The 17.6-million-square-foot Pittsburgh community-neighborhood shopping center market has had virtually no new supply since 2009, and survived the recession with minimal occupancy losses that have already been reversed. In the second quarter of 2012 the vacancy rate fell 20 basis points to 8.4%, which is down 60 from a year earlier. Net absorptoin totaled 17,000 square feet for the quarter. Both the average asking rent and the average asking rent increased 0.4% during the quarter to $16.13 psf and $14.03 psf. The asking rent gain was the fourth highest among the top Reis markets. The year-over-year gain was 1.8% by both measures.
The vacancy rate edged down 10 basis points in July, while rents rose by 0.1% asking and 0.2% effective. No additional community-neighborhood shopping centers are under construction within Reis submarkets, and the vacancy rate is forecast to end 2012 at 8.2%. It is expected to level off thereafter, as new supply resumes. Rent gains, starting at 1.6% asking and 1.7% effective for all of 2012, are expected to improve later on. Gains exceeding 4.0% are forecast for 2016.
The second quarter vacancy in the Pittsburgh power center market was 6.2%, up 40 basis points from the prior quarter and 20 year-over-year. The average asking lease rent for power center space was $20.22 psf, down from the prior quarter and unchanged from a year earlier. Cushman & Wakefield reports second quarter moveouts by JCPenney, Saks Fifth Avenue, and Roomful Express. Current construction, according to Reis, is dominated by two mixed-use projects led by McCandless Crossing with 161,300 square feet of space.
“Despite a slowdown in momentum in the second quarter, Pittsburgh’s retail market is poised for growth throughout the second half of 2012,” according to Cushman & Wakefield. This source predicts below average vacancy and rising rents through 2013.