Market Watch - 2011 -2Q
The Greater Harrisburg Office Market managed to close the Third
Quarter of 2010 on a positive note as absorption remained in
check ending the Quarter at negative 2,680 sq. ft. This respectable
figure should prolong the recovery of the Harrisburg Office Market
which demonstrated a solid first half of 2010 absorbing 131,000 SF
during that period.
Several large transactions are currently in negotiations and should
be completed later this year. Many of these deals are not expansions
but relocations to higher profile facilities. The possibility of additional
Class A and B+ space arriving on line in early mid 2011 is
almost a certainty. Furthermore, several deals are in the works which
would add additional vacancy to the Downtown Business District in late 2011, as tenants evaluate options and consider moves to more
premier properties.
In Summary, many office users are taking the time in this
Marketplace to upgrade their facilities as attractive options remain
available and pricing continues to be aggressive. With that in mind,
not all segments are ailing, certain pockets remain strong and should
continue to produce strong returns going forward in 2011.
Downtown Business District
Absorption totaled a negative 30,600 sq. ft. in the Third
Quarter 2010.
The Class A segment of the market remained unchanged at
94% as absorption totaled a negative 1,700 sq. ft. The Class B+
segment totaled a negative 14,500 sq. ft. and occupancy rates
slipped one percentage point to 89%. The Class B segment
totaled a negative 14,400 sq. ft. as occupancy rates moved slightly
lower to 87%.
With continuing uncertainty surrounding Harrisburg’s
financial outlook, the real estate market continues to see volatility
in pricing and demand in the Class B+ and B segments of the
Downtown Office Market. This trend will most likely continue
into the Fourth Quarter of 2010 as Harrisburg’s fiscal picture
becomes more clear.The Class A segment remains on solid footing,
fueled by government related transactions and lobbyists who
see the importance of being in close proximity to the Capitol
Complex. Unfortunately, Class B+ and B availabilities continued
to increase and must strengthen in order to improve the office
climate of Downtown going forward.
East Shore Business District
Absorption totaled a negative 42,380 sq. ft. demonstrating
a shift from the previous two Quarters in which positive
gains were realized.
Class A segment absorbed a negative 5,500 sq. ft. as occupancy
rates declined one percentage point to 93%. The Class B+
segment absorbed negative 14,780 sq. ft. and was off slightly at
88%. The Class B segment slipped one percentage point to 89%
as absorption totaling negative 14,600 sq. ft.The Class C segment
absorbed negative 7,500 sq. ft. as occupancy rates also moved
lower to 86%.
The solid demand realized in the First and Second Quarters
of 2010 failed to carry forward into the Third Quarter. New
availabilities coupled with modest demand helped keep absorption
figures in negative territory over this period. While demand
has appeared to increase modestly in recent weeks, the outlook
for the Fourth Quarter should include continued volatility as
larger businesses in the Marketplace continue to give back space
and others look to upgrade to higher profile properties.
West Shore Business District
Absorption totaled a positive 70,300 sq. ft. in the Third
Quarter of 2010, marking the third straight Quarter of
positive gains.
Class A occupancy rates remained unchanged at 91% as
absorption totaled a positive 3,900 sq. ft.The Class B+ and B segments
of the market also remained unchanged as occupancy rates
remained at 92% and 93% respectively. In the Third Quarter
absorption in the Class B+ segment totaled 47,700 sq. ft. and
Class B absorption totaled 6,500 sq. ft., a solid showing after two
strong Quarters. The Class C segment had absorption total of
12,200 sq. ft. as occupancy rates pushed two percentage points
higher to 93%.
While little changed statistically on the West Shore Business
District in the Third Quarter, the failure of a correction into negative
territory was a welcome relief. Fueled by a few large unanticipated
leases, the West Shore Business District remains the most
healthy District in the Harrisburg Marketplace.Although demand
must improve over the weeks ahead to provide further relief to
business owners with long term vacancies, the West Shore
Marketplace continues to perform well in calendar year 2010.
For an expanded market study analysis or to obtain a market survey of available office opportunities in the Central PA market please contact:
Thomas T. Posavec, SIOR - Vice President
The Office Services Group
717-731-1990 ext. 3007
717-503-7755 mobile
tposavec@landmarkcr.com
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