NVI Technical College Information

M ARKET A NALYSIS 41

M ARKET A NALYSIS

P ITTSBURGH I NDUSTRIAL M ARKET

Costar is the source for the following data. The data reflects conditions of 2023 Q2, the most recent data available. The initial discussion provides information on the overall Pittsburgh Industrial market. The subject is not located within one of the Pittsburg Industrial Submarkets. The overall Industrial market analysis has been utilized. CoStar has recently introduced its Houseview Base Case. This comes in addition to several algorithmic forecast scenarios that are based entirely on modeling results using CoStar’s internal econometric property sector models based on inputs from Oxford Economics’ macroeconomic models in its US States and Metros service published in June 2023. The Houseview Base Case forecast scenario is based on the Algorithmic Base Case below, where additional interventions are made to the property sector forecasts to account for structural and cyclical impacts in the commercial real estate markets that are not adequately reflected in macroeconomic forecasts. For example, tighter financial conditions have resulted in higher cap rates and steeper valuation losses, while low office utilization rates caused by the adoption of hybrid work arrangements have weakened fundamentals beyond what headline job gains or losses encapsulate. These interventions result in forecasts that are better aligned with the professional views of CoStar’s property sector specialists. Algorithmic Base Case forecast is based on the Oxford Economics baseline forecast, which reflects solid economic growth in the first half of 2023 followed but slowing momentum in the economy as the cumulative impact of Federal Reserve rate hikes and tighter credit conditions cool consumer spending and business investment and hiring. The economy is expected to enter a mild recession in the third quarter of 2023, with overall growth of 1.3% for the year. Job gains have been solid, with almost 1.7 million added in the first half of the year. But momentum in the labor market is expected to fade and job losses are seen to begin in the third quarter, losing about 1 million positions by year end. The unemployment rate rises from its near historic low to end 2023 about 110 basis points higher, rising further in 2024 before falling gently in the following years but remaining above 4% through the end of the forecast period. Headline and core inflation are expected to ease through the next four quarters, albeit very slowly. The PCE price index is expected to remain above the Fed’s target rate until mid- to late-2024. The FOMC has signaled its intent to bring inflation under control and is expected to boost the policy rate to 5.5%-5.75% by the end of the year, holding it within this range for some time. Capital markets remain calm. Spreads briefly rise above 210 basis points in the second half of 2023, then return to less than 200 basis points through the end of the forecast period.

Costar provides statistics related to the industrial market based on the following subtypes: Flex, Logistics and Specialized.

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