The Pittsburgh office market’s return to positive absorption and vacancy decline, despite limited new supply, signals potential for a cautious recovery. The city’s recently announced revitalization plan will likely stimulate further demand for updated office spaces and downtown activity, positioning Pittsburgh’s office market for gradual improvement over the next year.
Office Market Highlights
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1. Vacancy and Absorption Improvements
Office vacancy declined for the fourth consecutive quarter, reaching 15.8%, down from 16.0% in Q2 2024. Net absorption was positive for the second quarter in a row, marking a year-to-date total of +270k SF—a hopeful indicator of market stability as companies cautiously adjust their office requirements to fit hybrid work models.
2. Increased Demand for Class A Space
There is strong demand for high-quality office spaces, reflected by notable leases in Class A buildings such as 20 Stanwix and 30 Isabella Street, which bolstered positive net absorption in Q3. Companies are focusing on top-tier locations with modern amenities to retain talent and meet employee expectations, aligning with a national trend favoring premium office spaces.
3. Revitalization Impact and Limited New Supply
Pittsburgh’s $600 million revitalization plan for downtown, announced by Allegheny County, is set to transform 10 city blocks over the next decade, significantly enhancing the office market by encouraging adaptive reuse and residential conversions to reduce excess office space. Construction activity in Q3 remained low, with only 724k SF underway, reflecting developers’ caution amid high financing costs and uncertain demand.
Industrial Market Highlights
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Pittsburgh’s industrial market remains resilient with limited new supply and steady demand supporting its current vacancy and rental rates. The downtown revitalization plan should benefit surrounding industrial submarkets, particularly through the reuse of older sites to support Pittsburgh’s tech, life sciences, and logistics growth. As market fundamentals hold steady, these revitalization efforts may serve as a catalyst for future growth in the industrial sector.
Key Industrial Market Highlights:
1. Stabilizing Vacancy Rates Amid Soft Absorption
Despite experiencing a negative net absorption of -393k SF in Q3, the overall vacancy rate held steady at 6.4%, indicating that lower construction levels have mitigated the impact of move-outs and kept vacancy under control.
2. Strength in Rental Growth and Market Demand
Industrial rents continued their gradual rise, up to $7.30/SF from $7.02 in Q2 2024, reflecting a steady demand for quality industrial space across sectors such as logistics and manufacturing. This increase aligns with Pittsburgh’s ongoing expansion in tech flex that support tech-focused uses like AI and robotics.
3. Revitalization and Redevelopment Activity
The $600 million downtown revitalization plan will complement Pittsburgh’s existing industrial infrastructure, particularly as redevelopment projects continue along the rivers and former industrial sites. This investment is set to bolster the logistics and manufacturing sectors, with increased focus on supporting modern industry needs while benefiting from enhanced transport and infrastructure projects.
For personalized advice on navigating the commercial real estate market or to explore office and industrial space options, feel free to reach out to us at Rise Pittsburgh. We’re committed to helping businesses find the perfect fit for their evolving needs.