ROCK Commercial Releases 2022 Q2 Market REPORT

Aug 23, 2022 | Blog Posts

YORK COUNTY INDUSTRIAL | VACANCY DECLINE LOSES MOMENTUM AFTER SIX CONSECUTIVE QUARTERS

  • Though declining 7 basis points in Q2, the rate of vacancy decrease is slowing compared to 2020-2021.
  • Lease rates are up 17% from 2021 resulting from high demand and short supply.
  • Ironically, amidst this supply shortage, some industrial buildings find new life as residential/mixed-use conversions. This serves as testament to equally high demand in the multi-family sector.
  • A 1,075,200 SF facility in Jackson Township nears completion believed to be occupied by Amazon.


YORK COUNTY OFFICE | POSITIVE NEAR-TERM OUTLOOK FOUND IN DECLINING UNEMPLOYMENT & VACANCY

  • Economic factors continue to coalesce, making predictions for the office sector difficult. Although unemployment remains on the decline, effects from inflation, labor shortages, rising interest rates, supply chain disruptions, and threats from global conflict continue to work against progress made in the office sector.
  • Although economic downturn looms, positive indicators are found in a dropping unemployment rate and five-year low in vacancy.
  • Absorption hovers around zero with little absorption taking place year-to-date. Demand is evenly matched with supply.


YORK COUNTY RETAIL | LEASED SQUARE FEET SET TO EXCEED 2021 LEVELS

  • Absorption was negative in Q2 undulating positive and negative over the past 12 months. Demand has been evenly matched with supply.
  • Vacancy drops 76 basis points to 4.34% as lease rates continue to push higher.
  • Sale volume received a boost in Q2 due to the $42.5M sale of At Home located in West Manchester Town Center. The property was purchased with ten years remaining on the initial lease term, yielding a 7% cap rate.
"Although economic downturn looms, positive indicators are found in a dropping unemployment rate and five-year low in vacancy."

LANCASTER COUNTY INDUSTRIAL | DEMAND REMAINS HIGH AS SUPPLY RUNS LOW

  • Vacancy dropped for a seventh consecutive quarter inching toward 1% and is below the national vacancy rate between 3 – 3.3%.
  • Less absorption is taking place year-to-date. While typically illustrating less demand, the lack of absorption here is a symptom of lack of inventory.
  • Low vacancy is expected to continue throughout 2022 as demand remains elevated and the construction pipeline remains shallow. 781,168 SF is currently under construction with 1.4 MSF proposed.
  • The newly constructed 251,250 SF warehouse at 701 Stony Battery Road has been leased to an undisclosed tenant within a week of closing the sale.
  • Grocery brand, Ahold Delhaize USA, nears completion of their 250,000 SF automated frozen warehouse expansion at 3800 Hempland Rd, Mountville.


LANCASTER COUNTY OFFICE | OFFICE SECTOR STABLE WITH STEADY DEMAND & LEASING ACTIVITY

  • Despite economic uncertainty, steady demand and leasing activity has resulted in positive absorption year-to-date.
  • The most popular size category for office continues to be units between 1,000-2,000 SF. 44% of leases were signed in this size range in Q2.
  • Penn State Health Medical Center at 2160 State Road in East Hempfield Township is due for completion in Fall 2022. The project accounts for 95% of new construction.


LANCASTER COUNTY RETAIL | INCREASE IN VACANCY FOLLOWING FIVE QUARTER DECLINE

  • Retail remains stable with vacancy holding below 4% while lease rates continue to increase.
  • Although up 16 basis points from last quarter, vacancy remains 36 basis points below 2021 levels.
  • The July edition of the Lancaster County EDC Consumer Intelligence Report cited a “better to buy now to avoid future price increases” attitude for consumers.

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