Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

There's Plenty of Room to Move More Vacant Office Space in the Market - but Maybe That's Not a Bad Thing

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

There's Plenty of Room to Move More Vacant Office Space in the Market - but Maybe That's Not a Bad Thing

Article excerpt

Office vacancies in the Pittsburgh market hit their highest level in three years in the first quarter, but experts see it as more of an opportunity than a sign of distress.

According to the Newmark Knight Frank real estate firm, the vacancy rate jumped to 17.3 percent in the first quarter, the highest level since the end of 2015. It was nearly a full point higher than last year at this time.

Gerard McLaughlin, Newmark executive managing director, attributed the increase to several large blocks of leased space that have become available.

But he said another factor also is at work - companies reducing their office footprint in the name of efficiency while maintaining or even expanding employment.

The largest block of space to hit the market involves the Westinghouse Electric campus in Cranberry, where the bankrupt company is marketing up to 315,000 square feet for sublease.

On the North Shore, Bank of America is subleasing 144,000 square feet at Nova Place, the former Allegheny Center Mall space. Allegheny Health Network also is marketing 168,000 square feet for sublease at 30 Isabella St. on the North Shore.

In Downtown on Smithfield Street, accounting firm BDO USA LP is offering 63,000 square feet in the Heinz 57 Center, the former Gimbels building, for sublease.

All have helped to push the overall vacancy rate up, but Mr. McLaughlin doesn't see it as a troubling sign. He noted that there is very little speculative new construction taking place. That should help in filling the vacant space on the market.

"If we had cranes in the skyline and we were building half a million square feet or 800,000 square feet, I would say to you, yeah, there's going to be a softening [of the market]," he said.

"You never like to see space come back but this is a market that can absorb it. So I don't think it's a bad thing. I don't think it will affect rental rates."

In fact, Mr. McLaughlin believes the availability of so much subleased space offers existing companies in the market an opportunity to expand and a place to settle down for new companies looking to move in.

"I see it as a blip, so to speak," he said. "There are companies growing. …

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