See the latest retail statistics and trends in the Pittsburgh market.
The thriving Pittsburgh retail market’s momentum continued into the start of 2022. Various users, including discount chains, restaurants, car washes and entertainment operators are looking to open throughout the region. Large regional shopping centers are garnering growing interest from outside investors and construction cannot keep up with accelerated demand. The robust retail market is well positioned and poised for success going forward.
Discount retailers are thriving, particularly in the grocery and food sector. Supermarket operator, Grocery Outlet, is investigating the region for its next market expansion. They are open to various geographic locations for sites ranging from 15,000 to 20,000 SF. Similarly, Aldi intends to establish new regional stores after announcing plans to open a grocery store in the town of Natrona Heights in the Northeast Pittsburgh submarket.
The South Fayette region of the South Pittsburgh/Hwy 79 submarket is experiencing tremendous activity. The Piazza development, which is under construction, is gaining traction with several restauranteurs. Primanti Bros. and Firebirds Wood Fired Grill are a couple of the operators to recently reveal their tenancy. The location’s proximity to I-79 and the new I-576 Southern Beltway make it a sensible destination for various retailers. South Fayette’s popularity is extending beyond The Piazza. Pro Bike + Run will be occupying a former 10,000 SF auto body shop on Miller’s Run Road and Ivybrook Academy will lease space at the Shoppes at Bursca. BJ’s Wholesale recently opened in the Newbury Market development across from the Piazza.
Within the Greater Downtown submarket, the Strip District neighborhood remains hot. Golf-related venues are particularly active. Indoor miniature golf and bar operator, Puttery, announced plans to lease 19,000 SF in The Vision on Fifteenth. This announcement comes on the heels of Puttshack announcing their intentions to lease nearly 24,000 SF at The Terminal, the same complex where OnPar opened an indoor golf facility focused on teaching women. Additionally, the Terminal will also be home to a couple fitness facilities. Boxing legend, Floyd Mayweather, is opening a boxing gym and StretchLab announced they will open a stretching studio. These two tenants will be welcomed by current neighbor, Walk Run Lift Studio. Across Smallman Street from The Terminal, Papa J’s will be opening a 6,000 SF food concept in the former Smallman Galley space at 51 21st Street.
Stabilized assets, such as The Waterfront in Homestead and Penn Center East Town Center have been placed on the market for sale by current owner M&J Wilkow. The Waterfront, which is being marketed by Colliers, sits on a 265-acre former steel mill site. The 1.3 million SF project was originally developed in the early 2000s and currently enjoys a healthy occupancy of more than 90%. Last year, ownership executed a five-year lease renewal with AMC for the movie theater. This is an impressive feat considering the Pandemic’s pressure on the cinema industry, and provides evidence of the complex’s strong demand and consistent traffic.
The lack of new product delivered over the past quarter is concerning. The previous four quarters averaged nearly 70,000 SF of deliveries. However, this quarter only saw 27,738 SF of new product delivered to the market. Several factors are contributing to this abnormality. High construction costs, as well as choked supply chains are making the procurement and delivery of materials difficult. Furthermore, a surge in the Coronavirus, specifically the Omicron variant, at the end of Q4 2021 and early Q1 2022 adversely affected the workforce. Lack of development sites and high acquisition costs make barriers to entry high.
It is expected that the next few quarters will continue to be very similar to Q1 2022. Exceptionally low vacancy should drive rental rates upward. Until the demand for quality new product is met, tenants should expect to see a competitive market that will favor Landlords. Despite the presence of the pandemic, patrons will continue to frequent retailers of all types. Challenges remain, but the public is resilient.