Sublease availability continues to drive vacancy higher, with overall vacancy total at 20.6%.

1. © 2021 Jones Lang LaSalle IP, Inc. All rights reserved.
Pittsburgh
Pittsburgh’s office market experienced approximately 600,000 s.f. of
negative absorption in the first quarter of 2021 as several of Pittsburgh’s
headquarter companies placed large blocks on the market. CNX added over
110,000 s.f. of its Southpointe headquarters for sublease while Giant Eagle
chose not to renew their 76,000-s.f. headquarters lease at 701 Alpha Drive.
Although sublease availabilities have put upward pressure on total vacancy,
which ended Q1 at 20.6%, tenant interest has begun to increase and there is
an overall sense that activity is starting to return.
Outlook
While activity has been stagnant the past 12 months, office re-entry is
anticipated to return to approximately 80% by the end of the year as
vaccines are distributed across the region. The return to the office may
cause further footprint corrections to account for new ways of working and
this will be the driving factor for real estate decisions in the foreseeable
future.
In addition to new strategies from tenants, new construction deliveries that
have not been preleased may push vacancy higher in the short-term,
putting downward pressure on asking rates. However, with emphasis on
employee health, amenities and overall quality of work-life, there is
opportunity for buildings positioned to optimize employee well-being to
capture leasing activity during this period of footprint correction.
Remote work and hybrid work will have an impact as well on leasing
demand. COVID-19 has proven to companies that there can be a successful
implementation of remote-work for employees. However, with remote work
comes with the cost of lost culture and collaboration. Without in-person
collaboration, the affinity distance between coworkers grows and attrition
becomes a higher threat.
Leasing activity slowly begins to rise; however,
new sublease availabilities negate absorption
• Total vacancy surpasses 20.5% as sublease availabilities continue to
drive negative absorption across the market.
• Direct asking rental rates saw a slight decrease in Q1 and will likely
continue on a downward trend in 2021 due to softened demand.
• Tenants are still planning for future growth as Gecko Robotics signed
a 67,897-s.f. lease for its new headquarters at Nova Place and Google
expanded by two floors at Bakery Square.
• As a result from slower leasing demand in 2020, free rent concessions
have doubled since prior to COVID-19.
Fundamentals Forecast
YTD net absorption -602,907 s.f.
Under construction 1,685,187 s.f.
Total vacancy 20.6%
Sublease vacancy 1,828,501 s.f. ▶
Direct asking rent $26.01 p.s.f.
Sublease asking rent $24.23 p.s.f. ▶
Concessions Rising ▲
-1
0
1
2
2017 2018 2019 2020 2021
Millions
Supply and demand (s.f.) Net absorption
Deliveries
14%
16%
18%
20%
22%
2007 2009 2011 2013 2015 2017 2019 2021
Total vacancy (%)
$10.00
$15.00
$20.00
$25.00
$30.00
20072009201120132015201720192021
Average asking rent ($ p.s.f.)
Direct Sublease
For more information, contact: Tobiah Bilski | Tobiah.Bilski@am.jll.com
Office Insight | Q1 2021
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2. Pittsburgh | Q1 2021
JLL Research Report
Office Statistics
Class
Inventory
(s.f.)
Total net
absorption
(s.f.)
YTD total net
absorption
(s.f.)
YTD total net
absorption (%
of stock)
Direct vacancy
(%)
Total vacancy
(%)
Average
direct asking
rent ($ p.s.f.)
YTD
Completions
(s.f.)
Under
Development
(s.f.)
Northern I-79 / Cranberry Totals 4,376,907 16,901 16,901 0.4% 15.5% 21.9% $25.01 0 0
East Totals 3,053,814 -21,187 -21,187 -0.7% 30.2% 30.7% $20.07 0 0
North Totals 3,777,851 -75,295 -75,295 -2.0% 14.5% 15.1% $20.63 0 0
South Totals 2,311,420 12,408 12,408 0.5% 14.1% 14.1% $20.31 0 140,000
Southpointe Totals 3,529,607 -150,596 -150,596 -4.3% 16.6% 27.7% $21.92 0 0
West Totals 7,445,828 -210,905 -210,905 -2.8% 20.5% 23.8% $22.00 0 0
Suburban Totals 24,495,427 -428,674 -428,674 -1.8% 18.7% 22.6% $21.78 0 140,000
CBD Totals 18,972,607 -101,263 -101,263 -0.5% 16.5% 19.6% $27.28 0 0
Fringe Totals 8,801,410 -38,758 -38,758 -0.4% 17.0% 20.1% $28.75 0 649,367
Oakland / East End Totals 2,699,409 -34,212 -34,212 -1.3% 10.3% 11.4% $41.31 0 895,820
Urban Totals 30,473,426 -174,233 -174,233 -0.6% 16.1% 19.0% $29.42 0 1,545,187
Pittsburgh Totals 54,968,853 -602,907 -602,907 -1.1% 17.3% 20.6% $26.01 0 1,685,187
Northern I-79 / Cranberry A 3,691,749 16,740 16,740 0.5% 14.3% 21.9% $25.48 0 0
East A 1,580,784 -16,075 -16,075 -1.0% 39.2% 39.6% $21.19 0 0
North A 855,815 4,293 4,293 0.5% 13.0% 13.2% $24.88 0 0
South A 80,000 0 0 0.0% 34.9% 34.9% $20.00 0 140,000
Southpointe A 2,447,254 -143,801 -143,801 -5.9% 11.6% 27.2% $23.25 0 0
West A 4,160,571 -133,735 -133,735 -3.2% 16.3% 20.8% $23.82 0 0
Suburban A 12,816,173 -272,578 -272,578 -2.1% 17.6% 24.2% $23.47 0 140,000
CBD A 13,512,018 -22,800 -22,800 -0.2% 14.8% 18.1% $30.27 0 0
Fringe A 3,003,967 -15,194 -15,194 -0.5% 12.0% 17.3% $36.95 0 590,867
Oakland / East End A 1,457,896 -41,447 -41,447 -2.8% 14.8% 16.4% $42.58 0 895,820
Urban A 17,973,881 -79,441 -79,441 -0.4% 14.3% 17.8% $33.89 0 1,486,687
Pittsburgh A 30,790,054 -352,019 -352,019 -1.1% 15.7% 20.5% $29.59 0 1,626,687
Northern I-79 / Cranberry B 685,158 161 161 0.0% 21.8% 21.8% $23.16 0 0
East B 1,473,030 -5,112 -5,112 -0.3% 20.5% 21.1% $17.82 0 0
North B 2,922,036 -79,588 -79,588 -2.7% 15.0% 15.7% $18.84 0 0
South B 2,231,420 12,408 12,408 0.6% 13.4% 13.4% $20.34 0 0
Southpointe B 1,082,353 -6,795 -6,795 -0.6% 27.9% 29.0% $20.73 0 0
West B 3,285,257 -77,170 -77,170 -2.3% 25.9% 27.6% $20.49 0 0
Suburban B 11,679,254 -156,096 -156,096 -1.3% 20.0% 20.9% $20.04 0 0
CBD B 5,460,589 -78,463 -78,463 -1.4% 20.9% 23.2% $22.18 0 0
Fringe B 5,797,443 -23,564 -23,564 -0.4% 19.6% 21.5% $24.40 0 58,500
Oakland / East End B 1,241,513 7,235 7,235 0.6% 5.0% 5.6% $24.13 0 0
Urban B 12,499,545 -94,792 -94,792 -0.8% 18.7% 20.7% $23.29 0 58,500
Pittsburgh B 24,178,799 -250,888 -250,888 -1.0% 19.4% 20.8% $21.71 0 58,500
© 2021 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.