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Posts tagged "industry"

Home» Posts tagged "industry"

How the Medical Office Market Can Benefit from Using Flexible Office Space

Posted on September 21, 2018 by Mike Kushner in Blog, Office Leasing, Trends No Comments

Co-working and shared office space is not a new model. Businesses, like Regus, have been providing flexible, monthly memberships for access to shared office space for years now. This rose out of a growing need for businesses to have short-term, extremely flexible work locations so that they can scale up or down rapidly. Particularly, early stage startups couldn’t afford to lock into even year-long contracts for office space, because from week-to-week their needs for workspace were constantly changing.

What shared co-working space provides is an extremely flexible option for businesses and their employees to have a professional workspace with the ability to increase or decrease their space quickly and frequently. Now other industries have taken note of the unique benefits of co-working spaces and have started to develop their own model. The healthcare industry has jumped on this bandwagon and we’re now beginning to see the idea of medical co-working spaces spread across the nation, starting in cities such as Scottsdale, Arizona.

It may be hard to envision how doctors and other medical professionals can use shared workspaces to see patients, especially given the privacy and health considerations that come with the nature of the business. However, when you dig a little deeper, you’ll see that it’s a well thought out model that stands to disrupt traditional medical offices that tend to carry a large overhead and are unable to easily adapt.

Benefits of Using a Medical Co-Working Space

Co-working spaces are usually newly remodeled and fully built-out to fit the exact needs of the industry they serve. For medical co-working spaces, these rooms will feature a clean and organized space with new furniture and all the necessary resources to see and treat patients. Medical professionals can reserve the space for only the days that it’s needed. For some, this might be just 2-3 days per week. In a traditional medical office setting, when not in use, the space must still be paid for even if it’s sitting vacant.

Additionally, the concept of medical co-working spaces allows medical professionals to “test out” a new area where they may consider opening an office in the future. By offering services in a co-working space in the new area, they can see if patients prefer to see them at this location, and about how often they can fill their schedule here.

Space That Can Change with Demand

Additionally, co-working spaces are extremely flexible. Most businesses offering this amenity require only a 12 week commitment, then charge month-to-month. This is a big difference from a traditional office lease which is at least one year, usually multiple years.

In the medical industry, providers typically experience one of two problems as it pertains to medical office space. Either their practice is growing, and they don’t have enough rooms to accommodate their patients, thus delays in appointments or appointments that must be made weeks in advance. Or, the practice is shrinking and they’re losing even more money paying for space that is not being used. In both scenarios, medical professionals could benefit from the flexibility of office space that can change with demand.

With flexible office space, like co-working spaces, the need for space can change week-to-week and month-to-month. This affords medical professionals extreme flexibility. The end result is more convenient options for patients and less overhead for doctors.

Privacy and Health Considerations

It’s important to take into consideration that the highest standard of privacy and cleanliness is always expected by patients. If medical professionals should choose to see patients in a co-working setting, they should be prepared to reinforce to patients that though this is a “shared” space, the room is completely private and always properly cleaned.

As with any new trend, there may be some initial hesitations to overcome from both the providers and the patients. It’s a new model and something that will take some getting used to. However, because there are so many pros to outweigh the cons, as more and more people experience medical care from a co-working space, soon it will feel as comfortable as a traditional office environment – if not more so!

A Trend on the Rise

The reality is the co-working model is exploding, taking real estate empires, like New York City by storm. The 1.7 million square feet that co-working providers, like WeWork, leased in the first half of 2018 accounts for 10 percent of all new leasing activity in New York City this year. In fact, WeWork is about one lease away from becoming the biggest private office tenant in Manhattan – beating out JP Morgan Chase! How this relates back to the medical office market is that a trend that so quickly proved its value and dominance in a place like New York City in just eight years, will next begin to expand into smaller markets and new industries. This is not some overnight trend that will be a flash in the pan. Rather, it’s the future of office real estate that traditional real estate owners and investors need to embrace if they want to keep and attract new tenants.

The Bottom Line

Major healthcare trends are sweeping the nation and they stand to greatly change the way healthcare-related businesses view and use commercial real estate. The concept of co-working spaces that doctors and medical professionals can use to see patients is just one of these trends, and potentially a very disruptive one.

The benefits are clear. Being able to add or lose space on short notice and without penalty will allow medical professionals to save a ton of cost on overhead while having access to adequate space, if their practice grows. The most critical piece that will make this trend a success is that patients “buy into” the idea that they will be receiving care in a space that could be shared by other medical professionals on different days. So long as privacy and sanitary conditions are maintained, this trend has a lot of potential to benefit all parties.

What are some other benefits or drawbacks you see as the result of using medical co-working space? Share your thoughts and ideas by leaving a comment below!

 

[Online Resources] Real Estate, co-working, Commercial Real Estate, coworking, doctor's office, flexible office space, healthcare, hospital, industry, lease, medical office, Mike Kushner, office, Office Space, Omni Realty Group, patient, trends

Real Estate Trends to Impact the United States in 2018

Posted on December 27, 2017 by Mike Kushner in Blog, CPBJ Articles, Trends No Comments

Note: This article was published by the Central Penn Business Journal. Click here to read the original version.


Rapid technological advancements and significant demographic shifts significantly influence the real estate industry. These various factors like growing urbanization, longevity of Baby Boomers and differentiated lifestyle patterns of Millennials are changing the way people value real estate. Add into the mix macroeconomic and regulatory developments, and you have the perfect storm for some significant changes to come to the real estate market in 2018.

With the many changes that have already taken place in 2017, many real estate companies find themselves searching for ways in which they can gain a competitive advantage and drive top- and bottom-line growth in the New Year.

To achieve this, we must identify and monitor emerging trends that are likely to impact the economy moving into 2018. Take a look at the top trends that are shaping the U.S. real estate industry right now!

ECONOMIC OUTLOOK: Increasing interest rates could temper growth

  • Federal Reserve is likely to raise interest rates in the short-to-medium term. Volatile global markets have led to continued low interest rates, but that’s expected to come to an end in 2018. Higher interest rates are likely to increase mortgage costs and could deter real estate investments to some extent.
  • Gross domestic product growth will likely increase 2.5 percent in 2018. It’s the same as in 2017, but better than the 2.1% growth in 2016. The modest economic improvement could temper the pace of commercial real estate (CRE) transaction activity.
  • Improving labor markets and household wealth will boost consumer confidence. The U-5 unemployment rate which includes discouraged workers and all other marginally attached is expected to drop under 5 percent. The employment-to-population ratio is projected to peak in 2018, as retiring Baby Boomers may reduce the share of employed.

REGULATORY OUTLOOK: Greater compliance means greater cost

  • Increased compliance and administration costs will result from the new accounting standards on lease accounting and revenue recognition that will primarily impact real estate investment trusts (REITs) and engineering and construction (E&C) companies.
  • Risk retention rules will lower issuance of commercial mortgage-backed securities (CMBS). We are also likely to see a reduction in capital availability in secondary and tertiary markets.
  • The Protecting Americans from Tax Hikes (PATH) Act of 2015 will ease REIT tax provisions and R&D tax credits for E&C companies, while increasing the flexibility to invest in startups for R&D experimentation. However, corporate tax reforms will reduce flexibility for corporations to spin off real estate assets into REIT structures.

DISRUPTIVE TRENDS: These factors are reshaping the face of CRE

  • Collaboration and Sharing.These sound like two positive trends, right? They certainly are for startups who utilize new platforms and business models like Airbnb or WeWork to reduce their real estate overhead. However, this type of collaboration and sharing of space is disrupting the way organizations lease and use commercial real estate space for their businesses. Traditional CRE companies will need to rethink their approach toward space design, lease administration, and lease duration in order to compete.
  • CRE data is becoming more ubiquitous and transparent thanks to technological advancements. The traditional brokerage model is being threatened by the increasing ease and efficiency of online leasing. Traditional brokers will need to diversify their services to include consulting and collaboration.
  • A growing demand for mixed-use developments as consumers prefer to “live, work and play” in proximity. This demand is the result of a shortage of workers with strong STEM skills, rising urbanization and Millennials’ preference for an open and flexible work culture. Companies trying to compete for this type of talent should choose office locations in areas that cater to the living and working environments preferred by their ideal candidates.
  • Rising demand for fast and convenient online retailing is disrupting the retail and industrial markets. Innovations in speed and mode of delivery (such as same-day delivery and e-lockers) will decrease the demand for large retail and industrial spaces. This trend will also cause a blurring of the lines between these two properties. For example, some retail space could double as fulfillment centers. To stay afloat, retailers will need to try different store formats to appeal to the consumer, while industrial properties should focus on smaller, more flexible spaces located near cities.
  • A change in how we get around will also change how we use real estate. With each passing year, more and more people rely upon “pay-per-use” vehicles and rideshare platforms like Zipcar, Uber and Lyft. We also get closer to self-driving vehicles. This major disruption to the entire mobility ecosystem will result in fewer people owning and driving their own vehicles, especially in urban areas. This will free up large parking spaces in prime locations that can be put to different uses. Real estate companies should begin to explore ways to reduce and repurpose parking space as a means to generate more income.

Over the course of the next 12 months, the U.S. commercial and residential real estate industry can expect to be hit with various changes and challenges. Some of these changes may have a favorable impact, while others could impose some serious setbacks. For real estate businesses to gain a competitive advantage and drive top- and bottom-line growth in 2018, they should take note of these emerging trends and work on developing a strategy now to react to the changing market, when the time comes.

What real estate trend do you think will have the most significant impact on the United States in 2018? Share your insights by leaving a comment below!

[Online Resources] Real Estate, 2017, 2018, buyers agent, central pennsylvania, commercial, demand, Economy, growth, industry, Mike Kushner, Omni Realty, prediction, regulation, residential, tenant representative, trends, united states

Mega Warehouse Space Exploding in Central PA

Posted on December 4, 2017 by Mike Kushner in Blog, Local Market, Trends No Comments

Central Pennsylvania has gained 8 warehouses, each over 1 million square-feet, since 2010.

With today’s booming e-commerce market continuing to expand, the need for sufficient storage space to meet online consumer demands is at an all-time high.  To keep pace with online consumer needs, retailers look towards extra-large storage warehouses exceeding 1 million square feet, also known as “Mega Warehouses.” These warehouses are a way to keep an edge over the competition. Between 2010 and 2017, 21 of these mega warehouses were constructed in the Philadelphia Submarket which includes Central PA.

As people continue to prefer ordering goods online with a click of a button or a tap via smartphone applications, over the traditional brick and mortar storefronts, the need for these mega warehouses continues to grow. Mega warehouses around the U.S. are strategically placed outside large metro areas allowing them to benefit from the abundance of space. By maintaining access to road, sea and rail transportation channels, mega warehouses do not sacrifice their ability to directly deliver goods to consumers in a timely manner.

Top 5 Largest Warehouses in Central PA Since 2010

# 1: At the top of the list is the warehouse occupied by Georgia Pacific. Located at 234 Walnut Bottom Road, Shippensburg, the property is 1,495,700 square-feet.   CBRE Global Investors purchased this property from Prologis in 2015 for $83,000,000.

# 2: Unilever PLC, the company behind brands Dove, Lipton, Ben and Jerrys and many more, occupies 1,370,052 square-feet at 954 Centerville Road, Building 3, Newville. In 2013, this building was awarded LEED certification by the U.S. Green Building Council.

# 3: Developed by Hillwood and sold to GLP in 2016, this property is located at 1605 Bartlett Drive, Manchester. Starbucks occupies the entire 1,209,000 square-foot building.

# 4: The Urban Outfitters Distribution Center located at 766 Brackbill Rd, Gap, is 1,200,000 square-feet.   Completed in 2015, this property is owned by Urban Outfitters.

# 5: The Nordstrom Fulfillment Center is located at 30 Distribution Dr., Elizabethtown.  This 1,142,000 square-foot facility was constructed in 2015 and is located in a designated foreign trade zone (FTZ).

Take a look at all 8 warehouse properties in Central PA that are over 1 million square-feet.

Right Here In Central PA, We Are The Hub Of All The Action!

Central Pennsylvania remains a premiere market for industrial space and it’s easy to see why. To businesses that rely upon the ease and affordability of shipping their products to make a living, Central Pennsylvania possesses four main components that drive the decision –  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 states or regions.

Currently, there is one mega warehouse under construction in Central PA.  The Goodman Logistics Center located in Carlisle.  The property is fully leased and will be occupied by Syncreon, a third-party logistics company, in early 2018.  In addition, there are five proposed buildings in excess of 1 million square-feet.

Central Pennsylvania is well poised to harness the economic boost from the e-commerce boom. We have a unique opportunity to serve this industry that we can’t afford to miss!

Learn more from past market reports:

Central Pennsylvania Industrial Real Estate Report for Q2 2017

Influx of New Construction Impacts Central PA’s Industrial Real Estate Market

Central Pennsylvania Industrial Real Estate Report for Q1 2017

brick and mortar, central pennsylvania, Commercial Real Estate, Construction, distribution, ecommerce, Economy, industry, large, market, mega warehouse, Mike Kushner, news, Omni Realty, pennsylvania, report, shipping, space, square feet, top 5, transportation, trend, warehouse

Robust Growth Predicted in 2016 for Central PA Industrial Real Estate Market

Posted on January 8, 2016 by Mike Kushner in Blog, Local Market, Trends No Comments

Robust Growth Predicted in 2016 for Central PA Industrial Real Estate MarketAre you ready to start off 2016 with some good news? The industrial real estate market in Central Pennsylvania is riding a wave of robust economic growth and all signs point to a continuing boom that could be the greatest in the sector’s history!

Looking at the fourth quarter data, our latest research confirms that the industrial sector of the local real estate market has now absorbed over 8.5 million square feet of warehouse space since first quarter 2015. With virtually every industrial sector experiencing increased demand—from data processing hubs to distribution space and manufacturing centers—the four quarters of 2015 saw more demand for industrial space than compared to the last 20 years.

What exactly is driving this demand and what other trends can we expect to result from this economic growth? Let’s take a look!

Three factors driving this high level of industrial demand:

Employment: Across the nation, the real GDP has been expanding at a better than 4% growth rate since April of 2014 (nearly 150 bps higher than the historical norm). The faster rate of growth has triggered a burst of new hiring across nearly all job sectors and geographies. The U.S. economy created 2.9 million net new nonfarm jobs in 2014, and more specifically, industrial employment grew by 442,000 net new payrolls in 2014 – the most industrial-related job growth in 17 years.

Looking specifically at Harrisburg-Carlisle MSA, the unemployment rate is 3.5 percent as of November 2015 and the lowest it has been in recent months. We also closed the year with 294,626 nonfarm jobs which is nearly 7,500 more jobs than last year at this time and among the highest we have seen throughout 2015.

Manufacturing: Adding to the good news is the ISM Manufacturing Index, which has been in solid expansion mode for 25 consecutive quarters. Such robust trends have led to a 5.2% year-over-year increase (nationally) in industrial production—a rate of growth that went unmatched throughout the 2000’s.

Again looking locally, Harrisburg-Carlisle MSA, Lancaster MSA and York-Hanover MSA each rank among the top 10 regions in the state for manufacturing jobs. Combined, these areas (that correlate with CoStar’s Central PA submarket) employ a total 89,356 people in this industry alone, as of second quarter 2015. Manufacturing jobs continue to trend upward after recovering from a major dip in 2010.

Harrisburg MSA Manufacturing Employment

Oil Prices: The past six months of continually falling oil prices have given the bulk of the U.S. economy an additional boost and will provide another tailwind for growth moving forward. Since June of 2014, crude oil prices (WTI) have declined more than 50%, making the national average gas price $2.17 per gallon as of mid-January, 2015. Most consumers and businesses are responding favorably to the drop in energy prices, and consumer spending has ramped up for vehicle sales, durable goods, building materials, clothing and accessories, food and beverage, etc.

In the Harrisburg-Carlisle MSA, oil prices are down about 18.6 percent from last winter, beating the U.S. Energy Information Administration’s prediction of a 15 percent drop this winter. The average for heating oil was $2.999 on Dec. 1, according to the Energy Information Administration, compared with $3.683 a year ago. Local Marcellus Shale production has helped keep oil prices low while also adding jobs to the economy.

Final Takeaways

All of these factors bode well for industrial real estate, even as the rising value of the dollar and weakening economic conditions abroad present headwinds for the year ahead.

Additionally, new construction activity is showing no signs of slowing as there is currently 3.5 million square feet under construction in the Central Pennsylvania Submarket, of which 98% is being constructed on spec. The majority of new spec inventory is expected to deliver in the first quarter of 2016 and will push the overall vacancy rate northward for the market.

Despite the large amount of spec space coming online next quarter, tenant demand has been particularly strong in new inventory constructed over the past two years, evidenced by the market’s low vacancy and strong positive absorption.

The new space that has come into the market at the end of 2015 should continue this trend and generate a significant amount of activity in the near-term.

Which of the market factors discussed do you believe will be most powerful in 2016 and beyond? Join in the conversation by commenting below!

 

[Online Resources] Real Estate, 2015, 2016, article, blog, business, camp hill, carlisle, central pa, change, CRE, cumberland, data, dauphin, Economy, employment, future, growing, growth, harrisburg, hershey, impact, industrial, industry, information, jobs, land, manufacturing, market, mechanicsburg, Mike Kushner, money, msa, new year, news, numbers, oil, Omni Realty Group, pennsylvania, positive, prediction, recap, report, space, statistics, trends

Manufacturing Continues to Grow in Central Pennsylvania: What’s Going On and Why It Matters

Posted on October 27, 2015 by Mike Kushner in Blog, CREDC Articles, Local Market, Trends No Comments

This article has been featured by the Capital Region Economic Development Corporation (CREDC) and can be also viewed on their website. 


Manufacturing Continues to Grow in Central PennsylvaniaAccording to the PA Manufacturers Association, manufacturing and its affiliated businesses contribute $11 Billion to the economy in south-central Pennsylvania alone, providing our community with an estimated 110,000 jobs. This industry is a huge part of our local economy and its growth impacts the growth of many other businesses.

It should come as good news that the demand for manufacturing space is on the rise. Central PA is considered one of the premier “Big Box” industrial and multi-tenant logistics markets because of the area’s affordable cost of living, raw land and non-union labor. Additionally, the governmental approvals required for warehousing and distribution are comparatively easy and straightforward compared to other states or regions

As for location, this area is a central hub where products, after being manufactured, can be easily distributed throughout the northeast United States (via I-81, I-83, and I-78). Central PA also offers easy access to Port of Baltimore, MD and Port of Elizabeth, NJ and is within a one-day drive to 40% of the nation’s population.

For businesses who need to manufacture and distribute their goods far and wide, Central Pennsylvania is an obvious choice for setting up shop. No matter your particular business or industry, this growth matters to you too! It’s important to understand these trends and the various ways they will likely impact your business. Let’s take a look.

Current Market Trends Worth Noting:

Six more manufacturing buildings entered the market in the last quarter alone, giving us the highest RBA we have seen in more than two years at 62,988,707 square feet. Among this space, 60,527,229 square feet are currently occupied which showcases the high demand for manufacturing space in Central Pennsylvania.

Net absorption has also shown tremendous improvement since the 2013. Just two short years ago, net absorption was in the red by hundreds of thousands of square feet. The lowest point occurred in 2013 Q2 when net absorption was negative 403,861 square feet. The very next quarter, net absorption shot up to a positive 598,898 square feet. Though there has been some fluctuation in the market since, we have remained mostly in the black and currently have a net absorption of 30,468 square feet.

Additionally, Central Pennsylvania’s vacancy rate for manufacturing space has shown significant improvement from the 5.6% we saw in 2013 Q3. A steady decrease has brought this rate down nearly two whole percentage points to the 3.9% we see today.

Finally, the average rental rate has declined approximately $.20/SF since 2013, but has stabilized at approximately $3.50/SF in 2014 and 2015.

What this means to the Central Pennsylvania region:

To the many businesses that are directly and indirectly impacted by the manufacturing industry, the current real estate market is a positive indicator that other markets will follow this favorable trend. Growing manufacturing companies produce more jobs which spur growth in almost every other aspect of the economy from office and residential space to restaurants and shopping centers.

To the 110,000+ people who are employed by the Central Pennsylvania manufacturing industry, the market shows positive signs that these businesses continue to grow and also offers the potential of even more manufacturing businesses being drawn to the area.

Overall, Central Pennsylvania maintains its reputation for being a hub for manufacturing and distribution. The industrial real estate market, specifically for manufacturing space, reflects the strong and steady growth would we expect to see in this region.

View the original article on the CREDC website here. 

[Online Resources] Real Estate, blog, camp hill, Capital Region Economic Development Corporation, central pennsylvania, commercial, CREDC, cumberland, dauphin, demand, Economy, growth, harrisburg, industrial, industry, lancaster, local, manufacturing, market, mechanicsburg, Mike Kushner, Omni Realty, pa, region, trends, writing, york

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