Pittsburgh's Vacancy Rates Are Static Through Second Quarter

Summary of Study

At the onset of the pandemic, non-essential businesses were forced to close. As a result, many worked from home, which led to many empty office buildings in Pittsburgh. Even when the lockdowns ended and COVID-19 appeared to wane, many employees decided to still work from home. While much of Pittsburgh’s office space was leased, and thus not counted as vacant, some firms are still allowing remote work. Firms are even looking to reduce their office footprint and rental costs. Overall, vacancy rates in Pittsburgh’s central business district (CBD) began to rise in 2021’s first quarter and remained high in the second quarter.

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Allegheny Institute for Public Policy

Findings:

  • In this sample of central business districts (CBDs) across the country, Pittsburgh finished in the middle at 20 percent, up from 19.4 percent in the first quarter.
  • For all classes of space, inventories didn’t change too much in the CBDs. Pittsburgh’s inventory of 18.97 million square feet remained the same between the quarters. Los Angeles, San Francisco, and Seattle also held steady. Only Austin, Charlotte, and Cincinnati added class B space to their inventory in the second quarter of 2021.
  • Charlotte, Cincinnati, and Nashville were the only cities in the sample with a positive absorption rate of space. The other cities in the sample, including Pittsburgh, had more total office space become unleased in the second quarter. 
  • The vacancy rate data for the second quarter shows a slower recovery for office space than for the rest of the economy. 
  • The current business climate in Pittsburgh has little to attract new firms to the city to assume any vacant office space. With City Council pushing mandates covering sick leave and wages, most businesses that are unable to pass along the higher costs from these mandates will look elsewhere to set up.  
  • Given this climate, and the realities of COVID variants, the office buildings in the CBD will continue to have high vacancy rates. This could have consequences for property tax revenues, payroll tax revenues, and the local service tax collections.

Read the full policy brief here