ROCK Commercial Releases 2021 Q2 Market REVIEWS

Aug 20, 2021 | Blog Posts

YORK COUNTY INDUSTRIAL | VACANCY CONTINUES TO DECLINE, ADDITIONAL 1.95 MSF UNDER CONSTRUCTION TO MEET DEMAND

  • After peaking in 2020, vacancy has continued to decline in Q2. High demand will continue to push vacancy down in Q3 as 1.95 MSF of spec projects are not due for completion until later this year and into 2022.
  • Harley Davidson Motor Company, Inc. has leased 352,000 SF at 693 North Hills Rd, York.
  • Spec construction continues in the Greater York West region including Core5 Logistics Center at Codorus Creek –Bldg 1, Core5 Logistics Center at Laughman Farms –Bldg C and 405 Busser Rd Bldg 1. 405 Busser Rd, York has been pre-leased to Hill’s Pet Nutrition.
  • The ROCK Demand Index (RDI) reveals that 64% of industrial demand is comprised of new businesses or startups.

 

YORK COUNTY OFFICE | RELOCATIONS AND DOWNSIZING DRIVE DEMAND, LEASED SQUARE FEET SET TO EXCEED PRE-PANDEMIC LEVELS BY YEAR-END

  • With leased square feet already exceeding total square feet leased in 2020, the market is on track to meet or exceed pre-pandemic levels by year-end.
  • Lease activity continues to escalate with relocations and downsizing continuing to drive demand
  • Despite early speculation that office demand could be negatively impacted by the pandemic, vacancy is at a five year low of 4.32%.
  • The ROCK Demand Index (RDI) reveals that 46% of office demand is comprised of new businesses. The remaining 54% are existing businesses relocating or acquiring an additional location
  • 87% of office leases were signed in Greater York East, an area rich in Class A and Class B product.

 

YORK COUNTY RETAIL | VACANCY FALLS TO PRE-PANDEMIC LEVELS, LEASE RATES CONTINUE UPWARD TREND

  • Vacancy fell for the fourth consecutive quarter since peaking at 7.97% in Q2, 2020. Vacancy is at 5.27%, a 270 basis points (bps) decrease since Q2, 2020.
  • Absorption remains positive year-to-date with more inventory leased than made available on the market.
  • The ROCK Demand Index (RDI) indicates that 48% of retail space demand is comprised of entrepreneurs starting a new business. This is down 10 basis points (bps) from Q1, 2020.
  • Big box redevelopment remains in the pipeline at the York Galleria. The former Sears space remains under construction to become a Hollywood Casino due to open in Q3, 2021.
  • The ratio of demand for durable goods will see a shift to service oriented spending as workers return to offices with consumers patronize restaurants and venturing out of town for vacation.
"According to the Bureau of Economic Analysis, consumer spending increased 11.8% in Q2. "

LANCASTER COUNTY INDUSTRIAL | VACANCY BELOW PRE-PANDEMIC LEVELS, FULLY LEASED INVESTMENTS DRIVE SALES

  • Vacancy has fallen below pre-pandemic levels and trends below the national vacancy of 4.5%. Vacancy was at 2.85% in 2019 and is currently at 2.64%.
  • Vacancy is expected to remain low throughout 2021 as no major speculation builds are expected to be completed until 2022 and demand remains high for warehousing.
  • Low vacancy and favorable lease rates continue to draw investors. 65% of sales volume was attributed to three properties. All were 90-100% leased at time of sale.
  • The ROCK Demand Index (RDI) reveals that 67% of users are interested in buying rather than leasing their next space.

 

LANCASTER COUNTY OFFICE | LEASE RATES CONTINUE TO CLIMB AMIDS FIVE-YEAR LOW IN VACANCY

  • Less space is being vacated since the start of the Pandemic, allowing the market time to absorb the vacant square feet.
  • Demand for large office space has been decreasing. Since 2017, average unit size of signed leases has decreased 51.5% from 6,463 SF to 3,131 SF.
  • The ROCK Demand Index (RDI) reveals that 60% of office users in need of space are doing so with the intention of relocating an existing business to increase their unit size.
  • Absorption was positive for the second consecutive quarter with more inventory leased than vacated. After a year of negative absorption throughout the pandemic in 2020, this is a positive indicator of demand for office space.

 

LANCASTER COUNTY RETAIL | CLASS A CENTERS DRIVING HIGH LEASE RATES, VACANCY FALLS TO 4.32%

  • Since a peak of 218,246 SF vacated in Q2 2020, there has been less space vacated each quarter since, allowing existing inventory time to be absorbed.
  • According to the Bureau of Economic Analysis, consumer spending increased 11.8% in Q2. Inflation looms as a threat to consumer confidence but, for now, desire to spend is outweighing those fears.
  • Development of new Class A centers is continuing to drive lease rates to new heights. East Lancaster Plaza is the latest Class A delivery and is already 100% leased. Poké Bowl Station now occupies 2,191 SF of inline space.

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