Berks County's hot housing and industrial real estate market is expected to continue for the next several years, mirroring patterns in the Lehigh Valley and benefiting from its warehouse and distribution center boom, experts said Thursday at the third annual Berks County Real Estate & Development Symposium held at the DoubleTree by Hilton Reading Hotel.
The symposium, attended by about 125 people, is a program of Lehigh Valley Business.
“The real estate revival has finally taken hold in Berks County,” said J. Andrew Weidman, partner at RKL LLP, a Lancaster-based accounting firm that has an office in Wyomissing.
And as land and rental rates for large warehouses and distribution centers in Lehigh and Northampton counties have become more expensive, more development of warehouses is expected to continue along the Interstate 78 corridor in Berks, where land and rents are cheaper, said Andrew Komisor, senior associate at Lee & Associates of Eastern Pennsylvania.
Rental rates are at historic highs in Lehigh and Northampton counties, having increased $6 per square foot over the past year, he said.
The Philadelphia market, of which the Lehigh Valley and Berks are one of seven sub-markets, is second only to the Los Angeles market for warehouse square footage, Komisor said.
The Philadelphia market is an area with nearly 11 million people in 30 counties over 17,495 square miles.
BUILDING ON SPEC
Steven Willems, managing principal at NAI Keystone, said the availability of industrial properties is at a 15-year low in Berks.
“Landlords have the advantage in lease negotiations,” he said.
“Only 58 spaces in 39 buildings are listed as vacant in Berks County,” he said. And only 30 buildings of 10,000 square feet or larger are available.
Rental rates have increased to about $4.50-$4.75 a square foot, he said.
The industrial market is so brisk developers are willing to build on spec without a tenant.
Willems said the construction of 1.5-million-square-foot warehouses creates opportunities in the supply stream to build smaller warehouses.
Kevin Timochenko, president of Metropolitan Companies, said his company is able to rent or sell residential and industrial properties as fast as it builds them.
Timochenko said the apartment market in Berks has been underserved for the last 20 years.
HOMES SELLING FASTER
Residential sales in Berks are up 3 percent so far in 2017, with 4,263 homes sold through October and projected to reach 5,025 at the end of the year, said Dave Mattes, Realtor with Re/Max of Reading.
The number of days houses for sale are on the market is decreasing, too, with homes staying on the market an average of 61 days in 2017 compared to 76 days in 2016.
“There is more demand and homes are selling faster,” Mattes said.
With only 4.2 months of inventory available, it is a seller’s market, he said.
The average sales prices in Berks through October is $177,573, compared to $171,439 in 2016.
Mattes projected continued improvement through 2018.
“We’re finally back,” he said.
DOWNTOWN READING INITIATIVES
Meanwhile, real estate and economic development officials are holding out hope for downtown Reading, where several projects are underway as the city shows signs of a comeback.
The Berks Alliance, a nonprofit organization comprised of leaders from large business and educational institutions dedicated to creating a more vibrant downtown Reading, has adopted several initiatives to encourage development in the city.
The group will reissue a redesigned request for proposals to solicit interest in developing the Callowhill properties, four iconic buildings in the 400 block of Penn Street that have fallen into disrepair.
“These buildings really are at the heart of the downtown,” said David Myers, interim director of the Berks Alliance and director of the O’Pake Institute at Alvernia University.
When those buildings are rehabbed, “it will begin to change the downtown,” Myers said.
He cited two buildings on the next block as helping to spur change: 503 Penn St., which is being redeveloped by John Weidenhammer, president of Weidenhammer in Wyomissing, and 505 Penn St., which was purchased in April by James P. Cinelli, a principal at Liberty Environmental Inc.
Myers said a revitalized Reading is essential for the health of the region.