Market Watch - 2010 - 2Q
The Greater Harrisburg Marketplace showed continuing signs of improvement in the Second Quarter of 2010, a promising sign after a dismal 2009 which saw absorption figures reach their lowest levels in 16 years. Absorption totaled approximately 48,000 sq. ft. once again, fueled by demand from the East and West Shore Business Districts, while the Downtown Business District was able to produce only modest gains. Over 140,000 sq. ft. of office space has been absorbed in the past two quarters in the suburban markets as tenants are beginning to expand and relocation fears have begun to dissipate. Several tenants who have previously shelved plans to relocate have now accelerated
these plans to take advantage of opportunities that still remain in the Marketplace. Several large vacancies continue to impact all segments of the Downtown Business District. Demand for these availabilities has lagged over the past 24 months and continued uncertainty regarding the financial stability of the City may impact parking fees going forward, as options for Harrisburg’s Parking Garages are now on the table. Several large suburban deals are in the works and should be executed in the Third Quarter of 2010. These new transactions should push absorption figures higher throughout the remainder of 2010 further stabilizing an already improving Marketplace. The outlook for 2011 is difficult to pinpoint and will depend on continued expansion and demand from Harrisburg’s existing tenant base.
Downtown Business District
Absorption totaled a positive 5,100 sq. ft. in the Second Quarter of 2010, bringing a change for the better from the last several quarters for the Downtown Marketplace. Class “A” occupancy rates remained stable at 94% as absorption totaled a positive 4,900 sq. ft. The Class “B+” segment totaled a negative 1,900 sq. ft. and occupancy rates remained at 90%. The Class “B” segment absorbed 2,100 sq. ft. as occupancy rates remained at 88%. Occupancy rates for this Quarter demonstrate a stabilizing effect for the Downtown Business District, with little change in these rates in the Second Quarter of 2010. Prospect activity has been modest in recent months and landlords should be prepared to make concessions on spaces in order to reduce vacancy levels.
East Shore Business District
Absorption totaled a positive 17,776 sq. ft., marking the second straight Quarter of positive gains. Class “A” occupancy rates remained unchanged at 94% as absorption for this sector totaled a negative 5,600 sq. ft. Class “B+” occupancy rose one percentage point to 89% as absorption totaled 10,800 sq. ft. The Class “B” segment also rose one percentage point to 90% as absorption totaled 10,826 sq. ft. The Class “C” segment absorbed 1,750 sq. ft. as occupancy rates remained unchanged. While Class “B+ and “B” buildings continue to improve owners will still need concessions to push deals forward. Prospect traffic, while improving, remains less than spectacular, and more work must be done to stabilize these less sophisticated
properties. Few large availabilities are anticipated over the next several months, therefore market conditions should continue to improve.
West Shore Business District
Absorption totaled a positive 25,596 sq. ft. in the Second Quarter of 2010, demonstrating back to back solid quarters for 2010 and an improving market. Class “A” occupancy rates increased one percentage point to 91% as absorption totaled 11,464 sq. ft. Class “B+” occupancy rates rose one percentage point to 92% as absorption totaled 6,100 sq. ft. The Class “B” segment also rose one percentage point to 93% as absorption totaled 3,032 sq. ft. The Class “C” segment absorbed 5,000 sq. ft. and occupancy rates rose one percentage point to 90%. While all segments of the West Shore Business District continue to see improvement, the Class “A” and Class “B+” segments indicate a most noticeable change for the better. This trend demonstrates the appreciation for superior finishes and quality amenities in the Marketplace.
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
Please click on the links below to download the previous editions of the
Market Watch
|
