Natural gas is fueling the industrial demand in the region, with updates from the Shell cracker plant.

1. Beaver county land sales per acre (2014 to present)
Source: JLL Research
Net absorption vs average asking rent
Source: JLL Research
Blue collar labor force in metropolitan Pittsburgh
Source: JLL Research
Increased demand in Beaver County causing slight rise in price per acre
Beaver County has been the center of attention ever since Shell announced
plans to build a multi-billion cracker facility. The perceived increased demand is
causing an increase in price. From 2007 until 2013, the average price per acre
for land in Beaver County was on a decline. It wasn’t until 2013, when the sale
of retail land in Beaver Falls marked a new highest price per acre since the
recession, at $399,000 per acre. The former PGT Trucking HQ, located on 24.4
acres, sold in 2016 for $12.5 million and helped the average towards a positive
trend. The activity and limited supply in Beaver continues to drive the asking
prices higher across all property types.
Rising natural gas production and pipeline activity
The production of natural gas in Pennsylvania reached more than 4.8 million
cubic feet (m.c.f.) in 2015, 4.2 m.c.f. more than 2014. The increase in production
was aided by the addition of 1,000 producing gas wells in the state. In the fourth
quarter 2016, Range Resources announced an expected 10.0 percent organic
increase in production growth of their own in 2017. Also in the fourth quarter, the
EQT Midstream Pipeline began service, carrying as much as 850 m.c.f. of
natural gas, while Shell announced the construction of a 92.3-mile Falcon
Pipeline that will carry ethane to their cracker facility. The increasing production
and pipeline activity will help drive oil and gas tenant demand in the region.
Shell cracker plant watch: construction documents are submitted
In the fourth quarter 2016, Shell submitted details to Potter Township and the
county for approval before construction begins. The application included
preliminary schematics for multiple structures, including a central control
building, a two-story administrative building, three guard houses, a storage
building, a maintenance and warehouse building and a firehouse and medical
facility. The documents indicated that nearly 7,000 construction workers will be
needed, with 20 to 30 trucks entering and exiting the site daily once operational.
The cracker plant is expected to create real estate demand from downstream
industries due to the proximity to the materials and the improved manufacturing
infrastructure. However, rapid job creation will present challenges.
Industrial Insight
Pittsburgh | Q4 2016
13,332,334
Total availability (s.f.)
3,209,629
YTD total net absorption (s.f.)
$4.74
Average asking rent (p.s.f.)
137,500
Total under construction (s.f.)
9.6%
Total availability
2.3%
YTD net absorption (as a % of stock)
$6.25
New build asking rents (p.s.f.)
1,498,000
YTD construction completions (s.f.)
©2016 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com
770,000
191,000
260,000
Natural gas is fueling industrial demand in Pittsburgh
-$20,000
$50,000
$120,000
$190,000
$260,000
1/1/2014 12/31/2016
Sale date Linear (Sale date)
0
20,000
40,000
60,000
80,000
Construction Maintenance Production Transportation
$2
$4
$6
-500,000
1,000,000
2,500,000
4,000,000
2013 2014 2015 2016
Net Absorption (s.f.) Average asking rent (p.s.f.)
$0

2. Industrial Statistics
Pittsburgh | Q4 2016
©2016 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com
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.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
Warehouse & Distribution 82,851,096 509,286 2,127,012 2.6% 9,172,756 11.1% $5.19 1,442,000 137,500
Manufacturing 55,820,524 -81,247 1,082,617 1.9% 4,159,578 7.5% $3.76 56,000 0
Total 138,671,620 428,039 3,209,629 2.3% 13,332,334 9.6% $4.74 1,498,000 137,500
Flex / R&D 20,818,654 94,479 499,006 2.4% 2,706,800 13.0% $9.90 122,000 0
Warehouse & Distribution 4,495,997 84,573 379,805 8.4% 604,543 13.4% $5.39 0 0
Manufacturing 4,517,893 0 38,000 0.8% 157,200 3.5% $2.65 0 0
Total 9,013,890 84,573 417,805 4.6% 761,743 8.5% $4.82 0 0
Flex / R&D 579,085 16,736 26,475 4.6% 90,860 15.7% $10.00 0 0
Warehouse & Distribution 3,684,353 -240,200 -270,825 -7.4% 528,837 14.4% $4.23 135,000 0
Manufacturing 3,561,575 -55,400 16,100 0.5% 474,689 13.3% $1.20 56,000 0
Total 7,245,928 -295,600 -254,725 -3.5% 1,003,526 13.8% $2.80 191,000 0
Flex / R&D 386,900 0 0 0.0% 11,000 2.8% $10.00 0 0
Warehouse & Distribution 18,147,571 50,150 58,509 0.3% 1,346,986 7.4% $5.61 0 0
Manufacturing 4,823,443 5,700 268,796 5.6% 114,877 2.4% $7.15 0 0
Total 22,971,014 55,850 327,305 1.4% 1,461,863 6.4% $5.73 0 0
Flex / R&D 3,048,264 -28,073 27,109 0.9% 409,202 13.4% $8.10 0 0
Warehouse & Distribution 6,575,278 51,445 66,124 1.0% 590,260 9.0% $5.14 0 0
Manufacturing 4,570,489 0 9,981 0.2% 362,990 7.9% $3.67 0 0
Total 11,145,767 51,445 76,105 0.7% 953,250 8.6% $4.56 0 0
Flex / R&D 2,839,112 56,900 252,731 8.9% 582,672 20.5% $10.50 0 0
Warehouse & Distribution 6,216,992 -24,500 53,792 0.9% 345,011 5.5% $5.15 0 0
Manufacturing 6,408,774 -300 157,010 2.4% 123,836 1.9% $5.75 0 0
Total 12,625,766 -24,800 210,802 1.7% 468,847 3.7% $5.31 0 0
Flex / R&D 3,131,818 -33,362 38,587 1.2% 317,300 10.1% $10.75 0 0
Warehouse & Distribution 10,193,185 225,965 577,266 5.7% 867,138 8.5% $6.10 0 0
Manufacturing 3,479,451 0 58,300 1.7% 40,040 1.2% $4.00 0 0
Total 13,672,636 225,965 635,566 4.6% 907,178 6.6% $6.05 0 0
Flex / R&D 2,109,466 -4,651 14,367 0.7% 178,851 8.5% $12.37 0 0
Warehouse & Distribution 5,385,363 33,618 -62,741 -1.2% 507,982 9.4% $3.64 0 0
Manufacturing 8,033,856 0 -81,114 -1.0% 177,782 2.2% $6.75 0 0
Total 13,419,219 33,618 -143,855 -1.1% 685,764 5.1% $4.48 0 0
Flex / R&D 1,634,737 22,676 51,186 3.1% 85,888 5.3% $12.37 0 0
Warehouse & Distribution 5,424,228 120,675 404,905 7.5% 1,791,541 33.0% $5.04 0 0
Manufacturing 4,716,380 -114,650 32,375 0.7% 345,000 7.3% $4.95 0 0
Total 10,140,608 6,025 437,280 4.3% 2,136,541 21.1% $5.03 0 0
Flex / R&D 1,407,932 -15,078 -120,939 -8.6% 318,787 22.6% $9.00 0 0
Warehouse & Distribution 10,561,216 253,207 778,297 7.4% 1,072,964 10.2% $6.42 80,000 100,000
Manufacturing 2,749,553 0 4,172 0.2% 159,916 5.8% $5.00 0 0
Total 13,310,769 253,207 782,469 5.9% 1,232,880 9.3% $6.24 80,000 100,000
Flex / R&D 3,257,885 89,331 145,062 4.5% 443,991 13.6% $12.59 122,000 0
Warehouse & Distribution 12,166,913 -45,647 141,880 1.2% 1,517,494 12.5% $4.39 1,227,000 37,500
Manufacturing 12,959,110 83,403 578,997 4.5% 2,203,248 17.0% $3.60 0 0
Total 25,126,023 37,756 720,877 2.9% 3,720,742 14.8% $3.92 1,227,000 37,500
Flex / R&D 2,423,455 -10,000 64,428 2.7% 268,249 11.1% $4.77 0 0
Market Totals
Beaver County
Butler County
Downtown
East
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Northwest
South
Washington County
West
Westmoreland County