Colin McNickle At Large

PASSHE acts & Pittsburgh’s office vacancy rate

In an amazing spate of common sense, the Pennsylvania State System of Higher Education (PASSHE) is ramping up its efforts to bring costs better in line with revenues.

The Post-Gazette reports that about 350 professors face layoffs at the end of the spring 2021 semester. That will bring student-faculty ratios better in line with a decade of declining enrollments.

About 220 of those layoffs are to come at four Western Pennsylvania State System schools – California, Clarion, Edinboro and Indiana University of Pennsylvania.

That PASSHE officials expedited the moves show just how unsustainable the status quo had been.

That effort, coupled with a move to integrate a number of the schools, should go a long way in starting to right the badly listing State System ship.

All that said, the State System would have served itself better had it reacted more quickly to changing trends that slapped it.

A new report from the Jones Lang LaSalle (JLL) real estate firm in Pittsburgh continues to paint a troubling outlook for office vacancy rates in the City of Pittsburgh.

And the data yet again call into question the continuing and unacceptable practice of taxpayers subsidizing new office space construction.

Vacancy rates for premium office space is at a two-decade high. And as we’ve noted before, it could get worse before it gets better because of a surge in the construction of taxpayer-underwritten office space.

JLL says more than 20 percent of all premium office space sits empty. In some marquee buildings, the vacancy rate is astoundingly higher. And while the coronavirus pandemic has contributed to the historic rates, the problem was evident even before that.

A growing subleasing trend could only exacerbate the vacancy rate, JLL notes. Another real estate expert told the P-G that the subleasing rate might be understated in an attempt to salvage respective buildings’ reputations.

And there are other troubling stats, as the P-G further reports:

“Based on the report, there is more than 1.5 million square feet of speculative office space now being built in the Strip, Oakland and the East End — representing about 79 percent of all office construction being done in the Pittsburgh market as a whole.

“That will create a big jump in supply at the same time that several big subleases could become available because of the pandemic. As a result, those markets could see ‘a significant amount of volatility in upcoming years.’”

Which bring us to such projects as the coming First National Bank headquarters on the former site of the Civic Arena.

The 26-story office tower will cost $230 million.  First National wants taxpayers to pony up about $15 million.

That’s ludicrous on its face. But it’s even more absurd given the long-running glut of top-notch office space in Pittsburgh.

Why on Earth should taxpayers help pay for even more office space?

Simply put, they should not.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

Colin McNickle

Colin received his B.G.S. from Ohio University. The 40-year journalism veteran joined the Institute in October 2016. That followed a 22-year career with the Pittsburgh Tribune-Review, 18 as director of editorial pages for Trib Total Media. Prior that, Colin had a long and varied career in media — from radio, newspapers and magazines, to United Press International and The Associated Press.

Picture of Colin McNickle
Colin McNickle

Colin received his B.G.S. from Ohio University. The 40-year journalism veteran joined the Institute in October 2016. That followed a 22-year career with the Pittsburgh Tribune-Review, 18 as director of editorial pages for Trib Total Media. Prior that, Colin had a long and varied career in media — from radio, newspapers and magazines, to United Press International and The Associated Press.

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