By: JC Pelusi, Great Lakes Market Director, Jones Lang LaSalle
Pittsburgh vacancy has dipped below five percent. In fact, JLL experts deemed the Pittsburgh Skyline the “tightest in the country” in a 2013 report. Unemployment levels are down and population growth is on the rise. The city is saturated with business, entertainment, retail—and to accommodate the activity— a robust CRE scene.
Pittsburgh’s exponential growth has sparked transformation in the real estate landscape, as well as the downtown culture. The downtown scene has attracted attention from the up-and-coming high-tech industry. The upturn in activity has also sparked significant mixed-use development projects, including the former Civic Arena site driven by the Pittsburgh Penguins, and Walnut Capital’s development at Bakery Square 2.0.
Pittsburgh dubbed “Language Tech Hub” by Fresh Water
A recent article in Fresh Water highlighted Pittsburgh as one of several U.S. cities driving the “rise of the rest” movement (also known as the widespread increase of startups in secondary markets). Fresh Water noted that the proximity of Carnegie Mellon, known for its Language Technologies Institute, is attributed as one of the many factors for the success of Pittsburgh’s “tech cluster.”
The high-tech industry is soaring. JLL’s Industry In[sight]er said, “With more than $400 billion in gross cash, the high-tech sector is the only industry holding more cash than debt.” But, with an increase in business, industry talent and space are in high demand. For commercial real estate, this means higher asking rents and demand for creative space.
Mixed-use development at Bakery Square 2.0, purchased by Walnut Capital, in East Liberty is expected to bring significant high-tech activity into the Pittsburgh area. High-tech companies already within Bakery Square include Google, UPMC Technology Development Center, CMU Software Engineering Institute and TechShop Pittsburgh.
The high-tech growth in Pittsburgh will have a tangible impact on the CRE landscape, in regards to space utilization as well as rent growth.
Penguins Support Revitalization, Revamp Civic Arena
Pittsburgh’s downtown scene is undergoing a metaphorical makeover, driven by the CRE industry.
At the forefront is the Pittsburgh Penguins development project at The Civic Arena, estimated to total $600 million in invested development costs. As part of their new lease at the CONSOL Energy Center with the Sports and Exhibition Authority (SEA), the Penguins have agreed to revitalize their original 28-acre space. JLL is proud to partner with the Penguins to carry out development planning for the site.
The Penguins plan to build a sustainable, mixed-use development space, intended to improve the downtown experience for their fans (and area residents). When finalized, the space will include about 200,000 square feet of retail and entertainment space, 600,000 square feet of office space, as well as units of multi-family development.
The new space will have a long-lasting economic impact on the central business district. The project will support 7,490 jobs; it will also lift regional spending by $1.1 billion.
The Penguins are maximizing the success of an opportunity to give back to the city and revamp the downtown landscape. They are looking to similar projects for inspiration, including the Arena District in Columbus and LA Live in Los Angeles.
Since 2006, $4.8 billion has been invested downtown. The impact is apparent in downtown activity, and in local headlines. Experts predict ongoing growth within the Pittsburgh CBD for the remainder of 2013.
If you’d like more information on the changing CRE landscape, we invite you to reach out to a JLL professional for advice and assistance. Send inquires to: Spaces@am.jll.com.
About the Author
JC Pelusi is an International Director for JLL and works out of the Pittsburgh office. As the leader for JLL’s Great Lakes region, JC has extensive experience in a variety of areas, including Corporate Account Management and Transaction Services.