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CAP Rates, Employment and Commercial Real Estate Impact
Source: Marcus & Millichap – Special Report Emerging Trends 4Q 2016
Comparative MSA’s 5‐year Job Growth Trends
Source: Pittsburgh Today, Bureau of Labor Statistics
Percent Changein Jobs
November 2008to
November 2013Total Nonfarm
Year‐over‐Year Job GrowthPittsburgh vs. Benchmark Average
Source: Pittsburgh Today, Bureau of Labor Statistics
Comparative MSA’s 5‐year Job Growth Trends
Source: Pittsburgh Today, Bureau of Labor Statistics
Percent Changein Jobs
September 2011to
September 2016Total Nonfarm
Comparative Job Growth Trends
Percent Changein Jobs
December 2015to
December 2016Total Nonfarm
Source: Pittsburgh Today, Bureau of Labor Statistics
Pittsburgh Regional Employment1
1,200,000
1,150,000
1,100,000
1,050,000
1,000,000
950,000
900,000
1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
Pre‐CollapseHigh
(1,091)
Steel IndustryCollapse(954.6)
Peak ofTech Boom(1,152)
Peak BeforeRecession(1,148.9)
New High(1,179.3)
Source: United States Bureau of Labor Statistics
2016
Recession(1,120.7)
(1) Data represents November employment in each year.
(1,157.14)
Where Are The Jobs?2015 ‐ 2016
SERVICE PROVIDING• Leisure and Hospitality • Education and Medical• Professional and Business Services
• Mining/Construction+1.5K+2.3K+5.6K
GOODS PRODUCING(4.0K)
Source: Pittsburgh Today, Bureau of Labor Statistics
OFFICE• Steady demand in CBD and Suburbs with greatest potential in Parkway West
• Cap rates remain relatively flat, although upward pressure increases
RETAIL• Limited new development• Repositioning of existing centers/malls continue as anchor tenants close stores
Conclusions ‐ 2017 Pittsburgh CRE Market
MULTIFAMILY• New supply in 2017 and overhang of some 2016 deliveries may slow multifamily market
• Cap rates remain flat
INDUSTRIAL• Optimism for this product as E‐commerce creates new demand and Cracker Plant construction commences
HOSPITALITY• After six years of growth, supply is outpacing demand causing declining occupancies and RevPar
Conclusions ‐ 2017 Pittsburgh CRE Market
• Employment growth is negligible and expected to be slow
• Trump effect; tax rates, capital repatriotization, infrastructure plans, regulation constraints removed, foreign affairs risks, market instability
• Cracker Plant, energy sector rebound, tech employment growth
• Higher interest rates, cap rate increase• Oversupply; hospitality, multifamily
2017 Summary
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