2012 Global Market report - NAI Global

Harrisburg/York/Lebanon, Pennsylvania
Lancaster, Pennsylvania
Contact
NAI CIR
+1 717 761 5070
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
1,136,796
1,211,743
612,747
$69,122
$56,829
39
With variable economic conditions nationally, the Central
Pennsylvania market, with strong ties to the manufacturing
and medical sectors, has shown no signs of significant
economic retrenchment. Rental rates have remained static
and vacancy rates have slightly decreased by 1% or 2%.
Large national companies including Hershey Foods, Rite-
Aid, Graham Packaging and Giant foods, combined with a
large government sector, help provide stability to our area.
Occupancy for the CBD and the suburban office continues
to hover at approximately 90%. The office market is
showing signs of movement with a significant purchase in
Carlisle of two medical office buildings totaling 38,810
SF and Trans Core leasing 46,000 SF of office space in
Harrisburg. The Central Pennsylvania office market rates
remain relatively low allowing tenants to find competitive
rates that fit their needs.
The Industrial market remains the largest segment of
economic development in Central Pennsylvania. With major
highways, Rt. 81, 83, and the Pennsylvania Turnpike (I-76),
the region offers a centralized hub for distribution. Volvo
Construction Equipment is in the process of a $100 million
project to move operations from North Carolina to Central
Pennsylvania. This follows a 2007 renovation of 200,000
SF of warehouse space. Additionally, Volvo added another
28,800 SF for office space. Also in the region, Menlo
Logistics, a leader in worldwide truck logistics, expanded
regionally and leased another 201,600 SF in Harrisburg.
New development has not dramatically rebounded within
the past year. However, the lack of new projects has
contributed to an overall lowering of vacancy rates across
all sectors. The second half of 2011 has evidenced
occasional signs of development with 7.67 acres of land
being developed for retail in Carlisle and 9.7 acres being
developed for office space in the suburban East Shore of
Harrisburg. Central Pennsylvania is currently poised in a
strong regional position as a leader in pushing through the
current economic rebound.
Contact
NAI Commercial
Partners
+1 717 283 0600
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
528,756
565,996
275,192
$70,730
$56,486
37
Lancaster’s CBD continues to see new investment on the
heels of the Convention Center opening including the
acquisition of the former Pennsylvania Academy of Music
by Millersville University as well as redevelopment of the
Historic East Side into a mix of retail, office and residential
uses. Lease rates/property values within the city have
stabilized as a result of lower vacancy rates and migration
of many businesses into the city attracted by an urban
environment’s amenities.
Lease rates for all classes of suburban offices have
remained fairly consistent over the previous 12 months with
some positive absorption in Class B and C spaces but overall
vacancy levels remain historically high. Any new projects
being developed are coming from the institutional sectors
and include a new county forensic center and the new Ann
B. Barshinger Cancer Center being developed at Lancaster
General Hospital’s Health Campus.
The industrial market has seen the most activity throughout
2011 with significant demand coming from established
business owners that have taken advantage of attractive
pricing and financing to acquire existing buildings that have
come on the market. Lease rates have remained fairly
constant throughout the industrial market with modest
positive absorption being realized. Industrial land sales have
been virtually non-existent as buyers look to revitalize
existing buildings rather than incur the time and expense of
ground up construction.
Retail occupancy rates for anchored centers have risen,
while unanchored centers have experienced mild negative
absorption as a continuation of performance of 2010.
Anchored retail center absorption was a positive 11,927 SF
for the first half of 2011 creating an overall vacancy rate of
5%. The market continues to be under served, but is
progressing with examples such as Mill Creek Square’s
lease-up (Kohl’s, Bed Bath & Beyond anchored) adding
Staples, along with Red Robin in the prominent pad position.
Also boosting retail growth is the county’s second Target
entry which opened in Lititz. CBD leasing activity remains
soft, but suburban and regional demand is on a gradual
upswing evidenced by backfilling of the vacant Circuit City
and Linens N Things by HH Gregg and Home Goods
respectively.
Harrisburg/York/Lebanon At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
$
$
17.50
16.00
14.00
19.50
16.75
12.00
$
$
$
$
$
$
24.00
22.00
17.50
21.00
20.00
17.00
$ 20.75
$ 19.00
$ 15.75
$ 20.25
$ 18.37
$ 14.75
N/A
6.00%
8.00%
N/A
13.00%
20.00%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
$
$
$
1.25
1.00
4.00
$
$
$
4.00
3.00
9.00
$
$
$
2.75
2.50
6.50
17.00%
10.00%
12.00%
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
12.00
6.00
15.00
13.00
$
$
$
$
15.00
20.00
25.00
25.00
$ 13.50
$ 13.00
$ 18.00
$ 18.00
13.00%
12.00%
12.00%
12.00%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
$
$
75,000.00
125,000.00
80,000.00
100,000.00
150,000.00
N/A
$
$
$
$
$
150,000.00
225,000.00
135,000.00
250,000.00
1,750,000.00
N/A
Lancaster At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
$
N/A
11.00 $
N/A
13.00
N/A
$ 12.00
N/A
N/A
Class B (Secondary)
suburban offIce
$ 7.50 $ 9.00 $ 8.25 12.00%
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
18.00
14.00
10.00
$
$
$
22.00
18.00
12.00
$ 20.00
$ 16.00
$ 11.00
N/A
17.00%
21.00%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
Downtown
$
$
$
$
3.50
3.50
6.75
6.00
$
$
$
$
5.50
4.50
8.25
10.00
$
$
$
$
4.50
4.00
7.50
8.00
5.00%
19.00%
9.00%
N/A
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
10.00
16.00
18.00
$
$
$
13.00
22.00
22.00
$ 11.50
$ 19.00
$ 20.00
12.00%
6.00%
9.00%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
$
$
N/A
125,000.00
80,000.00
60,000.00
175,000.00
20,000.00
$
$
$
$
$
N/A
250,000.00
110,000.00
80,000.00
450,000.00
40,000.00
2012 Global Market Report n www.naiglobal.com 129