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Posts tagged "stats"

Home» Posts tagged "stats"

Central PA Office Submarkets End Quarter with Very Different Outcomes

Posted on November 8, 2018 by Mike Kushner in Blog, Local Market, Trends No Comments

Lancaster closes Q3 with the strongest market while Harrisburg West shows signs of distress.

The submarkets that make up Central Pennsylvania’s office real estate market each have unique advantages and disadvantages that really show through when you examine each individually. With the close of the third-quarter, we took a closer look at how the four main submarkets performed individually and comparatively.

The outcomes should surprise you! You may think you know which of the four submarkets outperformed the others, which one is most likely in distress and the others that are sitting pretty stagnant right now. But you’ll likely be shocked by the large variances in numbers, especially when compared to the historical averages and forecasted averages of what is yet to come.

Let’s take a closer look at some of the most interesting trends and numbers reported from CoStar’s Q3 2018 office report for Harrisburg East, Harrisburg West, Lancaster and York.

Harrisburg East

Vacancy – The vacancy rate for Q3 2018 in the Harrisburg East submarket is 6.4%. This is notably lower than the historical average of 7.8% and the forecast average shows this dipping lower to 5.7%. For comparison, the peak in vacancy rate occurred in Q4 2012 when it reached 10.8% and the trough was in Q4 1997 when it plummeted to 3.1%.

12 Month Net Absorption in SF – The twelve-month net absorption is 106,000 square-feet. While this is still lower than the historical average of 187,046 square-feet, the forecast average predicts the current net absorption will fall significantly to 61,648 square-feet. Though not by much, net absorption will at least remain in the black for now.

Rent Growth – The current 12 month rent growth is 2.0%. This is higher than the historical average of 1.4%, though the forecast average predicts that this will fall to 0.7%. For comparison, the peak in Harrisburg East’s rent growth occurred in Q1 2001 when it reached 8.3% and the trough was in Q4 2009 when it plummeted to -2.4%.

12 month deliveries in SF – Harrisburg East has a twelve-month delivery of 30,000 square-feet. This takes into account all of the deliveries that occurred over the last year; however no new buildings were delivered specifically in Q3 2018. Additionally, 20,000 square-feet of 4 and 5 star office space is under construction, which will be delivered in coming quarters.

Harrisburg West

Vacancy – The vacancy rate for Q3 2018 in the Harrisburg West submarket is 7.3%. This is slightly higher than the historical average of 7.0%; however, CoStar’s forecast average predicts this to dip to 5.6%. For comparison, the peak in vacancy rate occurred in Q2 2002 when it reached 9.8% and the trough was in Q4 1997 when it plummeted to 2.5%.

12 Month Net Absorption in SF – The twelve-month net absorption is negative 258,000 square-feet. The historical average is 95,454 square-feet and the forecast average predicts the market will again return to positive numbers with 25,193 square-feet. Q3 net absorption is not far from where it was in Q4 2014 when it was negative w 292,042 square-feet. Since then, it peaked in Q3 2016 at 611,057 square-feet before falling substantially to its current negative state.

Rent Growth – The current 12 month rent growth is 1.9%. This is higher than the historical average of 1.4%, though the forecast average predicts that this will fall to 0.6%. For comparison, the peak in Harrisburg West’s rent growth occurred in Q3 2000 when it reached 7.1% and the trough was in Q4 2009 when it plummeted to -2.8%.

12 month deliveries in SF – Harrisburg West has a twelve-month delivery of 40,000 square-feet, compared to the historical average of 127,660 square-feet. This takes into account all of the deliveries that occurred over the last year; however no new buildings were delivered specifically in Q3 2018. Additionally, 26,400 square-feet of 3 star office space is under construction, which will be delivered in coming quarters.

Lancaster

Vacancy – The vacancy rate for Q3 2018 in the Lancaster submarket is 3.6%. This is notably lower than the historical average of 6.8%; the forecast average predicts this remain fairly stable at 3.7%. For comparison, the peak in vacancy rate occurred in Q4 2004 when it reached 9.7%. The lowest the vacancy rate has ever been in Lancaster County is actually right now, in Q3 2018.

12 Month Net Absorption in SF – The twelve-month net absorption is 324,000 square-feet. The historical average is substantially lower than what it is currently and that is 109,103 square-feet. The forecast average predicts net absorption will decrease to 89,086 square-feet.

Rent Growth – The current 12 month rent growth is 4.9%. This is significantly higher than the historical average of 1.3%, though the forecast average predicts that this will fall to 1.6%. For comparison, the peak in Lancaster’s rent growth occurred in Q3 2000 when it reached 6.9% and the trough was in Q4 2009 when it plummeted to -5.0%.

12 month deliveries in SF – Lancaster has a twelve-month delivery of 12,000 square-feet, compared to the historical average of 114,237 square-feet. This takes into account all of the deliveries that occurred over the last year; however no new buildings were delivered specifically in Q3 2018. Additionally, 81,840 square-feet of 4 and 5 star office space is under construction, which will be delivered in coming quarters.

York

Vacancy – The vacancy rate for Q3 2018 in the York submarket is 5.3%. This is lower than the historical average of 6.9%; the forecast average predicts this remain fairly stable at 5.4%. For comparison, the peak in vacancy rate occurred in Q1 2008 when it reached 10.5%. The lowest the vacancy rate has ever been was 2.2% in Q4 1998.

12 Month Net Absorption in SF – The twelve-month net absorption is 29,500 square-feet. The historical average is 72,892 square-feet. The forecast average predicts net absorption will decrease to 8,847 square-feet.

Rent Growth – The current 12 month rent growth is 1.6%. This is fairly close in line with the historical average of 1.1%, though the forecast average predicts that this will fall to 0.6%. For comparison, the peak in York’s rent growth occurred in Q3 2000 when it reached 6.8% and the trough was in Q3 2009 when it plummeted to -4.3%.

12 month deliveries in SF – York has a twelve-month delivery of 0 square-feet, compared to the historical average of 80,056 square-feet. The forecast average predicts that this rise to 13,093 square-feet. Additionally, 22,000 square-feet of office space is under construction, 17,000 square-feet of 4 and 5 star space and 5,000 square-feet of 3 star space, which will be delivered in coming quarters.

Key Takeaways

Overall, York County and Harrisburg East have been very stable. Not much is moving the needle. There is not a lot of absorption nor much new construction that could spur activity.

The real positive news from Q3 2018 is Lancaster County. This submarket rose above the rest for several reasons. First is its 324,000 square-feet in net absorption and 4.9% rent growth (highest since Q3 2003). Additionally the vacancy rate decreased 2.3%. Currently there are 81,840 square-feet under construction and 89,166 square-feet of new construction proposed.

In contrast, the Harrisburg West submarket is showing signs of distress. Its negative 282,000 square-feet of net absorption combined with a modest vacancy rate increase of 1.6% does not offer much hope for a major turnaround anytime soon. Additionally, the submarket has 86,400 square-feet of new office space under construction and 225,596 square-feet of proposed new space that the market will struggle to absorb, further driving down the net absorption.

Based on the activity taking place in Central Pennsylvania’s office real estate submarkets, how do you think this will impact business growth and development throughout these counties? How will this have a ripple effect into other areas of our economy?

Share your ideas by leaving a comment below!

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Median Household Incomes Mostly on the Rise for Central Pennsylvania

Posted on September 26, 2016 by Mike Kushner in Blog, Local Market, Trends No Comments

According to the data from the U.S. Census American Community Survey, released on September 15, Central Pennsylvania is following in suit with greater Philadelphia – and the rest of the nation – which is experiencing an increase in median household incomes. Taking into consideration Cumberland, Dauphin, Lancaster, Lebanon and York Counties, here are some of the most notable trends published in the report.

The highest median household income is Cumberland County at $63,890; in contrast, the lowest median household income is Lebanon County at $52,571. Lancaster County increased the most in the last year, by $1,859. Decreasing the most was Lebanon County, by $1,497.

Lancaster County has the lowest median income for Black or African American households at $32,445. While the lowest median income for Hispanic or Latino households is Lebanon County at $25,422. The greatest difference in median income between male versus female householder (with no spouse present) is $18,429 in Cumberland County.

For all counties, the highest median income was for householders between the ages of 45 to 64 years old and for households of married couple families. Also, female householders (with no spouse present) always earned less than male householders (with no spouse present).

If you’re curious what other trends emerged and what these trends tell us about the health of our local economy, let’s take a closer look at each county’s specific numbers.

Cumberland County, Pennsylvania

The 2016 median household income in Cumberland County is $63,890. This number is up from $62,759 in 2014 and is the highest median income we have seen this decade. For householders between the ages of 45 to 64 years old, the median income rises to $78,960. Households of married couple families have the highest median income at $87,714. A male householder with no wife present has a median income of $54,837. In contrast, a female householder with no husband present has a median income of just $36,408. Black or African American households had a median income of $32,661 and Hispanic or Latino households had a median income of $35,097.

Dauphin County, Pennsylvania

The 2016 median household income in Dauphin County is $54,232. Up from $52,975 in 2014, this number has been on an almost steady rise for the last decade. For householders between the ages of 45 to 64 years old, the median income rises to $63,373. Households of married couple families have the highest median income at $79,328. A male householder with no wife present has a median income of $46,430. In contrast, a female householder with no husband present has a median income of just $35,520. Black or African American households had a median income of $37,823 and Hispanic or Latino households had a median income of $33,947.

Lancaster County Pennsylvania

The 2016 median household income in Lancaster County is $59,262. This county experienced the greatest increase in the Central PA region over the last year. Rising from $57,403 by $1,859, this is also the highest number we have seen this decade, which is especially notable since median income took a dip in 2010, falling to $51,740.

For householders between the ages of 45 to 64 years old, the median income rises to $73,155. Households of married couple families have the highest median income at $78,218. A male householder with no wife present has a median income of $47,391. In contrast, a female householder with no husband present has a median income of just $36,925. Black or African American households had a median income of $32,445 and Hispanic or Latino households had a median income of $38,125.

Lebanon County Pennsylvania

The 2016 median household income in Lebanon County is $52,571. Down from 2014’s median income of $54,068, Lebanon County experienced several ups and downs throughout the past decade. For householders between the ages of 45 to 64 years old, the median income rises to $60,578. Households of married couple families have the highest median income at $73,219. A male householder with no wife present has a median income of $44,239. In contrast, a female householder with no husband present has a median income of just $34,383. Black or African American households had a median income of $34,662 and Hispanic or Latino households had a median income of $25,422.

York County, Pennsylvania

The 2016 median household income in York County is $58,409. This was another Central PA county that decreased since 2014, though ever so slightly by just $178 ($58,587 in 2014). With several ups and downs in median income, the number has still mostly been on the rise over the past decade.

For householders between the ages of 45 to 64 years old, the median income rises to $72,004. Households of married couple families have the highest median income at $81,711. A male householder with no wife present has a median income of $46,681. In contrast, a female householder with no husband present has a median income of just $33,911. Black or African American households had a median income of $44,525 and Hispanic or Latino households had a median income of $33,182

Our Analysis

Increasing median household income is just one trend that affects commercial real estate. The local employment gains continue to be strong, with seasonally adjusted unemployment rate holding below 5.0 percent. This adds to the demand for housing in a variety of forms: for office space, for the retail sector and for industrial/distribution facilities.

Underlying inflation is extremely tame, providing no impetus for significantly higher rates. Lending rates and fixed income rates of return will remain low by historical standards. For most metro areas (including Central Pennsylvania) and property types, lower oil prices have been a net positive. Spending less on gasoline encourages consumers to spend more on other items, which helps retail and hotel market fundamentals.

Lower prices directly translate into an increase in household disposable income. Overall, the commercial property market in 2017 will continue to be characterized by strong fundamentals, increased investor flows and high transaction volume.

What median income was most surprising to you? What do you think some these trends say about the health of our local economy? Share your thoughts by commenting below!

[Online Resources] Real Estate, analysis, average, budget, central pa, central pennsylvania, commercial, data, debt, facts, income, market, median, Mike Kushner, money, news, Omni Realty Group, pennsylvania, people, poverty, prediction, report, statistics, stats, trends

Central Pennsylvania’s Largest Retail, Industrial and Office Lease Deals in 2015

Posted on March 23, 2016 by Mike Kushner in Blog, CPBJ Articles, Local Market, Trends No Comments

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


The New Year is well under way, but before we get too far into 2016, it’s worth taking a look back at the largest commercial lease deals that occurred in the Central Pennsylvania market in 2015. These deals represent significant trends and help predict where the market may be headed in future quarters.

Each sector within the commercial real estate market – retail, office and industrial – experienced a unique trend worth noting. Without further ado, let’s take a closer look at the largest lease deals that occurred in Dauphin, Cumberland, York, Lancaster and Lebanon counties for the retail, office, and industrial markets in 2015.

Largest Retail Lease Deals

1. Community Aid leased the first floor of a Class B retail space located at 25-31 Rohrerstown Road, Lancaster from Urban Edge Properties. The 40,712 square-foot lease was signed in January 2015 and began in June 2015.

retail 1

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

2. Blue Mountain Thrift Store leased the first floor of a Class B retail space located at 2-22 North Londonderry Square, Palmyra from Lavipour & Company. The 38,669 square-foot lease was signed in May 2015 and began in August 2015.

retail 2

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

3. HomeGoods leased a Class B retail space located at 5084-5098 Jonestown Road, Harrisburg from Cedar Realty Trust, Inc. The 31,436 square-foot lease was signed in June 2015 and began in November 2015.

retail 3

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

4. Tractor Supply leased a Class B retail space located at 100 Noble Blvd, Carlisle from Broad Reach Retails Partners, LLC. This 30,173 square-foot lease was signed in September 2015 and began in February 2016.

retail 4

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

Trends Worth Noting

Two of the top four largest retail lease deals of 2015 were thrift stores and HomeGoods is also a discount retailer, making 75% of the top leases related to discount shopping. Additionally, fourth quarter 2015 finished strong with a net absorption of 227,275 square-feet. Finally, the vacancy rate dipped below 5% (4.9%) for the first time since before the “Great Recession.” Combined, these trends tell us that the local market is recovering and absorbing 2nd generation space specifically for thrift-type retailers that budget-conscious consumers tend to prefer.

Largest Office Lease Deals

1. Pennsylvania College of Health and Science leased a specialty office space located at 850 Greenfield Road in Lancaster. This 213,000 square-foot lease was signed on January 2015 and began on January 2016.

office 1

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

2. Deloitte leased a Class A office space located at 100 Sterling Parkway, Mechanicsburg from Hoffer Properties. This 172,792 square-foot lease was signed on November 2015.

office 2

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

3. United Concordia Companies, Inc leased a Class A office space located at 4401 Deer Path Road, Harrisburg from DeSanto Realty Group. This 102,000 square-foot lease is a renewal and began on June 2015.

office 3

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

4. P.E.M.A. leased a Class A office space located at 2605 Interstate Drive, Harrisburg from Corporate Office Properties Trust. This 86,660 square-foot renewal was signed on June 2015 and began on January 2016.

office 4

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

Trends Worth Noting

Two of the top four largest office lease deals in 2015 were renewals (United Concordia and P.E.M.A). Additionally, the fourth quarter was a lackluster, producing only 15,921 square feet of net absorption. Finally, the vacancy rate is rising slightly. Combined, these factors tell us that the office market is not performing as strong as the other commercial sectors. More than half of the largest leases were from existing businesses, as opposed to new businesses moving into the area. A low net absorption and rising vacancy rate also tells us the market still remains slightly volatile.

Largest Industrial Lease Deals

1. Chew.com LLC leased a Class B industrial space located at 40 E. Main Street, New Kingston from SK Realty Management. This 600,000 square-foot lease is a renewal and began on January 2015.

Industrial 1

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

2. A business (not named) leased a Class A industrial space located at 950 Centerville Road, Newville from KTR Capital Partners LP. This 570,000 square-foot new lease was signed in May 2015 and began on November 2015.

Industrial 2

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

3. Unisource Worldwide Inc. leased a Class B industrial space located at 4501 Westport Drive, Mechanicsburg from I & G Direct Real Estate 33K LP. This 502,446 square-foot lease is a renewal and began on February 2015.

Industrial 3

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

4. GENCO leased a Class C industrial space located at 221 S. 10th Street, Lemoyne from GIC Real Estate International Pte Ltd. This 489,213 square-foot lease is a renewal and began on June 2015.

Industrial 4

Data provided by CoStar. Copyrighted report licensed to Omni Realty Group.

Trends Worth Noting

Central Pennsylvania maintains its role as a dominant player among logistic markets. Industrial buildings will continue to set new records for scope, as distribution centers greater than one million square-feet become more prevalent. Last year, the local industrial market experienced a total of 7.8M square-feet of net absorption and 3.5M square-feet of space was under construction at close of 2015. We can expect continued growth throughout 2016, which is great news for businesses and professionals impacted by local industrial real estate.

What largest lease deal in Central Pennsylvania in 2015 do you find to be the most impressive or telling of future market trends? Share your insights by commenting below!

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

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New Construction in Central PA Predicted to Increase Office Space Vacancy

Posted on October 21, 2015 by Mike Kushner in Blog, Construction, Local Market, Trends No Comments

In third quarter 2015, the Central Pennsylvania submarket for commercial office space showed some positive trends for growth and demand. We have four projects under construction that will deliver more than 400,000 square-feet to the market within the coming year, with a majority of this space already preleased.

However, this promising news for the market is tempered by the fact that many tenants will vacate other office space within the Central Pennsylvania market to occupy these newly constructed office buildings. How will this impact net absorption and vacancy rates? Let’s first take a look at the data for third quarter 2015 and apply this toward what we can expect to see in the future.

Select Top Under Construction Properties

Currently four different commercial office properties are under construction in the Central Pennsylvania submarket. The Cornwall Health Center, located in Harrisburg Area East, broke ground in fourth quarter 2014 and is scheduled to be delivered in fourth quarter 2015. It has an RBA of 54,234 square-feet and is 100% preleased. The TecPort Business Campus – Building A broke ground this quarter and is scheduled to be delivered in third quarter 2016. It has an RBA of 7,590 square-feet. It is not preleased and its quoted rental rate is listed as negotiable.

Additionally, a Class A office space project is under construction at the intersection of Carlisle Pike and Hogestown Road. The two buildings that make up this project have a combined 259,000 square-feet of space are expected to be completed in spring 2016. Finally, there is Class B office space at 1250 Camp Hill Bypass that is under construction. Its 82,000 square-feet of space is 100% preleased.

Select Deliveries this Quarter:

Although four of the top 15 Select Year-to-Date Deliveries in 2015 were from the Central Pennsylvania submarket, just one was newly delivered in third quarter 2015. The Vista Plaza consists of three floors and 32,500 square-feet of office space. It is 45% occupied and is currently priced at $21.23 per square-foot. ECI Constuction, LLC completed the new addition to Vista Plaza on Manor Drive in Mechanicsburg, PA. The addition nearly doubled the original square footage of the building by adding a new wing to match the existing wing. Some of the current tenants include Duck Donuts and MS Consulting, Inc.

Rental Rates:

This quarter showed an increase in quoted rental rates. The current price of $17.14 per square-foot is a $0.07 increase from last quarter and the highest rate we have seen since prior to 2011.

Vacancy:

In third quarter 2015, the vacancy rate in the Central Pennsylvania submarket for office space decreased from 7.8% to 7.5%. The vacant square-footage also decreased from 4,120,331 square-feet to 3,962,599 square-feet.

vacant space and quoted rental rate

Absorption and Demand:

With one more building being delivered to the market this quarter, the total RBA increased to 52,581,663 square-feet. Net absorption also experienced a substantial increase, more than tripling last quarter’s 50,466 square-feet to the 190,232 square-feet that closed out third quarter 2015. But take note, both net absorption and vacancy rates will soon be greatly impacted by the 400,000+ square-feet that will be delivered to the market in the next year!

deliveries, absorption and vacancy

Our Summary/Analysis:

Central Pennsylvania has four under-construction office space projects that have a combined 402,824 square-feet of space that is soon to be delivered to the market. As new inventory is added, with many tenants vacating existing space in Central Pennsylvania to do so, we can expect this to impact net absorption and vacancy rates significantly.

It will be important to closely watch this data over the coming quarters as some of these large projects reach completion. As a result, we expect net absorption to drop back into the negatives. Also, we expect vacancy rates to rise as high as 8.1% (assuming no outside business move into the market or existing businesses expand which has not been the trend in 2015, but was in 2014). Quoted rental rates may also dip because of this increase in vacancy.

While new construction certainly has its benefits, adding this much square-footage in such a short amount of time to the market can have some not so desirable effects from the standpoint of landlords and sellers. On the flip side, businesses looking to move or expand within Central Pennsylvania should be encouraged by the larger and more competitive selection of space available.

How do you anticipate new office space construction impacting the Central Pennsylvania market into the future? Share your personal insights – or ask a question by commenting below!

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