Mid Atlantic Real Estate Journal — Pennsylvania — February 10 - 23, 2012 — 43A
www.marejournal.com
W ESTERN PA S POTLIGHT
By: John M. Lisowski, Grant Street Associates, Inc. Energy industry leads to surge in Western PA manufacturing
T
he manu f a c t u r i ng industry in Western Pennsylvania is set
The Marcellus Shale natural gas reserves have brought an influx of activity to the region and will drive production in many sectors for years to come. The abundance of natural gas will keep the cost of fuel down which will further “fuel” the manufacturing sector. As de- mand increases for steel parts and piping for transport, man- ufacturers will begin to utilize the cheaper, more environmen- tally efficient gas to make them more competitive with their overseas counterparts. In the Pittsburgh region, local manufacturers have already benefitted from the height- ened demand. Of the top 25
manufacturers involved in non- food production, 65 percent of them have enjoyed double-digit growth in the last year, with the remaining manufactur- ers experiencing single-digit growth. Increase in production within a more competitive global manufacturing environment bodes well for the industrial real estate market. As produc- tion and cost competitiveness increases in these areas, com- panies will begin to expand their footprints. Additionally, ancillary service industries will have to keep pace with the expansion activity, inevitably needing more space.
Industrial vacancy rates in the region are already hovering at critically low rates, currently just over 7 percent. The need for additional space will spur the new construction. Among the plans already in place are Chapman Commerce Center, a 2.6 million s/f industrial busi- ness park, Phase II of Star- pointe Business Park in Wash- ington County, which calls for three buildings totaling more than 1.0 million s/f, and Jackson’s Pointe Commerce Park, where the first 69,000 s/f speculative building is cur- rently under construction. The industrial real estate market in the Pittsburgh re-
gion has long been linked to the manufacturing industry, and with the influx of energy companies in the region, both manufacturing and real es- tate will benefit greatly. The interrelationship among these three sectors forecasts a bright future with continual expan- sion on the horizon. Western Pennsylvania will once again be a significant player in the national and global markets. John M. Lisowski is an industrial brokerage and leasingmanager with Cush- man & Wakefield|Grant StreetAssociates, Inc. head- quartered in Pittsburgh, PA. ■
for revital- ization once again and the thanks f or this healthy surge go to the booming energy sec- tor. Histori- cally known
John M. Lisowski
for manufacturing, Western Pennsylvania, particularly the Greater Pittsburgh and the tri-state areas, are set to be big winners in employment, production, growth and overall earnings. While the Pittsburgh market has not returned to its highest growth levels of 2007-2008, it appears the region could be on its way to the sustainable levels of 2004-2006. If that is the case, financing for both build-to-suit lease and owner occupied proj- ects will be required as well as speculative construction in se- lect markets such as theAirport/ West; Northwest and Washing- ton County submarkets. Concurrently, as we head into 2012, two significant questions remain. Will the European Union come up with a definitive recapitalization plan that does not result in significant defaults or a recession? And how will the US Elections of 2012 play out in light of potentially improv- ing economic conditions, the existing budget deficits and the polarized positions of our two political parties in an election year? As to the first, the Eu- ropean Debt Crisis could have an impact on global companies, some of which are based in Pitts- burgh including US Steel, PPG, Heinz, Bayer, and Allegheny Technologies. Clearly, growth in the Pittsburgh industrial sector is more closely levered to the latter as debt reduction, tax rates, health care, regulation (or deregulation) will have a direct impact on consumer con- fidence, business confidence and banking. As most of the indus- trial occupiers in the Pittsburgh market are local or regional, a positive economic recovery is essential to continual growth and stability. Louis V. Oliva, CCIM, SIOR is senior vice presi- dent of Grubb & Ellis Com- pany headquartered inPitts- burgh, PA. ■ Continued from page 42A One Year Ends. . .
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