarters for 18 years from an
ownership group consisting of Clayco and the Pittsburgh Penguins.
CBD vacancies
Source: JLL Research
Speculative and build-to-suit construction underway across the metro
Office demand has kept construction crews hard at work across the metro. In
2014, 748,000 square feet of office space was delivered, with an additional 1.8
million square feet under construction at year’s end. Roughly half of this 2.3
million square feet is speculative space. The majority of construction activity is
taking place downtown and in Southpointe submarket. The largest project
currently underway is the 800,000-square-foot Tower at PNC Plaza downtown,
which will be fully occupied and owned by PNC when it is competed in third
quarter of 2015.
Office construction activity (square feet)
Source: JLL Research
14.9%
Total vacancy
129,808
YTD net absorption (s.f.)
38,211
Q4 2014 net absorption (s.f.)
3.0%
12-month rent growth
1,767,000
Total under construction (s.f.)
71%
Total preleased
Office Insight
Pittsburgh | Q4 2014
Construction pipeline to disrupt fundamentals
(10.0)
0.0
10.0
2010 2011 2012 2013 2014
Financial Activities Professional & Business Services Information Government
8.0% 5.9% 6.9% 7.2% 6.8%
19.5%
23.3% 21.9%
26.4% 24.3%
0%
10%
20%
30%
2010 2011 2012 2013 2014
Class A Class B
1,767,000
748,000
- 500,000 1,000,000 1,500,000 2,000,000
Under Construction
2014 Deliveries