The overall Pittsburgh industrial market finished the first quarter of 2019 with a 5.9% vacancy rate. This is slightly increased from the previous quarter which was 5.6%. Overall rental rates also increased to $6.74. While flex rates held steady at $12.95, warehouse rates increased to $5.12.
The Pittsburgh industrial market is very healthy. The demand is high across all types of industrial space, but warehouse seems to be the most highly sought-after product. This can be evidenced by The West Pittsburgh Industrial Park, a speculative development, being 100% leased prior to delivery. Tenants include DHL, Mallet and Grimco. Other major deals completed in Q1 include Sargent Electric who signed for 100,000 SF at 670 Pennsylvania Ave in Rochester and API Construction for 54,000 SF at the same facility.
The outlook should continue to be very positive, as vacancy should tighten, and rental rates are expected to increase. The technology and manufacturing sectors continue to expand, providing a need for research and development space, as well as warehouse and flex space. The local universities, particularly Carnegie Mellon and the University of Pittsburgh, are attracting many technology companies to the region. The Strip District and Lawrenceville have been and will continue to be very popular landing spots for robotics and technology manufacturing firms. Royal Dutch Shell’s ethane cracker plant in Beaver county is expected to cause demand to tighten not just the Beaver County submarket, but also the parkway West, West Pittsburgh and Northwest submarkets.