Pittsburgh developers are building larger facilities following national trends and tenants are beginning to respond.

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.
Q4 2017
Industrial Insight
Another year comes to a close with positive absorption and lower vacancy. In
general, industrial real estate in the region continues to perform steadily,
however typical deal size is smaller compared to first-tier markets. A case in
point would be Imperial Business Park’s newly developed 100,000 square foot
speculative warehouse that has been absorbed by three separate tenants.
Traditionally, developers in Pittsburgh limit the speculative development to
around 100,000 square feet or lower. Examples of the smaller industrial flex /
warehouse development are still present, like Sampson Morris’s 66,000
square foot warehouse currently under construction at West Pittsburgh
Business Park and Buncher’s 83,000 square foot warehouse at Findlay
Industrial Park. However, the modern economy is now being influenced
heavily by ecommerce and thus is requiring larger buildings in the first-tier
markets. Keeping up with national trends, Pittsburgh developers are going
bigger and are competing for first-mover advantage on the new larger
buildings. Pittsburgh will be tested by the market’s ability to absorb larger
speculative developments, similar to the 265,500 square foot warehouse at
Clinton Commerce Center and the 220,000 square foot Jackson Distribution
Center. In the fourth quarter, site development for the recently announced
507,000 square foot warehouse at Starpointe Business Park commenced. This
facility has been reported to be for a single occupier and may signal that
national trends are feasible in the Pittsburgh industrial market.
Outlook
Coal and natural gas producers are both projecting increases in production
for the coming years. Specific to natural gas, increased production means
increased need for ethane energy storage, especially due to the burgeoning
petrochemical industry in Pittsburgh. By having storage available, it will allow
more companies like Shell, as well as more midstream and downstream
occupiers, to invest in the region and absorb the new development.
Fundamentals Forecast
YTD net absorption 1,700,883 s.f. ▲
QTD net absorption -207,987 s.f. ▲
Under construction 1,284,000 s.f. ▲
Total vacancy 8.4% ▼
Average asking rent (NNN) $5.36 p.s.f. ▲
Tenant improvements Stable ▶
-500,000
1,500,000
3,500,000
2013 2014 2015 2016 YTD
2017
Supply and demand (s.f.) Net absorption
Deliveries
Pittsburgh’s New Year’s resolution for industrial growth
is to attract larger tenants.
12.4% 12.4% 11.8%
9.6%
8.4%
2013 2014 2015 2016 YTD 2017
Total vacancy
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com
• As the fourth quarter closes, vacancy rates for 2017 end at a five year low
of 8.4 percent.
• Is energy making a comeback in Pittsburgh? Activity around Washington
County is suggesting yes.
• The typical warehouse transaction remains between 20,000 and 40,000
square feet.
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
2013 2014 2015 2016 2017
Average asking rents ($/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.
Q4 2017
Industrial Statistics
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.)
Quarterly
completions
(s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
83,196,656 93,197 1,341,934 1.6% 7,949,765 9.6% $5.19 156,864 559,864 1,289,000
Manufacturing 55,600,717 -301,184 358,949 0.6% 3,770,029 6.8% $5.71 0 0 0
Total 138,797,373 -207,987 1,700,883 1.2% 11,719,794 8.4% $5.36 156,864 559,864 1,289,000
Flex / R&D 21,959,091 226,727 335,121 1.5% 2,694,343 12.3% $9.99 0 0 0
Beaver County
4,525,107 63,018 -55,286 -1.2% 631,948 14.0% $5.58 0 0 416,000
Manufacturing 4,748,578 -315,900 -245,000 -5.2% 402,200 8.5% $6.00 0 0 0
Total 9,273,685 -252,882 -300,286 -3.2% 1,034,148 11.2% $5.74 0 0 416,000
Flex / R&D 600,520 -17,735 -32,295 -5.4% 126,655 21.1% $10.00 0 0 0
Butler County
3,864,110 -13,640 -113,023 -2.9% 651,160 16.9% $3.55 0 0 220,000
Manufacturing 3,586,191 34,825 68,809 1.9% 410,180 11.4% $2.14 0 0 0
Total 7,450,301 21,185 -44,214 -0.6% 1,061,340 14.2% $3.01 0 0 220,000
Flex / R&D 386,900 -4,644 -4,644 -1.2% 15,644 4.0% $10.00 0 0 0
Downtown
17,850,155 113,967 225,268 1.3% 1,174,938 6.6% $5.44 0 0 0
Manufacturing 4,195,484 -7,284 51,893 1.2% 44,384 1.1% $7.18 0 0 0
Total 22,045,639 106,683 277,161 1.3% 1,219,322 5.5% $5.50 0 0 0
Flex / R&D 3,216,725 6,997 29,907 0.9% 412,010 12.8% $8.69 0 0 0
East
6,543,686 10,924 99,742 1.5% 489,929 7.5% $8.82 0 0 0
Manufacturing 4,588,748 0 -105,800 -2.3% 442,190 9.6% $3.25 0 0 0
Total 11,132,434 10,924 -6,058 -0.1% 932,119 8.4% $6.18 0 0 0
Flex / R&D 3,112,912 11,700 150,252 4.8% 485,502 15.6% $10.49 0 0 0
Northeast
5,870,737 -19,280 82,515 1.4% 211,564 3.6% $5.50 0 0 0
Manufacturing 6,408,774 200 -81,054 -1.3% 204,890 3.2% $5.75 0 0 0
Total 12,279,511 -19,080 1,461 0.0% 416,454 3.4% $5.62 0 0 0
Flex / R&D 3,261,718 29,656 61,080 1.9% 235,434 7.2% $10.75 0 0 0
Northwest
10,325,348 109,330 379,851 3.7% 597,753 5.8% $6.08 0 0 0
Manufacturing 3,478,558 0 -62,000 -1.8% 102,040 2.9% $9.95 0 0 0
Total 13,803,906 109,330 317,851 2.3% 699,793 5.1% $6.65 0 0 0
Flex / R&D 2,239,369 46,691 79,454 3.5% 153,356 6.8% $16.50 0 0 0
South
5,740,769 12,592 -23,780 -0.4% 509,948 8.9% $3.73 0 0 0
Manufacturing 8,033,579 0 -79,831 -1.0% 257,613 3.2% $5.73 0 0 0
Total 13,774,348 12,592 -103,611 -0.8% 767,561 5.6% $4.43 0 0 0
Flex / R&D 1,731,137 -7,278 27,006 1.6% 130,882 7.6% $12.37 0 0 0
Washington County
5,563,429 21,109 354,630 6.4% 1,315,077 23.6% $4.91 0 0 0
Manufacturing 4,715,323 -65,525 -114,475 -2.4% 530,575 11.3% $6.31 0 0 0
Total 10,278,752 -44,416 240,155 2.3% 1,845,652 18.0% $5.31 0 0 0
Flex / R&D 1,485,473 73,462 96,304 6.5% 236,994 16.0% $9.00 0 0 0
West
10,654,588 -48,975 263,210 2.5% 1,020,781 9.6% $5.76 156,864 522,364 573,000
Manufacturing 2,847,633 0 26,416 0.9% 146,000 5.1% $6.33 0 0 0
Total 13,502,221 -48,975 289,626 2.1% 1,166,781 8.6% $5.83 156,864 522,364 573,000
Flex / R&D 3,612,743 98,808 -99,692 -2.8% 657,366 18.2% $10.59 0 0 0
Westmoreland County
12,258,727 -155,848 128,807 1.1% 1,346,667 11.0% $4.09 0 37,500 80,000
Manufacturing 12,997,849 52,500 899,991 6.9% 1,229,957 9.5% $6.95 0 0 0
Total 25,256,576 -103,348 1,028,798 4.1% 2,576,624 10.2% $5.52 0 37,500 80,000
Flex / R&D 2,311,594 -10,930 27,749 1.2% 240,500 10.4% $5.38 0 0 0
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