ROCK Commercial Releases 2021 Q3 Market REVIEWS

YORK COUNTY INDUSTRIAL | LEASED SQUARE FEET APPROACHES FIVE YEAR HIGH, SPEC BUILDS IMMEDIATELY ABSORBED UPON COMPLETION

• 1.4 MSF Patriot Tech Center sold for $73M to SKM Property Management, LLC.
• Building 1 at Goodman Logistics Park –Newberry has been preleased to Amazon to fulfill last mile delivery in the York market.
• Over 1.6 MSF of new construction has been completed including 483,770 SF at Core5 Logistics Center at Codorus Creek –Bldg 1 and 580,000 SF at Goodman Logistics Center –Bldg 1. Hill’s Pet Nutrition, Inc. will occupy Building 1 at Codorus Creek.
• The ROCK Demand Index (RDI) reveals that 70% of industrial demand is comprised of new businesses or startups. This is up from 64% reported last quarter.

YORK COUNTY OFFICE | RELOCATIONS AND DOWNSIZING DRIVE DEMAND, LEASED SQUARE FEET SET TO EXCEED PRE-PANDEMIC LEVELS BY YEAR-END

• Average sale price is up 61.2% since last yearbut down 32.3% since before the pandemic.2
• Leased square feet is up 59.7% from last year and now exceeds pre-pandemic levels. Vacancy remains at a five-year low year-to-date.
• The office sector remains in a holding pattern within the recovery phase of the market cycle. The construction pipeline remains shallow except for medical players acquiring land for development.
• The ROCK Demand Index (RDI) reveals that 57% of office demand is comprised of businesses engaged in professional services followed by 18% engaged in medical practice. Those engaged in professional services are seeking an average unit size of 3,100 SF. Medical users are seeking an average unit size of 2,700 SF.

YORK COUNTY RETAIL | SUPPLY KEEPING PACE WITH DEMAND, FOUR QUARTER DECLINE IN VACANCY ENDS

• The four-quarter decrease in vacancy has finally ended, increasing slightly (17 basis points) to 5.44%.
• Despite negative absorption in Q3, supply remains evenly matched with demand year-to-date.
• The ROCK Demand Index (RDI) reveals that in the past twelve months, 67% of retail space demand is comprised of businesses seeking an additional location
• Redevelopment at the 80,000 SF Hollywood Casino at the York Galleria, York and new construction of the 5,600 SF Auto Spa Express at 2140 York Crossing Drive, York is now complete.
• The sale of 2818 E Market Street, York is intended for a Popeyes restaurant.

LANCASTER COUNTY INDUSTRIAL | LOW VACANCY AND HIGH LEASE RATES CREATE TIGHT MARKET

• Vacancy dropped for the fourth consecutive quarter and trends well below the national vacancy rate of 4.1%.
• Vacancy is expected to remain low throughout 2021 as no major speculation builds are to be completed until 2022 and demand does not show signs of abating.
• Susquehanna Valley Emergency Medical Services (SVEMS) has partnered with Penn State Health resulting in a three-property purchase of 66, 118 and 126 Keller Ave in Lancaster by Penn State Health. The facilities totaling 41,829 SF were sold for $2.6M and will continue operating as a service location for EMS vehicles.
• Dalfen Industrial, a buyer of last-mile facilities nationwide, purchased two warehouse properties totaling $70M and 572,800 SF.

LANCASTER COUNTY OFFICE | SUPPLY OUTPACING DEMAND, SIZE OF LEASED UNITS CONTINUES TO SHRINK

• Demand for larger office space continues to decrease. Since 2017, average unit size of signed leases has decreased 64.16% from 6,463 SF to 2,316 SF.
• The office sector remains in a holding pattern within the recovery phase of the market cycle with little need for additional supply. The construction pipeline remains shallow except for medical providers acquiring land for development.
• Penn State Health Medical Center at 2160 State Road in East Hempfield Township remains under construction and due for completion in Fall 2022.
• Lancaster General Health purchased 33,024 SF at 217 Harrisburg Ave, Lancaster.
• Leased square feet is down 27% from this time last year.

LANCASTER COUNTY RETAIL | DEMAND INTACT AMIDST INFLATION & SUPPLY CHAIN CONCERNS, VACANCY FALLS BELOW 4%

• The Lancaster County EDC cited weak consumer sentiment during the month of October due to concerns from inflation.
• Amidst waning consumer sentiment, positive absorption year-to-date and declining vacancy remain optimistic indicators for the sector.
• Average rent over the twelve-month rolling average declined two cents. Lease rates remain elevated.