pittsburgh viewpoint presentation 2017 - email...

INDUSTRIAL

Pittsburgh Industrial Market Timeline

EXPANSION

HYPERSUPPLYRECOVERY

RECESSION

2012, 2013

2015, 2016, 2017

2014

Industrial – Class ALocal Markets by Vacancy

Los Angeles, CA– 2.0%Naples, FL – 2.2%Boise, ID – 2.5%

Pittsburgh, PA – 3.5%

Raleigh, NC – 13.3%Phoenix, AZ – 13.8%Washington, DC – 15.7%

TOP TH

REE

BOTTOM THRE

E

Local MarketClass A

3.5% (9th out of 62)

SOURCE: Real Estate Research Corporation Real Estate Report, 3Q, 2011-2017

Industrial Cap Rate Trends East Region

General Industrial MarketDistribution / Warehouse Market

• U.S. Industrial Market vacancy currently stands at an all‐time‐low of 5.8%.

• National industrial rental rates have increased 4.9% per year for the past five years.

• Net absorption for industrial space has increased for 24 consecutive quarters.


• JLL’s Q3 Industrial Investment Outlook cites the Pittsburgh industrial market as a “rising market”.

• The Southwestern Pennsylvania Commission projects a 40 % increase in regional freight trafficking by 2040.

• E‐commerce and traditional regional transport are currently the primary drivers for distribution/ warehouse space.

• Amazon in Findlay Township? Where Amazon goes, others follow.


• The planned Shell Cracker Plant could have a substantial impact on the market.

• There is a lack of large, modern distribution/ warehouse space (and pad sites) in the market.

• Several large tenants (over 300k SF) were lost to the market, due to the lack of suitable existing space or pad sites.

RETAIL

Pittsburgh Retail Market Timeline

EXPANSION

HYPERSUPPLYRECOVERY

RECESSION

2012, 2013, 2014

2015, 2016,2017

RetailLocal Markets by Vacancy

Denver, CO – 2.5%Dallas, TX – 3.0%Washington, DC – 3.6%

Pittsburgh, PA 4.75%

Syracuse, NY – 13.75%Tulsa, OK – 14.5%Birmingham, AL – 18.2%

TOP TH

REE

BOTTOM THRE

E

Local Market

4.75% (11th out of 62)

Class A Community Center Cap Rate Trends

NationalPittsburgh

20166.9%7.25%

20176.77%7.25%

National Average Pittsburgh Average

SOURCE: Integra Realty Resources – Pittsburgh, 2017

Major Ongoing Projects

South Strabane

Proposed Market – South FayetteUpper St. Clair

McCandless

Ross Township

Integra Realty Resources, Inc. irr.com 39

HOSPITALITY

HOSPITALITY

Comparative Regional Hospitality Trends

• In 2015 and 2016, occupancy rates in the Pittsburgh regional hospitality market declined; most metro areas saw increased occupancy.

• ADR is substantially higher than peer cities.• Gas drilling and extraction activity caused a surge in the regional supply

between 2012‐2016.• Sharp decline in gas related activity and increase in hotel room supply

resulted in a decline occupancy over the last two years.

Source: Hotel Review, Smith Travel Research, Integra Realty Resources Pittsburgh

Segment 2016 2015 2014 2016 2015 2014 Pittsburgh, PA 59.0% 65.0% 67.4% $118.71 $119.18 $116.21 Charlotte, NC‐SC 72.2% 70.7% 70.2% $105.53 $100.96 $93.31 Cincinnati, OH‐KY‐IN 64.5% 63.3% 62.2% $101.34 $98.63 $93.11 Columbus, OH 66.0% 64.9% 64.7% $101.34 $99.25 $94.48 Indianapolis, IN 66.1% 65.4% 65.2% $106.80 $100.80 $94.37 Kansas City, MO‐KS 64.8% 65.2% 64.3% $99.54 $95.21 $90.52 Raleigh‐Durham‐Chapel Hill, NC 61.3% 63.0% 62.1% $109.24 $102.37 $99.00

Occupancy Average Daily Rate

Western PennsylvaniaRig Count vs. Hotel Occupancy

Source: Hotel Review, Smith Travel Research, Integra Realty Resources Pittsburgh, Baker Hughes

Hotel Occupancy Rig Count2011 68.20% 242012 67.60% 212013 66.10% 222014 67.40% 232015 65.00% 272016 59.00% 8

• Hotel Monaco and Homewood Suites opened in 2015.• Hilton Garden and Embassy Suites opened in 2016.• Room nights sold (RNS) has continued to increase with a new high of

1.105 million RNS sold in 2016.• However, the occupancy rate slid measurably for the first time since the

recession, falling in 2016 to 65.7%.• RevPar, which had been growing since the recession, fell by 10%

between 2015‐2016.

Source: Hotel Review, Smith Travel Research, Integra Realty Resources Pittsburgh

Hospitality Market ‐ Pittsburgh CBDYear RNA RNS Occupancy ADR RevPar2011 1,481,215 953,053 64.3% $141.04 $93.29

2012 1,489,811 992,734 66.6% $145.10 $99.44

2013 1,491,390 987,261 66.2% $147.59 $100.55

2014 1,491,390 1,020,921 68.5% $150.21 $105.36

2015 1,500,540 1,037,710 69.2% $155.04 $110.58

2016 1,681,572 1,105,210 65.7% $153.00 $100.50

Future Supply – Urban Pittsburgh

2017 ‐ 3 New Hotels (467 rooms)2016‐2017 – 10.1% increase in RNA

Future Supply – Urban Pittsburgh

2018 – CBD, Strip, North Side (722 rooms)2017‐2018 – 14.2% Increase in RNA

THE ANDREW

Hospitality Capitalization Rate Trends ►IRR research reveals

that cap rate compression has leveled off during 2016.

►71% of markets expect to see hospitality cap rates remain steady through 2017, while only 15% of markets are forecasting a further decrease.

pittsburgh viewpoint presentation 2017 - email...

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