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West Shore warehousing market shows signs of slowdown

Higher vacancy rates and a slower pace of new projects could signal a slight dip in the Cumberland County warehousing sector.

Higher vacancy rates and a slower pace of new projects could signal a slight dip in the Cumberland County warehousing sector.

Commercial real estate experts and academics are cautious. While a slowdown in the local warehousing market could be upon us, it may not last long, they said.

Travel the highways and byways of Cumberland County. Warehouses are everywhere, from the rural townships west of Carlisle to the urban areas of the West Shore. And there are many "Space for Lease" signs hanging from those warehouses.

"There's a fair amount of empty space out there in Cumberland County," said Gary Rosenstrauch, an industrial specialist and sales agent with RSR Realtors, based in Lemoyne.

Usually, warehousing space in Cumberland County is between 5 percent and 10 percent vacant, he said. The current vacancy rate is between 10 percent and 12 percent, he said.

"But we've become such a warehouse mecca that that could turn around at anytime," Rosenstrauch said.

Some new warehousing projects in Cumberland County have been delayed for various reasons, including opposition from residents.

South Middleton Township has plenty of warehousing space, and more is coming. But it's not always resident disapproval that snares such projects. Sometimes, the company can delay the project, said Barbara Wilson, the township's manager.

Exel Inc., a logistics and real estate company based in Westerville, Ohio, is building a 550,000-square-foot building off Exit 44 of Interstate 81. The project has been approved for three years, Wilson said, but the company

only began construction this year. The space was supposed to be leased, she said. The building is now being built on speculation, similar to other warehouse space in the same area of the township and Carlisle.

"Usually a commercial project goes quicker," she said.

All plans have a five-year limit on them. After that, a company would need to resubmit for another township approval, Wilson said.

Exel's business in Central Pennsylvania continues to be strong, said Lynn Anderson, the company's vice president of communications.

The company did not say why the warehouse facility was delayed.

"There're so many segments within the market. They're all affected differently," said Bret Crans, president of Commonwealth Commercial, a real estate firm in Lower Allen Township, Cumberland County.

A lot of big-box warehouses are going up in the area. Much of that will be leased, he said, but there's only so much the market can absorb. The question for developers is how long they must sit on the land before they'll be able to turn a profit, he said.

"You don't want too much supply," he said, "but they have an optimism that they'll be a little ahead of the curve."

If that's the case, the general slowdown of the economy may not be as large of a factor in the Cumberland County warehousing market, he said.

Robert Neidigh agreed.

"Some say there has been a slowdown, others say there hasn't been. It doesn't seem like anything out of the ordinary," said Neidigh, assistant professor of supply-chain management at Shippensburg University.

While gas is a big deal for consumers and truckers, it's less of a factor in whether warehouses are filled, he said. Products coming into the country still have to be taken off boats, stored, then moved and then stored again.

Consumers help move the logistics industry, even if gas costs more than $3.20 a gallon, he said.

"They skip the long trip and buy online," Neidigh said. "They still need the logistical industry."

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