The workforce continues to develop and gravitate toward urban cores, which makes it necessary for companies to focus recruitment efforts there and in surrounding secondary markets. Pittsburgh is a prime example of a hot market for job seekers due to advancements in technology, energy and more. However, that doesn’t necessarily create cause for new construction.
In the Pittsburgh office market, rents have not achieved the rate necessary for new construction to be viable, even as tenant demand gravitates toward a higher quality space. Accordingly, investors are realizing the returns that value-add properties provide, and they are responding with 15 office renovation projects.
These renovations include historic downtown locations like The Grand at Fifth Avenue, as well as surrounding suburban office parks like Penn Center East. In total, the 15 projects will impact more than 4 million square feet of office space in the Pittsburgh market.
Dan Adamski, Managing Director of JLL’s Pittsburgh office, sheds light on the impact these renovations will have on the Pittsburgh office market.
What are some common amenities that tenants demand in Pittsburgh’s urban submarkets?
Tenants are in search of properties that are essentially a one-stop shop for all of their needs. For that reason, we often see fitness centers and conference facilities named as top priority amenities. We also hear tenants talk about how they want to be within close proximity to dining options, whether they’re in-house or within walking distance, as well as convenient access to parking.
Are there any specific submarkets that you see certain industries gravitating toward more than others?
Southpointe is a popular market for energy-related companies. It has easy access to major highways and it is located in the same county as many of the state’s gas wells.
The Parkway West / Airport corridor has strong back-office presence, mainly for insurance or financial companies, while tech companies dominate Oakland and East Pittsburgh.
What kind of leasing terms are tenants seeking when it comes to these newly renovated spaces? (e.g. 10-year leases with flexibility, etc.)
Prospective tenants are signing leases typically between 7 and 10 years, driven by the significant capital outlay required by the landlord. Naturally, the greater the renovations and amenities provided, the higher the rates being commanded.
As the national job market and economy continues to strengthen, more of the current and future workforce will gravitate toward affordable urban areas, like Pittsburgh. Landlords renovating already existing spaces in both downtown and suburban markets may be able to secure their tenant base for the next 10 years—or longer.
For more information on these Pittsburgh Renovations, check out our interactive research page complete with maps of each submarket, descriptions of renovated spaces and more. Or, connect with JLL Managing Director Dan Adamski on LinkedIn and follow him on Twitter.