- The supply of natural gas has saturated the local market and the need for additional pipeline to transport the supply has become priority. - Warehouse and distribution demand remains steady, but commitments from large users have yet to surface in 2017. - Shell continues to buy more properties and land for the pipeline to the cracker plant, all while obtaining local approval to build the plant.

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.
Q1 2017
Pittsburgh
Industrial Insight
As the cost of construction for industrial buildings puts pressure on rental
rates, absorption of warehouse space has shown a flat line trend. However,
the energy sector continues to steal the spotlight of attention. The
southwestern Pennsylvania region produces a fourth of the natural gas in the
country and the infrastructure to transport the surplus in supply to other
areas of the country is needed.
The Atlantic Sunrise pipeline was granted environmental approval in the first
quarter 2017 and once built will connect Marcellus gas supplies with the East
Coast. In January, Shell acquired six easements for their 94-mile pipeline that
will transport ethane to the cracker plant. The count for the region’s oil and
natural gas drilling rigs ended in 2016 at 32, swinging back up from 13 during
mid-year, showing a rebound in production.
Outlook
The industrial market in Pittsburgh in general is taking a wait and see
mentality. The announcement of the $6.0 billion investment from Shell in
June 2016 garnered a lot of attention, but other large user commitments have
yet to surface. Current tenant requirements total over 6.0 million square feet,
the bulk of which has been focused in the West submarket with nearly 2.5
million square feet sought after. Available large blocks of Class A industrial
space with 24-foot and above ceiling height are few and far between. Only 7.5
percent of the Class A inventory found in the Pittsburgh market is currently
available. The construction of the 13-mile southern beltway, I-576, connecting
Route 22 to I-79 in the West submarket, began in the first quarter 2017, and
will open up new options along the corridor for construction once complete.
Fundamentals Forecast
YTD net absorption 1,902,437 s.f. ▲
QTD net absorption 1,902,437 s.f. ▲
Under construction 137,500 s.f. ▼
Total vacancy 8.3% ▼
Average asking rent (NNN) $4.89 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
Industrial rent growth and low vacancy going into 2017
as energy sector demand builds up
12.4% 12.4% 11.8%
9.6%
8.3%
2013 2014 2015 2016 YTD 2017
Total vacancy
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com
• The supply of natural gas has saturated the local market and the need
for additional pipeline to transport the supply has become priority.
• Warehouse and distribution demand remains steady, but commitments
from large users have yet to surface in 2017.
• Shell continues to buy more properties and land for the pipeline to the
cracker plant, all while obtaining local approval to build the plant.
$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.
Q1 2017
Pittsburgh
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.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
Pittsburgh Totals
Warehouse & Distribution 82,753,336 1,301,074 1,301,074 1.6% 7,916,875 9.6% $5.11 0 137,500
Manufacturing 55,597,540 601,363 601,363 1.1% 3,520,815 6.3% $4.40 0 0
Total 138,350,876 1,902,437 1,902,437 1.4% 11,437,690 8.3% $4.89 0 137,500
Flex / R&D 21,452,559 276,300 276,300 1.3% 2,679,936 12.5% $10.27 0 0
Beaver County
Warehouse & Distribution 4,328,801 -25,000 -25,000 -0.6% 586,262 13.5% $4.86 0 0
Manufacturing 4,517,893 2,600 2,600 0.1% 154,600 3.4% $2.65 0 0
Total 8,846,694 -22,400 -22,400 -0.3% 740,862 8.4% $4.40 0 0
Flex / R&D 579,085 0 0 0.0% 90,860 15.7% $10.00 0 0
Butler County
Warehouse & Distribution 3,843,756 -6,808 -6,808 -0.2% 596,545 15.5% $4.25 0 0
Manufacturing 3,561,575 183,624 183,624 5.2% 291,065 8.2% $1.20 0 0
Total 7,405,331 176,816 176,816 2.4% 887,610 12.0% $3.25 0 0
Flex / R&D 386,900 0 0 0.0% 11,000 2.8% $10.00 0 0
Downtown
Warehouse & Distribution 18,123,357 -1,000 -1,000 0.0% 1,420,306 7.8% $5.38 0 0
Manufacturing 4,589,443 29,000 29,000 0.6% 85,877 1.9% $7.18 0 0
Total 22,712,800 28,000 28,000 0.1% 1,506,183 6.6% $5.49 0 0
Flex / R&D 3,057,704 152,775 152,775 5.0% 268,035 8.8% $8.17 0 0
East
Warehouse & Distribution 6,568,324 10,977 10,977 0.2% 566,158 8.6% $5.32 0 0
Manufacturing 4,583,748 -109,500 -109,500 -2.4% 445,890 9.7% $4.00 0 0
Total 11,152,072 -98,523 -98,523 -0.9% 1,012,048 9.1% $4.72 0 0
Flex / R&D 3,174,112 901 901 0.0% 648,853 20.4% $10.50 0 0
Northeast
Warehouse & Distribution 5,873,556 18,867 18,867 0.3% 275,212 4.7% $5.12 0 0
Manufacturing 6,408,774 29,746 29,746 0.5% 94,090 1.5% $5.75 0 0
Total 12,282,330 48,613 48,613 0.4% 369,302 3.0% $5.28 0 0
Flex / R&D 3,260,696 57,100 57,100 1.8% 286,414 8.8% $10.75 0 0
Northwest
Warehouse & Distribution 10,250,565 466,772 466,772 4.6% 399,878 3.9% $6.36 0 0
Manufacturing 3,478,558 -31,000 -31,000 -0.9% 71,040 2.0% $9.95 0 0
Total 13,729,123 435,772 435,772 3.2% 470,918 3.4% $6.80 0 0
Flex / R&D 2,228,014 36,536 36,536 1.6% 192,120 8.6% $14.10 0 0
South
Warehouse & Distribution 5,526,006 17,454 17,454 0.3% 495,724 9.0% $3.51 0 0
Manufacturing 8,033,856 0 0 0.0% 177,782 2.2% $6.75 0 0
Total 13,559,862 17,454 17,454 0.1% 673,506 5.0% $4.40 0 0
Flex / R&D 1,634,737 5,581 5,581 0.3% 80,307 4.9% $12.37 0 0
Washington County
Warehouse & Distribution 5,493,929 452,836 452,836 8.2% 1,343,171 24.4% $4.52 0 0
Manufacturing 4,716,380 15,800 15,800 0.3% 345,000 7.3% $4.95 0 0
Total 10,210,309 468,636 468,636 4.6% 1,688,171 16.5% $4.61 0 0
Flex / R&D 1,407,932 11,526 11,526 0.8% 307,261 21.8% $9.00 0 0
West
Warehouse & Distribution 10,548,973 34,192 34,192 0.3% 986,129 9.3% $6.38 0 100,000
Manufacturing 2,748,203 28,502 28,502 1.0% 131,414 4.8% $8.50 0 0
Total 13,297,176 62,694 62,694 0.5% 1,117,543 8.4% $6.63 0 100,000
Flex / R&D 3,271,785 14,859 14,859 0.5% 523,859 16.0% $12.63 0 0
Westmoreland County
Warehouse & Distribution 12,196,069 332,784 332,784 2.7% 1,247,490 10.2% $5.14 0 37,500
Manufacturing 12,959,110 452,591 452,591 3.5% 1,724,057 13.3% $4.17 0 0
Total 25,155,179 785,375 785,375 3.1% 2,971,547 11.8% $4.58 0 37,500
Flex / R&D 2,451,594 -2,978 -2,978 -0.1% 271,227 11.1% $5.58 0 0