The third quarter experienced positive absorption as leasing slowly recovers.

1. © 2021 Jones Lang LaSalle IP, Inc. All rights reserved.
Pittsburgh
The pandemic continues to impact Pittsburgh’s office market. Several large
corporations pushed back their return dates beyond Labor Day and leasing
activity continues its temperate recovery. At the end of the third quarter,
new leasing totaled 531,000-s.f. for the year, which is 81% of last year’s total.
Pre-pandemic, Pittsburgh’s new leasing activity averaged 1.0 million s.f.
each year, indicating that the market still has room to recover.
Asking rates have experienced a slight increase year-over-year by 2.4%, due
in part by new construction projects delivering with availability. While rates
have increased, concession offerings continue to climb to record highs for
tenants that are willing to leverage their creditworthiness with longer lease
terms.
Outlook
The flight-to-quality trend continued this quarter with ATI’s 19,000-s.f. lease
at the Vision on Fifteenth in the Strip District. This example follows GNC’s
lease at 75 Hopper Place last quarter, which also indicates that the Strip
District remains a high-demand micro market.
As new construction deliveries lag due to the pause in construction at the
pandemic’s start, there will be multiple deliveries within the next year that
will provide options for tenants. New construction is currently 15.9%
preleased. While there is a potential influx of new available options on the
horizon, new office construction starts have lagged, which will limit the
amount of new product in 2023. One exception is FNB Financial Center,
which broke ground in early September, however financing and an anchor
tenant had already been determined prior to the pandemic.
Impending leasing activity will not be enough to create positive absorption
in the near-term, given that the majority of active tenants in the market are
existing Pittsburgh corporations. However, as companies examine space
needs upon re-entry, there is opportunity for increased leasing.
New leasing slowly recovers as more companies
begin a gradual return to the office
• New leasing totaled 531,000-s.f. during the first three quarters of 2021,
which equates to 81% of 2020’s total.
• Year-over-year asking rates have increased by 2.4% as new
construction delivers with higher priced availabilities.
• ATI’s lease at the Vision on Fifteenth is yet another example of the
flight-to-quality by tenants using advantageous market conditions.
• FNB Financial Center broke ground, being the latest Trophy tower in
the CBD in five years since JLL Center delivered in 2016.
Fundamentals Forecast
YTD net absorption -650,856 s.f.
Under construction 1,602,212 s.f.
Total vacancy 21.3%
Sublease vacancy 1,719,777 s.f. ▶
Direct asking rent $26.21 p.s.f. ▲
Sublease asking rent $21.09 p.s.f. ▶
Concessions Rising ▲
-1
0
1
2017 2018 2019 2020 2021
Millions
Supply and demand (s.f.) Net absorption
Deliveries
0%
7%
14%
21%
2007 2009 2011 2013 2015 2017 2019 2021
Total vacancy (%)
$0.00
$10.00
$20.00
$30.00
20072009201120132015201720192021
Average asking rent ($ p.s.f.)
Direct Sublease
For more information, contact: Tobiah Bilski | Tobiah.Bilski@am.jll.com
Office Insight | Q3 2021
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2. Pittsburgh | Q3 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 11,767 6,249 0.1% 15.8% 22.1% $25.13 0 0
East Totals 3,008,814 15,879 3,441 0.1% 29.8% 30.3% $20.17 0 0
North Totals 2,818,655 -26,684 -121,302 -4.3% 16.0% 16.8% $22.88 0 100,000
South Totals 2,451,420 3,027 20,800 0.8% 13.0% 13.0% $20.29 0 0
Southpointe Totals 3,532,244 39,756 -99,167 -2.8% 15.7% 26.3% $21.51 0 0
West Totals 7,449,393 113,856 -188,238 -2.5% 21.9% 23.5% $22.16 0 0
Suburban Totals 23,637,433 157,601 -378,217 -1.6% 19.2% 22.6% $22.07 0 100,000
CBD Totals 18,972,607 -10,359 -366,283 -1.9% 17.9% 21.0% $26.88 0 0
Fringe Totals 8,420,722 35,225 69,499 0.8% 15.7% 19.3% $29.32 120,000 1,064,563
Oakland / East End Totals 2,999,896 88,045 24,145 0.8% 17.4% 18.2% $38.65 224,813 437,649
Urban Totals 30,393,225 112,911 -272,639 -0.9% 17.2% 20.2% $29.38 344,813 1,502,212
Pittsburgh Totals 54,030,658 270,512 -650,856 -1.2% 18.1% 21.3% $26.21 344,813 1,602,212
Northern I-79 / Cranberry A 3,691,749 5,764 -8,823 -0.2% 15.2% 22.6% $25.59 0 0
East A 1,535,784 15,530 -1,305 -0.1% 39.4% 39.8% $21.29 0 0
North A 855,815 -3,613 -42,038 -4.9% 18.4% 18.6% $26.80 0 100,000
South A 220,000 367 367 0.2% 12.5% 12.5% $20.00 0 0
Southpointe A 2,449,891 34,891 -88,590 -3.6% 10.4% 24.9% $22.60 0 0
West A 4,162,490 78,581 -136,789 -3.3% 19.0% 20.8% $24.04 0 0
Suburban A 12,915,729 131,520 -277,178 -2.1% 18.5% 24.1% $23.76 0 100,000
CBD A 13,512,018 30,476 -19,637 -0.1% 14.5% 18.1% $30.32 0 0
Fringe A 2,616,526 37,917 154,023 5.9% 7.2% 12.1% $37.28 120,000 1,006,063
Oakland / East End A 1,683,709 59,244 21,412 1.3% 22.9% 23.8% $41.19 224,813 437,649
Urban A 17,812,253 127,637 155,798 0.9% 14.3% 17.7% $34.19 344,813 1,443,712
Pittsburgh A 30,727,982 259,157 -121,380 -0.4% 16.0% 20.4% $29.84 344,813 1,543,712
Northern I-79 / Cranberry B 685,158 6,003 15,072 2.2% 19.0% 19.7% $23.31 0 0
East B 1,473,030 349 4,746 0.3% 19.8% 20.4% $17.87 0 0
North B 1,962,840 -23,071 -79,264 -4.0% 15.0% 16.0% $19.77 0 0
South B 2,231,420 2,660 20,433 0.9% 13.0% 13.0% $20.32 0 0
Southpointe B 1,082,353 4,865 -10,577 -1.0% 27.7% 29.4% $20.54 0 0
West B 3,286,903 35,275 -51,449 -1.6% 25.5% 26.8% $20.54 0 0
Suburban B 10,721,704 26,081 -101,039 -0.9% 20.0% 20.9% $20.22 0 0
CBD B 5,460,589 -40,835 -346,646 -6.3% 26.2% 28.1% $22.09 0 0
Fringe B 5,804,196 -2,692 -84,524 -1.5% 19.5% 22.5% $24.57 0 58,500
Oakland / East End B 1,316,187 28,801 2,733 0.2% 10.3% 10.9% $24.46 0 0
Urban B 12,580,972 -14,726 -428,437 -3.4% 21.4% 23.7% $23.27 0 58,500
Pittsburgh B 23,302,676 11,355 -529,476 -2.3% 20.8% 22.4% $21.89 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.