If no news is good news, then the Q1 market report for Central Pennsylvania office space is very good news indeed. The waters remain calm – though not completely stagnant – for the local market.
With merely one year-to-date delivery and a vacancy rate that has only moved one-tenth of a percentage point or so since 2013, office space has been consistent and predictable. There are several important conclusions we can draw from the following data and how it relates to the current health of the market and predictions for future growth, but let’s first begin by breaking down the numbers and taking a closer look at the facts:
Select Year-to-Date Deliveries:
The Central Pennsylvania submarket has delivered one property so far in 2015. Located at 13 Adams Drive, Conestoga Oral and Maxillofacial Surgery will use most of the 10,000 square feet in this facility. The quoted rental rate is $22.58 and the building is 70% occupied.
Vacancy and Availability:
Vacancy has remained nearly unchanged throughout First Quarter 2015. Only one new building was delivered contributing 10,000 square feet of office space. Vacant square-feet fell ever so slightly from 4,266,826 in Fourth Quarter 2014 to 4,219,233 this quarter. This moved the vacancy % just one-tenth of a point down to 8.3% – a rate that has remained relatively unchanged since Fourth Quarter 2013.
Absorption and Demand:
In First Quarter 2015 we did see net absorption move back into positive numbers. Ending Fourth Quarter 2014 at negative 88,815 square-feet, this number jumped to 57,593 square-feet which is the highest for Central Pennsylvania since Fourth Quarter 2013.
The quoted rental rates for First Quarter 2015 rose $0.03 to an average rate of $17.18 per square-foot. While this increase in price is not a huge jump, it was enough to push the quoted rental rate in the Central Pennsylvania submarket to the highest it has been since Fourth Quarter 2011.
The Central Pennsylvania submarket has seen very little growth over the last 15 quarters. Total rentable building area (RBA) has increased by only 1.2%. The vacancy rate has averaged 8,4% (with a high of 9.2% and a low of 7.5%) and rental rates have averaged $16.78 per SF (with a high of $17.42 per SF and a low of $16.26 per SF). Although the economic indicators are improving, we don’t expect any significant new construction growth. Vacancy and rental rates should remain stable
How has office real estate in Central PA personally impacted you? Or how does this compare to the First Quarter you experienced in your own local market? Join in the conversation by commenting below!