Greater Reading Office Market Report

2009 is shaping up to be a stable year for the Greater Reading office market for both vacancy and rental rates with pockets of growth in the Wyomissing and Spring Township areas of the county. Coming off a poor net absorption rate in the Third Quarter 2008 the fulfillment of a 52,000 square foot lease to the utility concern UGI at Stone Point Office Center along with steady overall demand throughout the county contributed to a strong last quarter 2008. The premier office building at One Meridian which has a GLA of 377,000 square feet had a net absorption of nearly 40,000 in 2008 and stands as the marquis office building in terms of amenities and services in the area which helps maintain positive demand at its facility. In addition to commitments for existing space, over 200,000 square feet of new office space is under construction with signed tenants and should be completed in 2009 or early 2010.

Still, the market faces challenges in these difficult times with overall Class “A” building vacancies increasing from 7.5% to 10% in the fourth quarter, mainly from increased development and softening demand at the higher price points, and stiff competition from aggressive landlords. Traditionally a safe sector in this marketplace due to low inventory, the Class “A” building space is moving toward oversaturation with several properties being repositioned to compete at the low end of this sector along with an additional 300,000 square feet of proposed space waiting to be built. Currently a 110,000 square foot facility located at 525 Lancaster Avenue and 40,000 square feet at 210 George Street are being upgraded to meet modern office standards and will only add to the pull from the Class “A” market.

Tenants are willing to pay higher base rental rates (ranging from $14.50 NNN to 16.50 NNN) for Wyomissing’s central location with its easy access to major roadways and proximity to supporting services and amenities but some of the other suburban locations in the county such as Exeter Township and Muhlenberg Township are beginning to compete successfully on rental rates and amenities.

The Class “B” sector is experiencing a mixture of higher vacancy rates and lower rental rates, vacancy rates have slightly increased from 13.4% to 13.8% at the same time that rates have come down approximately 10%. Base rates for this sector are starting at $8-$9 per square foot and topping out at $12 - $13 per square foot and, with the decreased amenities generally provided, the gross rental rates struggle to get above $16 per square foot.

Downtown City of Reading vacancy rates continue to increase with rates rising from 14.5% to 16.5% with much of the vacancy surrounding larger blocks of contiguous space. Although difficult and costly to divide and transition to smaller users, owners are becoming much more flexible and finding ways to meet the market demands. Owners and tenants are struggling with high parking costs and security concerns, which are continuing to be addressed by a committed City Administration.

The City of Reading and economic development groups have been working hard to improve and revitalize downtown which shows in the number of projects underway. The new IMAX Theater and the nearly completed addition to the Reading Eagle Headquarters in the CBD are welcome entrants to the market and kick off a multi-million dollar main street corridor project that includes a new $67 million DoubleTree hotel and garage project across from the Sovereign Entertainment and Expo Center. This will help attract a more vibrant restaurant and entertainment segment with increased amenities and ultimately assist to bring tenants back downtown while decreasing vacancy rates and increasing the tax basis.

The suburban market has been flat on the sale side, due to the economic conditions and difficulty in obtaining financing. Most of the sales are occurring with owner/users with established and well capitalized businesses or from local organizations purchasing land to build. Utilities Credit Union and Reading Hospital are great examples of local organizations expanding their overall market presence. Downtown, the Reading School District has been the main driver in demand for building and land purchases to accommodate strong enrollment and replacement of obsolete facilities but otherwise the purchase market for office buildings remains flat.
The Greater Reading Area offers affordable rents with good amenities and a well educated work force. The residential market has remained stable even in these most troubling times with below average declines in home prices. The desirable bedroom communities along with excellent schools makes the area a good location to raise families and run businesses.

Written and compiled by Bryan Cole and John Buccinno who are the office specialists for NAI Keystone Commercial & Industrial, LLC in Reading PA.www. OfficeSpaceinBerks.com ~ 610-779-1400

Featured Properties for Lease

Featured Properties For Lease

http://www.bryanecole.com

Executive Park

2001 State Hill Road, Wyomissing PA 19610

25,000 Sq. Ft. Divisible to 3,000 Sq. Ft.


Wyomissing Corporate Campus

1166 Spring Street, Wyomissing PA 19610

3,000 to 145,000 Sq. Ft. Available

Exeter Ridge Corporate Center
3970 Perkiomen Avenue, Reading PA 19606
2,000 Sq. Ft. to 25,000 Sq. Ft. Available

Bryan Cole

Sr. Sales Associate

Main: 610 779 1400Direct: 610 370 8502Fax: 610 779 1985

Email: bcole@naikeystone.com

Commercial Real Estate

You built your family business on hard work and good relationships. One of the most important relationships you can develop is with your banker (or as we call them, Relationship Manager). By making your RM part of your team, he or she can help you achieve your goals and dreams, often in ways you may not have imagined. For example:

1. Expanding your operations. Say you have outgrown your existing location and are thinking of buying commercial real estate to expand. You may not have considered a SBA loan for this purpose, because, like most people, you think SBA loans are just for small or start-up companies. Actually, SBA loans are often used for expansion by larger businesses. A knowledgeable RM might consider this option and recommend a combination of direct bank financing and SBA-backed loans, using a structure that is financially beneficial to your business. Your RM will also know about County, State or Federal agencies that may assist in the financing options for your business.

2. Maximizing your cash flow. A bank can offer much more than loans. While you might run a very tight ship, you also could have cash and receivables sitting idle in an account, even for one day. That cash can work for you by being swept nightly into an instrument that can earn interest or pay down a loan. Your RM can arrange for you to have a no-fee, cash management evaluation to uncover such opportunities that will save you money, reduce interest costs, increase interest income, all while improving efficiency.

When you’re purchasing equipment, don’t forget to consider leasing as an option for the financing. Leasing can add to your current cash flow by requiring a smaller down payment with the ability to write-off the total lease payments annually. Also, much of today’s equipment has a “technical life” and leasing allows you to turn the equipment back when the lease is finished. This allows you to then go out and get the most “updated” new equipment your company needs.
Remember your financing, whether it be a term loan or lease, should follow the term of depreciation or life of that equipment.

The key to building a relationship with your RM is good communication. Here’s how to start:
1. Designate one person at your company to work with your RM. Leaders of family-owned businesses often share responsibilities. When it comes to finances, however, it’s best to delegate that responsibility to one person, who can bring knowledge and continuity to the banking relationship.

2. Make sure your RM also knows all of the key people in your company. Family-owned businesses have many important players and roles may change as the company grows.

3. Communicate early and often. By letting your RM know how your business operates, who the players are, and any changes you plan to make, he or she can recommend financial strategies that will maximize your resources.

You’ve worked hard to build your company. A quality relationship with your RM will pay multiple dividends and help you realize an even higher rate of success for your business.

Please contact Larry Rush, SVP at National Penn, at 610.208.4981 if you have any questions or would like more information.

*News* for February

*News* for February

NAI Keystone's Bryan Cole and Steve Willems are named exclusive representatives of Wyomissing Corporate Campus, a 158,000 Sq. Ft. Office Complex in Wyomissing.

NAI Keystone's Bryan Cole and John Buccinno are named exclusive representatives of the Meridian Building, a 366,000 Sq. Ft. Class "A" Office building in Wyomissing.

NAI Keystone's Bryan Cole handles sale of Goodwill Industries New Distribution Center for $3,650,000.

NAI Keystone's Bryan Cole & John Buccinno have been named Exclusive Brokers for $5.2 Million Dollar Investment Package.

NAI Keystone's Bryan Cole completes $20 Million in Total Sales & Leasing Revenue for 2008.