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Posts tagged "writing"

Home» Posts tagged "writing"

6 Things in 2018 that Should Have Commercial Real Estate Agents Feeling Grateful

Posted on November 13, 2018 by Mike Kushner in Blog, Commercial Real Estate, CPBJ Articles, Local Market, Trends No Comments

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


It’s about that time when people start to reflect upon the last year, making note of progress that has been made, and milestones that have been achieved. In light of the Thanksgiving holiday, there are certain things that should have commercial real estate agents, in particular, feeling grateful for what 2018 has brought with it.

Here’s a look at six things that should have CRE professionals giving extra thanks this year – and looking to 2019 with high expectations.

  1. Interest rates are still historically low.

Yes, interest rates are indeed rising and people are panicking over them reaching 6%, but keep in mind that we are still way below the average rate of the last 47 years at 8.35%. Furthermore, recent gauges of U.S. inflation signify little need for the Fed to change its slow-but-steady stance on interest rate hikes at this juncture, so we don’t expect this to jump up several points overnight. Plus, there are a lot of other factors working in the economy’s favor like…

  1. Unemployment hit a 49-year low.

It’s the headline you’re seeing smattered across every major news publication – the U.S. unemployment rate reached 3.7 percent in September — the lowest it has been since December 1969. What’s more, the job market is so tight that the amount of available jobs far exceeds the number of people seeking employment! Employers reported more than 7 million unfilled jobs in August, the highest level since record-keeping began in 2000.

  1. Demand for industrial space remains strong.

In Central PA, 2018 brought with it an increasing demand for industrial real estate. The third-quarter saw rent grow hit 6.9%. When compared to the historical average of just 1.9%, it’s easy to see how this boom in demand for industrial space is an exciting new trend for our local economy, particularly because we are poised to welcome more and more warehousing and distribution companies to the area.

  1. Sales of multifamily real estate hits record high.

In the third-quarter, multifamily real estate sales set a new record with the all-time high of $160.6 million. This same sector set another record this year in the second-quarter with an all-time low vacancy rate of 4.3%. With just two numbers, 2018 paints the picture of Central PA’s thriving commercial real estate market, particularly in the multifamily sector.

  1. The Fed raised short-term interest rates for a third time this year.

At its September policy-setting meeting, the Federal Reserve raised short-term interest rates for a third time this year. While to some a rate increase may not be something that has you feeling grateful, this is yet one more indication of a healthy, growing economy that can sustain such an increase. Furthermore, forecasters contend that unless inflation picks up or the economy starts slowing, the federal funds rate, which is currently between 2 percent and 2.25 percent, should continue to head higher.

  1. New industries are expanding their commercial real estate.

The sixth and final thing that should have commercial real estate agents feeling grateful this year is healthcare mergers. Why? Because this is shaking up the way healthcare systems are approaching real estate. Across the region, the Commonwealth and nationwide we are seeing mergers taking place between healthcare systems small and large. All of this “teaming up” is causing a change in the way these organizations are using commercial real estate. In some instances, such mergers call for consolidating medical office space to reduce redundancy. In other instances, more space is needed to break into new markets or regions. This burst of acquisitions and activity spurs growth and fuels CRE sales.

Gratitude…and Caution

It’s important to note, this is the highlight reel from 2018. The CRE market has certainly experienced both its ups and downs in the various sectors of retail, office and industrial real estate. What’s most important is to take all good news, and bad news, with a grain of salt and know that what goes up, will eventually come down – whether that’s next quarter, next year or next decade.

For now, we can slide into the holiday season feeling grateful for these “gifts” the market has given us this year and enter 2019 cautiously optimistic.

[Online Resources] Real Estate, agent, article, blog, broker, camp hill, central, central pa, central pennsylvania, commercial, Commercial Real Estate, CRE, east, gettysburg, harrisburg, hershey, investor, lancaster, market report, Mike Kushner, Omni Realty, Omni Realty Group, pennsylvania, tenant representative, trends, west, writing, york

How Tenant-Only Broker Representation Will Shape the Future of Real Estate

Posted on December 8, 2016 by Mike Kushner in Blog, Tenant Representative/Buyer Agent No Comments

Note: This article was originally published by www.DukeLong.com. Click here to read the original version.


Woman drawing business property chartHow Tenant-Only Broker Representation Will Shape the Future of Real Estate. 

Tenant-only broker representation is quickly growing in popularity and moving into the mainstream of real estate. Now more than ever, people looking for space realize they need a broker to solely represent their interests. It doesn’t take much more proof than to examine the success of the two premier exclusive tenant rep firms that are now part of multi-billion dollar companies. The Staubach Company, founded by Roger Staubach who pioneered the specialty of tenant representation,was acquired by Jones Lang LaSalle (JLL) and did $6 billion in revenue in 2015.

Studley, another firm offering exclusive tenant representation, was acquired by Savills, a global real estate powerhouse that did £1,283.5 million in revenue in 2015. If this trend continues, and I expect it will, other brokerage firms will need to adjust their practices to provide what clients want – fair and exclusive representation. Here is how I predict tenant representation to shape the future of real estate.

Technology will change the role of a tenant representative, but not replace it.

With technology making it easier than ever for potential tenants and buyers to find available properties, the future role of a tenant representative will be less about helping someone find space. Rather, tenant representatives will be sought out to provide advice, negotiate and exclusively represent the interests of the tenant/buyer.

Successful tenant representatives will use technology to streamline and automate the ways in which they research properties. This will allow them more time to reinvest in providing clients with their expertise and non-conflicting representation.

Large brokerage firms will need to “pick a side.”

In November 2016, the California Supreme Court upheld a lower court ruling that a listing broker had a fiduciary responsibility to both the buyer and the seller in a “dual agency” transaction. This case dealt with the 2007 sale of a Los Angeles home that was marketed as 15,000 square feet, but in reality was 11,000 square feet. The buyer reasonably felt like the brokerage company had pulled a fast one on him, especially since the house was both listed and sold by Coldwell Banker.

This court decision has potentially far-reaching impact on how commercial and residential real estate brokerages do business. While some may be able to continue doing business as usual and make their disclosures a little more apparent, the large brokerage firms may find it more difficult to do that and still be able to adequately represent both sides of a transaction. Essentially, large brokerage firms will need to pick a side. Will they represent the buyers or the sellers?

I predict we will see more real estate brokers choose to exclusively represent one side or the other so that they don’t risk the appearance of (or real) conflict of interest that just might result in a costly court battle.

Clients will get smart about seeking out exclusive representation.

Potential buyers and tenants are getting smarter about bringing their own representation to the table. Because of recent news stories and court cases, like the one mentioned above, light is finally being shed on the questionable practices of brokerage firms that represent both sides of a real estate deal. In nearly any other industry, this conflict of interest would never fly. Finally, real estate is catching up and buyers and tenants are seeking out exclusive representation to ensure a fair deal.

For many reasons, the growth in tenant-only broker representation is a good thing. It means tenants and buyers are getting equal representation in real estate transactions. It means companies are recognizing the conflict of interest in representing both sides and making changes to offer better transparency and disclosure clients. Finally, the growth in tenant-only broker representation means real estate professionals can and should specialize. People don’t want a Jack of All Trades, they want an expert who exclusively represents one side of a deal.


Note: This article was originally published by www.DukeLong.com. Click here to read the original version.

[Online Resources] Real Estate, blog, broker, buyers, central pennsylvania, changes, commercial, conflict of interest, duke long, exclusive, firm, future, impact, industrial, landlords, legal, news, office, Omni Realty Group, prediction, representation, residential, retail, space, tenant-only, tenants, trends, writing

Top 10 Most Shared Commercial Real Estate Articles of 2015

Posted on May 1, 2016 by Mike Kushner in Blog, Commercial Real Estate No Comments

Top 10 Most Shared Commercial Real Estate Articles of 2015

Commercial real estate is a hot topic, with authors from all across the globe sharing their expertise and insights in the form of online articles and blogs. Among the white noise of content being shared, there are a few articles that have risen to the top and earned their place on the list of “Top 10 Most Shared Commercial Real Estate Articles of 2015.

Among the thousands of most shared commercial real estate articles published in 2015 (according to www.buzzsumo.com), these are the topics that took social media by storm!

1. 5 Words Developers Dread (National Real Estate Investor)

This article dives into why we should expect real estate development to become less profitable and real estate development loans to become more expensive. One of the main catalysts? Regulated institutions are now required to set aside increased capital for High Volatility Commercial Real Estate (HVCRE) loans and as a result of these new rules, lenders are reporting increased related costs in the range of 40 to 150 basis points, depending on their specific situation. Read the original article here.

2. Foreign Money is Pouring into US Real Estate, and It’s Not Just Houses (Bloomberg)

Commercial real estate transactions jumped 45 percent by dollar volume in the first quarter of 2015, an increase driven by sales of multiple buildings or entire companies! This article goes on to explain why Blockbuster real estate deals are back and breaking records as cash from around the globe pours into U.S. office buildings, apartment complexes and other investment properties. Read the original article here.

3. The Mother of All Mega Projects (Crain’s)

The story of Hudson Yards epitomizes the trials, tribulations and triumphs of development in New York City, where grandiose ideas are often blown off course by the shifting winds of politics or economics, but sometimes come together in spectacular fashion. Read the original article here.

4. Four Trends that are Reshaping the Commercial Real Estate Industry (Forbes)

While much of the world has embraced technology innovations like the cloud, mobility and big data, commercial real estate (CRE) is still managed out of Excel spreadsheets and 20-year-old technology platforms. This article examines how the commercial real estate industry will be reshaped and redefined by four key trends. Read the original article here.

5. A Marketing Guide for Filling Vacant Income Properties (Entrepreneur) 

Vacancies mean that you’re on your own to pay the mortgage, utilities and other expenses until you can find a new tenant. This article shares some sound advice on filling your vacant rental properties as soon as possible through strategic marketing! Read the original article here.

6. 44 Commercial Real Estate Experts You Need in Your Life

From data transparency and client relationships to new sources of commercial funding and content delivery, this article highlights a few of the most influential and forward thinking commercial real estate experts that are blazing their own trail. Read the original article here.

7. 5 Commercial Real Estate Marketing Trends You Can Bank On (National Real Estate Investor)

This article cuts right to the chase and outlines the five biggest commercial real estate marketing trends we can look forward to seeing in 2016 and beyond! Read the original article here.

8. 5 Lessons From Commercial-Real-Estate Financing for Entrepreneurs Seeking Funding (Entrepreneur) Raising capital in the commercial real estate (CRE) world is a different game than early-stage fundraising for startup businesses. However, there are some valuable takeaways that startup businesses can learn from how CRE projects raise their funding. Read the original article here.

9. Soaring Commercial Real Estate Market is Now Bigger than it was in 2006 (Yahoo! Finance)

This article examines how a thriving commercial real estate market may be decelerating as we move into 2016 and beyond. Learn what major markets made the greatest strides and how they will be impacted in the years to come. Read the original article here.

10. A Millennial’s Perspective on Commercial Real Estate (National Real Estate Investor)

The not-so-new story is that Millennials are the next home buyers and we’ve all got to keep up with the technology in order to close those imminent sales. But how is Gen Y going to use technology to affect the industry’s brokerage side? Read the original article here.

Among these top 10 most shared commercial real estate articles, which one did you find to be most valuable? Share your thoughts by commenting below!

[Online Resources] Real Estate, 2015, 2016, advice, blog, central pa, Commercial Real Estate, expert, Facebook, harrisburg, industrial, information, insights, LinkedIn, list, Mike Kushner, news, office, Omni Realty Group, pennsylvania, popular, professional, retail, Social Media, top 10, twitter, viral, writing

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.

[Online Resources] Real Estate, analysis, article, blog, camp hill, central pa, central penn business journal, commercial, cpbj, cumberland, data, dauphin, deals, harrisburg, hershey, industrial, lancaster, local, market, mechanicsburg, Mike Kushner, office, Omni Realty, pennsylvania, predictions, retail, stats, trends, writing, york

How Federal Interest Rate Hikes Will Impact the Commercial Real Estate Market

Posted on February 3, 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.

How Federal Interest Rate Hikes Will Impact the Commercial Real Estate MarketBy now you have likely heard about the Federal Open Market Committee (FOMC) voting in December to raise the federal funds rate for the first time in almost 10 years. And if you haven’t, well, it’s time to take a crash course in what’s going on, and specifically how it will impact our local economy!

Mostly symbolic, this initial rate increase was just the first step in what will likely be a drawn-out process of monetary policy normalization. An important conclusion we can draw, is that it reflects the FOMC’s belief that the labor market is close enough to full employment.

While a 25-basis-point increase alone is not very significant, what matters most is where things head next. We can reason that the monetary policy, via the federal funds rate, will remain favorable in the near future. Also, current market conditions suggest inflation will remain below 2% for the next 10 years.

With a basic background as to what’s going on, let’s dive a little deeper into what this activity means for our economy, specifically for commercial real estate.

The Impact on Commercial Real Estate

It’s not the federal funds target rate or even the 10-year rate that impact commercial real estate the most, but rather economic growth and job creation. These factors have greater influence over lower vacancy rates and higher rental rates that really impact a building’s pro forma. Simply put, economic growth has a far greater influence on property values.

That’s not to say the commercial real estate sector hasn’t benefitted from the Fed’s massive injection of liquidity into the economy over the past seven years. Overall, prices have nearly recovered, and for some real estate segments, local markets prices actually exceed pre-recession peaks.

With the FOMC’s goal of normalizing interest rates, it’s reasonable to be concerned that rising rates will reduce investor demand for commercial real estate. However, I expect that commercial real estate prices and returns will continue to be attractive even in a rising interest rate environment.

More Than One Factor Impacting Interest Rates

There is more than one factor driving long-term interest rates. Take for example inflation (a major driver of longer-term yields) which is expected to remain low over the next decade. Additionally, our nation’s overall improving economic conditions, including a strong labor market, have helped to drive the Fed’s decisions. Nonfarm payrolls have increased by just more than 5.5 million jobs since the end of 2013. It is likely that 2014 and 2015 will be the strongest back-to-back job growth years since 1998 and 1999. Job growth is another major factor that continues to drive the improving leasing market fundamentals across the nation.

On a National Level

If we look to history for examples as to what to expect next, it’s that a rising federal funds rate has most often coincided with tightening commercial real estate markets and rising prices. Two similar instances have both been accompanied by rising office occupancy rates.

From 1993 to 2000 the federal funds rate rose from 3.0% to 6.5%. Office occupancy during that period increased from 79.6% to 90.9%. Similarly, from 2003 to 2007 the federal funds rate rose from 1.0% to 4.25% and office occupancy increased from 80.5% to 87.1%.

What we are currently seeing on a national level follows suit with these predictions. Commercial space is being absorbed, vacancy rates are falling and rental rates are rising. In third quarter 2015, the national office vacancy rate fell to 14.2%, its lowest level in seven years.

What’s Next?

According to F.N.B. Wealth Management, traders now believe the Fed is likely to hike rates just once in 2016, most likely not before September. This contrasts with earlier predictions that the Fed could move two or three times this year. As it pertains to commercial real estate, we should take this news in stride. Thus far, the federal interest rate hike has signaled a recovering economy and has not deterred investors and developers from diving into the market. An increase in absorption and rental rates and a decrease in vacancy rates are welcome side effects that are far more positive than what many other industries may be experiencing as a result of these economic changes.

For Central Pennsylvania’s commercial real estate investors, sellers and brokers, we should use what history has already taught us about the typical “tightening cycle” to our advantage to determine how we monitor and approach the market over the coming years.

Do you have an opinion on how federal interest rate hikes will impact the commercial real estate market at a local or national level? Join in the conversation 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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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

Back in Black: Central PA Retail Market Increases Net Absorption, Rental Rates in Q2

Posted on September 23, 2015 by Mike Kushner in Blog, Local Market, Trends No Comments

It is a good time to be building or renting retail space in Central Pennsylvania!

Second quarter 2015 closed out with the highest quoted rental rate we have seen since at least 2011. Retail businesses are willing to pay the $11.75 per square foot – and more – to move into highly sought after space in Harrisburg, Lancaster, York and the surrounding areas.

Combine this with the fact that the market absorbed a combined 144,318 square feet of space, bringing us back into the black with net absorption, and you can see why we’re hopeful that this is the start of a healthy and prosperous trend in Central PA real estate.

Let’s take a deeper dive into what the numbers are telling us about second quarter 2015 and what we can expect for the future of retail real estate in the Central Pennsylvania submarket.

Select Top Retail Leases

Properties all across the Philadelphia retail market continue to change hands as businesses exit and enter leases. Looking specifically at the Central Pennsylvania submarket, there are several retail leases that occurred in second quarter 2015 that are worth noting.

Blue Mountain Thrift Store now occupies the space at 2 N. Londonderry Square in Harrisburg Area East. In Harrisburg Area West, Peebles moved into the Shippensburg Shopping Center. And finally York County welcomed CSL Plasma into its Eastern Boulevard Plaza.

Select Year-to-Date Deliveries:

Three of the top 10 year-to-date deliveries in the Philadelphia retail market occurred in the Central Pennsylvania submarket. The Messina Highlands project in Shrewsbury was completed this quarter with an RBA of 30,000 square feet and a quoted rental rate of $26.06. A ton of popular shops including AT&T and Panera Bread will occupy this space. Currently, 32% of the space is still available for rent.

Another retail property located at 2108 S. Queen Street, York was delivered this quarter with an RBA of 16,000 square feet and is 100% occupied. Finally, the construction project at 750 Lititz Pike, Lititz was also completed in Q2. This property has an RBA of 10,820 square feet and its quoted rental rate is $17.

Select Top Sales:

Among the top select sales in Q2, the Central Pennsylvania submarket had two of the top nine on the list. The Shoppes at Susquehanna Marketplace in Harrisburg came in at number three. Clarion Partners purchased this from Stanberry Development, LLC for $44,000,000. In Lancaster, the Manor Shopping Center was sold by the Real Estate Equity Company, LLC to Wharton Realty Group for $34,990,000.

Vacancy:

This quarter, the vacancy rate dipped ever so slightly from 5.6% to 5.5%. These numbers have remained fairly stable ever since first quarter 2014 which is the last time we saw it at 6.0% or higher. The vacant square feet also reflected this small change in vacancy rate, decreasing by 93,642 square feet.

Rental Rates:

Looking at the quoted rental rates, Q2 experienced a $0.20 raise from $11.55 to $11.75. This is the highest rental rate we have seen in the Central Pennsylvania retail submarket since third quarter 2011.
vacant space and quoted rental rate
Absorption and Demand:

Last quarter, the net absorption dropped into the red at negative 160,861 square feet. In second quarter 2015, we are back in the black with 144,318 square feet. This significant change was certainly a reflection of the 3 new buildings that were delivered this quarter.

Deliveries Absorption and Vacancy

Our Summary/Analysis:

The Central Pennsylvania submarket experienced some exciting changes in second quarter 2015 that indicate a healthy and growing retail industry. Returning to a positive net absorption and increasing quoted rental rates to the highest they have been in more than four years demonstrates the demand for retail space in the local area. Additionally, three new buildings delivered to the market, with two more under-construction, are signs that Central Pennsylvania retail businesses are demanding more space to grow!

The retail industry is a strong indicator of economic health. At the local level, there is a lot we can take from this quarter’s numbers and apply them toward predicting the growth and changes in our overall economy. Retail businesses are investing in this area, moving and expanding into new spaces that are driving up net absorption and the quoted rental rate. We should enjoy this growth and excitement, as it is sure to catch the attention of other retail businesses who may also consider making Central Pennsylvania “home” for some of their stores.

How will the growth of the local retail real estate market impact you or your business? Share your personal insights – or ask a question by commenting below!

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The Obamacare Effect on Local Real Estate

Posted on September 6, 2015 by Mike Kushner in Blog, Commercial Real Estate, CPBJ Articles, Healthcare No Comments

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

The Obamacare Effect on Local Real EstateNo matter your age, income or current bill of health, in some way or another, we will all be impacted by the major changes taking place in the health care industry nationwide.

The Affordable Care Act, or Obamacare, represents the most significant overhaul of the U.S. health care system since the passage of Medicare and Medicaid in 1965.

While it’s easy to predict the industries where these waves of change will come crashing down the hardest, less obvious industries, like commercial real estate, have also felt the impact of these ripples — and there are more to come.

For real estate investors, the big question is what impact this regulatory overhaul of health care mandates, subsidies and insurance exchanges will ultimately have on the commercial market. The best clues can be found in the emerging trends taking place in local health care real estate across the region.

Simply put, there are two major trends we should be watching closely right now.

Monetization

Noncore real estate, such as medical office buildings and outpatient facilities, have become a common asset that health care systems are monetizing first to help stay financially afloat. Selling off real estate and consolidating square footage is a necessary tool for health care systems right now. Here’s why.

1. Provide an infusion of capital for core investments. Selling off noncore real estate assets can provide health care systems with a quick and significant infusion of cash, allowing them to reinvest this capital back into essential items like construction, renovation and upgraded medical equipment.

2. Focus on strategic growth. Rather than holding on to an underperforming or noncore real estate asset, health care systems are selling them off and using this money to prioritize physician recruitment and retention, clinical expansion and growing their market share.

3. Strengthen balance sheet. The capital gained from monetization will improve liquidity — and a health system’s balance sheet as a result — allowing it to earn a better credit rating.

4. Reduce legal and regulatory exposure. More properties mean more opportunities for a costly violation. Health care systems benefit from reduced legal and regulatory exposure by monetizing their noncore real estate assets.

Mergers and Acquisitions

Some of Central Pennsylvania’s largest health care systems have engaged in discussions regarding merging or acquiring another facility. Specifically, four different mergers have already taken place or are currently in the works, each for unique reasons, but with the same goal in mind — to rein in costs and expand access.

1. PinnacleHealth (JC Blair Health System) and Penn State Hershey (St Joseph Regional Health Network). The most compelling reason for this merger is the projected economic savings. The recurring long-term savings is estimated to be at least $86 million annually through avoided capital and operating costs.

2. Holy Spirit and Geisinger (AtlantiCare Regional Medical Center and health care system, Shamokin Area Community Hospital, Bloomsburg Health System and Lewistown Hospital). In this “affiliation,” a small Catholic health system formally joins with a large, technologically-advanced system in an effort to continue to make health care accessible and affordable to the most people.

3. Lancaster General and University of Pennsylvania Health System. One of the largest benefits of this merger, aside from their entry into a new market, is the ability for patients to receive treatment at one facility and follow up at another. LG Health President and CEO Tom Beeman identified health care reform as the driving force behind this merger.

4. WellSpan (Good Samaritan, Ephrata Community Hospital and Philhaven).Wellspan/Good Samaritan is primarily focused on physical health while Philhaven specializes in behavioral conditions and mental health. Combined, these organizations will be better equipped to serve a broad range of patients at a fraction of the cost of trying to add these specialties independently.

The future

The velocity at which the health care industry is changing cannot be overestimated. While we are already experiencing disruption and change resulting from health care reform, technology, big data, regulatory and other impactful forces in the health care industry, I believe it is simply too soon to accurately predict the full impact these changes will have on the commercial real estate industry.

Despite the many uncertainties surrounding the hot-button issue of health care reform, there is one certain conclusion I will draw. Health care systems are prepared (and have already begun) to proactively make changes to their real estate in an effort to stay afloat.

They will do whatever it takes, even if this means selling off large properties or merging with/acquiring another health care system. We should be prepared to continue to see health care systems tighten up and team up to make their services efficient and competitive.

While there are many more changes yet to come, ones that are sure to be both positive and negative, the real estate industry should remain ready to quickly react to the changing needs of health care systems during this time.

Read more by Mike Kushner on CPBJ.com…

Regional rental demand: What it means for economic growth

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5 Real Estate Myths that Could Cost You BIG!

Posted on September 3, 2015 by Mike Kushner in Blog, Commercial Real Estate, Tenant Representative/Buyer Agent No Comments

5 Real Estate Myths that Could Cost You BIG!How much do you think you know about real estate? What are often considered to be “basic” concepts can be laced with false information and dangerous myths many people believe to be true.

Falling for such “real estate myths” can result in paying more than you should for a property or signing into unfavorable terms that will continue to hurt you in the long run. How can you prevent falling into these pitfalls? Arm yourself with knowledge and surround yourself with people you can trust to have your best interests in mind!

Let’s get started in the right direction by examining the truth behind some of the most common real estate myths and how you can protect yourself.

MYTH 1: One agent can fairly represent both parties in the same transaction.

Facts: The operative word here is “fairly.” In a true arm’s-length transaction, the parties deal from equal bargaining positions. In addition, neither party is under the other’s control or dominant influence, nor do they rely upon the other’s fairness or integrity. At least that’s how the legal profession views it, which is why it is unethical for both parties to have the same representative in any legal matter.

The real estate industry sees it differently (to the detriment of millions of tenants and buyers), and permits a single agent, or multiple agents from the same firm, to represent both the tenant/buyer and the landlord/seller in the same transaction. This is called a “dual agency” (think “double agent” for the true meaning). Such an arrangement favors the property owner, who receives the highest amount possible, and the real estate agent, who retains the entire commission.

Strategies: Dual agency is the real estate industry’s dirty little secret and should never be tolerated. In practice, many tenants and buyers divulge confidential information to an agent they are led to believe is representing their interests alone, only to discover the agent has an undisclosed conflict of interest when a lease or purchase contract is presented. for them to sign. At that point, it is generally too late to renegotiate the terms of the transaction. Look for a real estate broker who only represents clients like you – either a tenant/buyer or a landlord/seller. Not both.

MYTH 2: Real estate services are free.

Facts: Real estate transactions typically include commissions that are shared by the agents representing each party. Even though it is the property owner who writes the commission check, it’s the tenant or buyer that ultimately funds the commission – in the form of rent payments (for leases) or purchase proceeds (for sales).

Strategy: Make certain that you are receiving full value from your “side” of the commission by having an unbiased, experienced, tenant rep/buyer agent assist you with the research for suitable spaces and in the negotiation of acceptable terms and conditions. The landlord/seller will most certainly have someone working on their side; you should too!

MYTH 3: Large real estate companies, and/or those with many listings, are the best sources of information for tenants or buyers.

Facts: Full service real estate companies employ dozens (even hundreds) of agents, brokers, property managers and support personnel, and are best suited for property owners who require property management and brokerage services. Regardless of their size, companies that list properties have inherent and unavoidable conflicts of interest when representing tenants and buyers, and tend to suppress competitive negotiations by steering them to the properties they control.

Strategies: Because tenants and buyers seek objective and rigorous representation, they should avoid agents and brokers from companies that list properties.. A real estate broker who does not exclusively represent the buyer/tenant may not be presenting all of the options available to you. For example, you are looking for office space and your broker represents several landlords who have office space available. You are likely going to be pushed toward choosing from these properties first before they show you outside properties with which they have no association. While this makes perfect business sense for your broker, it doesn’t benefit you in the same way. You deserve a broker who will exclusively represent your interests as a buyer/tenant and do all the research necessary to find your ideal property – beyond their own internal client book.

MYTH 4: Leases are less complex than purchases.

Facts: Even the most basic commercial leases contain several dozen interrelated variables (tax and operating expense escalations, work letters, electrical charges, sublease and assignments rights, alterations, and options to expand or renew) that are open to negotiation, and that affect the overall cost of occupancy. As a result, leases are generally more complex transactions than purchases.

Strategy: Recognize that, in order to make a fully-informed leasing decision, many terms and conditions need to be identified, addressed, and negotiated. Once the economic terms have been negotiated to your satisfaction, retain a competent real estate attorney to review and comment on the legal sufficiency of the lease agreement.

MYTH 5: Real estate agents are experts in real estate.

Facts: Expertise in any field is the result of much training and accumulated knowledge. Yet it takes the equivalent of attending just two weeks of classroom instruction, and then passing a very basic examination, to obtain a real estate license. This limited education is hardly sufficient to qualify anyone to help business people make some of life’s most significant financial decisions.

Strategies: Tenants and buyers have a legal right to hold real estate agents and advisors who imply or claim to have expertise in an area of specialization accountable for their actions and recommendations. Select your advisor with the same care as you would an attorney, accountant, or a senior member of your decision-making team, and make certain they have significant and verifiable experience in solving your specific problems.

The Bottom Line: Be aware that commercial real estate is a highly-competitive and adversarial business. While negotiations need not be combative or confrontational, the process, nevertheless, pits parties with opposing interests against each other. In the final analysis, a real estate transaction is only as good as the thoroughness of the research, the quality of the information, and the experience of the negotiator…and that’s a fact.

What other real estate topics have you wondering whether they are fact or fiction? Share your questions by commenting below and Mike will personally answer you!

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Central PA’s Demand for Rental Units is Booming: What this Means for Economic Growth

Posted on July 30, 2015 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.

Earlier this summer the Tri-County Regional Planning Commission (representing Cumberland, Dauphin and Perry counties) met to discuss current and future socio-economic trends that will influence land-use decisions and related impacts.

The data and statistics shared provided insight into some powerful trends that are emerging in the local real estate market. Based upon the growing population of both Baby Boomers and Millennials that will continue to make up the majority of our population in the Harrisburg Metropolitan Statistical Area (MSA) well into the future, these generations are going to have a profound impact on our economy.

While you might think the demographics of these generations would both want a large home in the suburbs, you would be mistaken. Rather, for various reasons, both Baby Boomers and Millennials are anticipated to drive the demand for rental units. Let’s now take a closer look at what exactly is causing this trend and the implications it will have on local economic growth.

The Cause: What’s fueling this trend?

According to the information shared by the Tri-County Regional Planning Commission, this year, Millennials (age 15-34) will make up one-third of all adults in the United States and will finally outnumber Baby Boomers. While the ultimate goal for these Millennials, especially ones who have started a family, is to move into the suburbs, the majority of this generation doesn’t yet have the savings they need for a down payment on a home, thus the necessity of renting. Additionally, more than half of millennials are likely to move in the next five years, making renting housing even more of a convenient and desirable option.

Now let’s take a look at why Baby Boomers are also fueling the demand for rental units. Nationally, one in five people are expected to be over the age 65 by 2030. Older Empty Nesters (age 65-74) are the fastest growing segment of the population in Harrisburg MSA. While this reflects a growing aging population, Baby Boomers are not yet ready to slow down. They are mobile, social and want to remain as active and independent as they can. Rather than being strapped down by caring for a home that is too large for their empty nest, Baby Boomers are moving into luxury rental units that give them ultimate flexibility, freedom and a close-knit community.

The Effect: What does this means for economic growth?

Retiring Boomers will Hurt Consumer Spending and Economic Growth

Baby Boomers are currently our most affluent generation and will be responsible for the largest transfer of wealth over the next 30 years. With that said, Baby Boomers will actually hurt economic growth by not spending their money on things like housing, insurance, appliances and apparel. Rather, they prefer to spend their income on entertainment, travel and social experiences. To further illustrate this point, in Harrisburg MSA, the average household expenditures by 2015 show people spending as much on entertainment as they do housing.

Household Expenditures by Geography 2015

Such spending habits again strengthen the demand for rental units as they require less money and maintenance than owning a large, single-family home. As a result, we can expect rental prices to remain competitive, and while they may rise slightly in response to demand, they will remain reasonable  to both Baby Boomers and Millennials relative to income and in comparison to the cost of owning a home.

Apartment Asking Rent Harrisburg MSA 2015

As for rental vacancy rates, these are expected to remain low through 2019. This is great news for owners of rental properties and developers who are looking to expand into this area. It’s a safe bet that a growing number of renters will be in the market for housing that will allow them to live life well, while still conserving money for whatever their priorities may be.

How Central PA can best harness this economic growth

Central Pennsylvania would be smart to take note of this important trend. If you identify with either Baby Boomers or Millennials, know that renting may be a viable option for you at this point in your life. With new projects on the rise, you are likely to find some very nice accommodations at competitive prices that are far less than the cost of a mortgage. This will allow you to channel your wealth into saving for a future home of your dreams, or spending it on life experiences you’ve been waiting until retirement to enjoy.

For businesses, real estate brokers and developers, this is also a powerful trend that can impact your industry. Get to know the Baby Boomers and Millennials – their habits, preferences, indulgences and priorities. Appealing to these growing generations will ensure your business will also continue to grow well into the future.

Click here to read the original article published by the Central Penn Business Journal.

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