Greater Reading
Office Market Report
Year End 2014
Greater Reading Office Report Bryan Cole, SIOR
[email protected] www.Bryan-Cole.com 610.779.1400 (Office) 610.370.8502 (Direct)
End of Year 2014
About Bryan Cole, SIOR This report provides an overview of the current office market conditions in Suburban Berks County Pennsylvania. Bryan Cole of NAI Keystone maintains a comprehensive list of all available properties within the Berks County marketplace, including but not limited to; available space, number of facilities in the market, asking rents, incentives, extra costs, tenants in the market, and much more. The information that NAI Keystone and Bryan has assembled is separated by Class A and Class B facilities and consists of market data such as, absorption rates, vacancy rates, asking rents and overall market statistics. This market report and data is assembled in house by Bryan Cole. All rights are reserved as this information has not been obtained by Public Sources, unless otherwise outlined within the “Source” footer. The report will be available on a quarterly basis by emailing
[email protected] and subscribing to our mailing list.
Individual or Company Membership:
Check out my other publications Quarterly Monthly Weekly Industry Specific
E-Brochures E-News Flyers Reports
•
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
Suburban
Market
Year End 2014 Reading, Berks County Pennsylvania
Suburban Office Market Report
Committed to Greater Reading. Connected to the World. ™
Suburban Berks Continuing to Stabilize
Suburban Berks Office
Overview The Greater Reading Suburban Office Market ended 2014 with a vacancy rate for Class A Office buildings at 15.01 percent which include existing and proposed sites. The vacancy rate for Existing Class A Office Buildings is 4.39%. There were no changes in vacancy rates from 4th quarter of 2014 and a large increase in vacancy from same period in 2013. The average rental rates remained unchanged at $17.50 - $22.50 per square foot Modified Gross, which is a decreases in the rates from the same period in 2013. Deals of primary focus within the Class A building sector were the newly constructed National Penn Bank facility in Spring Ridge and the two proposed Office Pad sites at 835 Berkshire Blvd, Wyomissing. Although the total square footage of the new National Penn Bank building was 48,000 sf., it left three vacancies within the Class B office product in the Berks County marketplace which remained vacant at the close of 2014. The Class B Suburban Office Market ended 2014 with a vacancy rate of 18.35 percent for existing and proposed sites. The vacancy rate for Existing Class B Office buildings is 16.14%. This is a slight increase in vacancy rates from 3rd quarter of 2014, and it is a large increase from the same period in 2013. The average rental rates remained unchanged at $12.50 - $15.50 per square foot Modified Gross from the 3rd quarter of 2014 to 4th quarter of 2014 and that is a larger decrease from the same period in 2014, when average rental rates were $12.50 - $17.50 per square foot. Deals of primary focus within the Class B building sector were two new leases, including the 26,016 sf. lease at 1125 Berkshire Blvd. in Wyomissing, and the 16,000 sf. lease at 2001 State Hill Road in Wyomissing. The activity level for second generation Class B space has slowed in the 4 th quarter, however, this is typical toward the holiday months. There were multiple sales completed within the Class B office market including the sale of 1001 Hill Ave a 150,000 sf. Mixed use facility in Wyomissing, a 30,000 sf. Multi-story office building in Flying Hills, the former JC Ehrlich Facility in Wyomissing and a 25,000 sf. Retail building converted to Medical in Exeter Township. All of the facilities described with exception of 1001 Hill Ave were purchased by End Users. And the Class C Suburban Office Market ended 2014 with a vacancy rate of 14.92 percent, which is a slight decrease from the same period 2013. The outlook for the office market sector going into the 1st quarter of 2015 is continued optimism as activity levels continue to remain active. ………………………………………………………………………………………………………………………... •
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
Suburban Berks Office
Suburban Wide Statistics Class A & Class B Office 2013 vs 2014 Class A Class B
Class A Class B
Class A Class B
Class A Class B
Net Absorption
Vacancy Rates
Asking Rates
Construction
The Office leasing market has seen continued growth year over year, with most new leasing concentrated around the Spring Township and Wyomissing Area.
The Office sale market had good activity due to the sale of 4 large office buildings. Banks have started to lend again, and seem aggressive as it relates to terms and rates.
It is our expectations that 2015 will continue to be a strong leasing market.
~ Bryan Cole, SIOR Office & Medical Brokerage
Suburban Berks Office
Suburban Wide Statistics Class A & Class B Office
Suburban Office Properties for Lease
2013 vs 2014 Other Trends
Tour Activity
Concessions
Sales Volume
Construction
1350 Broadcasting Road, Wyomissing
2001 State Hill Road, Wyomissing
Don’t forget to check: www.WyomissingOfficeSpace.com This website is dedicated to Office Buildings for Sale or Lease in Wyomissing and Spring Township. These two municipalities contain the largest concentration of office product in Berks County. Or check us out on LinkedIn
Suburban Transactions
Lease Transactions Building
Market
Qtr.
Size (SF)
958 Ben Franklin Hwy.
Amity
3rd Quarter
6,000 sf. +/-
Quarry Drive
Spring Twp.
4th Quarter
14,000 sf. +/-
2001 State Hill Rd.
Wyomissing
4th Quarter
16,500 sf. +/-
50 Commerce Dr.
Wyomissing
2nd Quarter
5,048 sf. +/-
1220 Broadcasting Rd.
Wyomissing
2nd Quarter
4,000 sf. +/-
6 Commerce Dr.
Flying Hills
1st Quarter
12,000 sf. +/-
1 Meridian Blvd.
Wyomissing
1st Quarter
60,000 sf. +/-
1125 Berkshire Blvd.
Wyomissing
1st Quarter
26,016 sf. +/-
Sale Transactions Price (PSF)
Building
Market
Buyer
Qtr.
Size (SF)
1001 Hill Ave
Wyomissing
Water Polo
4th Quarter
150,000
5479 Pottsville Pike.
Leesport
Archive Warehouse, LLC
4th Quarter
40,927
$122.16
5380 Perkiomen Ave.
Exeter
Berks Properties Associates
4th Quarter
26,874
$111.63
2228 State Hill Road
Wyomissing
Grove Real Estate Holdings
1st Quarter
7,272
$178.00
500 Spring Ridge Dr.
Wyomissing
Brentwood Industries, Inc.
1st Quarter
96,114
5320 Allentown Pike
Muhlenberg
Diamond FCU
4th Quarter
15,298
$124.00
•
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
Suburban Proposed Projects & Developments Status
Property Name
Market
Gross Bldg. SF
Vacant Bldg. SF
Delivery Date
Active - Proposed
Spring Corporate Campus - A
Spring Twp.
53,000
53,000
TBD
Active - Proposed
Spring Corporate Campus - B
Spring Twp.
8,000
8,000
TBD
Active - Proposed
Spring Corporate Campus - C
Spring Twp.
6,000
6,000
TBD
Active - Proposed
Spring Corporate Campus - D
Spring Twp.
35,000
35,000
TBD
Active - Proposed
Spring Corporate Campus - E
Spring Twp.
35,000
35,000
TBD
Active - Proposed
Spring Corporate Campus - F
Spring Twp.
35,000
35,000
TBD
Active - Proposed
1001 James Drive
Leesport
12,300
12,300
TBD
Active - Proposed
Wyomissing Corporate Campus - C
Wyomissing
43,000
43,000
TBD
Active - Proposed
520 Van Reed Road
Wyomissing
40,000
40,000
TBD
Active - Proposed
White Pines
Flying Hills
15,000
15,000
TBD
Active - Proposed
Hearthstone Court
Exeter
9,000
9,000
TBD
Active - Proposed
Spring Commons
Spring Twp.
14,000
14,000
TBD
Active - Proposed
835 Berkshire Blvd. - Building B
Wyomissing
24,000
24,000
TBD
Active - Proposed
Berkshire Ct. Bldg.
Wyomissing
30,000
30,000
TBD
Active - Proposed
Meridian Blvd. - D
Spring Twp.
13,300
13,300
TBD
Under Construction
Spring Ridge Corp. Campus Bldg.
Spring Twp.
48,000
48,000
2014
Under Construction
Wyomissing Corporate Campus - E
Wyomissing
27,000
27,000
2014
Under Construction
835 Berkshire Blvd. - Building A
Wyomissing
24,000
10,000
2015
Wyomissing Corporate Campus
835 Berkshire Blvd. For Lease
For Lease
• • • •
169,000 Total Square Feet Located in Wyomissing PA 19610 3 Buildings Existing and Full 1 Building under construction and 1 proposed.
• 24,000 Total Square Feet in Building B • 12,000 Total Square Feet in Building A • Located in the Borough of Family
•
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
Tenants Perspective (As a Tenant Representative) The Greater Reading market has experienced a steady level of interest during the calendar year 2014, although activity is good and deals are steadily moving forward; the A and B product is still offering incentives/concessions which have allowed Tenants to continue to capitalize on past market conditions.
Tenants should begin to negotiate any leases that are within 12-14 months of expiration. This allows for enough room to negotiate and capitalize on the current conditions. Although the markets are improving and landlords will begin to lock in better terms, we feel the market will continue to be a “Tenant’s Market” into the early stages of 2015 based on current vacancies and leasing activity.
Landlord Perspective (As a Landlord Representative) Greater Reading’s recent activity will sway some landlords to think the market has completely turned around. Be cautious. We feel the market will maintain its “Tenant Market” status into 2015. Interest Rates have been low during the past few years and, although they are beginning to rise, landlords should continue to take advantage of these rates for Improvements or refinancing. By offering free rent on the front end and maintaining higher base rates, landlords will not only provide tenants the ability to get into the space on a lower initial cost for year 1, it will allow landlords to maintain higher valuations on their assets since most “free rent” is outside the term. This allows landlords to still get effective 3-, 5-, or 7-year terms while limiting their exposure long term.
Downtown
Market
For Lease
Year End 2014 Reading, Berks County Pennsylvania
Downtown Office Market Report
Committed to Greater Reading. Connected to the World. ™
Downtown Reading Showing Growth
Downtown Berks Office
Overview The Greater Reading Downtown Office Market ended 2014 with a vacancy rate for Class A Office buildings at 23.25 percent. This was a complete reverse in rates as it was a very highly negative change in vacancy rates from the same period 2013; it was however a steady 3rd to 4th qtr. 2014. The average rental rates slightly decreased from the 3rd to end of 4th quarter of 2013 at $11.00 per square foot Modified Gross to $14.50 per square foot Modified Gross.
The reason for the large increases in vacancy rates was due to the sale of 401 Penn Street to I-Lead Charter School and the re-introduction of space to the market. Our initial understanding was I-Lead would be leasing some of the space out, nothing has been clearly defined. The Class B Downtown Office Market ended 2014 with a vacancy rate of 19.96 percent. This was a slight decreases in vacancy rates from 3rd quarter of 2014, and it was a large decrease from the same period in 2013. The average rental rates remained unchanged at $7.50 per square foot Modified Gross in the 4th quarter 2014 to $11.00 per square foot Modified Gross, this is similar to the rates from the
same period 2013.
Overall Vacancy Rates for Class C buildings rose to 23.62 percent. This was due to a few Class C tenants moving to higher tier properties and various buildings that were previously tracked as Class B buildings being changed to Class C buildings because of re-evaluating the assets and conditions.
………………………………………………………………………………………………………………………….... •
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
Suburban Berks Office
Downtown Statistics & Information 2013 vs 2014 Class A Class B
Net Absorption
Class A Class B
Vacancy Rates
Class A Class B
Asking Rates
Class A Class B
Construction
City of Reading Tax Rates Earned Income Tax (Resident) Earned Income Tax (Non-City Resident) Local Services Tax annually City Real Estate Tax Per Capita Tax Annually
3.6% 1.3% Max $52.00 15.689 Mills $15.00
Business Privilege Tax Service Commission Rental Retail Wholesale Real Estate Transfer Tax
2.25 Mills 2.25 Mills 2.25 Mills 1.5 Mills 1.0 Mills 5%
_______________________________________ ___ Greater Reading Economic Partnership www.GreaterReading.com Greater Reading Chamber of Commerce www.GreaterReadingChamber.org Greater Berks Development Fund www.ReadingPA.com Reading Redevelopment Authority www.Readingredevelopmentauthority.com City of Reading www.ReadingPA.gov NAI Keystone Commercial & Industrial, LLC www.Bryan-Cole.com --------------------------------------------------------------------
Downtown Statistics & Information
Downtown Properties for Lease
2013 vs 2014 Other Trends
Tour Activity
Concessions
Sales Volume
Construction
201 Penn Street, Reading
Facilities with the largest availabilities Largest Blocks of Space
Vacant SF
Building Class
645 Penn Street
25,697
Class B
201 Penn Street
40,690
Class A
35 N. 6th Street
37,000
Class B
501 Washington Street
36,725
Class B
443 Penn Street
44,028
Class B
230 N. 5th Street
33,600
Class B
401 Penn Street
200,000
Class A
400 Washington Street
18,765
Class A
• • • •
Suites from 3,500 sf. Direct Access to Penn Street Class A Office Building Fully Gross Leases
645 Penn Street, Reading
# of Buildings Tracked Location
Market
Downtown Total
229
Class A
8
Class B
41
Class C
180
• • • •
Suites from 1,500 sf. Retail and Office Available Quality Tenant Mix Below Market Rents
•
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
Downtown Information
Parking Locations
Downtown Improvement District Outline
•
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
We live and breathe the day-to-day happenings of landlords, tenants and the local market keeping us one step ahead of our competition. This enables us to anticipate and formulate a proactive plan of action with regards to new leases, tenant relocations, downsizing or expansions. Our clients range from institutions and pension fund advisors to private developers and individuals. Their needs are as diverse as their businesses and our intent is to provide custom solutions that are focused on their business objectives and financial bottom line.
Greater Reading Market Information Location
Few locations on the East Coast offer a more central location than Greater Reading, with easy access to markets, hubs and major cities in the Mid-Atlantic and Northeast. Philadelphia is just 50 miles to the southeast, and New York and Washington are a little more than 100 miles away. Greater Reading is an affordable location too, with occupancy costs among the most attractive of any comparable area in the eastern region. •
Over 100 million people within an overnights drive
•
Class-A office buildings, industrial parks, manufacturing sites and prime retail locations
•
Reliable electric grid
•
Good management relations
•
Strong and pro-active economic development groups
Road Systems: Routes 222, 61, and 422 are main state roads through Greater Reading, connecting Reading and its suburbs with the Lehigh Valley (Allentown/Bethlehem/Easton) to the north and east and Central Pennsylvania )Lancaster/York/Harrisburg) south and west. I-78, I-476, and I-76 are interstates connecting Greater Reading to the rest of the region. Greater Reading is home to such companies as Carpenter Technologies, Penske Corp., East Penn Manufacturing, Godiva, and Boscov’s stores. Take advantage of a diverse workforce—and a great lifestyle. Greater Reading is naturally beautiful and family oriented. Its diverse community lifestyle means there’s something for everyone. In addition, residents enjoy a much lower cost of living then those of neighboring metropolitan centers.
•
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
Greater Reading Market Information Market Data
Wage Information and Employee Availability in Greater Reading The Greater Reading community obtained an assessment from a site selection consultant on workforce availability, which confirmed a local CareerLink assessment and provided some additional empirical data. According to their evaluation: The metro Reading labor market could accommodate another 4,100 customer related positions (FTEs) As a rule of thumb, labor saturation is reached when call center employment exceeds 3% of the civilian labor
force Metro Reading’s labor force is 202,300 At 3%, the market could likely sustain a call center base of 6,100 Looking over the employer roster, the best estimate is that current call center employment
approximates 2,000 FTEs. This leaves excess capacity of about 4,100 A new call center paying market competitive wages would be able to sustain an HR level in at least the 750 FTE
range The estimated white collar underemployed pool (employment in lower wage occupations) is about
15,000+/ A new employer would likely be able to find 5% of that total to be well-qualified This translates into 750 additional positions As a buffer, a new call center could also draw from: The unemployed - 7.9% or 16,000 people Annual college graduates
Two Year 700 Four Year 3,500 Total 4,200
Availability of a bilingual workforce Population ages 16-64 is roughly 264,000 About 6% of metro population ages 16-64 is bilingual (English/Spanish according to the US Census) At 6%, this equates to 15,800 bilingual working age adults Tapping only 1% of this pool would allow a new employer to staff about 150 bilingual positions
•
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
Greater Reading Market Information Market Data Continued The CareerLink is a one-stop workforce development system comprised of a partnership of several public and private workforce development agencies. They offer a variety of employer and employee support services including: Screening and referral of applicants to employer specifications Information on hiring incentives such as tax credits and new-hire training programs Specialized recruitment, including management of large recruitment campaigns Recruitment facilities (meeting rooms and private office) for daily rental WorkKeys Functional and Personal Skill
Additionally, Greater Reading Economic Partnership confirmed that students at the five local colleges and universities could play a role in filling 2nd, 3rd, and weekend shifts at a call center. Below are the current enrollment numbers for each of our higher education institutions.
Albright College 2,358 Alvernia University 2,906 Kutztown University 10,634 Penn State University 2,759 Reading Area Community College 5,425
Wage and workforce availability confirmation was also obtained from one of the community’s premier employment agencies, Gage Personnel. Lastly, employer surveys annually conducted by Greater Reading Economic Partnership of call center operations in Berks County, confirmed the following ranges:
Assessments for applicants and incumbent workers WorkKeys Profiling to better assess skill needs of specific jobs The CareerLink partners assessed that an employer would need to pay an $11/starting wage, with increases based on performance. They believe that there will be second-income individuals and single parents applying for customer service positions. For bilingual needs, the applicant pool will be strong. If a high school diploma is not required, the applicant pool would be even greater because there are very capable people in our community who lack that credential but would be good employees. The CareerLink website can act as one of the bases for recruiting as well as the physical office if there is a desire to do paper applications. CareerLink also offers pre-employment assessments – for example, providing a short script that they ask folks to read.
Entry-Level: $11-12/hr Mid-Level: $12-14/hr Senior-Level: $15/hr Pay rates for a supervisor in a call center are in the $45-55K range.
Summary The wage rates contemplated throughout the entire evaluation was a salary of $11.50 as a starting point for employees. This salary would be competitive and attract a stable employee base for these type of positions. A bilingual workforce will be available in Greater Reading due to the large Latino population and correspondingly available workforce. The Commonwealth of Pennsylvania, the PA CareerLink office, and the Greater Reading Economic Partnership and its workforce partners can offer support and substantive resources for new employee recruitment and training.
•
The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
•
Source: Bryan Cole, NAI Keystone, CoStar Property, Greater Reading Economic Partnership, U.S. Bureau of Labor
Greater Reading Market Information Market Data Continued Major Road Systems
Top 10 Employers
- Rt. 422 (East/West)
- Reading Health System
- Rt. 222 (East/West)
- East Penn Manufacturing
- Rt. 183 (North/South)
- Carpenter Technology
- Rt. 61 (North/South)
- St. Joseph Medical Center
- Rt. 562 (East/West)
- Boscov’s Department Store
- Rt. 100 (North/South)
- Redner’s Markets, Inc.
- Rt. 724 (East/West
- Penske Truck Leasing
- I-78 (East/West)
- Sovereign Bank
- I-176 (North/South)
- Met-Ed / First Energy
- Pennsylvania Turnpike
- Associated Wholesalers Inc.
Resume
Bryan Cole Background & Experience Bryan Cole joined NAI Keystone in July of 2004 after four years active duty in the U.S. Marine Corp., which included a six-month deployment in Afghanistan, a four-month deployment in Kuwait/Iraq and a seven-month deployment in Japan. Prior to enlisting in the military, Bryan was involved in the construction of commercial and multi-unit properties throughout the Philadelphia suburbs. He has experience working with diverse groups of individuals in numerous countries throughout the world. During Bryan’s time at NAI, he has sold and leased in the excess of $450 million worth of commercial real estate. Due to this success, he earned NAI gold club status his first year with the company. Since 2006, he has been the top performer and producer at NAI Keystone. with an average of $30-$35 Million in production annually and more than $64 million in 2012 and $75 million in 2013. Bryan has concentrated his efforts on medical/office property, as well as big box industrial. Bryan has earned the SIOR designation. (Society of Industrial & Office Realtors)
Affiliations & Designations
NAI Corporate Services Council
NAI (New America International)
CCIM Candidate
Veterans of Foreign Wars
SIOR Member
PA Assoc. of Realtors
WERC
NAI Office Council
TriState Board or Realtors
CoreNet Global
Council of Supply Chain Management
National Assoc. of Realtors
Reading Chamber Rising Star Nominee
Greater Reading Economic Partnership
Chapter President of the National Marine Corp
Young Professionals Network
Business Network (Reading Chapter)
Commercial Industrial Council of Berks
Humane Society of Berks County Board Member
CIC Board Member (2007)
Greater Reading Economic Partnership Development
NAIOP Member Greater Reading Chamber of Commerce NAI Gold Club ICSC Member
Committee Member NAI Keystone Commercial & Industrial, LLC Top Performer 2006 - 2013
Greater Reading - Suburban
Office Market Report
End of 2014 Our Office Services Include: Product Representation • Project leasing and disposition of single buildings, multiple buildings and portfolios • Conversions, retrofits and redevelopment of existing properties • Brokerage of build-to-suit services on a lease or sale basis • Site searches and land assemblage for development of speculative buildings
Tenant Representation • Site searches and negotiation of leases or purchases for new facilities • Negotiation of renewals, expansions and contractions of existing leased space • Site searches and build-to-suit services for the development of new space • Sublease and disposition of surplus space
Valuation & Advisory Investment Services Project Marketing Research