Real Estate Journal — Pennsylvania — September 12 - 25, 2014 — 5C
www.marejournal.com
M id A tlantic
C entral PA
By Mike Kushner, CCIM, Omni Realty Group Central Pennsylvania retail market sees burst of growth in second quarter 2014
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No real estate class is more closely tied to economic recov- ery than the retail sector. While facing other obstacles such as the loss of major shopping center tenants, migration of retail users to pad sites, lack of new-format retailers and com- peting internet sales, the next six months will see continued recovery of gross retail sales as consumers increase household debt and feel more financially secure with restructured hous- ing payments and more retire- ment equity. Continued hous- ing market stability remains the key metric in the fate of local retail growth. n
he Central PA Retail Real Estate Submarket, which includes Adams,
York , Lan- caster, Perry, Dauphin and Cumberland C o u n t i e s , experienced a sur g e o f g r o w t h i n second quar- t e r 2 0 1 4 . Wh e r e d i d
Mike Kushner
this growth occur? What was the cause? And what does this mean for the local economy? Let’s first take a closer look at what the numbers are telling us. Second quarter 2014 experi- enced the most square-footage absorbed in one quarter since first quarter 2011. Total net absorption for this quarter was 298,553 s/f. This was a 237,473 square foot increase from first quarter 2014 which had a net absorption of just 61,080 s/f. Af- ter taking a major hit in second quarter 2012, net absorption has been slowly (and unsteadi- ly) recovering; however, this is the highest spike it has seen in more than three years. Vacancy rates dropped to 5.9% in the second quarter, fall- ing from the previous quarter’s 6.2%. This is the lowest vacancy rate Central PA has seen since before third quarter 2010. In correlation to the decrease in vacancy rates, rental rates increased by $0.27. At $11.47 psf, this is the highest rental rates we have seen since second quarter 2012. Additionally, second quarter 2014 brought Central PA some of its top retail leases as exist- ing businesses changed loca- tions and new businesses en- tered the area. Some highlights include White Oak Furniture’s 38,869 s/f lease in North Lon- donderry Square, Palmyra. Get Air signed a 24,300 square-foot lease in Union Square, Har- risburg. A new Aldi location in Mill Creek Square, Lancaster took 17,594 s/f of retail space off the market in second quarter 2014. Finally, Sky Zone moved into a 24,045 square foot space in Gateway Square, Hampden Township. Combined, this is a total of 104,808 s/f of retail rent- al space absorbed by just four locations in a single quarter. The Central PA retail real estate market finished second quarter 2014 with encourag- ing indicators of growth. New and expanding businesses are
requiring more space, push- ing rental rates higher and vacancy rates lower than
they have been in years. This growth is also sure to have a positive impact on the local
economy as these businesses create more jobs and bring new revenue streams to the area.
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