Harrisburg home to 2 of the priciest industrial sales of 2022

Who says big deals don’t get done in Harrisburg?

In 2022, two of the nation’s 50 priciest industrial property transactions were in the vicinity of the state’s capital. That data comes courtesy of the newest report from CommercialSearch.

Harrisburg’s $193 million portfolio sale of the Capital Logistics Center ranked 16th among the nation’s most expensive industrial deals from last year. The 1,288,690-square-foot property, consisting of three buildings, was sold May 18 by Link Logistics to CBRE Investment Management for roughly $150 per square foot.

Also ranking among 2022’s priciest U.S. industrial transactions was the $167 million sale of the 3000 State Drive building. The 970,000-square-foot property – ranked 24th on the list – was sold March 28 for $172 per square foot by DHL Supply Chain to CPUS LEBANON LP.

Pennsylvania accounts for the second-largest group of deals by state, with seven of the top 50 sales. California accounts for the largest group, with 16.

Paula Wolf is a freelance writer

75-unit apartment portfolio sells for more than $4.5M

ShoreGate Portfolio, a four-property, 75-unit apartment portfolio in Gettysburg and Hanover, sold for $4.55 million. PHOTO/PROVIDED

ShoreGate Portfolio, a four-property, 75-unit apartment portfolio in Gettysburg and Hanover, sold for $4.55 million, according to Sean Beuche, regional manager of Marcus & Millichap’s King of Prussia office.

Clarke Talone, Andrew Townsend, Daniel Bernard and Ridge MacLaren, investment specialists in Marcus & Millichap’s King of Prussia office, and Christopher Chadwick and Martin Mooradian from the Washington, D.C., office marketed the listing for the seller, a limited liability company. They also secured the buyer, a regional limited liability company.

“The ShoreGate Portfolio generated significant investor interest due to strong in-place cash flow and upside in rents,” Talone said in a release. “The buyer was new to the central Pennsylvania marketplace and was attracted by the stability of the submarket. They executed a smooth transaction.”

The out-of-state buyer assumed agency debt for two of the properties and utilized new bank debt for the other two.

According to the release, the four properties “have been nicely maintained and have strong historical occupancy.”

Paula Wolf is a freelance writer

Government bonds: relevant or not? That is the question 

Aaron Stolpen

With Treasury yields firmly hovering near 2020’s all-time lows, the looming threat of inflation, and a Federal Reserve that recently began its long march toward policy normalization, investors may be wondering whether investing in bonds is still a wise choice.  

While the modest yields offered these days are unlikely to inspire the levels of enthusiasm they once did, bonds remain an important piece of a well-constructed investment portfolio.  

Any port in a storm 

Of the many benefits bonds provide in an investment portfolio, perhaps the most crucial is their stability.  

After a year and a half in which nearly ever asset’s performance chart can be described as “up and to the right,” it can be easy to forget that stocks do suffer losses from time to time.  

The occasional debt ceiling showdown notwithstanding, government bonds are effectively free from default risk. While changes in interest rates may cause temporary losses on the bonds in your portfolio, these losses are vastly less severe than in equities or other risk assets. In fact, since 1927, a portfolio of 10-year Treasury bonds has had an annual total return of -5% or worse only five times: In 1969, 1994, 1999, 2009, and 2013.  By contrast, there have been 80 times where the S&P 500 index of stocks has dropped by that much or more in a single day.  

Beyond simply making it tougher for some of us to sleep at night, the higher volatility that comes with an over-allocation to risky assets can create a major hurdle to the long-term success of an investment portfolio. Because returns do not compound linearly losses will hurt more than gains will help.  

The only free lunch 

Beyond simply exhibiting low historical volatility, fixed income such as bonds can reduce the risk profile of a portfolio through the benefits of diversification.  

Famously called “the only free lunch in investing,” diversification is a vital feature of a well-managed investment portfolio. Diversification is the principle that by combining investment assets not impacted by one another or investment assets that tend to react in opposite ways, the volatility of the resulting portfolio will be lower than the average risk of the portfolio parts.  

Don’t fear the reaper 

One objection we sometimes hear about keeping bonds in a portfolio is that the returns we have experienced have been the result of a 40-year decline in interest rates. The logic goes that this lowering interest trend is all-but-certain to reverse itself now that we have been pushed against the very lowest rates can go. However, neither economic theory nor data support this idea of returns resulting from declining interest rates. Interest change rates tend to be a wash throughout the life of a bond.  

There are some who believe they should avoid bonds for the time being, thinking that as interest rates begin to rise, the value of the bonds will decrease. But there is no reason to be overly concerned. Rather than causing crippling permanent losses to you as a bond investor, a period of rising interest rates would at worst delay some of the returns an investor may earn over time.  

By waiting to invest until after rates rise, however; investors are hoping they can predict the timing and path of future interest rates. Not only that, but also timing it so well they would make up any bond yields lost in the interim. The likelihood of being successful with that timing is slim and extremely unlikely, and not worth losing out on the bond earnings over the timing you may be avoiding bonds.  

Bonds help bring stability, support diversification and yield over time. It’s natural in such a low-interest rate environment to question the value of bonds in your investment portfolio, but concern about interest rates should not outweigh the importance of that stability and diversification in your investment portfolio.  

Aaron Stolpen, CFA®, Esq., is a senior portfolio manager at Domani Wealth.