Industrial vacancy rates keep falling in central Pa., beyond

Activity in the Interstate 81/78 and greater Philadelphia industrial markets continued at a healthy pace in the third quarter, despite a drop-off in demand from the year before.

The two reports from Newmark Real Estate show lease rates are still rising as vacancy rates fall.

In the I-81/78 corridor, which includes the central Pennsylvania, northeastern Pennsylvania and Lehigh Valley submarkets, 29.6 million square feet is under construction, as land prices climb to peak levels. “With demand slowing, it will be interesting to monitor how much of the available speculative space coming online will be pre-leased before completion,” the report noted.

Positive absorption totaled just under 7 million square feet, bringing the year-to-date number to 19.1 million square feet.

Third-quarter vacancy fell to 5.3%, down from 8.6% a year ago. On average, asking rental rates for all industrial property types rose to $5.31 per square foot, an increase of 3.9% year over year.

Central Pennsylvania leads the way

Vacancy in the central Pennsylvania region was just 3.7%, lowest of the three I-81/78 submarkets. It also led in positive absorption, with 8.6 million square feet year to date, 3.1 million of that in the third quarter.

Among the major tenants taking occupancy were UPS moving into its newly built 775,000-square-foot East Zone Regional Hub at 2110 N. Union St., Middletown; Life Technologies Corp. relocating to Greencastle Logistics Center at 1611 Ebberts Spring Court, Greencastle; and Sun Run occupying 423,000 square feet in Susquehanna Logistics Center at 10874 Second Amendment Drive, Glen Rock.

Newmark reported that asking rents for warehouse and distribution space in central Pennsylvania are up 8.9% year over year, averaging $5.14 per square foot.

The real estate company also noted that 13 million square feet of the 29.6 million square feet under construction in the I-81/78 corridor is in central Pennsylvania.

Boohoo signed the largest lease of the quarter, for nearly 1.1 million square feet at 2771 N. Market St. in the First Logistics Center @ 283, Elizabethtown. In addition, Amazon leased 551,030 square feet at 121 Commerce Ave. in the Matrix I-81 Logistics Center, Greencastle, and Bowman Logistics renewed its lease for 447,000 square feet at 2294 Molly Pitcher Highway, Chambersburg.

Lots of activity in Lancaster County

In the second Newmark third-quarter report, for greater Philadelphia, Lancaster County is included in the southeastern Pennsylvania coverage area and saw some major tenants lease space.

Tyreflow Environmental Inc. moved into a 250,320-square-foot building at 1905 Horseshoe Road, Lancaster, and Ahold Delhaize occupied the newly constructed 250,000-square-foot cold storage building at 3800 Hempland Road, Mountville.

And once it’s completed later this year, the 325,500-square-foot building under construction at 2222 N. Reading Road, Denver, will be home to PureCycle LLC.

This quarter’s largest investment sale in southeastern Pennsylvania was in also in Lancaster County, with Dalfen Industrial buying the 251,250-square-foot warehouse at 791 Stony Battery Road, Landisville, for $29 million from Catalyst Commercial Development LLC. That comes out to $115 per square foot.

The overall vacancy rate in the southeastern Pennsylvania submarket fell to 3.9% from 4.7% a year earlier, with Lancaster County coming in at 1.5%, the lowest of the six counties in the coverage area.

Paula Wolf is a freelance writer

Donegal Group reports net income growth of almost 25% 

Marietta-based Donegal Group Inc. reported a jump in net income of nearly 25% in the first quarter of 2022. 

The company’s net income totaled $13.1 million, or $0.43 per diluted Class A share. 

In addition, net premiums earned grew 6.4% compared to a year ago, to $199.2 million. 

The insurance subsidiaries and affiliates of Donegal Group, an insurance holding company, offer personal and commercial property and casualty lines of insurance in 24 states. Donegal Mutual Insurance Co. and the insurance subsidiaries of Donegal Group conduct business as Donegal Insurance Group. 

“We achieved strong net earned premium growth in the quarter, which largely reflected an increase in net premiums written throughout 2021,” Kevin G. Burke, Donegal Group president and CEO, said in a release. “Underwriting results continue to strengthen as we transform our business and migrate our products and processes to modernized technology platforms. 

“We continue to emphasize sustainable profitability in our commercial lines business segment. Considering the challenging economic and inflationary environment, we intentionally moderated new business growth and heightened our attentiveness to appropriate underwriting discipline and rate adequacy.” 

As Donegal implements state-specific strategies and introduces new personal lines products, he added, “we are confident that our go-forward business plan will increasingly enhance our total financial results.” 

House sales in York, Adams counties soar in 2020

In the midst of a once-a-century worldwide pandemic, home sales in York County set an annual record in 2020, and came close to doing the same in Adams County as well.

Real estate agents sold 6,696 houses in York County last year, 4% more than in 2019. The total dollar volume exceeded $1.4 billion, reflecting a 12% increase compared with 2019 sales.

In Adams County, 1,253 home sales were closed in 2020, only eight fewer than the record set in 2018 and 2% more than last year. The total dollar volume sold in 2020 was $302.7 million, a 10% jump from the previous year.

The data is from year-end reports by the Realtors Association of York and Adams counties.

Despite a nine-week government shutdown of in-person real estate activity, 2020 also produced the highest annual median sales price in the history of the two counties. In York, it rose 8% to $200,000, making it 32% growth in the past five years.

In Adams, the median home price was $224,000, a 12% more than in 2019 and a 28% increase in five years.

Also, the median days on the market for a York County house was 10 days, turning 2020 into the fastest moving real estate market in the county’s history.

The same can be said for Adams County, which in 2020 reported 17 as median days on the market, the lowest in its history.

Tina Llorente, president of the Realtors Association of York and Adams counties, said in a release that three factors “set the tone for 2020 real estate sales: increased buyer demand, record low mortgage interest rates and a lack of inventory.”

“As we move into 2021, the real estate market continues with those same three trends.”

In an email, Llorente followed up with more explanation for these and other trends.

She wrote that 58.7% of all homes have at least 60% equity and 42.1% “are owned free and clear.”

“These two stats alone mean that sellers are able to have choices they haven’t had in years – do they want to relocate? Downsize? Move to their ‘forever home’? This huge buffer has helped to protect sellers from financial difficulties during the pandemic and provide generational lows in foreclosure rates,” she wrote.

In York County last year, foreclosure filings fell to 275, well under the 825 recorded in 2019. Foreclosure filings in Adams County dropped from 165 to 59.

Llorente also noted that folks are moving from dense, urban areas to York and Adams counties because of COVID-19, the desire for a less hectic lifestyle and other reasons.

“Low inventory will likely continue into 2021 as builders try to keep up with demand,” she wrote. “Typical rule of thumb is one housing permit for every two jobs created. So with a sluggish economy, housing starts are lower.”

And more people working from home because of the pandemic has added a new dimension to what buyers want/need in a home, Llorente added. “Gone is the ‘tiny home’ craze of a few years ago. Folks now need dedicated home offices with Wi-Fi as well as space for kids to homeschool.”

In addition, homeowners are staying in their houses longer – “up from the average of seven years to 10-12 years depending on the data you look at, which means fewer resale homes coming onto the market,” she said.

Plus, homeowners are using their equity to renovate rather than move, contributing to the shortage of inventory.

As for the appeal of historically low mortgage interest rates, Llorente wrote, “Who wouldn’t want to pay less for their home?”

Investing in a property right now is another way to take advantage of the market, she said.

Here are some other highlights from the year-end reports:

  • In December, 642 houses were sold in York County, 23% more than the year before. In Adams County, the total was 118, up 1% over 2019.
  • The median sales price in Adams County was $227,000, up 10% from this time last year. In York County, the median sale price was $201,000, an 8% increase.
  • In 2020, 10% of the homes sold in York County were priced under $100,000, 41% from $100,000 to $199,999, 33% from $200,000 to $299,999 and 16% from $300,000 and over.
  • In Adams County last year, 7% of the homes sold were under $100,000; 33% were from $100,000 to $200,000; 36% from $200,001 to $300,000; and 24% were more than $300,000.

Gov. Tom Wolf announces stay-at-home orders for entire state

Gov. Tom Wolf expanded his stay-at-home orders to the rest of the state on Wednesday afternoon.

Pennsylvania currently has stay-at-home orders enacted in 33 counties to help slow the spread of coronavirus throughout the state.

During a live-stream announcement on Wednesday, Wolf said that he would ordering the state’s remaining counties to also comply with his order to stay-at-home.

“Every day we wait the coronavirus spreads further and becomes more difficult to suppress,” he said. “regardless of where you reside in Pennsylvania you should not leave your home unless absolutely necessary.”

The order allows for people to leave their homes to maintain their health and safety or that of family members, if they need necessary supplies or services or for necessary travel such as caring for an elderly family member or for non-residents to return to their homes.

Businesses deemed non-life-sustaining must be closed as a part of the order. Life-sustaining businesses like restaurants can continue to offer take-out services.

“I’ve already implemented some of the strongest business and public space closures in the country and I’ve seen good compliance with residence already under my stay at home order,” Wolf said.

The counties already under stay-at-home orders currently include: Allegheny, Beaver, Berks, Bucks, Butler, Cameron, Carbon, Centre, Chester, Crawford, Cumberland, Dauphin, Delaware, Erie, Forest, Franklin, Lackawanna, Lancaster, Lawrence, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Philadelphia, Pike, Schuylkill, Somerset, Washington, Wayne, Westmoreland and York counties.

The Pennsylvania Department of Health announced Wednesday that the number of positive cases of coronavirus in the state have grown to 5,805.

“This stay-at-home order is not just to protect ourselves from exposure to COVID-19 but it protects those on the front lines, our doctors, our police officers, our fire officials and emergency medicine technicians and paramedics need us to do this,” Secretary of Health Dr. Rachel Levine said.