Wednesday, May 16, 2012
We’ve been following a discussion on a commercial real estate group on LinkedIn.
Recently, someone started a discussion which read:
The Tenant’s Advocate – we represent tenants only with negotiating commercial office leases only. Our fees are paid the by the landlord, not the tenant.
A few comments ensued, mostly around the follow-up question from a group member who replied:
I was really interested in your comment. How do you work for the tenant, but get paid by the landlord without having a conflict of interest?
We thought it would be helpful to share our response. We hope it shines some light on the vital role a tenant representative plays in the office leasing arena.
Our response:
I totally agree with your post. I have been a tenant rep/buyers agent for over 26 years and my motivation is to obtain the best outcome for my client. In addition, a “true real estate professional” is negotiating much more than rate per square foot. The long-term office lease represents one of the most complex relationships in modern commerce. It spins an intricate web of mutual obligations between tenant and landlord, which can endure up to a quarter century or even longer. It survives a succession of real estate and business cycles, employees and other relationships. For the corporate or institutional tenant, the lease is often its largest single financial commitment. For the landlord, it may determine the property’s long-run financial viability. Entering into such a commitment demands technical expertise of the highest caliber. In the current real estate climate – where the non-rent variable has emerged as the most significant factor in leasing economics – demonstrated effectiveness is required. A tenant must consider an almost endless list of variables, such as negotiating tax and operating expense escalations, work letters, electrical charges, sublease and assignment rights, alterations, and options to expand or renew.
Have you used a tenant representative/buyer agency in a transaction? What were your experiences?
Wednesday, May 09, 2012
Last week, we shared the first quarter 2012 office segment breakdown for the Harrisburg East submarket. This week, we reveal the first quarter 2012 office segment breakdown for the Harrisburg West submarket.
Overall rental rates ended the first quarter at $18.02, a decrease of 15 cents per square foot over the previous quarter. Meanwhile, the Harrisburg Area West office market ended the first quarter of 2012 with an overall vacancy rate of 10.1%, a decrease of 0.9% from the previous quarter. There were no new deliveries or new construction at the end of this quarter.
Rental Rates
The average quoted asking rental rate for available office space, all classes, was $18.02 per square foot at the end of the first quarter 2012 in the Harrisburg Area West office market area. This represented a .15 cent per square foot decrease in quoted rental rates from the end of the fourth quarter 2011, when rents were reported at $18.17 per square foot.
The average quoted rate within the Class-A office market was $20.74 at the end of the first quarter 2012, while Class-B rates stood at $16.83, and Class-C rates at $17.52. At the end of the fourth quarter 2011, Class-A rates were $20.27 per square foot, Class-B rates were $17.12, and Class-C rates were $17.32.
Vacancy
Class-A projects reported a vacancy rate of 10.7% at the end of the first quarter 2012 compared to 13.7% at the end of the fourth quarter 2011.
Class-B projects reported a vacancy rate of 9.0% at the end of the first quarter 2012 compared to 9.3% at the end of the fourth quarter 2011.
Class-C projects reported a vacancy rate of 12.1% at the end of the first quarter 2012 compared to 12.9% at the end of fourth quarter 2011.
Absorption
Net absorption for the overall Harrisburg Area West office market was positive 61,200 square feet in the first quarter 2012. That compares to positive 20,290 square feet in the fourth quarter 2011.
The Class-A office market recorded net absorption of positive 21,132 square feet in the first quarter 2012, compared to positive 19,754 square feet in the fourth quarter 2011.
The Class-B office market recorded net absorption of positive 19,970 square feet in the first quarter 2012, compared to positive 92,214 square feet in the fourth quarter 2011.
The Class-C office market recorded net absorption of positive 20,098 square feet in the first quarter 2012 compared to negative (91, 678) square feet in the fourth quarter 2011.
Largest Lease Signings
The largest lease signing occurring in the first quarter 2012 in the Harrisburg Area West submarket was the Arbor Building, a 20,000-square-foot-property leased by the Holy Spirit Hospital Camp Hill from Kinsley Properties.
Wednesday, May 02, 2012
Overall rental rates ended the first quarter at $16.86, a decrease of 16 cents per square foot over the previous quarter. Meanwhile, the Harrisburg East office market ended the first quarter of 2012 with an overall vacancy rate of 9.1%, a decrease of 0.3% from the previous quarter. There were no new deliveries or new construction at the end of this quarter.
Rental Rates
The average quoted asking rental rate for available office space, all classes, was $16.86 per square foot at the end of the first quarter 2012 in the Harrisburg East office market area. This represented a .16 cent per square foot decrease in quoted rental rates from the end of the fourth quarter 2011, when rents were reported at $17.02 per square foot.
The average quoted rate within the Class-A office market was $19.31 at the end of the first quarter 2012, while Class-B rates stood at $16.25, and Class-C rates at $15.42. At the end of the fourth quarter 2011, Class-A rates were $19.76 per square foot, Class-B rates were $16.68, and Class-C rates were $14.48.
Vacancy
Class-A projects reported a vacancy rate of 7.5% at the end of the first quarter 2012 compared to 7.9% at the end of the fourth quarter 2011.
Class-B projects reported a vacancy rate of 10.2% at the end of the first quarter 2012 compared to 10.8% at the end of the fourth quarter 2011.
Class-C projects reported a vacancy rate of 8.0% at the end of the first quarter 2012 compared to 7.9% at the end of fourth quarter 2011.
Absorption
Net absorption for the overall Harrisburg East office market was positive 7,126 square feet in the first quarter 2012. That compares to negative (135,414) square feet in the fourth quarter 2011.
The Class-A office market recorded net absorption of positive 15,831 square feet in the first quarter 2012, compared to positive 68 square feet in the fourth quarter 2011.
The Class-B office market recorded net absorption of positive 1,419 square feet in the first quarter 2012, compared to negative (121,830) square feet in the fourth quarter 2011.
The Class-C office market recorded net absorption of negative (10,124) square feet in the first quarter 2012 compared to negative (13,652) square feet in the fourth quarter 2011..
Largest Lease Signings
The largest lease signings occurring so far in 2012 include three properties represented by NAI/CIR: the 16,839-square-foot property at 30 North Third Street in Harrisburg as well as two properties at 8170 Adams Drive in Hummelstown – a 14,085-square-foot property and a 10,084-square-foot- property.
Stay tuned next week for the first quarter 2012 office market breakdown for the Harrisburg West submarket.
Wednesday, April 25, 2012
CCIM, which stands for Certified Commercial Investment Member, is a designation requiring more than 200 hours of classroom training and other professional experiential requirements. There are more than 9,000 CCIMs in the U.S. (I earned the designation this past fall).
Each quarter, the CCIM Institute teams with the Real Estate Research Council (RERC) to survey the CCIM membership. The two organizations use the information to create the RERC/CCIM Investment Trends Quarterly, which features statistics regarding the economy, investments and commercial real estate investment trends.
In the latest edition, CCIM members increased their performance and return ratings for commercial real estate and continued to give commercial real estate a higher investment rating than stocks, bonds or cash.
Respondents remained cautious, however, by giving a “hold” recommendation the highest rating (6.6) when compared to “buy” (6.4) and “sell” (5.8). Those numbers are on a scale from 1-10, with 10 being the highest.
Investors continue to believe that the return for commercial real estate outweighs the risk, with the apartment sector scoring the highest at 7.1 in the fourth quarter of 2011.
CCIM members noted that the value of commercial real estate in general is higher than its price, and increased their overall value versus price rating to 5.7 on a scale of 1 to 10, with 10 being high, during fourth quarter 2011.
The industrial sector received the highest value versus price rating, with a slightly improved score of 5.6 during fourth quarter.
Make no mistake, by reporting these trends I am not advocating that you “drop everything” and invest your life savings in commercial real estate. This report simply states that “CCIM members seem to be slightly more optimistic as they look to the future” despite the very real headwinds the economy still faces.
In which sector of commercial real estate would you be most inclined to invest: retail, industrial, office, apartment or hospitality? Why?
Wednesday, April 18, 2012
Last week, we began reporting information on the various commercial real estate segments in order to help you better understand the intricacies of the Central Pennsylvania market. We move from the Harrisburg East submarket to the Harrisburg west submarket – both reports are from the retail market.
Net Absorption
Retail net absorption decreased in the Harrisburg West submarket in the fourth quarter 2011, with negative 168,112 square feet absorbed in the quarter. In third quarter 2011, net absorption was positive 103,217 square feet.
Vacancy
Harrisburg West’s retail vacancy rate increased slightly from 8.1% at the end of the third quarter to 8.3% in the fourth quarter.
Largest Lease Signings
The largest retail lease signing the Harrisburg West submarket occurring in 2011 was the 34,180 square foot lease signed by Linens and More for Less in the Camp Hill Center.
Rental Rates
Average quoted asking rental rates in the Harrisburg West submarket decreased slightly from the third quarter. Quoted rental rates decreased in the fourth quarter 2011 levels, ending at $11.52 per square foot compared to $11.84 per square foot in the third quarter.
Inventory & Construction
During the fourth quarter 2011, no new buildings were completed in the Harrisburg West submarket.
Shopping Center
The Shopping Center market in the Harrisburg West submarket currently consists of 76 projects with 5,802,446 square feet of retail space. At the end of the third quarter, the Shopping Center market in the Harrisburg West submarket consisted of 74 projects with 5, 535,268 square feet of retail space.
Power Centers
The Power Center average vacancy rate was 3.9% in the fourth quarter 2011. With negative 11,147 square feet of net absorption and no new deliveries, the vacancy rate went from 3.7% at the end the third quarter to 3.9% at the end of the fourth quarter.
The General Retail sector of the Harrisburg West market, which includes all freestanding retail buildings, except those contained within a center, reported a vacancy rate of 7.0% at the end of fourth quarter 2011. There was a total of 355,445 square feet vacant at that time. The General Retail sector has average rental rates of $11.56 per square foot per year. There are total of 595 buildings with 5,082,727 square feet of General Retail space in Harrisburg West.
Specialty Centers
There is currently 1 Specialty Center in the Harrisburg West submarket making up 237,618 square feet of retail space. At the end of the third quarter 2011, there were 2 Specialty Centers in the Harrisburg West submarket making up 191,721 square feet of retail space.
Malls
Malls recorded net absorption of positive 22,640 square feet in the fourth quarter 2011, compared to the end of the third quarter which had a net absorption rate of positive 6,131 square feet. Rental rates for both quarters were $18.50 per square foot.
Sales Activity
There was no new sales activity in the third or fourth quarters of the Harrisburg West submarket.
For more information about this report or retail market conditions in your area, contact Omni Realty Group.
Wednesday, April 11, 2012
This week, we begin reporting information on the various commercial real estate segments in order to help you better understand the intricacies of the Central Pennsylvania market. The following is a breakdown of the retail market for the Harrisburg East submarket.
Net Absorption
Retail net absorption decreased in the fourth quarter 2011, with negative 376 square feet absorbed in the quarter. In third quarter 2011, net absorption was positive 36,858 square feet.
Vacancy
The retail vacancy rate increased slightly from 6.4% in the third quarter to 6.6% in the final quarter.
Largest Lease Signings
The largest retail lease signing in the Harrisburg East submarket occurring in 2011 was the 28,499 square foot lease signed by Gold’s Gym at Oakhurst Plaza.
Rental Rates
Average quoted asking rental rates in the Harrisburg East submarket decreased slightly in the third quarter. Quoted rents ended the fourth quarter 2011 at $11.74 per square foot per year. That is 21 cents lower than the third quarter rate.
Inventory & Construction
During the fourth quarter 2011, no new buildings were completed in the Harrisburg East submarket.
Shopping Center
The Shopping Center market in the Harrisburg East submarket currently consists of 70 projects with 5,421,290 square feet of retail space. At the end of the third quarter, the Shopping Center market in the Harrisburg East submarket consisted of 70 projects with 5,409,085 square feet of retail space.
Power Centers
The Power Center average vacancy rate was 3.8% in the fourth quarter 2011. With negative 6,825 square feet of net absorption and no new deliveries, the vacancy rate went from 4.0% at the end of the third quarter to 3.8% at the end of the fourth quarter.
General Retail Properties
The General Retail sector of the Harrisburg East market, which includes all freestanding retail buildings, except those contained within a center, reported a vacancy rate of 6.3% at the end of fourth quarter 2011. There was a total of 491,305 square feet vacant at that time. The General Retail sector has average rental rates of $10.55 per square foot per year. There are a total of 839 buildings with 7,838,052 square feet of General Retail space in Harrisburg East.
Specialty Centers
There is currently 1 Specialty Center in the Harrisburg East submarket making up 237,618 square feet of retail space. There was no change from the third quarter. Specialty Centers in this market have experienced 1,679 square feet of net absorption in 2011. The vacancy rate currently stands at 1.1%, and rental rates average $20.00 per square foot.
Malls
Malls recorded net absorption of positive 4,852 square feet in the fourth quarter 2011, which indicates no change from the third quarter.
Sales Activity
There was no new sales activity in the third or fourth quarters of the Harrisburg East sub-market.
Stay tuned next week for information on the retail market for the Harrisburg West submarket.
Wednesday, March 21, 2012
We’ve been talking about construction for the past few weeks. Our first blog of this series offered steps involved in building and the importance of hiring a qualified commercial real estate professional to aid in the process. Two weeks ago, we discussed the pre-approval and entitlement process and last week we shared an interview with David Martin, who is managing a construction project in Harrisburg. This week, we talk with the owner of the Harrisburg property, Robert Beachy.
Why did you decide to build rather than lease or buy existing space?
Our counseling practice has been interested in owning our own building for a number of years. We have been leasing space for a long time and were interested in owning a building in order to build some equity. We looked at numerous existing buildings before deciding to build so that we could design and configure the space exactly to our needs and specifications.
For you, what role does Mike play in this process?
Mike has played a pivotal role for us throughout the entire process, from making the decision to own rather than lease, to looking at existing properties, to deciding to build our own building. Since we had never done this before, Mike’s experience was invaluable in shepherding us through the project. He made contacts for us with other individuals including our builder, engineer, banker and township officials. He has kept a watchful eye on the project from start to finish. It has been very helpful to have someone we could trust representing our interests from the start.
Did you select the builder for the project or was that something coordinated by the commercial real estate agent?
Mike introduced us to our builder, someone he had worked with on other projects and felt would be a good match for what we were planning to build. However, we had the final decision about which builder to use for our project.
How did you choose location for the building?
We were aware of a lot that had been for sale for a number of years in the location we wanted to build in. We chose the location because it was close to our current location and provided easy accessibility for our clients.
Is there anything else you would like to tell us about your experience?
We want to reiterate the appreciation we have for Mike’s assistance with our building project. He has been available to us answer our questions, help clarify our confusion, and provide encouragement when we have needed it.
Wednesday, March 14, 2012
David Martin
We’ve been talking about construction for the past few weeks. Our first blog of this series offered steps involved in building and the importance of hiring a qualified commercial real estate professional to aid in the process. Last week, we discussed the pre-approval and entitlement process.
Now we have a chance to look at a ‘build in progress.’ Today’s blog features an interview with a builder who is managing a construction project in Harrisburg. Next week, we’ll talk with the owner about the same property in order to gain perspective from both sides.
Below is an interview with David Martin of Michael L. Martin, Inc.
What percentage of home building, commercial building and renovation makes up your business?
Currently renovation/remodeling/additions make up 75 percent of our business; the other 25 percent is commercial.
What makes Michael Martin Builders different than other builders?
Quality, integrity and value engineering go into every project. We put a lot of pride into our service.
How have the economic conditions affected your industry?
Like most in our industry, we’ve had to adapt to the market. We have gone from building custom homes to performing renovations, building additions, finishing basements, remodeling homes and small commercial jobs.
Pennsylvania adopted a $650 million energy bill was passed in 2008, giving builders access to several grant and loan programs. Have you been able to access these funds for ‘green’ building?
We have been able to pass on tax rebates and discounts to clients on heating systems, windows, etc.
Briefly tell us about the process of constructing a property such as Dr. Beachy’s.
The process involves designing a building that is functional for the client. Once the design is agreed upon we execute a contract and obtain the necessary permits. Construction is a 4-5 month process for a building such as theirs once we have obtained the permits and begin.
Is there anything unique or memorable about Dr. Beachy’s property? For example, something that made it different from other properties?
Each project presents new and exciting challenges, some bad and some good! The Beachy’s is a smaller scale commercial project that is much like building a Ranch home.
Do you have a date for the completion of this job?
We will complete this building sometime in May.
How does your business work with a commercial real estate professional, such as Mike Kushner of Omni Realty?
We rely on and appreciate the work of those like Mike Kushner. Mike was extremely helpful in getting us this project.
If you were to relocate today, would you prefer leasing, buying, or building office space? Why?
Wednesday, March 07, 2012
If you’re a homeowner, then you know what if feels like to be a first-time homebuyer. You know that buying a home is a massive undertaking. And you probably learned a few things that made it a lot easier to go through the process a second time.
But what if you’re looking to be a first-time builder of commercial real estate? How do you avoid making rookie mistakes that could derail your first attempt to enter such a complicated industry?
A critical early step is to acquire proper entitlement. Entitlement is a legal process that allows you to obtain pre-approvals for the right to develop property. These pre-approvals help you to ensure the project’s feasibility while up-front guidelines that help avoid costly mistakes.
The pre-approvals include areas such as zoning, rezoning, obtaining permits and easements, determining the availability of utilities and developing or redeveloping roads. You should be prepared to discuss your project with the municipality’s Planning and Development Department and meet requirements such as hearings, compliance with codes, a land review and approval of your site plan.
To make your project timely and cost-effective, you should consider hiring an experienced professionals such as architects, structural engineers, legal council, developers, project managers and consultants that can help you overcome the unique challenges of your project. You can help streamline your project by ensuring these professionals are familiar with the local jurisdictions in which you’re building.
For more information, contact The Pennsylvania Commercial Information Exchange, an online community for commercial real estate in Pennsylvania. In addition, the National Association of Realtors offers free commercial real estate monthly webinars.
At Omni Realty Group, we provide personalized service that will help you complete the project of your dreams. For additional information on commercial construction in Central Pennsylvania, call us at (717) 657-5833 or visit us online at Omni Realty Group.
Wednesday, February 29, 2012
At Omni Realty Group, we value quality over quantity. That’s why we’re the go-to firm in central Pennsylvania for highly personalized service and a full-range of commercial real estate support. In other words, we choose to limit our volume of real estate transactions so that we can handle your every real estate need from start to finish.
And whether you’re a buyer or you’re looking to lease property, there’s even better news: buyer agency and tenant representation services are often free to you – most of the time, these costs are paid for by the seller.
We have the expertise to guide you through any commercial real estate situation. Over the next four weeks, we’ll provide insight on building a new facility for your commercial venture.
If you’re looking to build, our experienced staff can assist you in planning and determining adequate financing for your building requirements. We can also help you identify potential building incentives, grants and loans.
For example, if you’re looking to “go green,” it’s good to know that Pennsylvania adopted a $650 million energy bill was passed in 2008, giving builders access to several grant and loan programs. Additional incentives involve tax credits of up to 30 percent on renewable energy such as solar, fuel cell and wind technology.
We also ensure that you take all of the proper steps in getting your project underway. For example, it’s important that you first acquire proper entitlement, a legal method of obtaining pre-approvals for the right to develop property. Some examples of entitlement include zoning and rezoning, obtaining permits and easements, availability of utilities, landscaping and development or redevelopment of roads.
We’ll discuss more about commercial building in the weeks to come. Our blog posts will include more information on the entitlement and pre-approval processes and we’ll also feature interviews with a commercial builder and commercial buyer.
In the meantime, for more information on commercial construction in central Pennsylvania, or to schedule an appointment, contact us by phone at (717) 657-5833, or online at Omni Realty Group.
