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What’s the difference between a listing agent and tenant rep agent?

Posted on April 8, 2019 by Mike Kushner in Blog, Tenant Representative/Buyer Agent No Comments

The use of the term real estate agent casts a broad umbrella under which people tend to lump all real estate professionals into the same category. The truth is that there is a big difference between the role of a listing agent and a tenant/buyer agent. While both might be referred to as simply a “real estate agent,” it’s important to understand when and how you would use each when it comes to buying or selling real estate.

Listing Agent – A listing agent might also be referred to as a seller’s agent. This is the person who represents the seller or landlord in a deal. His or her job is to list and market the property to attract potential buyers, then negotiate an acceptable deal on behalf of the seller.

Tenant/Buyer Agent – On the other side of the deal you have the tenant/buyer agent. This is the person who represents the tenant or buyer looking to lease or purchase property. His or her job is to find and bring a tenant/buyer to properties which meet their criteria, then represent them in a deal to ensure terms and pricing is fair to the buyer.

How is a listing agent compensated?

Most commonly, a listing agent signs an exclusive right-to-sell/lease listing with the seller/landlord, meaning only the listing agent’s brokerage is entitled to an agreed upon commission upon the sale or lease of the property. The brokerage then typically shares the commission with the agent. Exclusive listings are bilateral agreements between a broker and a seller/landlord. It’s important to know that a listing actually belong to the broker or brokerage, not the listing agent unless he is also owner of the brokerage. However, it is important to make the distinction between a tenant/buyer agent and a subagent of the seller/landlord. If the tenant/buyer does not have a formal written agreement with the tenant/buyer agent then the agent who is showing the property and providing information to the tenant/buyer is considered a subagent of the listing agent and is not representing the interests of the tenant/buyer.

How is a tenant/buyer agent compensated?

Generally, the listing agent cooperates with the tenant/buyer agent and shares a portion of the earned commission in exchange for bringing a tenant/buyer to the table, if that tenant/buyer then submits an offer that the seller accepts. This is referred to as a “co-op” commission. It’s important to note that a tenant/buyer agent is at no cost to the tenant/buyer.

Do I really need to work with an agent?

Legally, no. You are not required to work with an agent and can opt to list your property as a For Sale By Owner (FSBO). But there are benefits to working with a listing agent. Foremost, it becomes their responsibility to market and sell your property in a timely fashion and for an agreeable price. They will schedule showings and handle all of this for you. Many sellers benefit from working with a listing agent because their property may sell faster and at a higher price point than if they decided to go it alone. Also, many people value having a professional to take these time-consuming tasks off their hands.

If you are on the other side of the deal as a tenant/buyer, again you do not legally need to work with a tenant/buyer agent in order to buy or lease a property. However, similarly to the points regarding working with a listing agent, a buyer may also experience benefits when working with a tenant/buyer agent. Foremost, you will have their knowledge and expertise to guide you through the buying/leasing process, and someone who will represent your best interests. A tenant/buyer agent can also make your property search less time consuming by showing you only properties that they know fit your criteria. Think of them as your tenant/buyer “concierge.”

Can the listing agent also be the selling agent?

Simply stated, no. A listing agent should not be the selling agent within the same deal. Why? Because there is a major conflict of interest in doing so. Think of it like having the same lawyer represent both the defense and the prosecution in a case. Neither side will receive fully unbiased, honest representation, and the counsel walks away with twice the compensation. In fact, states such as California have gone as far as making such “dual agency” practices illegal.

Too often, a tenant/buyer begins looking at property without hiring a selling agent (aka tenant/buyer agent) to exclusively represent them. Usually they do not realize that a selling agent is not at the cost of the tenant/buyer, since the tenant/buyer agent will normally co-broke a commission with the listing agent. A tenant/buyer agent is compensated by splitting the commission with the listing agent. So, the client gets representation at no cost. The commission arrangement between the owner and listing agent will be paid whether or not the tenant/buyer has representation.

Without representation, tenants or buyers often find themselves needing the expertise, advocacy and unbiased advice of a listing agent. This can result in a number of troubling issues and frustrations for the tenant/buyer. These include losing the upper hand in negotiations, being subject to unfair pricing and unsatisfactory terms and too late realizing that things could have gone far better if they had a professional dedicated solely to representing their best interests.

When it comes to understanding the differences between a listing agent and a selling agent (aka tenant/buyer agent), the most important take away is that whatever side of the deal you’re on, you want to be sure you have your own representation to advocate for your best interests and negotiate a favorable deal.

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Central PA’s Largest Commercial Real Estate Sales of 2018

Posted on February 25, 2019 by Mike Kushner in Blog, Commercial Real Estate, Industrial, Local Market, Office Leasing, Trends No Comments

Central PA’s Largest Commercial Real Estate Sales of 2018

There is much we can learn by analyzing a market’s largest commercial real estate sales in a given year. Looking at each the industrial, retail and office sectors, it’s interesting to see the varying demand for size, price and class from sector-to-sector. This tells us a lot of about the direction of economic growth for a region; and for a real estate investor, it also showcases where the best investment opportunities for the future may lie.

Here is a look at the largest commercial real estate sales that took place in Central Pennsylvania in 2018, grouped by sector and sorted by highest sell price.

INDUSTRIAL

1. 2 Ames Drive – Amazon (Carlisle)

This 700,000 SF, Class A industrial distribution building sold on December 20, 2018 to MetLife Real Estate Investments for $74,600,000. Built in 2012, this building was sold by American Realty Advisors for $106.57 per square foot. The price represents a 4.89% cap rate. American Realty Advisors had acquired the property in 2015 for $62.475 million.

2. 3700-3900 Industrial Rd – Supervalu (Harrisburg)

This 750,000 SF, Class B industrial building sold on May 1, 2018 to Fortress Investment Group LLC for $38,373,479. Built in 1985 and renovated in 1999, this building was sold by Supervalu Inc. for $51.16 per square foot. The lease agreements between Supervalu and the new landlord had an initial term for 20 years, with five five-year renewal options on a triple-net lease.

3. 6345 Brackbill Blvd – Exel Logistics (Mechanicsburg)

This 507,634 SF, Class B industrial warehouse sold on April 5, 2018 to Penwood Real Estate Investment Management, LLC for $33,100,000. Built in 1985, this building was sold by the Abu Dhabi Investment Authority for $66.20 per square foot. The price represents about a 6.15% cap rate on in-place income.

4. 102 Roadway Drive – Saia, Inc. (Carlisle)

This 61,658 SF, Class C, truck terminal along with 40 acres was sold in October 2018 to Saia for $32,000,000. The additional acreage pushed the sales price to over $518 per square foot. YRC, the seller, still owns and occupies the larger industrial building next to this property.

5. 571 Independence Ave – Upper Allen Business Park (Mechanicsburg)

This 378,000 SF, Class B industrial warehouse sold on August 22, 2018 to Prologis, Inc. for $24,971,824. Built in 1999, this building was part of a portfolio sold by DCT Industrial Trust for $66.06 per square foot. Prologis, Inc., a global leader in logistics real estate, acquired DCT in an all-stock acquisition of for $8.5 billion, including the assumption of debt.

RETAIL

1. 6416 Carlisle Pike – Silver Spring Square (Mechanicsburg)

This 342,603 SF power center anchored by Wegmans was sold on April 17, 2018 to The Wilder Companies for $88,810,000. Built in 2007, this building was sold by Silver Spring Square, LLC for $235.87 per square foot. The price represents an in-place cap rate of 7%.

2. 830-870 N. US Route 15 – The Dillsburg Shopping Center (Dillsburg)

This 162,783 SF neighborhood center was sold on September 24, 2018 to Vastgood Properties, LLC for $24,400,000. Built in 1994 and renovated in 2002, this property was sold by Brixmoor Property Group for $149.89 per square foot. The property traded at a 6.333% cap rate.

3. 5301 Simpson Ferry Rd – Giant (Mechanicsburg)

This 51,394 SF retail property sold on August 17, 2018 to Patriot Equity Partners, LLC for $17,540,000. Built in 2004, this property was sold by Exchange Right Real Estate, LLC for $341.28 per square foot.

4. 130 Kline Village – Kline Plaza (Harrisburg)

This 214,628 SF community center was sold to Nassimi Realty Corp. on December 12, 2018 for $8,700,000. Built in 1952, this property was sold by Brixmoor Property Group for $40.54 per square foot. The price represents a 10% in-place cap rate.

5. 1313 Kenneth Road – Dick’s Sporting Goods (York)

This 55,200 SF retail property was sold to the Stewart Companies on December 27, 2018 for $6,250,000. Built in 1988, this property was sold by First Capital Realty Inc. for $113.22 per square foot.

OFFICE

1. 1920 Technology Pky – Pennsylvania Department of Corrections (Mechanicsburg)

This 100,000 SF Class B Office Building sold on December 3, 2018 to Boyd Watterson Asset Management for $26,950,000. Built in 2010, this building was sold by Hudson Companies for $269.50 per square foot at a 7.5% cap rate. The building is fully leased to the PA Dept of Corrections.

2. 1250 Camp Hill Bypass (Camp Hill)

This 84,000 SF Class B Office Building sold on November 27, 2018 to Waterday Properties for $19,750,000. Built in 2015, this building was sold by Hoffer Properties for $235.12 per square foot. The building is leased to Hewlett Packard and Medical Mutual.

3. 1 Trinity Dr E – UPMC Pinnacle FamilyCare (Dillsburg)

This 43,212 SF Class B Medical Building sold on August 9, 2018 to Hammes Partners for $19,000,000. Built in 2008, this building was sold by Anchor Commercial Realty for $439.69 per square foot. The MOB is occupied by UPMC Pinnacle and Presbyterian Senior Living.

4. 909 Elmerton Ave – Pennsylvania DEP South Central Regional HQ (Harrisburg)

This 73,101 SF Class B Office Building sold on August 2, 2018 to Boyd Watterson Asset Management for $14,500,000. Built in 1998, this building was sold by Elmerton 909, LP for $198.36 per square foot. The building is fully occupied by the PA Dept of Environmental Protection.

5. 3801 Paxton Street (Harrisburg)

This 61,198 SF Class A Office Building sold on January 31, 2018 to Arthur L. Walters Co. for $8,425,000. Built in 2006 and updated in 2017, this building was sold by Thomas A. Salvaggio for $137.67 per square foot. The property traded at a 6.86% cap rate.

Closing Thoughts

In Central Pennsylvania and across the nation, it’s fair to say that the commercial real estate market delivered its fair share of ups and downs. Now that we’ve taken a closer look at the largest industrial, retail and office real estate sales of 2018, there are a few interesting points worth noting in each sector.

Industrial – Industrial real estate continues to lead all other real estate sectors with $529 million in sales volume in 2018. The average price was $60 per square-foot, with the average property selling for $4.2 million with a 6.3% cap rate.

Retail – A total of $346 million was invested in Central PA’s retail real estate market in 2018, an increase over 2016 and 2017. The average sale price was $107per square-foot with a 7.5% cap rate.

Office – Annual volume levels for Central PA’s office real estate market were trending down for 3 years running, but 2018 rebounded with $266 million in total sales. The average office property sold for $1.4 million with 8.2% cap rate. Two of the top five largest office sales to take place in 2018 were buildings leased to the Commonwealth of Pennsylvania.

Given the largest and most notable commercial real estate sales that took place in Central PA in 2018, do you notice any other trends this might indicate? Share your insights below by leaving a comment.

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Growing Demand for “Live-Work-Play” Communities in Central PA

Posted on December 4, 2018 by Mike Kushner in Blog, Commercial Real Estate, Community, Guest Blogger, Local Market, Trends No Comments

Photo: Walden in Mechanicsburg, PA

If you’ve been a resident of Central Pennsylvania for more than a few years, you’ve likely seen various live-work-play (LWP) communities – maybe you even live in one. What we’re talking about it mixed-use commercial and residential real estate where people have the opportunity to live, work and play (shop, dine, etc.) all in a relatively close distance to one another. A great example is the Walden community in Mechanicsburg, but there are many others that we will examine in this article.

To help us explore this growing trend, we turned to Chris LeBarton who is a Senior Market Analyst with CoStar Group. Chris covers commercial real estate data in Western Maryland, including the Baltimore metro area, up through Central Pennsylvania for CoStar’s Market Analytics platform.

Chris joins Mike Kushner of Omni Realty Group for a Q&A series where we specifically look at the growing demand for LWP communities in Central PA – and what this means for CRE professionals. Here is how Chris answers our most pressing questions.

Omni: When did the LWP trend begin and how has it grown?

Chris LeBarton: The earliest usage of LWP spaces I can find was in 2005. The trend really started to grow in popularity leading up to the market crash, but there’s no correlation between the two that I can see. The term “live-work-play” was very likely used prior to that, but I’m guessing the branding of mixed-use development really took off as concepts of ‘walkable urbanism’ and ‘Transit Oriented Development’ (TOD) exploded across the country.

According to the Urban Land Institute’s Mixed-Use Development Handbook, which was published in 2003, mixed-use development: provides three or more significant revenue-producing uses (such as retail/entertainment, office, residential, hotel, and/or civic/cultural/recreation); fosters integration, density, and compatibility of land uses, and; creates a walkable community with uninterrupted pedestrian connections.

Omni: Describe a LWP community in Central PA.

Chris LeBarton: First, let’s clarify what a LWP community really is, and what it is not. Some economic development entities and marketing types play pretty fast and loose with the term. An area can be a really nice place to live, work and play in, but if there’s over a mile or so between one element of the triad and the other two legs of the stool aren’t in the same building/development, it’s not really a LWP dynamic. Of course, the likelihood that most people who live in one of these communities also works in the same office/industrial park nearby is fairly low. But being able to do all three and be largely reliant on public transportation or your own two feet is really the spirit of the LWP concept.

Another key element to understand is that LWP is not at all relegated to a city environment. In fact, part of these projects’ collective appeal is that they can recreate a city environment without being in the hustle and bustle of a CBD. Specifically in Central Pennsylvania, there are a number of LWP developments. Here are just a few:

Lime Spring Square (Lancaster/Hempfield Township): A multi-phase, mixed-use campus being developed by Oaktree Development Group, the end result will include over 100,000 SF of retail, several hundred high-end apartments, and components of office, medical and industrial space. Penn State Health has a 76,000 SF medical office building there, while PDQ Industries is expanding operations into an 80,000 SF building.
North Cornwall Commons (Lebanon/North Cornwall Township): Another phased project that has been delayed off and on since being proposed in 2004, North Cornwall Commons is finally seeing movement at what would be the largest mixed-use development in Lebanon County history. A retail strip center with at least one confirmed tenant (a local coffee business) is underway at 148-acre site that includes plans for roughly 165 townhomes, office space and a hotel.
The 1500 Condominium (Harrisburg): An example of how you don’t have to have everything in one place, 1500 has 43 units (mostly rentals) that sit over top of two restaurants and is within walking distance to the Broad Street Market and several small-to-medium sized employers.
Wyomissing Square (Reading/Wyomissing Borough): A quintessential brownfield redevelopment, Wyomissing Square now consists of 250 4 Star apartments, a Courtyard by Marriott, small-scale retail, restaurants, and a 60,000 SF medical office building.

Omni: Who is the target demographic for this type of community?

Chris LeBarton: As with anything that deals with where people live, shop/eat or work, I think the answer is “All of the Above.” We hear all too often about Millennials, or Boomers, or Downsizers, or Divorcees. Honestly, the more conversations I have with leasing agents and brokers the more I’m convinced the rule is diversity and the exception is homogeneity. Granted, most of these LWP sites cater to the more upscale or educated among society, but that doesn’t mean there can’t be families with two working blue collar parents who make a decent living and who want to save money on a car/parking and live close to work.

Omni: What advice could help commercial real estate professionals capitalize on the LWP trend?

Chris LeBarton: I don’t give investment advice, but here are a couple thoughts. First, find a way to make it authentic. Be it the retail mix, or a unique concept to the green space, or simply having the “town center” not look boiler plate, be conscientious of that buzz word “place making.” If you’re going to basically spend the majority of your waking life in a small area, it can’t be boring or cookie cutter.

Next, think ahead. What will you need to provide 3-5 years from now? Who would have thought that cities would be crawling with scooters?! Or even just electric vehicles. People looking to walk or be publicly transported or drive as little/cheaply as possible will likely demand options and flexibility. Things to consider are multiple charging stations, bike share platforms, car-share parking lots, etc.

Finally, identify fairly gentrified but not-yet-there locations that are retail/grocery deserts. LWP in the middle of a depressed community won’t work in many places (there are exceptions, of course). But cool/changing areas that are the next ‘it place’ often still need the food and fun to complete the shift.

Omni: Looking to the future, how do you predict LWP communities to evolve in Central PA?

Chris LeBarton: I think you can expect to see more of these types of projects turn up around dying malls or outlet centers that have to repurpose big blocks of space. Another interesting new trend that I could see taking off is the rise of co-living and co-working spaces in the same building.

The LWP trend stands to have a significant impact on Central PA’s commercial real estate market. Because LWP communities rejuvenate the local community, drive business and create employment opportunities, Central PA should be encouraged that so many of these communities are popping up across the region. Additionally this type of real estate appeals to a wide variety of demographics, making it a valuable investment opportunity for commercial real estate professionals. Looking to the future, LWP communities could be among the most powerful tools to breathe new life into struggling areas, and spur a burst of new economic activity that is greatly needed.

What are your thoughts on the growing demand for live-work-place communities in Central Pennsylvania? Is this type of community attractive to you? Why or why not?

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How Omni Realty Uses Research, Skill and Experience to Benefit Our Commercial Real Estate Clients

Posted on June 4, 2018 by Mike Kushner in About Us, Blog, CCIM No Comments

When in search of a service or product, you’re likely to start with a Google search. These results will lead you to visiting some potential businesses’ websites and possibly their social media pages. You may feel like you’ve gathered enough information based on the quality of their online presence, reviews and word of mouth recommendations to choose the right business to fit your needs.

But how often do you consider a business’s mission statement in this decision making process? If you don’t, you should!

A business’s mission statement (or lack thereof) will tell you a lot about their focus, approach and how they treat their customers. A nice website, active social media and high ranking reviews only paint part of the picture of the quality of the company – and what they stand for.

For the benefit of our clients, whether they be past, present or future, we hope to give you deeper insight into our own mission so you can understand what we value and our commitment to serving you!

At Omni Realty, our mission is to secure the most effective space at the most favorable terms for our clients. We use research, skill and experience to offer unmatched, highly personalized service while carefully determining our clients’ needs and analyzing all possible solutions.

But our mission statement is more than just words on paper. The values it represents are closely woven into our daily client interactions as well as our long-term visioning. Here is how Omni Realty strives to live out our mission with everything we do.

Current and Consistent Research

We are strategic about maintaining access to the industry’s most comprehensive database of commercial real estate through our partnership with CoStar. Even though we specifically serve the Central Pennsylvania market, we have access to a combination of reliable tools, resources, and expert analysis on over 5 million commercial real estate properties in today’s market. This allows us to pull and compare market reports, keep a pulse on emerging trends and give our clients valuable advice even if it’s outside of our market.

Additionally, we have access to the most technologically advanced industry tools including:

Esri ArcGIS and Business Analyst – demographics and mapping
DataVu – business list data
Riskmeter Flood Maps – assess flood hazards and generate reports
RealNex MarketEdge – financial analysis

High-Level Skill

Mike Kushner is a graduate of University of Pennsylvania (Penn) with his degree in economics. This education is combined with Mike’s CCIM Designation, making him a uniquely qualified commercial real estate broker, developer and investor. CCIM stands for Certified Commercial Investment Member and requires advanced coursework in financial and market analysis. The CCIM designation demonstrates extensive experience in the commercial real estate industry. Furthermore, CCIM designees are recognized as leading experts in commercial investment real estate.

As part of Omni Realty’s mission, developing this high-level of skill is essential to offering our clients unmatched expertise backed by confidence. Just a few of our uncommon, but highly valuable skill areas include:

Property Management
Raw Land Development
Historic Rehab Property Development
Chairman of Local Zoning Hearing Board
Expert Witness Testimony

Diverse Experience

Skill can only be grown when it is applied. Over the last 25 years of being a licensed real estate broker, Omni Realty has grown a diverse portfolio of experience. We have served over 500 clients, brokered 1,250 commercial real estate deals and have helped businesses of all sizes and industries find the most effective space at the most favorable terms. Our diverse experience also includes extensive property management, both residential and commercial.

We love sharing our experience and applying it toward delivering favorable outcomes for our clients. Experience gives us negotiation power on behalf of our clients, a leg-up on emerging market trends and a vast network of contacts that we call upon to help our clients overcome any number of challenges, both inside and outside the scope of commercial real estate.

Unique Value Proposition

We understand that other businesses may tout that they are “different” and it can be confusing to cut through the clutter and determine which commercial real estate business truly offers a unique model. First, when we say we work with businesses of all sizes, we truly mean it. From a one-person startup looking for co-working space, to a Fortune 1,000 organization looking to develop a growing campus, we are excited to work at both ends of the spectrum because we are excited to see our locally-based businesses thrive.

Second, our skill and expertise comes at no cost to our clients. As an exclusive tenant representative/buyers agent, Omni Realty is compensated by the landlord or seller, not by our client. This also means we come to the table to represent only you and your interests. There is no conflict of interest like there might be if a single agent represented both the tenant and landlord in a commercial real estate transaction. Finally, our service is highly personalized and highly hands-on. You work with only the principals in our firm; and we are responsive and proactive in our communications.

With a better understanding of our mission, and the various pieces involved in bringing our mission to life, we hope you can see why Omni Realty is in a unique position to serve our commercial real estate tenants and buyers. And remember, a business’s mission should not be taken lightly. When looking to work with a commercial real estate broker in Central Pennsylvania, be sure to assess their mission and compare it to your own. The most successful partnerships come from businesses and clients who work together over a shared mission!

Have a comment or question? Join in the conversation by leaving a comment below.

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How Commercial Real Estate Owners and Investors Can Capitalize on the Co-Working Movement

Posted on May 9, 2018 by Mike Kushner in Blog, Local Market, Office Leasing, Trends No Comments

To younger generations who are making up more and more of our work force every day, work is no longer a physical space, but rather an activity that, for better or worse, can be taken nearly everywhere we go. For this reason, the movement toward co-working spaces has emerged in virtually every city that has a business industry. Co-working is present here in Central Pennsylvania with spaces like the Park and St@rtUp in Harrisburg, the Candy Factory in Lancaster and the Techcelerator in Carlisle, to name just a few.

Even though co-working spaces are present in Central Pennsylvania, the majority of our workplaces are still modeled after the “old” economy assembly line, where workflow was linear and corporate structures were hierarchical. For commercial real estate owners and investors who want to capitalize on the growing demand for co-working spaces, here’s what you need to know.

Understand how the modern day “office” has changed

Foremost, we must take a step back to understand how the modern day “office” has vastly changed from what was desired decades ago. Simply put, stop thinking like a baby boomer! Nearly 10,000 baby boomers retire every year. It’s estimated that millennials will comprise the largest segment of our work force (75 percent to be precise) within the next decade.

If you’re a commercial real estate landlord or investor, you know the importance of understanding your clients’ wants and needs. So let’s examine what millennials want out of an office. First, the word “office” isn’t really appropriate anymore. What’s desired is a workspace that in one instance can provide quiet and solitude for “head-down” work, and the very next moment, provide an energizing and collaborative group work environment. Should it come as a surprise that millennials want it all without having to commit to one style of space? This brings us to the next important point, which is design.

Design spaces that quickly adapt to changing needs

Co-working spaces are high on function and that means being able to quickly adapt to a variety of work situations. In a single day, a business and its employees may need quiet, private work stations where people can work independently; open, collaborative space where people can work in groups; and traditional meeting space where people can meet with clients. Over time, growing businesses also desire the ability to easily accommodate more employees without having to uproot and find a bigger office every few months.

With traditional office space, businesses usually have to settle for dysfunctional work spaces that don’t quite fit the number of employees or their work styles. As a result, employees are less efficient, communication is disjointed and company culture suffers. For those who own or invest in commercial real estate, the focus needs to be on redesigning traditional office space to function more like a co-working space. This means large, open work areas where employees can interact and collaborate. Also, look for furniture that can be easily reconfigured as often as needed to provide more work spaces and private offices for independent work and meetings. These features will be huge selling points for businesses who want an office that will meet their immediate needs as well as grow with them.

Offer shared amenities to attract and retain tenants

The good news about co-working spaces is that people get used to sharing amenities. Multiple businesses working in the same building could all benefit from a shared conference room, snack bar, lounge or gym. While this would be far too much for any one of these businesses to individually afford in their own office, a building that provides all tenants with access to such amenities has quite a leg up over the competition.

Look at how Google and Apple have designed “campuses” for their employees. You can create the same effect out of your office building. Give businesses a place to interact with other businesses. Now you not only offer work space, you offer networking and business development opportunities for all!

Deliver a seamless experience – even if it comes at a premium

By adding luxury amenities to your office building, like mentioned above, you give businesses a seamless experience. Their employees will have incentive to do more at the office, even if that is relaxing, eating or exercising. Best of all, this higher level of employee engagement comes at a premium. Businesses will pay more for office spaces that keep employees happy, healthy and invested in their jobs. When you invest in adding luxury amenities to you work spaces, you will stand out among the competition and be able to charge more for your space.

Focus on building your own brand!

If you want to engage the growing millennial workforce, you need to pay attention to your brand. This demographic is used to polished and prominent branding. If you want to attract them to your office space, you need to present them with a brand worth buying into. Many co-working spaces brand themselves with a trendy name and logo. They have professional websites and a strong social media presence. How does your “brand” compare? Any effort put into properly branding your properties will bring exponential benefits as time goes on.

Which of these tips do you believe is most valuable to commercial real estate owners and investors capitalizing on the growing trend of co-working spaces?

Join in the conversation by leaving a comment below!

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10 Facts Any Commercial Real Estate Investor Should Know about Central PA’s Industrial Market

Posted on April 30, 2018 by Mike Kushner in Blog, Commercial Real Estate, Industrial, Local Market No Comments

10 Facts Any Commercial Real Estate Investor Should Know about Central PA’s Industrial Market

Central PA’s industrial real estate market is unique for a variety of different reasons. Taking into consideration its geographic, demographic and economic factors, we’ve compiled a list of what we feel are the most important facts worth knowing about our local industrial market.

If you are a commercial real estate investor, or simply someone who wants to know more about Central Pennsylvania’s commercial real estate market, you are sure to find this list of top 10 facts both valuable and interesting. Let’s take a look!

Harrisburg-York-Lebanon CSA is 3rd most populous in PA and 43rd most populous in U.S.

The Harrisburg-York-Lebanon Combined Statistical Area (CSA) is made up of six counties and includes four metropolitan areas in Central Pennsylvania. In 2010, the CSA’s population was 1,233,708 people, making it the 3^rd most populous CSA in PA and the 43rd most populous CSA in the U.S. The Harrisburg-York-Lebanon CSA includes the following Metropolitan Statistical Areas (MSAs): Harrisburg-Carlisle, Lebanon, Gettysburg and York-Hanover.

Harrisburg area puts up strong competition against Lehigh Valley.

Though Lehigh Valley is commonly recognized as Pennsylvania’s leader in warehousing and distribution, Harrisburg delivered only 600,000 SF less than Allentown in 2017, while also generating roughly the same rent growth. Additionally, companies such as Whirlpool, Amazon, Ace Hardware, FedEx, Kohler, and Lindt Chocolates have set up large-scale warehouse and distribution centers in Harrisburg – and those tenants account for just a portion of more than 16 million SF of net absorption.

Harrisburg-Carlisle and Lancaster Ranked Among Leaders in National Job Growth

Of the 25 metro areas with the fastest job growth, as of August 2017, both Harrisburg-Carlisle and Lancaster placed on this competitive list. Lancaster ranked number 24 for its steady growth as it diversifies its economy and renovates its downtown and industrial areas. In six months Lancaster added 3,100 new jobs, bringing its total employment to 252,400 and 2017 growth rate to 1.23%. Harrisburg-Carlisle ranked number 8 on the list with 6,200 new jobs added in the first two quarters of 2017, bringing total employment to 346,100 and 2017 growth rate to 1.82%. Noted was the area’s diverse group of healthcare, technology and biotechnology businesses.

Prime location for warehousing and distribution.

Central Pennsylvania is a premiere market for industrial space for several compelling reasons. For businesses who need easy and affordability storing and shipping of products, the areas offers a great roadway system, an abundant work force, relatively inexpensive and available raw land, and the ability to reach 70 to 80 percent of the U.S. population in 24 hours. Additionally, our government regulations on warehousing and distribution are comparatively easy and straightforward compared to other nearby states or regions.

Four of the 10 Select Top Industrial Leases in Q4 2017 took place in the Harrisburg market.

According to CoStar’s Q4 report for 2017, Harrisburg east and west markets represented the majority of top industrial leases signed that year. Prologis Carlisle (1,029,600 SF), Goodman Logistics Center Carlisle (1,007,868 SF), Prologis Harrisburg (623,143 SF) and Carlisle Distribution Center (575,000 SF) were all leased to different businesses who were looking to grow their industrial real estate space in Central Pennsylvania. This activity indicates economic growth and interest in Central PA’s industrial real estate market, both from businesses and real estate investors.

Lancaster market has the highest quoted rental rate for industrial space in Central PA at $4.69 per SF.

Even though Lancaster’s quoted rental rate for industrial space decreased by $0.45 per SF than where it was at the end of Q4 2016, it still comes in higher than Central PA’s other surrounding submarkets. At $4.69 per SF, Lancaster is $1.41 per SF higher than Lebanon, $0.03 per SF higher than Harrisburg/Carlisle, $0.08 per SF higher than Gettysburg and $0.67 per SF higher than York/Hanover based on Q4 2017.

Lancaster also has the lowest vacancy rate for industrial space in Central PA at just 2.0%.

Lancaster ended Q4 2017 with the lowest vacancy rate of all surrounding submarkets. Compared to Lancaster’s vacancy rate of 2.0%, Lebanon came in at 15.8%, Harrisburg/Carlisle at 6.8% and York/Hanover at 4.9% based on Q4 2017. Though Gettysburg did end 2017 with a vacancy rate of 0.4%, it’s important to note this submarket has just 78 buildings with a combined 4,372,179 SF of existing inventory which places it at a much different level than the other submarkets, comparatively.

Within the MSA, Harrisburg/Carlisle has the largest SF of industrial space under construction at 1,813,468 SF.

Two significantly large industrial projects will soon result in the addition of 1,813,468 SF to the Harrisburg/Carlisle submarket. Comparatively, Lebanon has three buildings under construction with a combined 1,310,195 SF of space, Lancaster has two buildings under construction with a combined 76,486 SF of space, York/Hanover has two buildings under construction with a combined 895,000 SF of space and Gettysburg has no new industrial space under construction. For Central PA as a whole, that equals 4,095,149 SF of new industrial space that will soon be delivered to the market.

Harrisburg/Carlisle’s ended 2017 with a positive net absorption of 2,700,108 SF.

According to CoStar’s Q4 2017 industrial market report, Harrisburg/Carlisle ended the year with the highest, positive net absorption we’ve seen since prior to 2014. At 2,700,180 SF, this is significantly higher than any other quarter that year, especially Q2 where the net absorption dropped to negative 499,576 SF. Additionally is Q4 2017, one new building was delivered to the market, adding 1,100,000 SF of space. Even with this influx of inventory, the net absorption rose by 2,083,756 SF. The new building that was delivered is Whirlpool’s new distribution facility located at 100 Fry Drive, Mechanicsburg.

Influx of State and Federal dollars will continue to improve transportation in and around Central PA.

The Trump administration has recently been touting a $1.5 trillion, 10-year public-private plan to improve roads, bridges, ports and other infrastructures across the nation. Central Pennsylvania has plans to utilize some of this federal funding to bolster its priority projects which include fixing structurally deficient bridges and widening interstates. Improvement to our roadways and infrastructure will improve public safety, create construction jobs and make Central PA an even more attractive location for warehousing and distribution.

After reading through these top 10 facts any commercial real estate investor should know about Central PA’s industrial market, you are likely to have some comments or questions of your own.

Start a discussion by leaving a comment below!

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Search Available Commercial Real Estate in Central Pennsylvania

Posted on April 5, 2018 by Mike Kushner in Blog, Commercial Real Estate No Comments

The American culture is heavily reliant upon the internet to provide us with information. If we have a question, we are quick to turn to our cell phones or computers to deliver the answer.

The search for real estate is no exception. According to a report by the National Association of Realtors, as many as 51% of buyers found the home they ultimately purchased through an internet search. This statistic demonstrates the power of having an online presence when marketing your real estate properties.

Looking specifically at commercial real estate, tenants or buyers wanting to rent or buy retail, office or industrial space often take to the internet to begin their search. And why not? You can do this from the comfort of your home or office and view details of hundreds, if not thousands of different properties with the click of a button.

We recognized this very real need for people to quickly and easily search Central Pennsylvania for commercial real estate. As a result, we are excited to announce the launch of Omni Realty Group’s property search feature. While there are many available websites and platforms that allow for commercial property search, we’d like to explain a little more about what makes ours unique and advantageous to you, the tenant or buyer.

How Do I Search for Commercial Real Estate in Central Pennsylvania?

This is a question we hear often. “How do I search for commercial real estate in Central Pennsylvania?” Many businesses looking for commercial office, retail or industrial space will begin with a Google search. While this will yield many results, it can be difficult to sort the results by your property “wish list.” The top search results have the strongest SEO, but may not have the features you desire.

When using the Omni Realty Group commercial property search to look for commercial real estate, you are able to use a variety of filters to fully customize your search results to yield properties that most closely match what you’re looking for. Filters such as: Lease or Purchase; Use (e.g. Retail, Office, Industrial) and Size (SF) will help you save time scrolling through results that aren’t relevant to what you need. In addition, the “draw” feature allows you to create geographical boundaries so that search results are located only within the areas you wish to consider.

Most importantly, the Omni Search feature allows you to view all the properties that are available in the market not just those your agent wants you to see. Omni is committed to securing the most effective space at the most favorable terms for our clients.

Benefits of Omni Realty Group’s Commercial Property Search

Benefit of Saving Time: You can save an immense amount of time by not actually visiting the place and instead going online. You clearly deduct the time of travelling and you don’t need to deal with the traffic and weather problems. You can do it anytime you want to regardless of other factors.

Benefit of Comparison: When you check online you can compare prices of different landlords or sellers for the same area. All these gives you clear idea of pricing and gives you the power of bargain as an online platform is more competitive as well as transparent. In addition, you can get multiple properties at different locations in the same screen. You can see the actual difference between two sites and have data which is better and why.

Benefit of Convenience: There are many mediums when it comes to the actual ground visit of a property. When you search online you are master of your own will. You can do the initial research at your convenience. You can use your leisure time while commuting or even late night.

Benefit of Representation: Once you find properties you wish to tour, you have the dedicated and exclusive representation of Omni Realty Group to guide and advise you through every step of the process. Literally any property you find on our search, we can show you and represent you as your tenant representative or buyer’s agent. It’s easy to fall victim to a dual agency saying only they can show you a property, but that’s simply not true. When you begin your search with Omni Realty Group, you eliminate the chance that you will be without proper representation to negotiate favorable terms and pricing in your lease agreement.

How a Tenant Rep/Buyer Agent Adds Value

As an exclusive tenant representative and buyer agent, Omni Realty Group adds value and peace of mind to your commercial real estate property search. First, this means you receive exclusive representation without conflict of interest between the two parties. Second, you have an experienced commercial real estate professional on your side to advise you of current market pricing and negotiate on your behalf for fair and reasonable terms.

What most people don’t know about working with a tenant rep or buyer’s agent is that it almost never comes as a direct cost to you. Our fee is commonly paid for by the landlord or seller. At Omni Realty Group, we pride ourselves on building strong working relationships with other real estate businesses in the area. The result is a mutual respect that allows us to work effectively on behalf of our clients to expedite the leasing process and get them into their new space on the best possible terms!

Now that you have a better understanding of how the Omni Realty Group commercial property search feature works, you have all the tools you need to find your new office, retail or industrial space to take your business to the next level. Check it out now to see how fast and easy it is to find the best available commercial properties in Central Pennsylvania!

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Top Commercial Real Estate Projects to Impact Central PA

Posted on February 26, 2018 by Mike Kushner in Blog, Commercial Real Estate, Construction, Local Market No Comments

There is a lot of different commercial construction activity taking place in Central Pennsylvania. Looking at the top commercial real estate projects to be delivered in 2018, there are two retail projects and 4 Class A industrial projects that will enter the market, bringing with them new businesses, jobs and consumers. Let’s take a closer look at these top projects to better understand the likely impact they will have on Central Pennsylvania’s economy both now and into the future.

RETAIL

Lancaster County has two retail real estate projects under construction that are projected to have a significant impact on jobs and the economy. The anchor stores for each of the two projects are supermarket brands we have come to know and love – and ones that will surely attract consumers far and wide.

The smaller of the two projects is the Crossings at Conestoga Creek, located on U.S. Route 30 in Lancaster. The 90,000 square feet of retail space being developed will be anchored by Wegmans which will become the county’s second largest supermarket, trailing only Shady Maple Farm Market in East Earl, which is 150,000 square feet. With annual sales of $7.4 billion, Wegmans is the nation’s 32nd largest supermarket chain.

The Crossings, which sits on a 90-acre site between Toys R Us and the Lancaster Post Office, is being developed by High Real Estate Group. This new retail space will create a substantial number of jobs and attract shoppers from surrounding counties. The Wegmans store anticipates the creation of 500 to 550 new jobs, and they have already begun hiring for their grand opening in 2018.

Project at 206 Rohrerstown Road.

Lancaster’s Manheim Township has exciting news of its own as it prepares to welcome the grand opening of a Whole Foods market in 2018. The proposed $130 million Belmont housing and retail project includes the market, other retail stores and homes on farmland just south of Route 30.

Rendering of Belmont retail and housing project.

Anchoring the retail portion of the 110,508 square-foot project will be the 40,000-square-foot Whole Foods market. Additional tenants will be Two Farms, Inc. Panera Bread, Metro Diner, Fuddruckers, Citadel Federal Credit Union and Mod Pizza. The retail portion of Belmont will create nearly 1,000 jobs, while Belmont overall will generate millions of dollars in tax revenue for Lancaster.

INDUSTRIAL

Four new industrial real estate projects are also under construction in Central Pennsylvania. Though much larger in size, these spaces will have a slightly different impact on our local jobs and economy than Lancaster’s retails spaces.

The largest is the Class A industrial space located at 100 Goodman Drive in Carlisle. This is part of the Goodman Logistics Center Building 1. It was announced in August 2017 that the tenant for this 1,007,868 square-foot space will be syncreon, a global third-party logistics company headquartered in Michigan. From this prime industrial location, syncreon will have access to more than 40 percent of the population of the United States.

Project at 100 Goodman Drive.

Another Carlisle Class A industrial space soon to enter the market is the warehouse at 100 Carolina Way. This 805,600 square-foot space, currently not pre-leased, is located next to Keen Transport, U-Pack and ABF Freight. The third industrial construction project is the 738,720 square-foot space located at 112 Bordnersville Road in Jonestown (First Logistics Center – Building A). Situated in the heart of the I-78 and I-81 industrial distribution corridor, the industrial park is designed to accommodate two Class A distribution centers. The second space will be delivered in Q3 2018.

Project at 100 Carolina Way.

Project at 112 Bordnersville Road.

The final Class A industrial space which is under construction in Central PA is the Ace Hardware expansion located at 139 Fredericksburg Road, Fredericksburg. With 225,875 square-feet of space, this expansion will turn the building’s existing space into a combined 1.1 million square-feet of distribution space located at Lebanon Valley Distribution Center.

Rendering of the ACE Hardware expansion.

As Central Pennsylvania’s warehousing and distribution industry grows through the delivery of these new buildings, to what extent do you feel this will impact our local jobs and economy?

Also, which of Lancaster’s two new retail spaces do you feel will gain more traffic – short term but also long term?

Join in the conversation by leaving a comment below!

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Central Pennsylvania Office Real Estate Made Few Gains in 2017

Posted on February 19, 2018 by Mike Kushner in Blog, Local Market, Office Leasing No Comments

Vacancy rates in the local office market remained mostly stagnant moving into the New Year.

If the saying “no news is good news” can be applied to Central Pennsylvania’s office real estate market, then 2017 was a good year indeed! We closed out 2017 with few noticeable gains and mostly stagnant vacancy and rental rates. On a positive note this means there were no lasting drops to cause volatility to the market; however, if “stagnant” remains an ongoing theme for our local office real estate market in 2018, we may have some cause for concern.

Let’s take a look at some key data for our three local submarket clusters: Harrisburg/Carlisle, Lancaster and York/Hanover. You will see that each experienced its own ebb and flow with some submarket clusters faring better than others at the close of fourth quarter 2017. The most important question to consider when looking at this data is: “What submarket is poised to perform the best in 2018 and what does that mean for commercial real estate and our local economy?”

Harrisburg/Carlisle Submarket Cluster

Vacancy – The office vacancy rate for the Harrisburg/Carlisle Submarket Cluster increased to 6.3% at the end of the fourth quarter 2017. The vacancy rate was 5.8% at the end of the third quarter 2017, 5.9% at the end of the second quarter 2017, and 6.5% at the end of the first quarter 2017, placing it just shy of where we began the year.

Absorption – Net absorption for the Harrisburg/Carlisle Submarket Cluster was a negative (135,877) square feet in the fourth quarter 2017. That compares to positive 25,603 square feet in the third quarter 2017, negative (6,036) square feet in the second quarter 2017, and positive 22,829 square feet in the first quarter 2017.

Largest Lease Signing – The largest lease signing occurring in 2017 was the 57,764 square foot lease signed by Pennsylvania Health and Wellness, Inc. at 300 Corporate Center Drive located in Camp Hill.

Rental Rates – The average quoted asking rental rate for available office space, all classes, was $18.12 per square foot per year at the end of the fourth quarter 2017 in the Harrisburg/Carlisle Submarket Cluster. This represented a .89% increase in quoted rates from the end of the third quarter 2017, when rents were reported at $17.96 per square foot.

Inventory – Throughout 2017, a total of two new office buildings were delivered to the market with a combined total of 73,000 square feet. At the close of the fourth quarter, two additional buildings remained under construction with a combined total of 70,000 square feet of inventory yet to be delivered.

Lancaster Submarket Cluster

Vacancy – The vacancy rates for the Lancaster Submarket Cluster in 2017 held steady for the first three quarters at 6.0%. Only in fourth quarter 2017 did we see the slightest movement in vacancy to 6.1%. Since its dip to 5.3% in third quarter 2016, the vacancy rate has returned to its recent historical average where it continues to remain stable.

Absorption – In the fourth quarter of 2017, net absorption dropped into the negatives for the first time all year, ending 2017 at negative (13,391) square feet. Net absorption was 2,462 square feet in third quarter 2017, 101,013 square feet in second quarter 2017 and 16,187 square feet in first quarter 2017.

Rental Rates – Even with a drop in net absorption and only a slight increase in vacancy rates, the quoted asking rental rate for available office space, all classes, in the Lancaster Submarket Cluster continued to increase throughout 2017. In the first quarter the quoted rental rate was $16.63, $17.13 in the second quarter, $17.20 in the third quarter and $17.46 in the fourth quarter. This is the highest quoted rental the Lancaster Submarket Cluster has experienced since prior to 2014.

Inventory – Two new office buildings were delivered to the Lancaster Submarket Cluster in 2017. Both delivered in the second quarter and combined they added a total of 113,000 square feet of new office space.

York/Hanover Submarket Cluster

Vacancy – The fourth quarter office vacancy rate for the York/Hanover Submarket Cluster held steady at 5.9%, the same as it was in the third quarter. This is slightly higher than the 5.6% vacancy rate in the second quarter and the 5.8% vacancy rate in the first quarter.

Absorption – The fourth quarter ended with a net absorption of 1,400 square feet. This is an increase from the third quarter’s negative (29,853) square feet that was a significant drop from the second quarter’s 15,646 square feet the first quarter 2017’s 31,636 square feet. This is the only increase in net absorption the market experienced in 2017.

Rental Rates – 2017 started off with a fairly steady quoted asking rental rate for available office space, all classes, of $17.40 per square foot. It increased by $0.01 in the second quarter to $17.41 and spiked in the third quarter at $18.05. Though still higher than the first two quarters, 2017 finished with a slight dip in quoted rental rates as it fell to $17.74.

Inventory – No new office buildings were delivered in the York/Hanover Submarket Cluster in 2017. There is one building under construction with a total RBA of 840 square feet.

Looking at the comparison of the three Central Pennsylvania submarket clusters, which do you feel is in the best position to start making some moves in 2018? Share your ideas by leaving a comment below.

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Impact of the New Tax Law on Commercial Real Estate

Posted on February 12, 2018 by Mike Kushner in Blog, Commercial Real Estate No Comments

The federal tax overhaul, which was enacted into law on December 22, 2017, was the most drastic tax law changes that the United States has seen in 30 years. While it will take some time to fully understand how much tax savings the changes could generate for commercial real estate investors, there are several significant impacts that are quite apparent.

New tax climate favors commercial real estate investors

Legal and tax experts agree that the new tax law bestows several benefits that make it more appealing for commercial real estate investors to buy properties. Many of the changes will put more money back into the pocket of investors in terms of tax savings. Some of the changes, particularly the tax treatment of capital expenditures, will shield a tremendous amount of income for property owners that are making capital investments and improvements to their properties. And let’s not overlook the ripple effect the new tax bill may create, such as fueling economic and job growth that will drive demand for commercial real estate. All things considered, real estate has become just about the most accessible way for high net-worth investors to profit from the tax law.

A shift in capital should increase demand for commercial properties

The tax new law creates an incentive for investors to shift capital from equities to pass-through businesses. Essentially, the law enables a taxpayer to factor 2.5 percent of the original purchase price of a property into the calculation of the 20 percent deduction for pass-through income. This allows a real estate investor the ability to reduce real estate investments to an effective 29.6 percent tax rate, which is 10 points lower than it was in 2017. Without the predicted shift in capital based on the tax new law, commercial real estate prices likely would have stalled in 2018, due to increasing interest rates and decreasing cap rates. It’s important to note that the deduction is set to expire in December 2025.

Expansion of Section 179 allows commercial property owners to direct expense improvements

Another positive for commercial real estate investors is the expansion of the Section 179 deduction for depreciation. Under the Section 179 revision, the new tax law lets commercial property owners count the cost of improvements (i.e. roofs, HVAC systems and security systems) as direct expenses in the year these items were installed. Under the previous tax law, improvements had to be capitalized with a small piece being expensed each year until the full cost was exhausted. Additionally, the Section 179 change is retroactive to the 2017 tax year, which is unlike other parts of the new law.

Tax-free 1031 swaps for real estate were retained

Another piece of the tax law that should have commercial real estate investors excited is the retention of tax-free 1031 swaps for real estate. The real victory here is that lawmakers did not yank 1031-exchanges for real estate, as they did for aircraft and other types of personal property. In fact, under the new law 1031 trades are now restricted exclusively to real estate.

Insights from a tax adviser

The new tax law creates some gray areas and leaves many questions unanswered, particularly as it relates to commercial real estate. As a commercial real estate investor, the best thing you can do is consult a tax adviser before making any drastic changes to your real estate investment strategies. At Omni Realty Group, we had a few questions of our own so we asked Jim Holland, accountant and owner of Jim Holland CPA to weigh in with his insight. Here is what he shared.

“There is no doubt the biggest winner in the real estate arena was for commercial real estate investors; however, it is wise to proceed with caution. I would recommend to any commercial real estate investor that they tread lightly until more is known about calculating the 20% reduction of business income, including from flow through entities. The calculation can be complicated and burdensome.”

That’s not to say there are some immediate actions CRE investors might consider taking in 2018 to put themselves in the best possible position to maximize the benefits of the new tax law. Clifton Guise, Tax Attorney and Partner at Halbruner, Hatch & Guise, LLP shares the following.

“Because most real estate investors own and operate their real estate activities through pass-through entities (LLCs, LPs, and S-Corps) or sole proprietorships, it is important to determine if the investor qualifies for the Qualified Business Income (“QBI”) Deduction. The QBI Deduction is an individual level deduction that can reduce the tax rate on income from pass-through entities. An investor may need to restructure their entity or in some cases restructure their leases in order to qualify for the QBI Deduction.”

Taking the time to fully understand the new tax law, and identifying how you may need to restructure your leases or business model to maximize your benefits under this law is a worthy investment of your time. If you are a commercial real estate investor, make it a goal to seek advice on the new tax law and how it stands to impact your business going forward.

Share your opinion! What do you think is the most important impact the new tax law will have on commercial real estate?

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