Vacancy Down as a Result of Steady Demand and Limited New Construction

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Colliers International recently released its NE Pennsylvania Office Market Report for Q3 – 2016.

According to Senior Vice President of Office Brokerage Services John Susanin, “Vacancy in the Class A and B sector has been steadily declining, dropping 90 basis points since 2015, due to steady leasing demand in the face of limited new construction.”

“Sale activity has been a mix of investor and user transactions,” said Jeff Algatt, Senior Vice President of Investment Services for Colliers. “For example, the ten-story, 39 Public Square office and retail tower in downtown Wilkes-Barre traded hands in a short sale to a Philadelphia-based value add investor in late June. In the first quarter of 2016, a local owner/occupant acquired the single-story medical office at 1130 Route 315 in Plains Township,” noted Algatt.  Both of these transactions were arranged by Colliers International.

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Algatt and Susanin, who cover the NE Pennsylvania office market for Colliers, can be reached at jeff.algatt@colliers.com and john.susanin@colliers.com , respectively.

KEY TAKEAWAYS:

  • Vacancy Rates Down. The vacancy rate at the end of the third quarter of 2016 was 8.8 percent, down from 9.7 percent at the end of 2015 and below the trailing five year average of 10.6 percent.
  • New Absorption Down. Absorption totaled over 57,000 square feet following an occupancy loss in 2015.
  • Rental Rates Up. The average asking rent for Class A space increased by 2.3 percent from the end of 2015 to $18.67-per-square-foot, full service. The average Class B rent decreased by 2.0 percent to $15.58-per-square-foot.
  • New Construction Down. There have been no completions of new office product since May of 2015. Although plans are in the works for new construction and several sites are approved and ready to go, none of these will commence construction without significant pre-leasing or an owner/occupant purchaser.
  • Primary Drivers: Healthcare, government, education and FIRE[1] are the primary drivers of office demand in Northeastern Pennsylvania.

[1] The Finance, Insurance, and Real Estate or FIRE sector is composed of Commercial Banks, Savings & Loans, Credit Unions, Finance / Credit Companies, Securities & Investment, Venture Capital, Hedge Funds, Private Equity & Investment Firms, Insurance, Real Estate, Mortgage Bankers & Brokers Accountants.

About Colliers International Group Inc.
Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is an industry leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and

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For further information, please contact:

Marilyn Storck
Colliers International
Phone: 215 925 4600
Email: Marilyn.storck@colliers.com