Total net absorption remains negative for the year, however recent leasing suggests companies are committing long-term to office space in Pittsburgh.

1. © 2021 Jones Lang LaSalle IP, Inc. All rights reserved.
Pittsburgh
Net absorption for the year is reminiscent of the dip in 2017 when corporate
right-sizing was widespread. However, several leases over the past year
suggest that companies are committed to office space beyond short-term
re-entry strategies. While Dollar Bank downsized in the CBD last year, they
also expanded in the Strip District, creating a negligible result in net
absorption. Also, Del Monte and PLS signed leases in the suburbs this year
resulting in no reduction in footprint, while WTP Law tripled their size
downtown.
Another trend exemplifying forward-thinking strategies is the movement of
owner-occupiers to leased locations. Since 2018, Bombardier, Philips
Respironics, WABTEC and now GNC have signed leases in urban
submarkets. The preference for liquidity and flexibility has motivated office
users to avoid absorbing the unnecessary risk of owning real estate as well
as trying to operate a business.
Outlook
While leasing activity has yet to fully recover to pre-pandemic levels, as the
amount of leasing in the first half of 2021 is 48% of the leasing in the first half
of 2019, it is however already 45% higher than the second half of 2020. Prior
to 2020, leasing demand in Pittsburgh chased inventory, with new
construction capturing the majority of activity. GNC’s 76,000-s.f. lease at 75
Hopper, 3M’s 53,000-s.f. lease at Rockwell Park and Aurora’s 100,000-s.f.
lease at 1600 Smallman are indications this trend is continuing.
Construction costs and over saturation in primary markets have created
challenges for investors to find rent growth opportunities, which presents a
window for a lower cost market like Pittsburgh to become more desirable.
From 2014 through 2016, investor demand peaked in downtown Pittsburgh
as gateway markets commanded sub-5% cap rates, proving Pittsburgh can
easily become the focus for new-to-market investment. Pittsburgh’s strong
foundation in innovative industries and sustained office demand in new
construction, as well as within renovated buildings, exemplify the
opportunity Pittsburgh can offer for investment.
Leasing activity the past two quarters 45 percent
greater than the second half of 2020
• With the addition of GNC’s lease at 75 Hopper, 3 relocations over
65,000 s.f. each have been signed since the pandemic began.
• Direct asking rental rates remain relatively unchanged quarter-over-
quarter as vacancy climbs slightly higher.
• Sales volume has increased year-over-year since 2016, but the first
half of 2021 has lagged, totaling 11.5% of last year’s $303M.
• Although new leasing increases, net absorption remains negative for
the quarter.
Fundamentals Forecast
YTD net absorption -740,811 s.f.
Under construction 1,268,383 s.f.
Total vacancy 21.0%
Sublease vacancy 1,895,617 s.f. ▶
Direct asking rent $26.02 p.s.f.
Sublease asking rent $22.75 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 | Q2 2021
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2. © 2021 Jones Lang LaSalle IP, Inc. All rights reserved.
Pittsburgh
For more information, contact: Tobiah Bilski | Tobiah.Bilski@am.jll.com
Office Statistics | Q2 2021
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 25,663 42,564 1.0% 15.2% 21.3% $25.00 0 0
East Totals 3,053,814 3,071 -12,438 -0.4% 29.9% 30.4% $19.87 0 0
North Totals 3,777,851 -12,823 -88,118 -2.3% 14.9% 15.5% $22.08 0 100,000
South Totals 2,451,420 4,488 16,896 0.7% 13.1% 13.1% $20.17 0 0
Southpointe Totals 3,529,607 8,404 -133,215 -3.8% 17.0% 27.2% $21.40 0 0
West Totals 7,445,828 -97,937 -308,842 -4.1% 21.4% 25.1% $22.19 0 0
Suburban Totals 24,635,427 -69,134 -483,153 -2.0% 18.9% 22.7% $21.95 0 100,000
CBD Totals 18,972,607 -88,638 -189,901 -1.0% 17.0% 20.0% $26.78 0 0
Fringe Totals 8,730,052 46,766 -3,857 0.1% 16.0% 19.5% $29.35 120,000 606,563
Oakland / East End Totals 2,875,725 -29,688 -63,900 -2.2% 15.4% 17.7% $38.49 100,642 561,820
Urban Totals 30,578,384 -71,560 -257,658 -0.8% 16.6% 19.7% $29.17 220,642 1,168,383
Pittsburgh Totals 55,213,811 -140,694 -740,811 -1.3% 17.6% 21.0% $26.02 220,642 1,268,383
Northern I-79 / Cranberry A 3,691,749 9,961 26,701 0.7% 14.5% 21.6% $25.37 0 0
East A 1,580,784 -760 -16,835 -1.1% 39.2% 39.6% $21.01 0 0
North A 855,815 -42,718 -38,425 -4.5% 18.0% 18.2% $26.94 0 100,000
South A 220,000 0 0 0.0% 12.7% 12.7% $20.00 0 0
Southpointe A 2,447,254 22,286 -121,515 -5.0% 11.6% 26.2% $22.30 0 0
West A 4,160,571 -81,635 -215,370 -5.2% 17.4% 22.7% $24.04 0 0
Suburban A 12,956,173 -92,866 -365,444 -2.8% 18.1% 24.7% $23.78 0 100,000
CBD A 13,512,018 447 -22,353 -0.2% 14.8% 18.1% $30.28 0 0
Fringe A 2,932,609 111,234 84,175 3.3% 8.0% 13.4% $37.70 120,000 548,063
Oakland / East End A 1,559,538 3,615 -37,832 -2.4% 20.3% 21.6% $40.56 100,642 561,820
Urban A 18,004,165 115,296 23,990 0.2% 14.1% 17.6% $33.93 220,642 1,109,883
Pittsburgh A 30,960,338 22,430 -341,454 -1.1% 15.8% 20.6% $29.73 220,642 1,209,883
Northern I-79 / Cranberry B 685,158 15,702 15,863 2.3% 18.9% 19.5% $23.40 0 0
East B 1,473,030 3,831 4,397 0.3% 19.8% 20.5% $17.87 0 0
North B 2,922,036 29,895 -49,693 -1.7% 13.9% 14.7% $18.91 0 0
South B 2,231,420 4,488 16,896 0.8% 13.2% 13.2% $20.18 0 0
Southpointe B 1,082,353 -13,882 -11,700 -1.1% 29.0% 29.5% $20.64 0 0
West B 3,285,257 -16,302 -93,472 -2.8% 26.4% 28.1% $20.68 0 0
Suburban B 11,679,254 23,732 -117,709 -1.0% 19.7% 20.5% $20.11 0 0
CBD B 5,460,589 -89,085 -167,548 -3.1% 22.5% 24.8% $21.98 0 0
Fringe B 5,797,443 -64,468 -88,032 -1.5% 20.1% 22.6% $24.66 0 58,500
Oakland / East End B 1,316,187 -33,303 -26,068 -2.0% 9.5% 13.1% $26.53 0 0
Urban B 12,574,219 -186,856 -281,648 -2.2% 20.0% 22.6% $23.34 0 58,500
Pittsburgh B 24,253,473 -163,124 -399,357 -1.6% 19.9% 21.6% $21.85 0 58,500