- Natural gas production in Washington County increased year-over-year in October 2018 and has maintained an upward trajectory into 2019, however measurable leasing activity in the region as a result has yet to occur, potentially due to low vacancy. - Online holiday shopping increased substantially compared to the previous year, but leasing activity for last mile distribution centers locally has not reflected this rise in ecommerce. - Al. Neyer began construction of two buildings totaling over 260,000 square feet in the West submarket, adding to the region's warehouse inventory.

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.
Q4 2018
Industrial Insight
In an online survey of 1,000 U.S. consumers conducted by JLL in October, 50.3
percent indicated they would make at least one purchase from their phones,
compared to 22.2 percent in the previous holiday season. Additionally, 15.2
percent said they would buy online and pick-up in the store and 10.4 percent
stated they would buy directly from the retailer’s website. In Pittsburgh, the
growing number of retailers offering pick-up and delivery options as opposed
to in-store shopping also presents potential logistical needs. Pittsburgh has
one of the highest concentration of Millennials living within the city limits as it
compares to total population in the country. Current trends within the
ecommerce industry and Pittsburgh’s urban demographics are suggesting
that an increase in last mile distribution centers is probable, however such
leasing activity in the region has been minor through this cycle.
Outlook
According to the Pennsylvania Department of Environmental Protection,
unconventional natural gas well production in Washington County for
October 2018 totaled 106.0 billion cubic feet, equating to nearly 7.0 billion
cubic feet more than December 2017 and over 90.0 billion cubic feet more
than the entire year of 2008. The steady increase in production over the last
decade has maintained its trajectory into 2019, but measurable leasing
activity in the region as a result has yet to occur. A reason for the slow activity
can be the shortage of availability. Total vacancy in the market descended
below 8.0 percent in the fourth quarter 2018. Al. Neyer has begun speculative
construction of two buildings in the West submarket totaling over 260,000
square feet. In the fourth quarter, the construction of the Shell petrochemical
facility passed its one year commencement anniversary. As the region
approaches its first cracker plant, the companies that lease the growing
amount of speculative development in the West and the rate in which they
lease will inevitably indicate the downstream impact of the cracker plant.
Fundamentals Forecast
YTD net absorption 1,646,698 s.f. ▲
QTD net absorption 398,386 s.f. ▲
Under construction 1,458,887 s.f. ▶
Total vacancy 7.7% ▼
Average asking rent (NNN) $5.95 p.s.f. ▲
Tenant improvements Stable ▶
-500,000
1,500,000
3,500,000
2014 2015 2016 2017 YTD
2018
Supply and demand (s.f.) Net absorption
Deliveries
Significant leasing activity yet to be seen despite an
uptick in gas production and rise in online shopping
12.4% 11.8%
9.6%
8.4% 7.7%
2014 2015 2016 2017 YTD 2018
Total vacancy
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com
• Natural gas production is up year-over-year, both in Washington County
and Pennsylvania.
• Online holiday shopping this season was initially estimated in November
to finish higher than the previous year, however last mile delivery leasing
has not reflected an increase locally.
• Al. Neyer’s construction of two buildings at Clinton Commerce Center
will add over 260,000 square feet of warehouse.
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
2014 2015 2016 2017 2018
Average asking rents ($/s.f.)
W&D Manufacturing

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.
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.)
83,276,656 394,918 1,667,426 2.0% 6,946,274 8.3% $5.95 0 134,000 1,458,887
Manufacturing 55,690,983 3,468 -20,728 0.0% 3,818,041 6.9% $5.88 0 0 0
Total 138,967,639 398,386 1,646,698 1.2% 10,764,315 7.7% $5.92 0 134,000 1,458,887
Flex / R&D 21,863,641 -142,394 101,282 0.5% 2,487,858 11.4% $11.19 0 0 275,000
Beaver County
4,525,107 40,726 264,919 5.9% 475,136 10.5% $5.86 0 0 416,000
Manufacturing 4,777,962 0 -104,264 -2.2% 506,464 10.6% $3.00 0 0 0
Total 9,303,069 40,726 160,655 1.7% 981,600 10.6% $4.38 0 0 416,000
Flex / R&D 600,520 15,013 29,371 4.9% 97,284 16.2% $7.77 0 0 0
Butler County
3,864,110 3,864 56,462 1.5% 645,306 16.7% $3.48 0 0 220,000
Manufacturing 3,586,191 -21,517 91,009 2.5% 319,171 8.9% $2.72 0 0 0
Total 7,450,301 -17,653 147,471 2.0% 964,477 12.9% $3.23 0 0 220,000
Flex / R&D 418,900 -7,540 19,294 4.6% 18,851 4.5% $7.00 0 0 0
Downtown
17,850,155 -157,651 -142,741 -0.8% 1,245,135 7.0% $6.82 0 0 0
Manufacturing 4,195,484 -25,173 -4,766 -0.1% 49,150 1.2% $8.16 0 0 0
Total 22,045,639 -182,824 -147,508 -0.7% 1,294,286 5.9% $6.87 0 0 0
Flex / R&D 3,216,725 -80,418 67,820 2.1% 344,190 10.7% $11.80 0 0 95,000
East
6,543,686 26,175 27,407 0.4% 522,452 8.0% $8.71 0 0 0
Manufacturing 4,720,748 231,317 133,945 2.8% 283,245 6.0% $4.25 0 0 0
Total 11,264,434 257,491 161,352 1.4% 805,697 7.2% $7.02 0 0 0
Flex / R&D 3,112,912 -3,113 90,286 2.9% 420,416 13.5% $10.25 0 0 0
Northeast
5,870,737 41,095 -17,395 -0.3% 228,959 3.9% $6.27 0 0 0
Manufacturing 6,408,774 0 19,036 0.3% 185,854 2.9% $5.75 0 0 0
Total 12,279,511 41,095 1,641 0.0% 414,813 3.4% $6.04 0 0 0
Flex / R&D 3,264,902 5,046 -132,096 -4.0% 359,179 11.0% $9.00 0 0 0
Northwest
10,325,348 30,976 271,496 2.6% 364,687 3.5% $6.92 0 0 0
Manufacturing 3,456,690 -165,921 -226,346 -6.5% 328,386 9.5% $9.95 0 0 0
Total 13,782,038 -134,945 45,150 0.3% 693,073 5.0% $8.36 0 0 0
Flex / R&D 2,252,535 -6,758 -11,008 -0.5% 222,050 9.9% $16.66 0 0 135,000
South
5,740,769 195,186 300,786 5.2% 314,117 5.5% $4.18 0 0 0
Manufacturing 8,033,579 8,034 -31,596 -0.4% 289,209 3.6% $5.00 0 0 0
Total 13,774,348 203,220 269,190 2.0% 603,326 4.4% $4.60 0 0 0
Flex / R&D 1,731,137 111 11,182 0.6% 69,245 4.0% $12.37 0 0 0
Washington County
5,563,429 27,817 -287,020 -5.2% 1,062,798 19.1% $5.86 0 0 0
Manufacturing 4,666,073 33,262 189,950 4.1% 326,625 7.0% $6.75 0 0 0
Total 10,229,502 61,079 -97,070 -0.9% 1,389,423 13.6% $6.07 0 0 0
Flex / R&D 1,456,673 -53,897 -50,531 -3.5% 218,978 15.0% $9.00 0 0 0
West
10,654,588 223,746 769,934 7.2% 703,203 6.6% $6.12 0 54,000 822,887
Manufacturing 2,847,633 46,562 47,121 1.7% 165,163 5.8% $5.91 0 0 0
Total 13,502,221 270,308 817,055 6.1% 868,366 6.4% $6.08 0 54,000 822,887
Flex / R&D 3,612,743 -10,838 49,963 1.4% 632,230 17.5% $12.51 0 0 45,000
Westmoreland County
12,338,727 -37,016 423,578 3.4% 1,384,481 11.2% $5.44 0 80,000 0
Manufacturing 12,997,849 -103,095 -134,817 -1.0% 1,364,774 10.5% $6.95 0 0 0
Total 25,336,576 -140,111 288,760 1.1% 2,749,256 10.9% $6.23 0 80,000 0
Flex / R&D 2,196,594 0 27,000 1.2% 105,437 4.8% $5.36 0 0 0
Warehouse & Distribution
Pittsburgh Totals
Warehouse & Distribution
Warehouse & Distribution
Warehouse & Distribution
Warehouse & Distribution
Warehouse & Distribution
Warehouse & Distribution
Warehouse & Distribution
Warehouse & Distribution
Warehouse & Distribution
Warehouse & Distribution
Q4 2018
Industrial Statistics
For more information, contact: Tobiah Bilski | tobiah.bilski@am.jll.com