The 60-million-square-foot Pittsburgh warehouse/ distribution space market is at equilibrium, with moderate vacancy and rent gains. The second quarter saw 173,000 square feet of net absorption, and the vacancy rate fell 30 basis points to 10.9%. The rate reached 10.7% in July. The average asking rent increased 0.2% during the second quarter to $4.31 psf, with the average effective rent up 0.5% to $4.03 psf. Rents were down 0.5% and 0.7%, respectively, from a year earlier as a result of earlier losses, but the effective average added a penny in July.
No space of this type is under construction within Reis submarkets, and with demand staying positive the vacancy rate is forecast to fall to 10.6% at year-end 2012. Small year-by-year declines are expected to follow, as new supply revives but trails demand. Following increases of 1.9% asking and 2.5% effective in 2012, annual rent gains are forecast at around 3.0% through 2016.
The 9.45-million-square-foot local Flex/R&D market appears weaker, but has more space under construction. In the second quarter 179,000 square feet of negative net absorption pushed the vacancy rate up 190 basis points, as the average asking rent fell 0.3% to $7.69 psf and the average effective rent fell 0.4% to $7.07 psf. Three Flex/R&D projects added 199,700 square feet to the market in the first eight months of 2012, and another 604,170 square feet are under construction, most at Robinson Commerce Center. In July, however, the vacancy rate slipped 30 basis points and rents stabilized, and Reis predicts the vacancy rate will fall to 19.6% at year-end as rents are unchanged for 2012. Gains of 1.5% to 2.5% per year are forecast to follow, as the vacancy rate drifts down but remains high through 2016.
Cushman & Wakefield reports an overall vacancy rate of 8.8%, up 90 basis points from a year earlier, and a direct asking rent of $7.57 psf, up 6.6%.