Pittsburgh is going into the fourth quarter with positive absorption. The market's unique position as a central distribution hub and hub to a petrochemical facility will continue to drive activity.

1. © 2017 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.
Q3 2018
Industrial Insight
Pittsburgh’s industrial market, although uniquely positioned as a top energy
market and central hub between the Midwest and East coast, is only slowly
progressing along with national averages. In the second quarter, the U.S.
annual rent growth was at 6.2 percent, while Pittsburgh is currently at 2.9
percent. The U.S. vacancy rate last quarter was recorded at 4.8 percent, while
Pittsburgh is currently 8.2 percent. Although Pittsburgh has performed slightly
lower than the national average, the steadiness has been also meant stability.
Since at least 2014, the Pittsburgh market has experienced positive
absorption every year, including 2018 year-to-date. Total market vacancy has
also decreased year-over-year, from 12.4 percent in 2014 to 8.2 percent in the
third quarter 2018.
Outlook
Pittsburgh’s stability is an advantage to the region, however certain factors
will start to move the needle as time progresses. As Shell’s petrochemical
facility takes shape, new speculative construction in close proximity to the
cracker are also commencing development. The potential of another
petrochemical facility and ethane storage hub could turn the dial up a notch
on investor appetite, but that has yet to be a reality. As the energy market
influences activity in the West, robotics influences activity in the Downtown
submarket. Autonomous vehicle company Aptiv signed for 70,000 square feet
in the Hazelwood Green development, which will set off construction of the
second phase of the Mill 19 flex development on the site. The first phase of Mill
19 is being anchored by CMU’s Advanced Robotics for Manufacturing Institute
and the Manufacturing Futures Initiative. The increase in robotics activity in
the Downtown submarket flex product will continue to drive development
near the urban core, changing the landscape and limiting the number of sites
for more traditional industrial uses.
Fundamentals Forecast
YTD net absorption 765,292 s.f. ▲
QTD net absorption 723,296 s.f. ▲
Under construction 1,458,887 s.f. ▶
Total vacancy 8.2% ▼
Average asking rent (NNN) $5.83 p.s.f. ▲
Tenant improvements Stable ▶
-500,000
1,500,000
3,500,000
2014 2015 2016 2017 YTD
2018
Supply and demand (s.f.) Net absorption
Deliveries
More speculative development underway in the West
submarket as the cracker takes shape
12.4% 11.8%
9.6%
8.4% 8.2%
2014 2015 2016 2017 YTD 2018
Total vacancy
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com
• Total availability remains low, but new speculative development is on
horizon.
• Heading into the fourth quarter, total net absorption for the year is
positive.
• Flex leasing activity at Hazelwood Green development is picking up as
Aptiv takes 70,000 square feet in the third quarter.
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
2014 2015 2016 2017 2018
Average asking rents ($/s.f.)
W&D Manufacturing

2. © 2017 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
absorption
(s.f.)
YTD absorption
(s.f.)
YTD
absorption
(% of stock)
Total
availability
(s.f.)
Total
availability
(%)
Average
asking rent
($ p.s.f.)
Quarterly
completions
(s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
83,276,656 337,010 430,574 0.5% 7,415,193 8.9% $5.96 0 134,000 1,458,887
Manufacturing 55,690,983 386,286 334,718 0.6% 3,944,823 7.1% $5.58 0 0 0
Total 138,967,639 723,296 765,292 0.6% 11,360,016 8.2% $5.83 0 134,000 1,458,887
Flex / R&D 21,863,641 20,135 76,646 0.4% 2,341,732 10.7% $10.70 0 0 140,000
Beaver County
4,525,107 40,726 67,877 1.5% 515,862 11.4% $5.88 0 0 416,000
Manufacturing 4,777,962 -33,446 0 0.0% 506,464 10.6% $3.00 0 0 0
Total 9,303,069 7,280 67,877 0.7% 1,022,326 11.0% $4.45 0 0 416,000
Flex / R&D 600,520 0 0 0.0% 112,297 18.7% $7.77 0 0 0
Butler County
3,864,110 -65,690 -38,641 -1.0% 672,355 17.4% $3.48 0 0 220,000
Manufacturing 3,586,191 25,103 111,172 3.1% 297,654 8.3% $2.72 0 0 0
Total 7,450,301 -40,587 72,531 1.0% 970,009 13.0% $3.25 0 0 220,000
Flex / R&D 418,900 9,635 7,540 1.8% 13,405 3.2% $10.00 0 0 0
Downtown
17,850,155 121,951 32,700 0.2% 1,087,484 6.1% $6.97 0 0 0
Manufacturing 4,195,484 0 -3,000 -0.1% 23,977 0.6% $8.16 0 0 0
Total 22,045,639 121,951 29,700 0.1% 1,111,461 5.0% $6.99 0 0 0
Flex / R&D 3,216,725 -12,867 115,802 3.6% 263,771 8.2% $11.80 0 0 95,000
East
6,543,686 -52,349 -32,718 -0.5% 555,170 8.5% $8.71 0 0 0
Manufacturing 4,720,748 28,324 -94,415 -2.0% 514,562 10.9% $3.25 0 0 0
Total 11,264,434 -24,025 -127,133 -1.1% 1,069,732 9.5% $5.93 0 0 0
Flex / R&D 3,112,912 50,318 121,915 3.9% 417,303 13.4% $10.25 0 0 0
Northeast
5,870,737 -17,612 -41,095 -0.7% 270,054 4.6% $6.27 0 0 0
Manufacturing 6,408,774 19,226 19,226 0.3% 185,854 2.9% $5.75 0 0 0
Total 12,279,511 1,614 -21,869 -0.2% 455,908 3.7% $6.06 0 0 0
Flex / R&D 3,264,902 48,974 -129,152 -4.0% 364,225 11.2% $10.75 0 0 0
Northwest
10,325,348 72,277 134,230 1.3% 395,663 3.8% $6.92 0 0 0
Manufacturing 3,456,690 41,480 -27,654 -0.8% 162,464 4.7% $9.95 0 0 0
Total 13,782,038 113,758 106,576 0.8% 558,128 4.0% $7.81 0 0 0
Flex / R&D 2,252,535 30,147 11,261 0.5% 215,292 9.6% $16.66 0 0 0
South
5,740,769 47,648 -9,760 -0.2% 532,266 9.3% $4.20 0 0 0
Manufacturing 8,033,579 16,067 16,067 0.2% 297,242 3.7% $6.22 0 0 0
Total 13,774,348 63,715 6,307 0.0% 829,509 6.0% $4.96 0 0 0
Flex / R&D 1,731,137 -3,573 -19,153 -1.1% 69,356 4.0% $12.37 0 0 0
Washington County
5,563,429 5,563 -134,832 -2.4% 1,090,615 19.6% $4.75 0 0 0
Manufacturing 4,666,073 107,320 256,634 5.5% 447,943 9.6% $6.75 0 0 0
Total 10,229,502 112,883 121,802 1.2% 1,538,558 15.0% $5.34 0 0 0
Flex / R&D 1,456,673 13,110 -4,370 -0.3% 159,254 10.9% $7.76 0 0 0
West
10,654,588 159,819 362,256 3.4% 948,258 8.9% $6.25 0 54,000 822,887
Manufacturing 2,847,633 13,238 4,695 0.2% 208,877 7.3% $5.91 0 0 0
Total 13,502,221 173,057 366,951 2.7% 1,157,136 8.6% $6.19 0 54,000 822,887
Flex / R&D 3,612,743 -115,608 -46,966 -1.3% 621,392 17.2% $10.53 0 0 45,000
Westmoreland County
12,338,727 24,677 90,559 0.7% 1,347,465 10.9% $6.59 0 80,000 0
Manufacturing 12,997,849 168,972 51,991 0.4% 1,299,785 10.0% $6.95 0 0 0
Total 25,336,576 193,649 142,550 0.6% 2,647,250 10.4% $6.78 0 80,000 0
Flex / R&D 2,196,594 0 19,769 0.9% 105,437 4.8% $5.36 0 0 0
Warehouse & Distribution
Pittsburgh Totals
Warehouse & Distribution
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Warehouse & Distribution
Q3 2018
Industrial Statistics
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com