The holiday season wasn't too kind for Pittsburgh's retail sector, at least from a vacancy standpoint. The rate jumped year-over-year by 60 basis points to 5.1 percent in the fourth quarter.
This came "amidst recent bankruptcies and big box closures."
However, that may not tell the full story in Pittsburgh. While net absorption was negative, it improved to -33,900 square feet compared with -568,200 square feet a year ago.
"Pittsburgh’s retail sector is staying dynamic, with plenty of leasing activity keeping things moving," Mark E. Anderson, Colliers' senior vice president of retail brokerage, said in a statement.
"While a few recent bankruptcies have nudged the vacancy rate up, the added space could actually act as a release valve in a market that’s been running a little too tight.”
A notable lease in the fourth quarter was TJ Maxx and Sierra Trading Post signing for a combined 50,000 square feet at McCandless Crossing.
Average retail leasing rates in Pittsburgh were $14.79 per square foot, up from the $14.32 square foot posted in the 12 months prior.
Also, although bankruptcies lifted the vacancy rate— tenants are still seeing less options on the market, as empty big box stores get re-purposed to other uses, according to Colliers. Inventory has shrunk from 154,000 square feet to 152,000 square feet. And new supply on the market was just 7,200 square feet compared with 12,700 a year ago.
A notable development in the market includes Piatt Companies' $740 million mixed-use project along the Ohio River that will feature 160,000 square feet of retail space.
While Colliers noted that vacancy may tick up in some of Pittsburgh's submarkets in the future, the overall retail fundamentals look "stable."
"Redevelopment projects like Station Square and Esplanade, combined with ongoing investment in experiential retail and mixed-use environments, position the region for long-term viability and renewed vibrancy," Colliers forecasts.
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