ROCK Commercial Real Estate, LLC
Susquehanna Commerce Center West
221 West Philadelphia St. Suite 19
York, PA 17401-2992
717-854-5357 / Fax: 717-854-5367
Feature Article Industrial Real Estate in South Central PA - An Insider's Look -
By
Dave Keech
In an attempt to answer the question everyone is asking:
How has the Economy and Residential Mortgage crisis
affected the Industrial Real Estate market in South Central Pennsylvania?
South Central Pennsylvania has been conservative both from a construction and
business operation stand point. As a result, we are not overbuilt, and there
is limited supply of buildings available for sale or lease.
When the Economy slows down aided by the “mortgage crisis”
and fuel costs, businesses change their way of “doing business”. As a
result, business owners will decide to lease industrial space to meet any
short term needs and move slowly while closely evaluating longer term needs,
and ownership or new construction opportunities. Large overseas companies
shipping products into the west coast will decide to keep those products on
the ships and bring them to the east coast before unloading. This saves
distribution and associated fuel costs, and has been a boost for
construction in our area. You might have noticed the “mega” warehouses
(greater than 500,000 square feet) being built to house these new products.
As of March 2008, York County records show
almost 75,000,000 square feet of industrial properties over 10,000 square
feet. The overall vacancy rate was 7.32% based on commercial multiple
listing services (MLS and www.loopnet.com
). This is low compared to the national average of over 10%. These numbers
represent a reflection of not overbuilding. If you break
this vacancy down into
Class A, B & C warehouses, using age, ceiling height, and amenities as
characterizations, where A has newer high ceilings and C has older low ceiling
buildings, vacancy rates are 11.85%, 3.27% and 8.27% respectively.
Class B buildings were built between 10 and 35 years ago
when government backed low interest financing was readily available and
construction costs were low for everything from concrete and steel to
plywood and plaster board. As a result lease rates are lower and our
conservative business owners will give up height and amenities, for cost.
Those days are soon over, if not already. Low vacancy
rates are driving the demand for more supply spurring new construction. New
construction costs are driving up lease rates for new buildings under
100,000 square feet to $6.00 per square foot per year rate, traditionally
$3.50 to $4.00 per square foot. For buildings greater than 100,000 square
feet rates are $4.00 to $5.00 per square foot from a previous $3.00 to $3.75
rate.
High construction costs are driving buyers out of the build
to suit market and causing them to look seriously at existing buildings. As
this occurs supply of existing buildings becomes limited, and when supply is
down, prices for existing buildings go up.
You can’t blame all the increases on construction costs and materials.
Government involvement has increased, slowing the approval
process and driving up overhead, architectural, engineering, holding and
carrying costs. Approvals necessary for zoning, land development, building
codes, signs, highway permits, and environmental (everything from wet lands
to bog turtles, and historical artifacts), has pushed back the approval
process for existing buildings to a minimum of 3-6 months and 1 to 3 years
or more for new development. This involvement is not just for purchased or
build to suit buildings; it also applies to the leasing use and occupancy
process.
The pendulum has swung. Prices for real estate, purchased
and leased, are going up.
The Federal
Reserve is trying to lessen the effects of the
residential mortgage crisis
and slowing economy by lowering interest rates. Banks haven’t responded as
quickly, but as interest rates drop, some companies will have an opportunity
to take advantage of these rates and purchase properties. How long will
these opportunities last?
The need for professional real estate advice and service is
more important today than ever. ROCK Commercial Real Estate recognizes that it is important for you to work with
qualified, educated real estate advisors who can identify the available
properties, research values, coordinate timelines, and get you the best
property to service your business needs. The process may take longer than
you expect. There are valuable properties available
to service your real estate needs.
Originally built in 1979, this building was
renovated in 2005 to meet International
Building Codes. This property is located in
Manchester Township with access from
Interchange Place near I-83 Emigsville Exit 24. This property is
available for sale or lease.
Military & Commercial Fasteners,
Inc.has leased 251,250 square foot industrial space at 631 South
Richland Avenue in Spring Garden Township. This property was formerly
known as York International.
Stoneplace USA, Inc.
sold the industrial building located at 3400 Board Road in York to Dico,
Inc. The property consists of 13,200 square foot manufacturing space
and is located in Manchester Township.
Dico, Inc. is a custom and production foundation concrete contractor
serving MD, northern VA, and DE. 3400 Board Road is their first location in
Pennsylvania.
Ricky Kress
sold the industrial building located at 6 Pine Street in Hanover to Kapp
Advertising Services, Inc. The property consists of 18,725 square foot
of manufacturing space and is located in Hanover Borough.
Kreutz Stream Limited
sold the building located at 3491 Industrial Drive in York to PMP Realty
Associates, LLC. The property consists of 55,814 square foot of
industrial space and is located in Springettsbury Township.
Pre-Cast Step Co.
has leased 1,776 square foot industrial space at 60 Black Rock Road in
Hanover for three years. Pre-Cast Step Co. will be expanding from their
previous location at 1800 Baltimore Pike in Hanover. They offer 36”, 48”,
64” and 74” wide steps from one step high to six steps high along with
parking bumper blocks and 12’ and 14’ round pole building pads.
Relationships based on communication, responsiveness, effectiveness, and
mutual trust are delivered to satisfy your needs. With the
implementation of our Team concept and the collaboration of all our members
we provide resources & tools along
with real estate opportunities for you.
ROCK Industrial Team
David Keech
Ted Turnbull
Kevin Hodge Jason
Turnbull Wayne Lee
