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Crossgates' new focus paying off

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Known more for real estate development such as the TecPort Business Center in Swatara Township — its largest project to date — Washington County-based Crossgates Inc. has switched gears slightly in recent years.

As in many other industries, the economic recession was to blame.

Crossgates, which has its local office in TecPort, still has an interest in developing and managing its own properties.

But with strong competition from much-larger national firms, with deeper pockets and an eye on key land tracts along major corridors in the midstate, its focus has been more on third-party property management, said Matthew Crocker, assistant vice president.

"We have irons in the fire for local development. (But) because industrial is so hot (right now), we can't compete," he said, citing the likes of California-based Panattoni Development Co. Inc., Dallas-based Hillwood Investment Properties and California-based Goodman Birtcher North America.

All have had significant industrial development interest in Central Pennsylvania in recent years. The proximity to major metropolitan areas and network of highways has always made this area appealing.

That group also includes Georgia-based Industrial Developments International Inc. and Chester County-based Liberty Property Trust. The trust is developing a Procter & Gamble distribution center near Shippensburg.

Crossgates will continue to scout development potential in the Mid-Atlantic while maintaining and continuing to expand its growing management business, Crocker said. The firm recently picked up management of a large industrial portfolio owned by a private investment group based in the Northeast, which shot it up the charts for commercial property management.

Large private groups and institutional investors are moving beyond primary markets into secondary markets such as the greater Harrisburg area to find better returns.

"These guys are pursuing credit-worthy tenants," Crocker said. "(And) the pension funds have an obligation to real estate (investing)."

That new portfolio for Crossgates, which is spread across the Mid-Atlantic, includes about 6 million square feet, Crocker said. He declined to name the client.

"A lot of management opportunities are gained through acquisitions of property," he said. "Not everyone has the full service to buy, manage and lease to themselves. He needs a knowledgeable representative to oversee his interests at the property."

Those typically include a fee of 2 to 5 percent of rents collected. It also means dealing with tenants moving in or out, as well as overseeing maintenance projects for the owner.

Making connections, as in many other businesses, is critical, Crocker said. Many of these management opportunities, which often are renewed annually, are not advertised.

Crossgates, which has just three local employees, has to work harder than its larger peers.

"We are not challenged operationally," Crocker said. "We understand the business and the value of tenants in buildings. And we work hard to solidify relationships."

A combined 80 percent of its managed properties are industrial/warehouse or residential. The former makes up about 45 percent, according to a July ranking in the Business Journal of commercial property managers.

Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin County. Have a tip or question for him? Email him at jasons@cpbj.com. Follow him on Twitter, @JScottJournal. Circle Jason Scott on .

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