7/28/2019 Office Market Overview - (1Q13) by Bryan Cole - Full Report

1/2

Greater Reading Office Market Overview1st Quarter 2013

By Bryan ColeSuburban Office Market OverviewThe Greater Reading Suburban Office Market ended the first quarter 2013 with a vacancy rate for Class A Office buildings at

17.4%. This is a decrease in vacancy rates from 4th quarter 2012 and an increase in vacancy from same period 2012. Theaverage rental rates increased to $16.00 - $21.50 per square foot Modified Gross which is a increase in the rates from the same

period 2012.Deals of primary focus within Class A building sector were the 13,268 sf. Lease to Sunoco Logistics at 1 Meridian Blvd, which

was a relocation and expansion for the already Wyomissing based organization, and the new VA Medical Center lease that was

signed at 2762 Century Blvd. these leases along with a few other assisted in reducing vacancy rates and increasing overall

absorption.The Class B Suburban office market ended the first quarter of 2013 with a vacancy rate of 18.67%. This is a slight decrease invacancy from 4th quarter 2012 by less than one quarter percent, however it is an increase from the same period 2012. Theaverage rental rates had an increase from 4th quarter 2012 to 1st quarter 2013 at $12.50 - $16.50 per square foot modified

gross opposed to that of rates from the same period 2012 which was $11.00 - $16.50 per square foot.Deals of primary focus within the Class B building sector were the new leases at 975 Berkshire Blvd. of 5,300 sf, and 2001 State

Hill Road of 4,000 sf. The activity level for second generation Class B space has greatly increased within the quarter which

doesn't seem to be slowing down.And the Class C Suburban office market sector ended the 1st quarter of 2013 with a vacancy rate of 11.97% which was an

increase from the 4th quarter 2012.Our outlook for the office market going into 2nd quarter 2013 is very optimistic with activity levels at new highs within the

market place and four new transactions pending totaling 70,000 sf. of new lease deals all of which NAIs Bryan Cole is handling.

Downtown Reading Office Market OverviewThe Greater Reading Downtown Office Market ended 2012 with a vacancy rate for Class A Office buildings at

22.96%. There was no change in vacancy rates from 3rd quarter 2012; however it was a significant increase from

the same period 2011. The average rental rates slightly decreased from 3rd to 4th quarter 2012 at $14.00 per

square foot Modified Grossto $13.50 per square foot Modified Gross.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 andoverall interest in the City, these buildings remain vacant and are still taking a toll on the overall vacancy ratewithin Downtown.The Class B Downtown office market ended 2012 with a vacancy rate of 22.08%. There was no change in vacancy

rates from 3rd quarter 2012, and it was a slight increase from the same period 2011. The average rental rates

dropped from $11.50 per square foot Modified Grossin the 3rd quarter 2012 to $10.00 per square foot Modified

Gross in 4th quarter 2012 this is also a slight decrease to the rates from the same period 2011.

7/28/2019 Office Market Overview - (1Q13) by Bryan Cole - Full Report

2/2

Overall Vacancy Rates for Class 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.

Tenant perspective: (As a Tenant Representative)The Greater Reading market has experienced a high level of interest within the 1st quarter 2013, although activity

is high and deals are steadily coming forward the A and B product is still offering incentives/concessions which

have allowed Tenants to continue to capitalize on past market conditions.However as we moved forward in 2013, landlords have begun as expected to raise rates, and limit the concessions

as they negotiate with many more details than before.

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.Although the markets are improving and landlords will begin to lock in better terms, we feel 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 will sway some landlords to think the market has completely turned around. Be

cautious as we feel well into 2013 the market will maintain its Tenant Market status.Rates have been low over the past few years, so by offering free rent on the front end while maintaining higher

base rates will not only provide tenants the ability to get into the space on a lower initial cost for year 1, it will

allow landlords to maintain higher valuations on their assets since most Free Rent is outside the term. This

allows landlords to still get effective 3, 5, or 7 year terms while limiting their exposure long-term.Interest rates will probably remain relatively lower well into 2013. This will allow tenants to finance TI themselves

at sometimes better rates then landlords. This makes the Free Rent on the front end even more appealing to

some tenants.

By Bryan Cole, NAI Keystone Commercial & Industrial, LLCOffice & Medical Real Estate Specialistwww.Bryan-Cole.comorwww.WyomissingOfficeSpace.com

http://www.bryan-cole.com/http://www.bryan-cole.com/http://www.wyomissingofficespace.com/http://www.wyomissingofficespace.com/http://www.wyomissingofficespace.com/http://www.bryan-cole.com/