NORTHEAST SNAPSHOT, JANUARY 2007
Harrisburg/York, Pennsylvania Office Market
Situated along the nexus of the eastern United States’ distribution network, the Harrisburg/York, Pennsylvania, submarkets are poised for significant growth. Utilizing smart growth plans, the majority of the development in these two markets has primarily technically been oriented campuses and urban revitalization. Throughout the past year approximately 5 million square feet of office space has come online, a substantial pace that is expected to continue in the future. Currently, the rental rate for Class A office space has leveled off to around $24 to $28 per square foot with a vacancy rate of approximately 13 percent.
The majority of growth and development in the Harrisburg/York office market is occurring within the Central Business Districts (CBD). One of the major developments under construction is the Harrisburg Southern Gateway Project, a mixed-use development in the southern business district of Harrisburg that will contain approximately 3 million square feet of office, retail and residential space. It is expected to reduce congestion of vehicles through its highway improvement plans and create as many as 6,500 new jobs. The project’s main area of focus is between the Second Street interchange of Interstate 83 to the south, the Susquehanna River to the west, Walnut Street to the north and the Amtrack railroad lines to the east. The project is expected to extend the CBD of Harrisburg by 50 percent.
Another major development currently under construction in the Harrisburg/York office market is the 80,000-square-foot Hershey Center for Applied Research in Hershey. The research center, adjacent to the Penn State Milton S. Hershey Medical Center, is being developed by Wexford Science & Technology, a Baltimore-based development company. The Medical Center and College of Medicine is expected to lease 32,000 square feet of space for the expansion of the school’s pharmacology and technology development departments. Construction completion is scheduled for spring 2007.
As the office market of Harrisburg/York gradually strengthens, the Lancaster market will begin to increase as well. With its strategic location east of Harrisburg and York, it holds much potential for future office development.
— Kevin Fry is the vice president of CB Richard Ellis’ Harrisburg, Pennsylvania office.
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