Vacancy rate hits a new cyclical low in the first quarter 2019.

1. © 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q1 2019
Industrial Insight
Mill 19 has undergone a transformation at the Hazelwood Green site in
Hazelwood, with the first phase scheduled for completion this Spring. The
once steel mill site has converted from a urban brownfield patch of dirt, into a
test track for Uber and Mill 19 will soon be home to Carnegie Mellon
University’s Advanced Robotics for Manufacturing Institute and Aptiv. In the
first quarter, Trinity Commercial Development announced plans to begin
construction on a 26,000-square-foot industrial building at the “Rocks
Multimodal Park,” a brownfield site located in McKees Rocks. Development at
this site has been slow moving, as has the Hazelwood Green site. Although
brownfield sites offer potential for new development, the process can be long.
For Hazelwood Green, zoning alone took 18 to 20 months and hundreds of
thousands of dollars. Obtaining permitting is also an arduous process. In
2017, four organizations in southwestern Pennsylvania received $1.8 million in
federal funds to examine brownfield sites. Although brownfields are long-term
investments, the prospect of converting Pittsburgh’s past into the future could
be a positive and an efficient solution to a steadily declining vacancy rate.
Outlook
Looking ahead, future deliveries in the West and Beaver County submarkets
will provide additional options and relieve some pressure off of demand.
Although new construction starts have lagged in 2019, there are several sites
in the West, Northwest and Westmoreland County submarkets. Kenco
Logistics, a subsidiary of Royal Dutch Shell, may have taken 455,000 square
feet of newly constructed warehouse space, but their occupancy in Pittsburgh
is unrelated to Shell’s petrochemical facility. Kenco stated that they chose
Pittsburgh for the locational advantage logistically, further illustrating Shell’s
opinion on the region and possibly foreshadowing future leasing activity.
Fundamentals Forecast
YTD net absorption 1,063,015 s.f. ▲
QTD net absorption 1,063,015 s.f. ▲
Under construction 932,887 s.f. ▼
Total vacancy 7.4% ▼
Average asking rent (NNN) $5.99 p.s.f. ▲
Tenant improvements Stable ▶
-500,000
1,500,000
3,500,000
2015 2016 2017 2018 YTD
2019
Supply and demand (s.f.) Net absorption
Deliveries
As vacancy rates continue to decline, brownfield sites
are returning to focus
11.8%
9.6%
8.4% 7.7% 7.4%
2015 2016 2017 2018 YTD 2019
Total vacancy
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com
• The planned redevelopment of the former Pittsburgh and Lake Erie
Railroad Company car repair yard in McKees Rocks could mean new life
for another brownfield site near downtown Pittsburgh.
• Vacancy rates decline to new cyclical low as more space is absorbed.
• Kenco Logistics takes occupancy at their new 455,000-square-foot
warehouse in Starpointe Industrial Park, bringing 50 jobs to the region.
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
2015 2016 2017 2018 YTD 2019
Average asking rents ($/s.f.)
W&D Manufacturing

2. © 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Inventory (s.f.)
Quarterly total
net absorption
(s.f.)
YTD total net
absorption (s.f.)
YTD total net
absorption (%
of stock)
Total vacancy
(%)
Total
availability
(%)
Average total
asking rent ($
p.s.f.)
Quarterly
Completions
(s.f.)
YTD
Completions
(s.f.)
Under
construction (s.f.)
Pittsburgh total
Warehouse & Distribution 88,044,571 1,027,851 1,027,851 1.2% 4.8% 7.6% $5.98 831,899 831,899 932,887
Manufacturing 53,815,485 5,164 5,164 0.0% 6.9% 6.9% $6.00 0 0 0
Totals 141,940,056 1,063,015 1,063,015 0.7% 5.6% 7.4% $5.99 831,899 831,899 932,887
Beaver County
Warehouse & Distribution 5,494,762 -145,344 -145,344 -2.6% 10.1% 18.3% $4.83 0 0 416,000
Manufacturing 4,329,593 27,000 27,000 0.6% 9.8% 9.8% $3.00 0 0 0
Totals 9,824,355 -118,344 -118,344 -1.2% 10.0% 14.7% $4.28 0 0 416,000
Butler County
Warehouse & Distribution 3,915,399 42,300 42,300 1.1% 11.7% 13.7% $3.48 0 0 220,000
Manufacturing 3,561,575 -111,491 -111,491 -3.1% 10.5% 7.4% $2.72 0 0 0
Totals 7,476,974 -69,191 -69,191 -0.9% 11.1% 10.7% $3.23 0 0 220,000
Downtown
Warehouse & Distribution 18,343,861 9,321 9,321 0.1% 2.4% 4.2% $8.64 0 0 0
Manufacturing 4,643,481 0 0 0.0% 1.1% 1.2% $7.64 0 0 0
Totals 22,987,342 9,321 9,321 0.0% 2.1% 3.6% $8.57 0 0 0
East
Warehouse & Distribution 5,969,910 30,328 30,328 0.5% 3.4% 6.6% $8.71 0 0 0
Manufacturing 3,623,789 23,500 23,500 0.6% 6.1% 6.5% $4.25 0 0 0
Totals 9,593,699 53,828 53,828 0.6% 4.4% 6.6% $7.05 0 0 0
Northeast
Warehouse & Distribution 6,086,164 6,000 6,000 0.1% 3.3% 4.9% $5.99 0 0 0
Manufacturing 6,880,307 0 0 0.0% 2.0% 2.5% $5.75 0 0 0
Totals 12,966,471 6,000 6,000 0.0% 2.6% 3.6% $5.90 0 0 0
Northwest
Warehouse & Distribution 10,470,019 0 0 0.0% 2.0% 4.3% $6.92 0 0 0
Manufacturing 3,063,621 0 0 0.0% 4.5% 4.1% $9.95 0 0 0
Totals 13,533,640 0 0 0.0% 2.6% 4.3% $7.58 0 0 0
South
Warehouse & Distribution 5,458,438 -36,255 -36,255 -0.7% 3.4% 4.7% $4.95 0 0 0
Manufacturing 7,881,590 0 0 0.0% 2.8% 3.6% $6.54 0 0 0
Totals 13,340,028 -36,255 -36,255 -0.3% 3.0% 4.1% $5.79 0 0 0
Washington County
Warehouse & Distribution 6,103,640 117,678 117,678 1.9% 5.2% 18.2% $5.90 80,249 80,249 0
Manufacturing 4,736,380 82,550 82,550 1.7% 7.3% 5.9% $6.75 0 0 0
Totals 10,840,020 200,228 200,228 1.8% 6.1% 12.9% $6.07 80,249 80,249 0
West
Warehouse & Distribution 11,855,558 849,977 849,977 7.2% 6.9% 4.7% $7.45 714,150 714,150 268,887
Manufacturing 2,706,639 -25,295 -25,295 -0.9% 4.4% 5.8% $5.91 0 0 0
Totals 14,562,197 824,682 824,682 5.7% 6.4% 4.9% $7.11 714,150 714,150 268,887
Westmoreland County
Warehouse & Distribution 14,346,820 153,846 153,846 1.1% 6.0% 8.7% $4.77 37,500 37,500 28,000
Manufacturing 12,388,510 8,900 8,900 0.1% 13.5% 13.9% $6.95 0 0 0
Totals 26,815,330 192,746 192,746 0.7% 9.6% 11.3% $6.04 37,500 37,500 28,000
Q1 2019
Industrial Statistics
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com