Spotlight On: Jeffrey Ackerman, Managing Director, CBRE

Spotlight On: Jeffrey Ackerman, Managing Director, CBRE

2021-10-29T14:59:46+00:00October 29th, 2021|Economy, Pittsburgh, Spotlight On|

CBRE Jeffrey Ackerman2 min read October 2021 — CBRE is one of the world’s leading commercial real estate services companies. In an interview with Invest:, Market Leader and Managing Director of the Pittsburgh office, Jeffrey Ackerman, discussed the state of commercial real estate in the Pittsburgh region and his outlook. 

How does capital flow in Pittsburgh today compare to pre-pandemic levels? 

Capital is coming from several different areas. One, local Pittsburgh developers are putting  money into developing spec projects, whether those be office, industrial, multifamily or retail.  They believe in Pittsburgh and know they’ll see solid growth here in the long term. Over the last  five or six years, we have also witnessed a tremendous amount of capital coming from the  institutional world. For a long time, institutional investors shied away from Pittsburgh; they didn’t  expect the growth that we’ve experienced in recent years. Now, they finally see predictable  growth in Pittsburgh because we have various sectors that have seen significant growth with  rising rents and increasing demand. As well, a lot of private equity is coming in from all over the  country and they’re driven to Pittbsurgh because secondary markets tend to have a bit of a  higher yield that Tier 1 markets.

There is a lot of liquidity here because of the surplus in Tier 1 cities, particularly in properties  that will be serving the tech, medical, industrial or multifamily markets. Where we’re not seeing a  strong interest of capital is in the multi-tenant office buildings, particularly in the CBD. 

How is the office market faring? 

Activity in the CBD has been soft. Companies are trying to determine whether they can function  with less space or need more space to spread out their people. We haven’t seen many  companies opt for larger space. Rather, there has been more downsizing or putting off of  decisions. We’re seeing approximately 40% to 50% of workers coming back to their offices in  the CBD but the suburban markets are doing better with greater demand. Approximately 60% of  people are returning to suburban offices in Pittsburgh. For those companies searching for new  spaces, COVID has furthered their focus on health, amenities and green spaces. 

I believe companies are going to realize that they can’t collaborate as efficiently over Zoom than  they can in an office. In the tech and medical sector, we continue to see the demand growing.  These companies are coming back to the office sooner because they need to collaborate and  come up with new ideas to compete. 

What is the status of the industrial market? 

The shift to e-commerce and a modernized supply chain has driven the demand for high-quality  warehouse distribution space unlike anything we’ve seen in the past. We’ve seen more spec  development in the industrial market than ever before and most of those spec developments  end up getting leased before they’re finished. Pittsburgh is not known as a primary warehouse  hub but we’re starting to see more demand for last-mile work in the region. People want their  goods delivered faster and more efficiently than ever before and that has driven a tremendous  demand for high-quality warehouse distribution space. 

How has the retail space developed since the onset of the pandemic? 

Retail hit a wall when COVID first hit because people weren’t shopping in person but shopping  patterns have clearly changed since. People have returned to brick and mortar shopping but the  hardest challenge has been finding people to work in the stores. Restaurants in particular have  been struggling greatly in finding adequate staffing. However, the demand for high-quality retail  space has been stronger than it’s ever been, with the exception of large B-class malls that  continue to struggle. 

How is the multifamily market performing? 

Our multifamily market is tighter than a drum. We’ve seen rising occupancy rates, rent growth  and a lot of new developments as a result. For the first time, we’re seeing a significant amount  of institutional capital targeted toward multifamily in Pittsburgh. They’re looking for high-quality  properties, especially within the city. Tech companies like to be located in an area where their employees can live, work and play. They want multifamily in the same location they’re locating  their business. 

What is your outlook for Pittsburgh’s commercial real estate market? 

I have a very bullish outlook but I do think the rebound in our CBD is going to take a few years  as the existing stock is absorbed. The recovery will be dependent upon people coming back to  work and we are starting to see a decline in our sublease space. If companies don’t come back  to work, that will strain the CBD office market. Aside from that concern, we are bullish on this  market as it continues to be driven by the tech and startup industry, with a lot of venture capital  here to support these businesses, as well as talent.  

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