A strong economic rebound from the effect of COVID prevailed in 2021 with a high volume of real estate transactions however the vitality of individual market segments currently varies and must be ascertained on a case-by-case basis.
Forecasting the Real Estate Market
As the threat of yet another reported variant (“Omicron 2”) percolates in Europe, questions and opinions as to the likelihood of returning to work in traditional office environments in the future remain unanswered; as such the market has been adversely affected.
Forecasting with respect to occupancy, rents and building values remains highly speculative. The Pittsburgh office market has indeed been characterized as recessionary by Viewpoint 2022 Commercial Real Estate Trends Report published by Integra Realty Resources in December 2021. As of first quarter 2022, the market segment is characterized by increasing vacancy rates, nominal to zero growth in rental rates, and low absorption of space. Uncertainty with respect to the office market reportedly has resulted in lower transaction volume for this segment due to disparities between asking prices and offers.
Multi-Family Housing Market
In contrast to the office market, the multi-family housing market nationwide is experiencing a recent record surge in activity at the beginning of 2022. Real Capital Analytics (RCA) reports that transaction volume in the multi-family segment exceeds all prior historic annual records for 20 years. Pittsburgh has been characterized by Integra Realty Resources as in an expansionary multi-family housing market in Viewpoint 2022 as of first quarter 2022 as well, which is symbolic of decreasing vacancy rates, the presence of measurable new construction projects, and medium to high rental growth rates.
Pittsburgh Housing Market
Similar to multi-family, the Industrial market segment in Pittsburgh is reported to be expansionary and having decreasing vacancy rates, increases in construction, space absorption, and rents. This placement correlates with most of the markets surveyed nationwide wherein 90% are reported as being in an expansionary cycle and no industrial market is reported as recessionary. As demand for warehouse and distribution space is reported to be in high demand from both users and investors, supply-chain issues arising in mid-2021 do not appear to have adversely affected the industrial market segment.
Contact MBM Law for Pittsburgh real-estate legal services
The Pittsburgh retail market is reported to be squarely in the midst of a recession as is approximately 25% of the markets nationwide surveyed by RCA. On a positive note, the number of markets nationwide in a recessionary cycle has reportedly been reduced dramatically from 2020 to the beginning of calendar year 2022. Notwithstanding the reported recovery, and even expansion of the retail segment nationwide in significant percentages, investors as judged by transaction volume remain highly skeptical of this segment. Transaction volume for retail through the third quarter 2021 was reported as less than one-half the industrial sale volume and less than one-quarter of the volume of the multi-family segments.
Local Real Estate Legal Firm
MBM Law has law offices in Pittsburgh and Wexford but assist with real estate legal questions beyond these locations. To learn more, contact the Pennsylvania real estate law team of Maiello, Brungo & Maiello for your legal needs.
