Downtown office space filling up, rents rising
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When it comes to office space in Pittsburgh, there's little room to spare.
Aided by the Marcellus Shale boom and the growth of the local health care and banking industries, the Pittsburgh office market is tighter than ever, with near record low vacancy rates in some quarters pushing rental rates up.
In the Golden Triangle, demand has driven the vacancy rate for premier class A space down to 6 percent to 7 percent, one of its lowest points in decades.
Jeffrey Ackerman, executive vice president of the CB Richard Ellis investment properties group, said the vacancy rate hasn't been that low since the early 1980s, before construction of new skyscrapers like Oxford Centre, Fifth Avenue Place and BNY Mellon Center.
"I would say we're in record territory. There's never been such a dearth of space," added Dan Adamski, managing director of the Jones Lang LaSalle commercial real estate firm in Pittsburgh.
Mr. Adamski said it's becoming harder and harder to find class A space for clients, particularly larger ones, as the office market tightens.
"Anyone really needing two floors of space or more, you can count the options on one hand, where as recently as three years ago, you might have 15 options," he said.
As little as four years ago, the U.S. Steel Tower had half a million square feet of space available for lease and rental rates were less than $18 a square foot, Mr. Adamski said.
Now, the vacancy rate is less than 2 percent and what space is available costs at least $28 a square foot. "There's not even a full floor left," he said.
UPMC now occupies 13 floors of the U.S. Steel Tower and plans to add seven more by next summer. PNC is building a 40-story, $400 million skyscraper Downtown to consolidate employees.
Downtown isn't the only place feeling the squeeze. In Oakland, nearly all class A space has been taken, with a vacancy rate of less than 2 percent. Cranberry, Southpointe and the city's East End also are doing well.
"Over the last two years, we've been as strong as almost any market in the country," Mr. Ackerman said.
First Published August 5, 2011 12:00 am
