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Q4 2010 | INDUSTRIAL

SOUTHERN I-81 AND I-83

Market Trends 4Q 2010 Review and Forecast MARKET INDICATORS 2010 Q4

2011 Q1

CONSTRUCTION

RENTAL RATES

The Southern I-81 and I-83 Industrial Market, as defined by Colliers International, contains 92.4 million square feet of warehouse space in buildings over 50,000 square feet, not including military-owned facilities. The surveyed market includes the Southern Interstate 81 corridor in Lebanon, Dauphin, Cumberland, Franklin counties and along the Interstate 83 corridor in York County

VACANCY NET ABSORPTION

An increase in bulk activity during the previous four quarters helped to reverse the upward vacancy trend which began in 2007. Activity has been partially offset by continued space contractions. Most recently, Hershey closed its 597,100-square-foot distribution center in Mechanicsburg. Following the completion of three speculative buildings in 2009: Exeter Property Group’s 342,160-square foot spec facility in Northern York County, Lauth Property Group’s 1.0 million square feet and Exel/ING Real Estate’s 575,000 square feet at Exit 44 of I-81 in Carlisle, the most recent development cycle has stopped. The only projects currently under construction are a build-to-suit for Ollie’s Bargain Basement on Espresso Way in York County and the first phase of an expansion by Giant in Carlisle totaling 67,000 square feet. Ollies will be consolidating five area warehouses into its new location.

5.0

16%

4.0

14%

3.0

12%

2.0

10%

1.0

8%

0.0

6%

-1.0

4%

-2.0

2%

-3.0

0% 2004 2005 2006 2007 2008 2009 2010 Absorption

Construction

Vacancy

www.colliers.com/philadelphia

In addition, construction has commenced on the Norfolk Southern intermodal hub in Chambersburg, which is anticipated to increase industrial demand along the I-81 corridor. Vacancy

MSF

NEW SUPPLY, ABSORPTION, VA-

UPDATE Market Statisics

INVENTORY

TOTAL VACANT

VACANCY RATE

NET ABSORPTION ANNUAL

COMPLETIONS YTD

UNDER CONSTRUCTION

AVG. ASKING RENT

92,395,735

11,709,415

12.7%

1,073,271

-

670,000

$3.77


Accelerating Success is at the core of our business at Colliers.

MARKET TRENDS (CONT’D) Logistics, consumer products and retailers have been the most active sectors over the last year. Bay Valley Foods, a distributor of private label foods, recently leased the entire Key Distribution Center in Carlisle, one of the largest lease deals in the region in 2010. Asking rental rates generally averaged between $4.00 and $4.35 per square foot for new bulk space and from $3.25 to $3.95 for second generation warehouse space. Medium warehouse space ranges from $4.00 to $4.75 per square foot. The current asking rents do not reflect the deep discounting on signing rents. Modern bulk lease rates have been starting well under $4.00 per square foot. In order to compete with these buildings, owners of second generation buildings have been doing lease proposals under $3.00 per square foot.

Sales activity also slowed following an active first half when Hillwood acquired a 602,500-square-foot warehouse from Higgins in Carlisle and SK Realty acquired three net-leased buildings from the DEXUS North American Industrial Portfolio totaling 563,800 square feet. Prices for these buildings were between $40.00 and $45.00 per square foot. Investors have become more active in the market, and there are additional properties under agreement.

Committed to your business and not just the deal, we combine market expertise and world-class service to deliver results that are always advancing your business goals at every stage in your growth.

Contact Us MICHAEL ZERBE SENIOR VICE PRESIDENT

+1 610 684 1853 michael.zerbe@colliers.com

LEASE ACTIVITY: 3Q -4Q 2010

LEE FEIN PROPERTY ADDRESS

TENANT

SIZE SF

TYPE

1700 Ritner Road

Bay Valley Foods

602,500

New

300 Quality Circle

Clark Group

252,000

New

Ozburn-Hessey Logistics

220,000

Expansion

Crane Logistics

152,282

Renewal

Performanc Radiator Pacific

51,774

New

Systems Material Handling Co.

50,000

New

80 S. Middlesex 275 Cross Farm Lane 3400 Industrial Road 1530 Bobali Drive

SENIOR VICE PRESIDENT

+1 610 684 1854 lee.fein@colliers.com MARK CHUBB SENIOR VICE PRESIDENT

+1 302 425 4077 mark.chubb@colliers.com

DEFINITIONS: Inventory:

Flex, warehouse and manufacturing buildings over 50,000 square feet

Vacant Space:

All spaces within established criteria physically vacant in a given market. For the purposes of this report, we have distinguished between direct and sublease vacant. Any space currently under construction or under substantial rehabilitation is not included in these totals.

Net Absorption:

The difference in physically occupied space within a given time period for a particular market.

Vacancy Rate:

Total vacant space divided by the total inventory.

WILLIAM AIELLO SENIOR VICE PRESIDENT +1 717 730 3752 william.aiello@colliers.com

Average Asking Rent: Weighted average rent per square foot, triple net.

Accelerating success.

The foregoing information was furnished to us by sources which we deem to be reliable, but no warranty or representation is made as to the accuracy thereof. Subject to correction of errors, omissions, change of price, prior sale or withdrawal from market without notice.


Colliers International Industrial Market Trend Q4 2010