Residential Real Estate

By Sam Spatter, FOR THE PITTSBURGH TRIBUNE-REVIEW
Wednesday, March 17, 2010

Pittsburgh led the nation during 2009 in the amount of office space leased or occupied by new tenants, the chief economist for Grubb & Ellis, a national commercial real estate company, said Tuesday.

"The region did remarkably well versus other markets," said Bob Bach, during the firm's 2010 Commercial Real Estate Forecast Update at the Duquesne Club, Downtown.

The region filled 693,276 square feet of office space -- equal to about 40 football fields -- which helped reduce the office vacancy rate to about 15 percent -- from about 16 percent -- while other cities, such as Philadelphia, had 2 million square feet vacated last year, increasing office vacancy to 16.8 percent, Bach said.

The overall increase in occupancy was fueled by Westinghouse Electric Co.'s move to about 500,000 square feet of space at its new world headquarters in Cranberry, and Dick's Sporting Goods occupancy of its new 670,000-square-foot headquarters in Findlay, at Pittsburgh International Airport.

Other gains included K&L Gates law firm occupying 251,000 square feet of space in K&L Gates Center, formerly One Oliver Plaza Building, Downtown, and the state's leasing of space in three Downtown buildings, now that the State Office Building, Downtown, has been sold to Millcraft Industries Inc. Because the state owned the building, the office space was not included in previous office inventories.

Offsetting losses included about 387,000 square feet of space at Westinghouse's former Monroeville campus and 289,000 square feet of space K&L Gates is vacating at the Henry W. Oliver building, Downtown. But BNY Mellon Corp. already has leased 100,000 square feet of space at the Monroeville site.

Bach said class A rental rates Downtown are predicted to increase to $22.75 this year from $21.75 per square foot last year, while suburban office rates could increase to about $20.85 from about $20.40 per square foot of space.

"Dwindling class A space will force tenants to consider second generation space, and the limited availability of larger blocks of space will provide upward pressure on class A rates," he said.