The Pittsburgh Commercial Real Estate (CRE) market has changed quite a bit! The number one defining factor? COVID-19. COVID has shut down buildings, hotels, companies, restaurants, coffee shops – you name it and it’s been affected.
Like many other cities across the United States, Pittsburgh’s central business district (CBD) has been the hardest hit. Subleases have increased 135% over the past twelve months and continue an upward trend. The pandemic has altered the way businesses are operating. And few companies have truly determined what their CRE needs will be going forward. Will they need more space? Less space? Closed offices? A place to gather? Will they relocate to the suburbs? Open multiple smaller offices? It will likely be hard to make a decision until a COVID vaccine has been approved and distributed.
Not only that, with the closure of hotels, restaurants, and coffee shops, the Central Business District (CBD) has taken a tremendous hit. As most companies continue to allow their workforces to work from home, there is less need for lunch spots, coffee runs or last minute drug store stops. This trend will most likely have long term effects on the entire marketplace. It’s hard to imagine the CBD devoid of lunch spots once offices re-open, but it’s a definite possibility!
The vacancy rate increased to 9.1%, but that number doesn’t yet include subleases. Once sublease space is out of lease, the vacancy rate will likely increase significantly. Thankfully, through the market has slowed down, some deals are still going through. The largest recent deals signed include Benshaw, Inc. at 183,295 SF in the Northeast Submarket, ConnectiveRX at 110,000 SF in the Parkway West Corridor, and Dollar Bank at 73,768 SF in the CBD.
Obviously, there are far more questions than we have answers. It will be very interesting to see what comes next, as we look to a future after COVID-19.
For a more detailed analysis, check out the rest of our Viewpoint Q3 2020 HERE.