8B — March 30 - April 12, 2012 — Commercial Office Spotlight — Mid Atlantic Real Estate Journal
www.marejournal.com
NAI K EYSTONE C OMMERCIAL & I NDUSTRIAL By Bryan Cole, NAI Keystone Commercial & Industrial, LLC Greater Reading Office Market Report End of Year 2011 Report
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Although the level of activity has jumped, there have also been recent press releases of large tenants vacating large blocks of contiguous space or looking to sub-lease their space. This includes the announce- ment of CNA looking to close down or downsize its Reading facility which contains approxi- mately 260,000 sf., along with Teleflex marketing their 60,000 s/f. for Sub-Lease at 1 Merid- ian Boulevard in Wyomissing, IMS Healthcare reducing their footprint locally, and Sovereign Bank continuing to try and sub-lease their 57,000 s/f. office building on Berkshire Blvd.
Overall the end of year 2011 showed a slight decrease in Suburban class “A” building Vacancies starting at 12.4% in late 2010 and closing at 12.2%, mostly due to a new build to suit for the Reading Hospital and Medical Group, along with companies increasing their foot- prints at 1 Granite Point, and 1105 Berkshire Blvd. Class “A” buildings have typically been a safe sector in the marketplace because of low inventory; how- ever with new developments coming on line, and companies still looking for lower rents the class “A” sector has seen less demand. This will and has changed in 2012 with a great deal of the activity surrounding this type of product. Class “A” rental rates in 2011 remained flat with rates ranging from $15.50 - $16.75 (Triple Net) on the high side; however there was considerable downward pressure on pricing within this segment. The class “B” sector experi- enced the same in 2011 as did class “A”, starting at 13.6% and ending at 13.2%, however while vacancy rates decreased, rental rates has a slight increase. Base rental rates slightly in- creased within this sector rang- ing from $9-10 per square foot and tops out at $13-14 psf with gross rates coming in around $16-17 psf! Downtown City of Reading has seen some new deals con- summated, like the renewal of the United Way of Berks Coun- ty and the Spanish Council of Berks County. However the market still remains flat due to these companies’ renewing leases rather than expanding their footprints. Buildings that have seen vacancy for some time, including 645 Penn St. and 501 Washington St. are starting to show some signs of hope due to new management and ownership changes taking effect. Owners and tenants are continuing to struggle with high parking costs and security concerns, which are continuing to be addressed by a committed City Administration. Downtown City of Reading vacancy rates continue to in- crease in late 2011 with rates rising 20.70% to 21.00% in class “B” Product with much of the vacancy continuing to sur- round large blocks of contigu- ous space. This also includes approximately 20,000 s/f. of vacant space which was not ac- counted for in 2010’s numbers continued on page 20B
companies were nervous about making decisions on moving or relocating from their existing facilities. The positive absorp- tion came from some tenants taking advantage of the market by extending their lease terms to take advantage of the lower base rental rates and tenant incentives and few slightly in- creasing their footprints. These renewals included The Travelers insurance group who renewed their lease at 1105 Berkshire Blvd, Wyomissing which consisted of approxi- mately 60,000 +/- s/f, along with STV Inc., who renewed their lease at 205 W. Welsh Drive in
Douglassville, which was ap- proximately 50,000 s/f. New developed slowed in 2011 with only a few facilities being built which includes the 33,000 s/f. speculative project at The Wyomissing Corpo- rate Campus and the Reading Hospitals newly built MOB in Cumru Township. The 4th quarter 2011 into the 1st quarter 2012 experienced an extreme level of activity. There are approximately 200,000 s/f. of new and existing tenants circulating the market; looking to move into the county or relo- cate from the existing facilities within the county.
he 2011 Greater Read- ing Office Market expe- rienced similar activity
as the previ- o u s y e a r ; however un- like 2010 the market noted a slight posi- tive absorp- t i o n . Th i s was mainly due t o the
Bryan Cole
majority of the tenants in the local market maintaining their space rather than reducing or relocating. The activity level was still there in the 1st thru 3rd quarters of 2011; however
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