Urban leasing activity concentrates in new construction, making it difficult for the existing product to compete without proper upgrades.

1. © 2019 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.
Fundamentals Forecast
YTD net absorption 413,561 s.f. ▲
Under construction 947,153 s.f. ▲
Total vacancy 16.6% ▼
Average asking rent (gross) $24.11 p.s.f. ▲
Concessions Rising ▲
Q4 2018
Office Insight
Although total year-to-date absorption was positive in 2018, it was relatively
modest for the region, at 0.8 percent of the total inventory. Large block leasing
has concentrated within new construction and when the new construction
delivers in the first half of 2019, the Fringe will benefit the most from the
absorption. SAP Center and District Fifteen will be delivering in the Fringe
submarket with over 220,000 square feet leased. In the last ten years, only
three office buildings have been built in the CBD, two of which were built with
the intention of being primarily owner-occupied. The relative absence of new
construction in the CBD has created an amenities arms race in that
submarket, as building owners continue to renovate existing product
downtown in order to compete with the influx of new development in the
Fringe and Oakland / East End. Even though the urban submarkets continue
to garner the most attention, the suburbs have netted over twice the amount
of square-footage absorbed this year than the urban submarkets. However,
the velocity of leasing activity in the suburbs has not moved the needle in
regards to negotiation favorability.
Outlook
A possible recession is looming, but Pittsburgh’s office market is currently
positioned well for steady growth. The latest recorded unemployment rate for
the region was 3.8 percent for October and the metro real GDP is trending
upward. Undeniably, the technology industry is at the core of the growth. In
December, it was announced that 3M entered into an agreement to acquire
M*Modal, a leading healthcare technology provider with roots at CMU, for $1.0
billion. Apple also made headlines, investing $1.0 billion in a new office in
Austin, TX and committed to adding up to 250 jobs in Pittsburgh. The
combination of established technology companies growing in Pittsburgh and
the success of home-grown technology firms will help progress the region.
-1,000,000
0
1,000,000
2014 2015 2016 2017 YTD
2018
Supply and demand (s.f.) Net absorption
Deliveries
The year ends with modest positive absorption, but
with low unemployment and the promise of more jobs
15.9% 15.8%
16.6%
17.5%
16.6%
2014 2015 2016 2017 2018
Total vacancy
$0.00
$10.00
$20.00
$30.00
2014 2015 2016 2017 2018
Average asking rents ($/s.f.) Class A
Class B
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com
• Demand in the suburbs helps keep total year-to-date net absorption
positive.
• The local technology industry hits another milestone as M*Modal joins
the three-comma club, acquired by 3M for $1.0 billion.
• In December, Apple announced a commitment to add up to 250 jobs to
the Pittsburgh region.

2. © 2019 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.
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 4,286,907 -42,008 -31,081 -0.7% 10.0% 18.2% $24.02 0 0
East Totals 3,046,536 -6,464 201 0.0% 26.7% 27.8% $19.59 0 0
North Totals 3,751,808 27,890 89,992 2.4% 10.9% 11.0% $20.23 103,000 0
South Totals 2,306,096 11,393 76,644 3.3% 10.7% 12.3% $19.95 0 0
Southpointe Totals 2,972,107 32,539 70,876 2.4% 14.2% 18.9% $23.01 0 0
West Totals 7,046,426 53,015 85,157 1.2% 17.8% 19.8% $21.72 0 0
Suburban Totals 23,409,880 76,365 291,789 1.2% 15.3% 18.3% $21.40 103,000 0
CBD Totals 18,969,985 -79,804 47,225 0.2% 14.3% 15.1% $27.11 0 50,000
Fringe Totals 8,230,380 -138,366 40,351 0.5% 13.4% 18.5% $24.94 130,500 614,700
Oakland / East End Totals 2,057,356 20,591 34,196 1.7% 2.9% 2.9% $23.94 0 282,453
Urban Totals 29,257,721 -197,579 121,772 0.3% 13.2% 15.1% $26.42 130,500 947,153
Pittsburgh Totals 52,667,601 -121,214 413,561 0.8% 14.2% 16.6% $24.11 233,500 947,153
Northern I-79 / Cranberry A 3,601,749 -23,913 -5,213 -0.1% 7.8% 17.6% $25.73 0 0
East A 1,580,784 -20,833 -17,620 -1.1% 31.6% 31.9% $20.62 0 0
North A 809,347 18,539 80,173 9.9% 10.6% 10.7% $24.84 103,000 0
Southpointe A 1,909,754 13,619 84,717 4.4% 5.9% 11.8% $23.36 0 0
West A 3,767,504 -6,214 67,566 1.8% 16.6% 19.7% $23.56 0 0
Suburban A 11,669,138 -18,802 209,623 1.8% 13.7% 18.8% $23.10 103,000 0
CBD A 13,498,998 -42,870 53,537 0.4% 12.1% 13.1% $30.12 0 50,000
Fringe A 2,388,470 9,672 102,459 4.3% 4.3% 14.1% $29.32 130,500 577,200
Oakland / East End A 969,243 4,291 11,796 1.2% 2.7% 2.7% $27.65 0 240,453
Urban A 16,856,711 -28,907 167,792 1.0% 10.5% 12.6% $29.98 130,500 867,653
Pittsburgh A 28,525,849 -47,709 377,415 1.3% 11.8% 15.1% $27.00 233,500 867,653
Northern I-79 / Cranberry B 685,158 -18,095 -25,868 -3.8% 21.6% 21.6% $20.66 0 0
East B 1,465,752 14,369 17,821 1.2% 21.4% 23.4% $17.95 0 0
North B 2,942,461 9,351 9,819 0.3% 11.0% 11.1% $19.00 0 0
South B 2,306,096 11,393 76,644 3.3% 10.7% 12.3% $19.95 0 0
Southpointe B 1,062,353 18,920 -13,841 -1.3% 29.2% 31.6% $22.85 0 0
West B 3,278,922 59,229 17,591 0.5% 19.3% 20.0% $19.91 0 0
Suburban B 11,740,742 95,167 82,166 0.7% 16.8% 17.8% $19.97 0 0
CBD B 5,470,987 -36,934 -6,312 -0.1% 19.8% 20.3% $22.05 0 0
Fringe B 5,841,910 -148,038 -62,108 -1.1% 17.2% 20.3% $23.69 0 37,500
Oakland / East End B 1,088,113 16,300 22,400 2.1% 3.0% 3.0% $21.04 0 42,000
Urban B 12,401,010 -168,672 -46,020 -0.6% 16.9% 18.7% $22.69 0 79,500
Pittsburgh B 24,141,752 -73,505 36,146 0.2% 17.0% 18.3% $21.44 0 79,500
Q4 2018
Office Statistics
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com