Landlords Poised to Regain Upper Hand In Recovering Office Market

Article by Costar Group Research Department

Office space absorption doubled during 2011 as the office-using job base expanded and vacancies declined across nearly two-thirds of U.S. submarkets, CoStar Group reported this week in its Year-End 2011 Office Review & Outlook. The report presented to CoStar clients found that positive momentum in office fundamentals and the continued absence of new construction is expected to result in higher rents for building owners over the next few years.

Office sales increased steadily through 2011 over the previous year as investors sought to get ahead of the curve, with investor interest spreading beyond the safer well-leased investment-grade buildings in top-tier markets and into smaller properties and second-tier markets such as Seattle, Atlanta and Northern New Jersey. Total fourth-quarter 2011 office sales are likely to match or exceed fourth-quarter 2010’s impressive $25 billion once all sales are tallied.

Total CRE sales, which evened out in 2011 across all property types, is estimated at nearly $300 billion, the highest since the peak of the real estate boom in 2007, and well above the historical average of around $220 billion since 2000.

Although office tenants continue to hold the cards in many markets, CoStar reports the outlook appears to increasingly favor building owners in coming years as the cycle continues.


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“To sum it up, for the office market, we’re just now getting started. Now is a good time to be an office investor,” said Walter Page, director of research for Property and Portfolio Research (PPR), CoStar’s analytics and forecasting division. “We expect vacancy to continue to decline through 2015, and when you have declining vacancy rates, you can raise rents, returns are better, and for an investor, that’s good news.”

Economy Shows Positive Signs For CRE
CoStar Group founder and CEO Andrew Florance noted that, although overall employment growth has been anemic, the U.S. posted a solid 1.7% gain in office-using jobs, led by technology and energy markets such as Seattle, Boston, San Francisco and Dallas.

Other positive signs abound, including a leveling off in the loss of manufacturing jobs and a bottoming of the housing market, which should be less of a drag on the economy going forward, and likely to be the source for new jobs as replacement demand for single-family and apartment housing fuels expected construction demand.

Meanwhile, corporate profits are off the charts, from $800 billion in 2000 to $2 trillion in 2011.

“Coupled with low-interest rates, companies are in a position to invest aggressively in new facilities and equipment. From a CRE perspective, Corporate America is well positioned to invest in their businesses, plant facilities and equipment,” Florance added.

Challenges remain, including relatively weak consumer confidence, continued high unemployment, a record federal budget deficit and economic upheaval in Europe. Occupancy recovery varies widely between metros, with “have” markets such as supply constrained New York City showing 7.4% vacancy and housing bust “have-nots” like Phoenix lingering at a stubbornly high 20.7%.

However, CRE values have recovered to roughly 2000-year levels, and vacancies declined across the country last year. In a strong indicator of an impending office rebound, vacancy rates declined in 63% of the 2,400 office submarkets tracked by CoStar. That’s the strongest number since 2004-05, which roughly marked the beginning of the last CRE up cycle.

In the fourth quarter, CoStar recorded 18 million feet of net absorption, which drives occupancy rates and other leasing fundamentals, and a total of 49 million square feet for the year, doubling 2010’s absorption.

Despite rising concerns about the darkening economic picture that started last spring and continued through the year, absorption rose sharply in the second half of 2011, said Page, noting that companies are leasing space “and smaller tenants, the lifeblood of the office sector, are back.”

Jay Spivey, CoStar senior director of research and analytics, said that the office recovery, while not feeling very strong so far for many landlords and investors, is actually much stronger than the recovery in the office market following the collapse of Internet companies and real estate downturn 10 years.
“We have seven quarters of positive growth, and at that same point 10 years ago, we were still seeing negative absorption,” Spivey said.

Concessions Starting to Disappear
With improving occupancy and little new supply, concessions like free rent and tenant improvements are burning off in some markets and overall, the long downward slide in average office rents has likely bottomed.

CoStar sees significant upside in office rents, which are currently 11% below their long-term trend, Page said. With office construction at an all-time low, rents will rise and are expected to reach their long-term average between 2015 and 2017.

The analysts singled out “premier” suburban areas located near the urban core in markets such as Bethesda, MD, and West Los Angeles are seeing net absorption recover much more quickly on a rolling annual average compared with CBDs or outer suburban areas. Likewise, a survey of four- and five-star buildings in CoStar’s new Building Rating System, the equivalent of the top Class A properties, shows that the best buildings are absorbing most of the space. One- and two-star buildings, typically Class C, were hammered during the recession and are recovering more slowly.

While national vacancy and availability rates are both trending down, there are vast differences within metros and within the CBD and suburban properties in those markets. In Miami, for example, the CBD vacancy rate is about 22%, while suburban and premier suburban rates are lower. By contrast, Atlanta’s Buckhead premier office suburb, where much new construction came on line as the recession hit, has the highest vacancy at over 20%, more than 6 percentage point higher than the Atlanta CBD.

Investors Explore Secondary, Suburban Markets for Deals
The return of portfolio sales outside the largest markets in 2011 shows that investors, who largely retreated to the safety of well-leased properties in safe core markets like Washington and New York over the last couple of years, are ready to assume risk in certain transactions, with the help of a slowly returning flow of debt financing.

Distressed sales volume as a percentage of total office sale transactions fell during 2011. As distress has abated, prices have begun to rise over the last couple of quarters, spreading from investment-grade properties to smaller general commercial sales, according to the CoStar Commercial Repeat Sale Index (CCRSI).

Pricing has risen in most markets and is approaching replacement cost for some buildings, Spivey noted. Higher occupancy buildings are fetching a higher price premium currently than in 2007, possibly opening a window for investors on opportunities in select vacancy challenged properties.

Source Costar Group

For More Information about Local News, Market Intel, or Commercial Real Estate Opportunities; visit www.Bryan-Cole.com

Bryan E. Cole
NAI Keystone Commercial & Industrial, LLC
direct: 610-370-8502
Bcole@naikeystone.com
Check out my new website at www.Bryan-Cole.com

About Bryan Cole and NAI Keystone

Bryan joined NAI Keystone in early 2004, but before joining NAI, Bryan Cole spent 4 year’s active duty in the United States Marine Corp, including a 6 month deployment in Afghanistan, a 4 month deployment in Kuwait/Iraq, and a 7 month deployment in Japan. Prior to joining the military Bryan was involved in the construction of commercial and multi-unit properties in the Philadelphia suburbs. Bryan has experience working with a diverse group of individuals in numerous countries throughout the world. During Bryan’s time at NAI, he has sold and leased well over $200 Million Dollars worth of Commercial Real Estate. Because of this, Bryan earned NAI gold club status his first year in the business. Bryan is currently working on earning both his CCIM designation and SIOR designation. Bryan has been NAI Keystone’s Top Performer from 2006 – 2010.
NAI Keystone is a full service commercial and industrial real estate firm located in Reading, Berks County.  NAI Keystone manages and handles approximately 4 Million square feet of commercial and industrial space in Berks and Schuylkill County.  NAI is the only firm in Berks County dedicated to strictly commercial real estate.  www.Bryan-Cole.com.

September 2011 Commercial & Industrial Real Estate Newsletter

September 2011 Commercial & Industrial Real Estate Newsletter

See Link Below

The September 2011 Commercial Real Estate Newsletter. This Newsletter outlines listings,events, deals, and articles relative to Commercial Real Estate in Berks and Schuylkill County PA.

Interactive September Brochure: – Click Here

 

For a full list of all our Newsletters please visit:  http://www.bryan-cole.com/Newsletters.html

For More Information about Local News, Market Intel, or Commercial Real Estate
Opportunities; visit www.Bryan-Cole.com

Bryan E. Cole | Senior Associate
NAI Keystone Commercial & Industrial, LLC

direct: 610-370-8502

Bcole@naikeystone.com

Check out my new website at www.Bryan-Cole.com

NAI Keystone is a full service commercial and industrial real estate firm located in Reading PA; We handle buyer, tenant, and landlord representation throughout Pennsylvania and with the association of our global partners we can assist in locating product throughout the country.

Press Release – New Lease Transaction to Riverfront Federal Credit Union

NAI Keystone’s Bryan Cole handles lease to Riverfront Federal Credit Union.  For Press Release see link below.

To view the press release see link >>  https://teamcole.box.net/shared/oy3i3i8xrh

For More Information about Local News, Market Intel, or Commercial Real Estate Opportunities; visit www.Bryan-Cole.com

Bryan E. Cole | Team Leader
NAI Keystone Commercial & Industrial, LLC
direct: 610-370-8502
Bcole@naikeystone.com

Check out my new website at www.Bryan-Cole.com

NAI Keystone is a full service commercial and industrial real estate firm located in Reading PA; We handle buyer, tenant, and landlord representation throughout Pennsylvania and with the association of our global partners we can assist in locating product throughout the country.

Board gives push to zoning change

 

By The Reading Eagle Company

The Perry Township Planning Commission is recommending that the township rezone a 15-acre parcel at Routes 61 and 662 to commercial from light industrial.

The 4-1 vote Wednesday begins to pave the way for a retail complex on the northeast corner of the intersection. Edward J. Walsh IV of McCarthy Engineering Associates, West Lawn, said Shoemakersville developer Eugene Bell hopes to build several stores and retail shops at the northeast corner.
The other corners are zoned commercial and have restaurants and a convenience store with gas pumps.

Walsh said Bell owns 38 more acres and they would remain zoned light industrial.

The land is adjacent to a residential development, proposed by Bell, of more than 100 units.

Planner Nancy A. Rogers voted against the rezoning, but did not say why. Planners Richard A. Furnanage and Alton Rohrbach were not present.

In other business, township Engineer Joseph H. Body said that preliminary plans for a commercial center just west of Route 61 are not ready for approval.

Body said a proposed design for the 16-acre parcel, just north of the former Boyer’s Food Market and near the Shoemakersville pool, needs to show improved access for tractor trailers.

“If people can’t get in, the business will lose out,” he said.
Grant T. Smith, senior project manager with Stackhouse Bensinger Inc., Sinking Spring, said that the plan design would be revised.

Smith said the Federal Emergency Management Agency recently approved the building of a planned driveway across a stream tributary just east of Market Street.

Owner-developer Scott G. Homel of Jenkintown, Montgomery County, said he has reserved sewage treatment capacity at the Shoemakersville sewage treatment plant and wants to proceed with the project as soon as possible.

A convenience store and pharmacy are planned on the tract, he said.

For More Information about Local News, Market Intel, or Commercial Real Estate Opportunities.  visit www.Bryan-Cole.com

Bryan E. Cole | Team Leader
NAI Keystone Commercial & Industrial, LLC
direct: 610-370-8502
Bcole@naikeystone.com

Check out my new website at www.Bryan-Cole.com

NAI Keystone is a full service commercial and industrial real estate firm located in Reading PA; representing buyer, tenant, and landlord representation throughout Pennsylvania.

New File uploaded to DocStoc


411 S Claude A Lord Blvd

NAI Keystone’s Bryan Cole and John Buccinno are named Exclusively brokers for 411 Claude A Lord Blvd Pottsville Pa 17901 Location 411 Claude A Lord Blvd

www.docstoc.com/docs/70239555/411-S-Claude-A-Lord-Blvd

For more information about this property.  Please contact.

Bryan E. Cole | Team Leader
NAI Keystone Commercial & Industrial, LLC
direct: 610-370-8502
Bcole@naikeystone.com
Check out my new website at www.Bryan-Cole.com

MedExpress opens in Muhlenberg

 

Reading Eagle Article www.ReadingEagle.com

MedExpress Urgent Care opened an urgent-care center today at 3407 N. Fifth Street Highway, Muhlenberg Township.

The office, open seven days a week from 9 a.m. to 9 p.m., employs 30.
Dr. Frank Alderman, chief executive of the Morgantown, W.Va.-based company, said the office provides prompt care for episodic illnesses or injuries that are not perceived to be life-threatening.

“Anything life- or limb-threatening – a gunshot wound or significant trauma – should go to the emergency room,” Alderman said. “But a broken ankle, stitches, asthma, pneumonia – all that stuff is welcome at MedExpress.”

He said that a physician and registered nurse are always on site.
Alderman said the company also works with employers to minimize the amount of time that a worker would lose if he had to go to the ER.
The company is in the networks of most insurance companies, but also offers payment plans for the uninsured, he said.

MedExpress was founded in 2001 and has 52 locations in country.

MedExpress opens in Muhlenberg

 

Commercial & Industrial Real Estate in Reading PA

Bryan E. Cole | Team Leader
NAI Keystone Commercial & Industrial, LLC

www.Bryan-Cole.com
Bcole@naikeystone.com

direct: 610-370-8502
3970 Perkiomen Avenue
Suite 200
Reading, PA 19606

NAI Keystone Commercial and Industrial, LLC releases November 2009 Newsletter

NAI Keystone’s Bryan Cole and John Buccinno publisher of The Greater Reading Commercial & Industrial Real Estate Newsletter publish Novembers edition.  NAI Keystone representing a large market share of commercial and industrial real estate in berks county.  For more information please contact Bryan E. Cole or John Buccinno of NAI Keystone at 610 370 8502 ; bcole@naikeystone.com or www.Bryanecole.com

 

Newsletter Link is – http://www.docstoc.com/docs/14561859/NAI-Keystone—Bryan-Cole-Novembers-Greater-Reading-Commercial-Real-Estate-Newsletter