Thrice the cluster cluck
The Allegheny Institute first raised the red flag a few weeks ago that a glut of premium office space in downtown Pittsburgh – that is, a troubling high vacancy rate – could very well be exacerbated by the coronavirus pandemic.
With the “new normal” being continuing at-home work, companies could discover that employees indeed can get their jobs done well and those companies can save money at the same time by downsizing expensive office space.
There now are at least hints that it might be coming to pass.
As the Post-Gazette reports it, a new report by the CBRE real estate firm calculates that space offered for sublease in the Pittsburgh market has increased by 10.7 percent since the last quarter of 2019.
Just more than 425,000 square feet of office space has been put up for sublease since April, bringing the total amount of sublease space now available at 1.45 million square feet, the report found.
That said, a CBRE official does note that the glut increase is being driven by downsizing in the energy sector, a trend that began before the pandemic hit.
Still, the P-G reports, CBRE says “companies, at least short term are adjusting their office footprint because of the fallout over the pandemic.”
But, and counter-intuitively, the CBRE official says the pandemic could lead to an upswing in occupancy as companies, attempting to adjust to social distancing guidelines, require more space.
That might be a far too rosy prediction, given the serious (and continuing) damage to many companies’ bottom lines. And Pittsburgh continues to have much more sublease space available than comparable cities such as Baltimore, Cleveland, Columbus, Indianapolis and Nashville.
Yet again, the great unspoken in all of this is even more available top-tier office space, much of it with some form of public subsidy, still scheduled to come online in the next few years.
We can only wonder if government will behave as government too often does and attempt to cover the lie of such command-economy interventionism with another lie – subsidizing leases.
That could turn into an even greater cluster cluck.
Speaking of cluster clucks, tolls on the Pennsylvania Turnpike will rise by another 6 percent on Jan. 3.
It will be the 13th straight year that tolls have been jacked up. And non-E-ZPass motorists will face a 45 percent surcharge for toll-by-license-plate processing. That, as the jobs of toll-takers are phased out.
Turnpike tolls have been steadily rising to cover debt service on debt forced upon the commission by the state Legislature. Those ill-gotten gains then are effectively laundered to help fund mass transit across the commonwealth.
What a horrible public policy this has been – virtually crippling one government operation to prop up an unsustainable operation.
Of course, such cluster clucks long have been indigenous to government. And a recent P-G editorial skewered a practice we’ve long panned – tax credits given to business with little or no accounting.
The editorial singles out a tax credit designed to extend broadband internet service to underserved areas. The rationale is that the credit will better serve rural areas where there’s little profit potential.
But, “A review by the state’s Independent Fiscal Office shows that wasn’t how the $5 million in annual credits were used,” the P-G notes.
“The program didn’t specifically require companies getting the credit to extend broadband to rural areas. Instead, companies used the credits to extend or improve broadband in areas where the service already existed.”
What an absolute racket.
Over five years, an estimated $12 million lined the pockets of three broadband providers. Talk about corporate wealthfare.
And that’s just one of many examples.
The P-G calls such behavior “malpractice, if not malfeasance.”
A common denominator in all this clearly nonfeasant behavior long has been the state Department of Community & Economic Development. Legislative action to cut off the head of this problem child would be the logical place to start.
But with the Legislature too often being its own problem child, we’re not holding out much hope.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (email@example.com).