The Pittsburgh Central Business District office vacancy rate remained stubbornly high in the second quarter of 2021. And the trends – those eminently controllable by public officials and those totally out of their control – are not encouraging for the government. improvement, concludes a analysis of the Allegheny Institute for Public Policy.
The wild card of the continuing coronavirus pandemic, new tax-subsidized office space and government policies that discourage business creation and expansion will all play a role, said Frank Gamrat, executive director of the think tank of Pittsburgh.
Keep in mind that the vacancy rate is a measure of the available space that is not under a lease. So even though a large amount of office space was not used during the pandemic, most of that space was rented and not vacant for vacancy reporting purposes.
And while the office vacancy in Pittsburgh’s Central Business District (CBD) predates the pandemic, there is good reason to believe that in the long term, the pandemic will exacerbate it as labor trends in the world. homes precipitated by (but now lifted) government-ordered closures show endurance.
“This will likely affect the vacancy rate in the Pittsburgh CBD going forward, as some companies will allow employees to continue working from home and look to reduce their footprint and rental costs,” Gamrat said.
A little point of view here:
Before the foreclosure – in the fourth quarter of 2019 – the Class A office vacancy rate in the Pittsburgh CBD stood at 15.9%, the highest since the recession year of 2010. In 2013, a 5.2% trough was recorded – one of the lowest in the country.
For the first quarter of 2021, the Pittsburgh CBD vacancy rate reached 18.1%, reflecting a further slowdown in office demand.
New data, for the second quarter of 2021 when economic activity began to normalize, shows the Pittsburgh Class A CBD office vacancy rate held steady at 18.1%. For Class A and B office space in the second quarter, Pittsburgh’s rate increased slightly from the first quarter, from 19.4% to 20%.
And future warning signs abound for Pittsburgh.
“Although there is currently no office space under development in the Central Business District, Class A or B, according to JLL data, there is nearly 1.2 million square feet of office space under development, 1.1 million class A, on the outskirts. and the Oakland / East End sections of the city, ”recalls Gamrat.
“This will put more pressure on CBD as existing businesses will have options to explore outside of the Golden Triangle,” he said.
Additionally, “the highly anticipated and taxpayer-subsidized office building on the former Civic Arena site will also put pressure on an already weak office market,” Gamrat said.
And that old bugaboo bugaboo will likely continue to play a role in the high office vacancy rate in the Pittsburgh CBD.
“(T) the business climate in the city is such that there is not much to attract new businesses to come into the city to take over vacant offices,” Gamrat reiterates. “With city council pushing for mandates covering sick leave and wages, most businesses that are unable to pass on the higher costs of these mandates will look elsewhere to locate.
“Given this climate and the persistence or acceleration of the pandemic, office buildings in the CBD will continue to have high vacancy rates,” Gamrat concludes, which could impact tax revenues. land, tax revenues on wages and local taxes. collection of taxes on services.