TCN Worldwide Market Insights: Industrial Market Snapshot for Pittsburgh by Hanna Commercial Real Estate/TCN Worldwide
Overall the Pittsburgh Industrial Real Estate Market continues to remain healthy with vacancy hovering around 5.6% and a minor decrease in asking rents over all of the sub-markets.
According to CoStar” lease volume in the fourth quarter of 2023 fell to the lowest level in more than a decade. Just 442,000 SF of space was leased in 23Q4, which is 64% below the average fourth-quarter total in the five years prior to the pandemic. In Q3 2024, the industrial real estate market in Pittsburgh experienced several notable trends:
1. Vacancy Rates: The overall industrial vacancy rate remained relatively stable, hovering around 5.6% throughout much of 2024. Class A industrial space saw slightly lower vacancies at around 5.3% by mid-year, down from 5.5% in Q2 2024, indicating steady demand for higher-end facilities.
2. Rental Rates: Every sub-market observed a slight decrease in rental rates. This reflects a slowing demand for logistics, warehousing, and manufacturing spaces, even as construction slowed down after record deliveries in 2023.
3. Leasing Activity: There was an uptick in inquiries, tours, and proposals for industrial properties in Q3, marking a continuation of the recovery seen earlier in the year. Transactions are taking longer to conclude with uncertainty regarding the economy and labor markets leading the concerns.
4. Construction: After substantial deliveries in 2023, new construction activity tapered off, with an 85% reduction in under-construction inventory compared to previous highs. This slowdown could impact the availability of new space in the coming quarters, with just 300,000 square feet under development.
5. Sales: Overall, sales of buildings greater than 20,000 square feet were muted with only 5 properties changing hands. Most notably, the University of Pittsburgh Advanced Research Center (UPARC) a 900,000 square-foot campus that is comprised of 53 buildings on 83 acres in the Northeast Pittsburgh Sub-Market which sold for $5,000,000.
Outlook: While demand remains high, industrial construction activity is beginning to taper off compared to previous years. Rising material costs, labor shortages, and higher interest rates have contributed to a slowdown in new developments. Nationwide, large distribution centers are being put back on the market for sublease as retailers like Home Depot are seeing challenges because of slower sales.
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Get in touch:
Hanna Commercial Real Estate - Pittsburgh | 412-261-2200 | www.hannacre.com/pittsburgh
Hanna Commercial Pittsburgh is rooted in the history of this region. Our legacy in Pittsburgh real estate spans nearly 90 years through various companies and names, culminating from the merger of Langholz Wilson Ellis, Inc., and Howard Hanna Commercial Real Estate.
Entrepreneurial in culture, Hanna Commercial brokers personally own more than $175MM worth of retail, office, industrial, multi-family, and otherwise investment real estate. As an active participant in the ever-changing landscape of commercial real estate as investors and advisors, Hanna Commercial has thrived by delivering bespoke strategic consultation to our clients. We leverage our experience and skills to outperform your expectations and outwork our competitors. Our success is achieved when our clients win.
About TCN Worldwide:
TCN Worldwide, a consortium of independent commercial real estate firms, provides complete integrated real estate solutions locally and internationally. Established in 1989, TCN Worldwide stands as a prominent figure in the commercial real estate industry, ranking among its largest service providers. As an alliance of premier independent brokerage firms serving more than 200 primary and secondary markets worldwide, TCN Worldwide provides comprehensive integrated solutions across North America, Asia, Europe, the Middle East, and Australia.
With an expansive array of real estate services and an unwavering commitment to exceeding client expectations, TCN Worldwide member firms represent approximately $47.3 billion in transactions annually across 70+ offices and more than 1,500 commercial real estate professionals.
For more information on TCN Worldwide, visit www.TCNWorldwide.com.