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MarketREVIEWINSIGHT • TRENDS • PERSPECTIVE

Adams County, PA 2nd Quarter 2015

RESEARCH & MAPPING

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This report provides market data and statistics on the Adams County, Pennsylvania commercial real estate market including insights, trends, and perspectives. The TEAM at ROCK Commercial is proud to provide this comprehensive look at various aspects of the market based on vacancy, absorption, sales, leasing, employment, new developments and much more.

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© 2015 ROCK Commercial Real Estate. All Rights Reserved. | Market Review | 2

TABLE OFCONTENTS

RETAIL MARKET REVIEWAdams County Retail Vacancy

Remains Low

OFFICE EMPLOYMENTHow much employment in Central

Pennsylvania is supported by office-based businesses?

INDUSTRIAL MARKET REVIEW

Increase in Industrial Lease Activity in Adams County

OFFICE MARKET REVIEWAdams County Office Market

Continues to Tighten

3

5

7

9

ADAMS COUNTY, PA

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ADAMS COUNTY, PA

$

$

Population

103,382

Households

39,008

Avg. HH Income

$70,790

Per Capital Income

$27,022

Businesses

4,113

Employees

103,382

Additional information for Adams, Lancaster & York Counties such as Tax Calculators, Recent Transactions, Market Reports and MORE can be found at www.RockRealEstate.net

221 West Philadelphia Steet, Suite 19 York, PA 17401 | 717.854.5357

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Adams County Retail Vacancy Remains Low

VACANCY Adams County’s Retail market witnessed a slight rise in vacancy from the first quarter to the second quarter. The rate which previously was 2.28% rose to 2.30% in this time frame. Vacancy has been slowly trending upward over the last four quarters, but still remains at a very low level. The rate hit its highest point in the second quarter of 2011 at 4.31% and has since then decreased. AVAILABLE PROPERTIES The number of available retail properties in the Adams County market has seen an upward trend since 2013. From 2011 to 2013, the number of available retail buildings for sale or lease remained somewhat level. In the fourth

quarter of 2013, there were 43 active retail listings. This increased to 78 available listings in the third quarter of 2014 and has since then dropped back down to 64. This pattern also remains true for the amount of available square footage. During the fourth quarter of 2013, there was just under 940,000 square feet available. This number increased to 1.5 million square feet in the third quarter of 2014 and has since then dropped back down to 1.2 million square feet.

SALES ACTIVITYAdams County saw a growth in pending retail sales transactions during the second quarter. There were six buildings under contract at the end of June 2015 totaling just over $2 million. These transactions equated to 13,400 square feet. The average price per

RETAILMARKET

Vacancy and Absorption

ADAMS COUNTY, PA 2.29%Overall retail vacancy in the first quarter of 2015.

$1.75 Million in retail sales**

45,143Millionretail sales square feet sold**

$2.0 Million* in pending retail sales

$16.67 average retail lease rate per square foot*

20,700 retail square feet leased*

13,400*square feet of pending retail sales


square feet declined from $160.17 to $151.86 during the same time period.* There were two completed retail sales transactions during the second quarter in Adams County. The total dollar volume of these two transactions was $184,000, up from $120,000 in the first quarter. The average sale price per square foot declined for the fifth quarter in a row. The rate hit a peak in the first quarter of 2014 at $83.04 per square foot and has since then decreased each quarter to the current rate of $37.05 per square foot. LEASING ACTIVITY The Adams County retail market had more leasing activity during the second quarter than the first quarter of 2015. There were three new leases signed totaling just under 21,000 square feet. This is up from 8,000 square feet in the first quarter. The average size of retail leases also increased in this same time period graduating from 2,500 square feet to 4,200 square feet. The average lease rate was $16.66 per square foot.

*Pending sales data includes transactions that were only reported through online listing services. This information does not include transactions that occurred privately.

**Rolling 12 month total.

Vaca

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Abs

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(SF)

Retail Market IndicatorsThe graphic below is a snapshot of current market conditions for retail

properties in the Adams market. The green and red indicators illustrate each metrics change over the previous quarter.

OFFICE EMPLOYMENT FROM ROCK Thinking AheAd. GettinG Results.

© 2015 ROCK Commercial Real Estate. All Rights Reserved. | Market Review | 65 | Market Review | © 2015 ROCK Commercial Real Estate. All Rights Reserved.

How much employment in Central Pennsylvania is supported by office-based businesses?

Industries in the office sector support a large number of employment in the United States. In 2014, there were an estimated 87.2 million white collar workers throughout the U.S. and this number is projected to grow by another 2.2 million workers by the year 2019. Employment trends indicate that companies are filling vacancies and adding new positions at a faster pace to keep up with rising workloads. But what does this mean for Central Pennsylvania?

Office Workers in Central PA

In Central Pennsylvania, there are

approximately 40,000 “office” businesses that employ just over 600,000 people. In breaking down the data, we learn that Lancaster County currently has the largest number of office businesses (8,637) followed by Berks County with 6,719. Cumberland County and Dauphin County have the largest percentage of total businesses that entail some type of office business. In Cumberland County, approximately 50.9% of the total businesses are office-based businesses, and in Dauphin County, 50.3% of the total businesses are office-based.Dauphin County currently has the largest number of office employees. In fact, 62.2% of the total employment in the county is office-based employment which is predominately driven by government employees in Harrisburg. In Dauphin County, one office-based business supports approximately 24 employees on average, which is 23.6% higher than the average for all businesses and employees in the county. Employment-to-population ratio

The employment-to-population

ratio is used to help evaluate the state of the economy and its ability to create jobs. It is measured by taking the total number of employment and dividing it by the total civilian population to determine how many people one job “supports”. Having a high ratio means that an important portion of the population is dependent upon a specific industry. Of the Central Pennsylvania counties, Perry County ranks the highest for office employment-to-population ratio. One office job in the county supports 10.8 people. The employment-to-population ratio overall in Perry County is only one job to every 5 people. Adams County ranks second on the list for office employment-to-population ratio (1 to 6.5) followed by Franklin County (1 to 6.0).

Change in population from 2008 to 2014

In the six year time period from 2008 to 2014, changes in office-based employment were mostly positive overall for Central Pennsylvania. All of the Central Pennsylvania counties individually witnessed some

growth over this time period. Growth in the office-based job market in the region as a whole experienced 5.3% growth from 2008 to 2014. Franklin County had the overall highest change in this time frame with office-based employment increasing by 15.7%. Adams County ranked second on the list with a change of 12.8%, followed by Dauphin County which increased by 11.8% overall. The information industry took the hardest hit in employment from 2008 to 2014 in the Central Pennsylvania region.

Total employment in this industry decreased by 20.3% over this time frame. The information industry includes newspaper publishing, software publishing, motion picture and video recording, sound recording industries, radio and TV broadcasting, cable and other telecommunications (including wireless and satellite), data processing, and others.Both the health care and education industries in the Central Pennsylvania region saw the highest growth in employment from 2008 to 2014. These industries saw an overall increase of 13.8%. Lancaster County

had the highest growth in medical employees (17.6%) as well as the highest growth in education employees (44.6%).

Office Business and EmployeesCentral Pennsylvania Counties

The graph above shows the employment difference by percentage and total number of employees in each county.The graph above displays the total number of office-based

employees and the total office-based businesses in each county.

ROCK publishes a weekly column entitled MORETidbits which takes national news, data and statistics that are relevant to real estate, business, and economics and gives the information a local Central PA perspective.

Read other MORETidbits: http://www.rockrealestate.net/moretidbits

MORETidbits™

Change in Office EmploymentCentral Pennsylvania Counties

Increase in Industrial Lease Activity in Adams County

VACANCY The Adams County Industrial market witnessed a slight increase in vacancy from the first quarter to the second quarter of 2015. The rate which was at 2.37% during the first quarter rose to 2.39%. Vacancy in the county’s industrial market during the first half of the year is at its lowest point since 2011. Vacancy began rising in 2011 until it hit its peak in the first quarter of 2012 at 6.73%. Since then, vacancy has been on a downward trend.

AVAILABLE PROPERTIES At the end of the second quarter there was

approximately 1.4 million square feet of industrial space available for sale or lease in Adams County. This represented a 6.3% decrease from the first quarter. The total dollar volume of industrial properties for sale during the second quarter equated to $13.5 million ($14.67 per square foot average). The average asking lease rate for these properties remained relatively the same at $3.98 per square foot. SALES ACTIVITY There were two industrial properties sold in Adams County during the second quarter. The total dollar volume of these transactions was $2.14 million (approximately $49.82 per square foot). There was a decrease of approximately 23% in the total square footage sold

INDUSTRIALMARKET



from the first quarter to just over 43,000 square feet for the second quarter. Pending industrial transactions in Adams County rose during the second quarter. At the end of June 2015 there was 452,000 industrial square feet under contract for approximately $12.9 million. The average price per square foot for these transactions rose from $27.53 in the first quarter to $28.54 per square foot in the second quarter.* LEASING ACTIVITY Adams County saw an increase in the amount of industrial square feet leased. There were 3 new industrial leases completed during the second quarter totaling approximately 52,600 square feet. This was a 39.6% increase over the first quarter. These leases translated into larger deals in the same time period. During the first quarter, the average industrial lease transaction in Adams County was 12,570 square feet. That increased in the second quarter to 17,549 square feet. The average asking lease rate rose to $2.25 per square foot, up from $2.13 per square foot.


2.39%Overall industrial vacancy in the first quarter of 2015.

$6.4 Million in industrial sales*

109,000industrial sales square feet sold*

$12.9 Million in pending industrial sales

$2.26 average industrial lease rate per square foot*

98,900 industrial square feet leased*

452,120square feet of pending industrial sales

ADAMS COUNTY, PA

*Rolling 12 month total.

Vaca

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(SF)

Industrial Market IndicatorsThe graphic below is a snapshot of current market conditions for industrial properties in the Adams market. The green and red indicators illustrate each

metrics change over the previous quarter.

Adams County Office Market Continues to Tighten

VACANCY The Adams Coun-ty Office market continued to have very little vacancy during the second quarter, although the rate has been slightly trend-ing upward since 2012. The rate at the end of the second quar-ter of 2015 was at 2.09%, down slightly from 2.16% in the first quarter. This rate has continued to rise every quarter since the second quarter of 2012 when the rate was at 1.28%. AVAILABLE PROPERTIES The total amount of available office listings in Adams County

has remained relatively stable. The tightness of the market has not allowed for many availabil-ities. At the end of the second quarter, there were only 16 available office properties for sale or lease. These properties totaled just under 244,000 square feet which is up from the first quarter when there was 215,000 square feet of office space available. The average ask-ing lease rates in Adams County declined slightly to $10.90 per square foot from $11.01 per square foot. The average asking sale price per square foot also decreased from the first quarter to the second quarter of 2015, going from $23.82 per square foot to $20.77 per square foot.

OFFICEMARKET



SALES ACTIVITY The number of pending sales in Adams County’s office market increased from 2 to 4 during the second quarter. These deals represent just under 8,400 square feet for approximately $840,000. The average price per square foot for these office transactions increased approxi-mately 10% to $100.21. There was one completed office sale during the second quarter. The building sold was 2,200 square feet and sold for roughly $37.00 per square foot. LEASING ACTIVITY Over-all, the Adams County Office market has been experienc-ing more leasing activity over the past four quarters. Within the past year, there was over 15,000 square feet of office space leased. This is the highest amount of leased square feet that the county has seen since 2013. The average lease price per square feet for office space decreased during the second quarter going from $10.85 per square foot to $8.14 per square foot.


2.09%Overall office vacancy in the first quarter of 2015.

$500 Thousand in office sales*

6,600office sales square feet sold*

$840,000 in pending office sales

$8.14 average office lease rate per square foot*

15,043 office square feet leased*

8,400square feet of pending office sales

ADAMS COUNTY, PA

*Rolling 12 month total.

Vaca

ncy

Abs

orpt

ion

(SF)

Office Market IndicatorsThe graphic below is a snapshot of current market conditions for office

properties in the Adams market. The green and red indicators illustrate each metrics change over the previous quarter.

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