Five predictions for the 2013 commercial real estate market in ...

The new year is shaping up as a mixed bag when it comes to commercial real estate in central Pennsylvania. Small commercial and office buildings will continue to sell well, but land could lag in a market still recovering from a deep contraction brought on by the great recession.

All this and more is according to William Gladstone, of the Bill Gladstone Group of NAI CIR. In predicting 2013 market trends, he says size will continue to matter when it comes to selling commercial real estate. The sweet spot will remain properties and office buildings that weigh in under 7,000 square feet. This end of the market is holding its value, provided the location is good, Gladstone says.

Other bright spots include the hospitality sector, including hotel and restaurant properties, which should continue to see a modest recovery. Gladstone points out that the West Shore, especially, needs more restaurants to fill existing vacancies.

On the down side, office leasing in downtown Harrisburg will remain flat. For things to change, Gladstone says there needs to be a breakthrough in the city?s debt crisis ? ?some type of resolution allowing the city to move forward.? That said, office leasing in the suburbs isn?t exactly setting records, either. Gladstone projects more of the same ? a middling pace that should see less than 10,000-square-foot of net space absorption per quarter.

As for building more office space? It will only happen when tenants are lined up in advance for a custom build-to-suit job ?- or when larger new tenants enter or relocate to Central Pennsylvania, Gladstone says.

In the industrial sector, leasing of large warehouses (above 500,000 square feet) ticked up slightly, but only when new businesses relocate here. The real demand for industrial space remains on the small end ?- buildings in the 25,000-75,000 square-foot range.

With so much existing commercial space still standing idle, it?s no wonder that Gladstone is most pessimistic when it comes to prospects for commercial land in 2013. ?The ability to finance and to purchase at a reasonable number is just not there today,? he says of land for most commercial uses. ?The only exception will continue to be land for apartment development, which are mostly larger tracts.?

All in all, the commercial real estate game in central Pennsylvania remains a challenge in 2013. Yet, Gladstone sounds as if he wouldn?t have it any other way.

?There is no doubt that in the upcoming year, real estate will be inviting, challenging and even have a sense of thrill about it,? he says. ?As we move through our future, we are hoping for the best, preparing for the worst and anticipating something in between those two positions.?

Bill and Karen Gladstone
Submitted photo

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Source: http://www.pennlive.com/midstate/index.ssf/2013/01/five_predictions_for_the_2013.html

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