In the Northeast submarket, an affiliate of Kratsa Properties sold a multi-tenant 171,000-square-foot building for $7.55 million, or $44/square foot. There were two speculative “value-add” acquisitions in the Route 28 corridor, including the former 85,000 square foot Watson Standard Facility which sold for $3.3 million and the former 147,000 square foot L3 Harris facility which sold for $5.6 million. Both buildings are being marketed for single or multiple tenant occupancy.
Looking Ahead
With interest rates increasing, it will be interesting to see how build-to-suit projects and acquisitions are priced and financed, as well as what the impact will be to lease rates on speculative construction that is underway or contemplating a start in the third or fourth quarter of 2022. With over 1.9 million square feet of new Class A inventory under construction in the region, any downturn in the economy could potentially disrupt the steady flow of successful industrial projects coming online throughout the region. Anecdotally, prospects in the market remain strong in the West submarket, although inventory remains limited in the outlying counties. Investor appetite for industrial assets remains high, although cap rates are increasing and may cause friction with sellers late to the party, with pricing expectations tied to 2021 instead of 2022. DP
Park, Neyer is nearing completion of a 280,000-square-foot shell and broke ground on an adjacent 110,000-square- foot building. Neyer also broke ground for 175,000 square foot build to suit at the NorthField site for an undisclosed tenant. In the Northwest submarket, BCI Steel announced a new production facility in the Leetsdale Industrial Park, for approximately 90,000 square feet. In the Butler County submarket, Al. Neyer secured Werner Transportation to lease the remaining 50,000 square feet in the 220,000-square-foot Jackson Distribution Center. In Westmoreland County, the WCIDC announced several transactions, including a land sale to Fossil Industries to construct a second building in the Westmoreland Tech Park II. This 52,000-square-foot facility will complement the recently completed 41,000-square-foot facility. Also in the Westmoreland Tech Park II, Al. Neyer secured a buyer for its 150,000 square foot speculative building which will close in Q3. This sale will allow Al. Neyer to start construction on another 150,000 square feet on the adjoining site. In the Jeanette Industrial Park, Scott Electric announced a lease for 50,000 square feet. At the Commerce Crossings, Al. Neyer completed the shell construction for its 250,000 square foot speculative building. In Beaver County, Crossgates secured its second tenant in the speculative 105,000-square-foot building in the Westgate Business Park. Hello Fresh is opening its first warehouse to service
the Pittsburgh area out of 31,500 square feet at 400 Enterprise Dr., which leaves 42,000 square feet available in the Westgate Commerce Center. In Washington County, LaCarte Enterprises is working on two projects in the Alta Vista Business Park, including securing Bakery Barn for its 45,000-square-foot spec building in Alta Vista and starting construction on a 60,000-square-foot building adjacent to the recently leased 52,000-square-foot Bloom Engineering facility.
Capital Markets
There were four distinct, significant industrial investment sales, two of which occurred in the second quarter of 2022 and two that closed in the late first quarter of 2022. The most significant industrial investment sale in the second quarter of 2022 was the sale by Chapman Properties of its two multi-tenant buildings totaling 146,000 square feet in Chapman Westport to Sealy for $24.0 million, or $164/square foot. This was the highest price/square foot for a multi-tenant building in the Pittsburgh market. Two sales were single-tenant, long-term net lease sales. In Butler County, SunCap sold the 220,000-square-foot build-to-suit for Bayer Healthcare/FedEx Supply Chain to an affiliate of Realty Income Trust for $27.5 million, or $125/square foot. In the Clinton Commerce Park, Stag added 1100 Clifford Ball Dr. to its portfolio in the West submarket. The 400,000-square-foot building was acquired for $50.0 million, or $125/square foot.
Newmark 210 Sixth Avenue, Suite 600 Pittsburgh, PA 15222 412-281-0100 www.nmrk.com Louis Oliva Executive Managing Director Louis.oliva@nmrk.com
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DEVELOPING PITTSBURGH | Fall 2022
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