Office vacancies in Pittsburgh stabilized in the third quarter after the market was pummeled by a pandemic that forced many workers out of offices and into their homes, according to reports from two real estate firms.
“One of the reasons why you haven’t seen much adjustment to the overall vacancy rate is that a lot of the downsizing that started with the pandemic has already happened,” said Andrew Miller, senior vice president of CBRE.
Construction projects also have slowed, keeping the market from getting flooded with new space.
“Development coming out of that three-year stretch was stalled, and that has not increased supply,” Miller said.
CBRE reports that the vacancy rate in the Pittsburgh market held its ground at just over 16.1% during the third quarter. In Downtown Pittsburgh, the vacancy rate fell to 17.2% during that period.
In another report, JLL found that although the absorption rate — that’s the sum of the square feet that became occupied, minus the sum of square feet that became vacant — remained negative at about minus 40,600 square feet, the third quarter showed the smallest decline in occupancy since the second quarter of 2022.
Additionally, vacancy rates remained stable compared to the previous quarter after steadily rising since the start of the year, JLL said.
Meanwhile, some significant moves and new leases happened in the past several months, including The Robotics Factory at Tech Forge in Lawrenceville and Xylem’s research facility expansion, also at Tech Forge, which is now fully leased.
The return-to-office push after Labor Day has also boosted the Pittsburgh market’s business districts.
“We’re seeing more and more of our clients move in that direction,” said Nick Francic, managing director in JLL’s Tenant Representation Group, based in Pittsburgh. Francic noted that large employers such as Highmark Health and FedEx required employees to return to the office, at least on a hybrid basis.
“That’s encouraging on the real estate front, because it leads to more stabilization in the office market,” Francic said.
At CBRE, Miller said he expects the year to close out with more signed deals. That’s typical as companies try to finish transactions before the new year. In addition, Miller expects to continue to see companies opt for space in higher-end buildings with more amenities, which helps attract workers.
“Landlords have started to proactively improve some of their spaces, and those tend to be the first to go,” Miller said.
