Many key fundamentals in Pittsburgh's office market are performing poorly, yet some bullishness exists, according to a Colliers' report that looked at the first quarter of 2025.
Vacancy in the first three months ticked up by 40 basis points from the end of 2024 to 15.5 percent. Also, leasing rates dropped by five cents per square foot to $23.35, while absorption remained negative at -247,600 square feet.
However, there are a few reasons why Colliers is staying optimistic. For one, vacancy remains below the 16.6 percent recorded in the first quarter 2024. Secondly and thirdly, leasing rates are 35 cents higher per square foot than in the third quarter of 2024, and negative absorption has improved from the -330,900 recorded in the final three months of 2024.
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"The latter figure was largely contributed to by the Parkway West (-277,228 SF), a submarket that New York Life recently vacated: a tenant formerly occupying a 105,315-square-foot space at 300 Park Lane Drive," Colliers wrote.
"Additional markets that experienced significant negative absorption included Butler County (-57,891 SF) and South Pittsburgh (-24,069 SF). Submarkets that recorded the highest positive gains in Q1 2025 were Washington County (+46,427 SF), the Parkway East (+41,181 SF), and West Pittsburgh (+32,666 SF)."
Although construction has increased to 310,000 square feet from 235,000 square feet to start in 2025, no new supply has hit the market in the past six months.
Regarding recent major leases, K&L Gates stood out with its deal to take 150,000 square feet of space in the central business district. It was followed by Hellbender, Inc.'s 40,000 square feet in East Liberty, and NHI Hydrogen Infrastructure and Oriden's 33,600 square feet in North Shore.
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