www.marejournal.com construction is underway in Southpointe II, with more than half of the new space committed to tenants Ansys, Noble Energy and Rice Energy. In Cranberry Township, Butler County, Sampson Morris Group is planning a 125,645-sf mixed-use project called Ehrman Square; Sippel Industries plans to add a 190,000-sf office building adjacent to the new Pittsburgh Penguins/UPMC Sports Medicine facility; and, Chaska Properties is proposing another 100,000 sf at Cranberry Business Park. OUTLOOK With a number of both build-to-suit and speculative projects slated to begin construction in 2015, Pittsburgh should see a significant increase in leasing activity over the next 12 months, though rental rates will remain virtually unchanged and vacancy will fluctuate as new product is delivered to the market. Investor activity, particularly in the CBD, is expected to continue to increase in response to the market's stability and high occupancy levels in class A and B properties. Cushman & Wakefi ld | Grant Street Associat s Pitts. office market remains among strongest in the Country E P ennsylvania SUBMARKET STATISTICS – RENTAL RATES BY BUILDING CLASS (4Q14) BUILDING CLASS CLASS A CLASS B CLASS C
4C — March 13 - 26, 2015 — Pennsylvania — M id A tlantic
Real Estate Journal
CONOMIC OVERVIEW Commercial real es- tate offers the most optimistic future in Western Pennsylva- nia, according to the Federal Reserve’s Beige Book survey. Demand for business credit was strongest for commercial real estate and commercial and industrial loans, reflecting improved prospects for new and expanding offices in the metro. However, the volatile oil mar- ket could impact growth for the energy sector that has driven much of the leasing and devel- opment activity in Pittsburgh for the past decade.
SUBMARKET
RENTAL RATE
$25.92 $24.69 $22.38 $24.25 $27.00 $22.00 $22.74 $21.52 $22.50 $19.55
$19.31 $21.45 $18.69 $21.00 $20.86 $16.17 $18.52 $18.62 $18.84 $17.66
$12.68 $16.14
CBD
GREATER DOWNTOWN
$9.00
NORTH PITTSBURGH
$19.00
CRANBERRY TOWNSHIP/LOWER BUTLER CO.
$15.00 $10.11 $11.73 $13.50 $15.21 $13.25
OAKLAND
EAST PITTSBURGH/MONROEVILLE
NORTHEAST PITTSBURGH
WEST PITTSBURGH
SOUTH PITTSBURGH
WASHINGTON COUNTY
Unemployment in the fourth quarter dropped to 4.8%, 1.5 percentage points (pp) lower than the same period 2013, and though the region fell in global rankings for economic and employment growth in 2014, United Van Lines reported that Pittsburgh was the only Penn- sylvania metro where more people were moving in than out, with 58% of the company’s Pittsburgh business coming from inbound residents. TECH COMPANIES BEGIN MIGRATION TO CBD In 2014, 79 companies raised $337.8 million in technology sector investments, an increase of 159% over 2013, according to PriceWaterhouseCoooper’s Money Tree Report. This in- flux of capital has enabled a number of start-ups to move out of incubator spaces and into prime office space – much of it in Pittsburgh’s Central Business District. TrueFit, a commercial app and software company, inked a deal to relo- cate its offices from Cranberry Township, north of the CBD, to the Union Trust Building, Downtown. The company will be joined by Jawbone, a San Francisco-based wearable tech company, occupying 30,000 s/f in the Flemish Gothic building. Neighboring tenants include AMEC Foster Wheeler’s global environmental sciences divi- sion and Novitas Solutions, an administrative processing firm. Davis Companies, who pur- chased the 546,200 s/f building at sheriff’s sale in 2013, plans to convert the 10th and 11th floors to incubator space for emerging tech companies with the intent of creating a technology hub as part of its $35 million historic renovation of the building. GREATER DOWNTOWN AREA DRAWS INTEREST continued on page 14C
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