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Cumberland County developer eyes four-story project for growing office portfolio

Lowell and Linda Gates started investing in residential rental properties in 1992 as a hobby.

For the next 12 years, their small Cumberland County company, Linlo Properties, focused on apartment and townhouse rentals in the Harrisburg area.

But Lowell Gates, a longtime West Shore tax attorney, said the couple started to see more opportunities to buy commercial real estate and the business slowly shifted away from residential to office buildings.

Linlo began selling off its housing rentals and buying office buildings, one new purchase every two or three years.

By 2010, Lowell was working part-time as an attorney and dedicating more of his time to Linlo. He left his law practice in 2013 to run the real estate company full-time with his wife.

“The more it grew, the more I thought this could be something,” he said.

Today Linlo is one of the most active buyers and developers of office buildings in the Harrisburg area. The Wormleysburg-based company, which now focuses only on the office market, has 19 buildings in its portfolio totaling about 700,000 square feet of space.

Linlo’s holdings include many buildings that needed repairs or had a lot of vacancies before the company acquired them.

As Linlo purchased properties and added staff to maintain them, it also branched out into construction of new offices, including Vibra Healthcare’s new headquarters in the WestPort Business Center in Lower Allen Township.

Lowell Gates expects similar build-to-suit developments, or projects undertaken with a tenant in mind, will play a bigger role in the company’s growth. Office construction remains tight and higher-end properties, or Class A spaces, are filling up in the Harrisburg area.

In fact, Linlo already has land development approvals in hand from Susquehanna Township to build a four-story office building at 2552 Interstate Drive, which would be next to its 2550 Interstate Drive building, home of AT&T Services. Linlo bought 2550 Interstate in 2016.

All Linlo needs is a lead tenant to begin construction on the nearly 73,000-square-foot building at 2552 Interstate, dubbed Susquehanna Center.

The company is optimistic it will sign a large regional or national company this year for the building. So is Michael Curran, part of CBRE Group’s Harrisburg office team, which is marketing the site.

“The key for them as local owners is they understand the importance of not just owning the site, but making sure the site is fully entitled prior to marketing,” Curran said.

Developers face a long and costly process to buy land and get a new project approved, he said. And with limited existing office options available for companies looking for 25,000 square feet or more, the Linlo property in Susquehanna Township could float right to the top.

The Class A vacancy rate in the Harrisburg area in the fourth quarter of 2017 was 8.6 percent, down from more than 11 percent the previous year, according to CBRE.

“A lot of space is getting absorbed,” Lowell Gates said. “If you’re a Class A user, there is not a lot out there.”

Meanwhile, the developer also is focusing on other building acquisitions in Cumberland and Dauphin counties to expand its portfolio. The company also sees potential opportunities in surrounding counties.

Recent building purchases by Linlo have led to new hires, including more full-time maintenance staff and property managers.

Linlo, which has its own carpenters, electricians and other construction staff, has grown to about 31 employees — about double the size it was 18 months ago.

The company wants to be a larger full-service firm capable of taking office projects from start to finish. Currently, it has to hire contractors for larger projects, such as the Susquehanna Center.

“I can see us getting to a point where we can manage it all,” said Sarah Gates, one of Linda and Lowell’s two daughters who are in the business.

Sarah, 28, is involved in leasing and acquisitions. She joined the family business about four years ago. Her sister, Emily Tarbell, 31, the company’s senior property manager, has been at Linlo for more than five years.

Neither had planned to be in the real estate business, but their parents convinced them to give it a try as the company’s holdings grew and they needed help managing it.

Tarbell was in the Army for eight years and was between military assignments when her mother asked her to help out a few hours per week with accounting and payroll. She came home from Alabama and hasn’t left.

Sarah Gates was teaching English in Vietnam after college before she returned home.

The siblings say they like being in the office real estate business. And the Gates family takes pride in being hands-on landlords. Tarbell and her team regularly tour their buildings and talk to tenants, hoping to resolve minor maintenance issues before they become major ones.

The family believes that personal touch in property management will pay off as they continue to build the business. They see it as a way not only to retain tenants in current buildings, but also as a path to undertake new construction for businesses that might outgrow existing spaces.

Linlo itself has outgrown its office at 1013 Mumma Road and will move this summer into its nearby building at 150 Corporate Center Drive.

The Mumma Road building was the first commercial building Lowell and Linda Gates acquired. It started out as space for his law firm and is now bursting with a growing staff at Linlo.

The Gates family is hoping the larger office space will help Linlo begin the next chapter in its growth.

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