Economic Policies and Pittsburgh Office Vacancies
Summary of Study
Pittsburgh’s central business district’s (CBD) class A office space vacancy rate continues to climb. The vacancy rate already had reached a 10-year high of 15.9 percent in the fourth quarter of 2019. That mark preceded the onset of COVID-19 and was remarkable because six years earlier in 2013, Pittsburgh’s CBD had the second-lowest class A office vacancy rate (5.2 percent) among 53 major U.S. cities.
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Findings:
- In the first quarter of 2021, the vacancy rate has increased by 13.8 percent to reach 18.1 percent.
- Only four cities in our sample of 13 geographical diverse cities had higher CBD vacancy rates for class A office space in 2021—Los Angeles, Seattle, Denver and Dallas.
- Cities with better vacancy rates include: Boston; New York; San Francisco; and Columbus.
- Keeping in mind that while the lockdowns sent many workers from the office to work-from-home status, a space is only vacant if it is not currently under lease. The work-from-home mandate meant that offices were empty, not necessarily vacant.
- However, as some leases expired, the lockdown and economic conditions that undoubtedly produced financial hardship for some firms resulted in fewer square feet being leased.
- Vacancy rates are likely to continue to grow as firms reassess their need for office space going forward and some employees continue to work from home.
- In the City of Pittsburgh, an anti-free market regulatory environment that deters business growth, along with city-subsidized projects that have a strong likelihood of failure -- combined with the strict COVID-19 economic restrictions -- have contributed greatly to the prospect of further increases in office vacancies in Pittsburgh.
Read the full policy brief here.
