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Downtown Office Market Report - by Bryan Cole

www.Bryan-Cole.com

2012 - 3rd Qtr. Update


Reading, Berks County Pennsylvania

Downtown Office Market Report

Committed to Greater Reading. Connected to the World.

Downtown Office Market Report - by Bryan Cole


From the Authors Desk
2012
This report provides an overview of the current office market conditions in Suburban Berks County Pennsylvania. 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 market, asking rents, incentives, extra costs, etc The information that NAI Keystone has assembled is separated by Class A and Class B facilities and consists of market data such as, absorption rates, vacancy rates, asking rents, etc 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. The report will be available on a quarterly basis by emailing us at marketing@bryanecole.com and asking to subscribe to our mailing list.

Bryan E. Cole Broker Bcole@naikeystone.com 610.370.8502 (direct) 610.370.8503 (e-fax)

Bryan E. Cole Resume


Bryan joined NAI Keystone in July of 2004, but before joining NAI, Bryan Cole spent 4 years active duty in the U.S. 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 Bryans time at NAI, he has sold in the excess of $250 Million Dollars worth of Commercial Real Estate, and leased hundreds of thousands of square feet of industrial and office/medical space. Because of this, Bryan earned NAI gold club status his first year in the business which is presented to approximately 75 - 100 brokers within the NAI Global network, which is comprised of over 8,000 Brokers. Bryan is currently working on earning both his CCIM designation and SIOR designation. Bryan has been NAI Keystone's Top Performer from 2006 - 2011. Dont forget to check: www.Bryan-Cole.com Now Optimized for the IPad and IPhone

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan

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Downtown Office Market Report 3rd Qtr. 2012
3rd Qtr. TRENDS
Vacancy Rates
Class A Class B

OVERVIEW:
The Downtown City of Readings 3rd Quarter overall office market was much like the similar period of 2011 and the first half of 2012. The largest additions to the overall vacancies in Class A facilities were at 401 Penn Street and 201 Penn Street, which caused Class A vacancy rates to sky rocket from 2011 into 2012. Due to the current economic climate and overall interest in the City, these buildings remain vacant. Overall Vacancy Rates for Class B/C buildings remained unchanged throughout 2012 however, various buildings previously tracked as Class B buildings were changed to Class C buildings, due to re-evaluating the assets and conditions. There is over 523,000 sf. of vacant space located within Class A & Class B buildings and an additional 272,000 sf. available in Class C product. Vacancy rates will continue to climb if Tenants continue to relocate out of the city into the suburbs. In the event C.N.A relocates its entire operations., Another 80,000 sf. +/ - will be added to the overall high vacancy. Downtown City of Reading vacancy rates for Class A buildings is 22.96% with Class B building estimates at 22.08% and Class C vacancy rates at 20.35% Concessions and Incentives including free rent, high tenant improvement allowances and moving allowances are some ways landlords are getting creative to assist in landing quality long term tenants.

Other Trends
Tour Activity

Net Absorption
Class A Class B

Concessions

Asking Rents
Class A Class B

Sales Volume

Construction
Class A Class B

# of Properties for Sale

For Full Article visit http://bryan-cole.com/MarketIntel.html

Total Blocks of Space (Can be Demised) # of Bldgs. Size


0 - 4,999 5,000 - 9,999 10,000 - 19,999 20,000 - 39,999 40,000 - 74,999 75,000 - Greater

Class A 2

Class Class B C 1 5 1 3 4 2 1

Total 6 9 3 5 2

1 1 1

3 1 1

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan

NAI Keystone - Bryan Cole


Downtown Office Market Report 3rd Qtr. 2012

Current Rental Rates


Year 2011 EO 1st Qtr. 2012 EO 2nd Qtr. 2012 EO 3rd Qtr. 2012 Class A $13.00 - $15.00 (MG) $13.00 - $15.00 (MG) $13.00 - $15.00 (MG) $13.00 - $15.00 (MG) Class B $10.00 - $13.00 (MG) $9.00 - $13.00 (MG) $9.00 - $13.00 (MG) $10.00 - $13.00 (MG)

Number of Buildings Tracked


Location Downtown Total Class A Class B Class C 229 Buildings 8 Buildings 41 Buildings 180 Buildings

Tenant perspective: (As a Tenant Representative) The Greater Reading market has experienced a high level of vacancy in its Class A and B product and increased incentives/ concessions which have allowed Tenants to capitalize on the current market conditions. Within the past 18 months Tenants have been able to lock in favorable rates, while obtaining leases with early out clauses in the event their long term commitments do not pan out. Tenants should begin to negotiate any leases that are within 18 months of expiration. This allows for enough room to negotiate and capitalize on the current conditions. The market will continue to be a Tenants Market into the late stages of 2013 based on current vacancies and leasing activity.

Landlord perspective: (As a Landlord Representative) Greater Readings recent activity has brought numerous tenants to the market place allowing landlords to get aggressive, now that tenants are starting to commit rather then Kick Tires. Landlords understand the value of maintaining their tenant base even in the event of reducing their base rents and offering additional TI dollars. Overall the market has seen the majority of the activity surrounding Medical and Large Operations centers. Most recently National Penn Bank announced they will be constructing a 48,000 sf. facility in Spring Twp. Although the market will most likely be a Tenants Market through 2013. Increased activity and deals being consummated are encouraging.

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan

NAI Keystone - Bryan Cole


Competitive Set - Contiguous Blocks of Space
Largest Blocks of Space Vacant SF 401 Penn Street 201 Penn Street 400 Washington Street 35 N. 6th Street 501 Washington Street 443 Penn Street 230 N. 5th Street 645 Penn Street 180,000 40,690 35,579 75,000 46,595 37,740 30,000 24,889 Building Class Class A Class A Class A Class B Class B Class B Class B Class B Parking for the City of Reading

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan

NAI Keystone - Bryan Cole


Methodology/Definitions/Sub Market Map
Absorption (Net) The change in occupied space in a given time period. Available Square Footage Net rentable area considered available for lease; excludes sublease space. Average Asking Rental Rate Rental rate as quoted from each buildings owner/ management company, For office space, a full service rate was requested; for retail, a triple net rate requested; for industrial, a NN basis. Building Class Class A Product is office Space of steel and concrete construction, built after 1980, quality tenants, excellent amenities & premium rates. Class B product is office Space built after 1980, fair to good finishes & wide range of tenants. Direct Vacancy Space currently available for lease directly with the landlord or building owner. Market Size Includes all existing and under construction office buildings (office, office condo, office loft, office medical, all classes and all sizes, both multi-tenant and single-tenant, including owner-occupied buildings) within each market. Overall Vacancy All unoccupied lease space, either direct or sublease.

SF/PSF Square foot/per square foot, used as a unit of measurement. Sublease Arrangement in which a tenant leases rental property to another, and the tenant becomes the landlord to the subtenant. Sublease Space Total square footage being marketed for lease by the tenant. Sublease space is not considered in the overall occupancy or absorption numbers - only direct leases are included. Sublease Vacancy Space currently available in the market for sublease with an existing tenant within a building acting as the landlord.

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan

Contact info:
Bryan Cole Office & Medical Specialist 610.370.8502 (direct) Bcole@naikeystone.com

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