Downtown Office Market Report - by Bryan Cole

2012 - 4th Qtr. Update

Reading, Berks County Pennsylvania

Committed to Connected to the W

Downtown Office Market Report - by Bryan Cole

From the Authors Desk
2012
This report provides an overview of the current office market conditions in Downtown Berks County Pennsylvania. Bryan Cole of NAI Keystone maintains a comprehensive list of all available properties within the Berks County marketplace, including but not limited to; available space, number of facilities in the market, asking rents, incentives, extra costs, etc The information that NAI Keystone has assembled is separated by Class A and Class B facilities and consists of market data such as, absorption rates, vacancy rates, asking rents, etc

Bryan E. Cole
Bcole@naikeystone.com 610.370.8502 (direct) 610.370.8503 (e-fax) This market report and data is assembled in house by Bryan Cole. All rights are reserved as this information has not been obtained by Public Sources. The report will be available on a quarterly basis by emailing marketing@bryanecole.com and subscribing to our mailing list.

www.Bryan-Cole.com Bryan E. Cole Resume

Bryan joined NAI Keystone in July of 2004, but before joining NAI, Bryan Cole spent 4 years active duty in the U.S. Marine Corp, including a 6 month deployment in Afghanistan, a 4 month deployment in Kuwait/Iraq, and a 7 month deployment in Japan. Prior to joining the military Bryan was involved in the construction of commercial and multi -unit properties in the Philadelphia suburbs. Bryan has experience working with a diverse group of individuals in numerous countries throughout the world. During Bryans time at NAI, he has sold in the excess of $290 Million Dollars worth of Commercial Real Estate, and leased hundreds of thousands of square feet of industrial and office/medical space. Because of this, Bryan earned NAI gold club status his first year in the business which is presented to approximately 75 - 100 brokers within the NAI Global network, which is comprised of over 3,500 Brokers. Bryan is currently working on earning both his CCIM designation and SIOR designation. Bryan has been NAI Keystone's Top Performer from 2006 - 2012.

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan Out on:

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Downtown Office Market Report 4th Qtr. 2012
Vacancy Rates
Class A Class B

The Greater Reading Downtown Office Market ended the 4th quarter 2012 with a vacancy rate for Class A Office buildings at 22.96%. There was no change in vacancy rates from 3rd quarter 2012., however it was a significant increase from the same period 2011. The average rental rates slightly decreased from 3rd to 4th quarter 2012 at $14.00 per square foot Modified Gross(1) to $13.50 per square foot Modified Gross(1). The largest additions to the overall vacancies in Class A facilities were at 401 Penn Street and 201 Penn Street, which caused Class A vacancy rates to sky rocket from 2011 into 2012. Due to the current economic climate and overall interest in the City, these buildings remain vacant and are still taking a toll on the overall vacancy rate within Downtown. The Class B Downtown office market ended the fourth quarter of 2012 with a vacancy rate of 22.08%. There was no change in vacancy rates from 3rd quarter 2012, and it was a slight increase from the same period 2011. The average rental rates dropped from $11.50 per square foot Modified Gross(1) in the 3rd quarter 2012 to $10.00 per square foot Modified Gross(1) in 4th quarter 2012 this is also a slight decrease to the rates from the same period 2011. Overall Vacancy Rates for Class C buildings remained unchanged throughout 2012 however, various buildings previously tracked as Class B buildings were changed to Class C buildings, due to re-evaluating the assets and conditions.

Tour Activity

Net Absorption
Class A Class B

Concessions

Asking Rents
Class A Class B

Sales Volume

Construction
Class A Class B

# of Properties for Sale

For Full Article visit http://bryan-cole.com/MarketIntel.html

(1) = Modified Gross is a rate that includes CAM, Taxes, Insurance. However typically Utilities are separate as well as in-suite janitorial.

Total Blocks of Space (Can be Demised) # of Bldgs. Size

0 - 4,999 5,000 - 9,999 10,000 - 19,999 20,000 - 39,999 40,000 - 74,999 75,000 - Greater

Class 2

Class Class 1 5 1 3 4 2 1

Total 6 9 3 5 2

1 1 1

3 1 1

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan Out on:

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Downtown Office Market Report 4th Qtr. 2012

Current Rental Rates

Year 2011 1st Qtr. 2012 2nd Qtr. 2012 3rd Qtr. 2012 4th Qtr. 2012
(1)

Largest Blocks of Space

Class B

Vacant SF 180,000 40,690 35,579 75,000 46,595 37,740 30,000 24,889

Building Class Class A Class A Class A Class B Class B Class B Class B Class B

Class A $13.00 - $15.00 MG(1) $13.00 - $15.00 MG(1) $13.00 - $15.00 MG(1) $13.00 - $15.00 MG(1) $12.00 - $15.00 MG(1)

401 Penn Street 201 Penn Street 400 Washington Street 35 N. 6th Street 501 Washington Street 443 Penn Street 230 N. 5th Street 645 Penn Street

$10.00 - $13.00 MG(1) $9.00 - $13.00 MG(1) $9.00 - $13.00 MG(1) $10.00 - $13.00 MG(1) $8.00 - $12.00 MG(1)

MG - Modified Gross is a form of Lease Rate. This typically includes CAM, Taxes, and Insurance.

Local Resources Greater Reading Economic Partnership www.GreaterReading.com Greater Reading Chamber of Commerce www.GreaterReadingChamber.org Greater Berks Development Fund www.ReadingPA.com Reading Redevelopment Authority www.ReadingRedevelopmentauthority.com NAI Keystone Commercial & Industrial, LLC www.Bryan-Cole.com

City of Reading Tax Rates Earned Income Tax (Resident) Earned Income Tax (Non-City Resident) Local Services Tax City Real Estate Tax Per Capita Tax Business Privilege Tax Service Commission Rental Retail Wholesale Real Estate Transfer Tax 3.4% 1.1% Max $52.00 annually 14.334 Mills $15.00 Annually 2.25 Mills 2.25 Mills 2.25 Mills 1.5 Mills 1.0 Mills 5%

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan Out on:

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Competitive Set - Contiguous Blocks of Space
Number of Buildings Tracked
Location Downtown Total Class A Class B Class C 229 Buildings 8 Buildings 41 Buildings 180 Buildings
Parking for the City of Reading

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan Out on:

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Methodology/Definitions/Sub Market Map

including market.

Bryan E. Cole | Office & Medical Specialist 610.370.8502 (d) | www.Bryan-Cole.com | Bcole@naikeystone.com Check Bryan Out on:

Contact info:
Bryan Cole Office & Medical Specialist 610.370.8502 (direct) Bcole@naikeystone.com

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Bryan Cole
NAI Keystone Commercial & Industrial, LLC Exeter Ridge Corporate Center 3970 Perkiomen Avenue Suite 200 Reading, PA 19606 www.Bryan-Cole.com www.NAIKeystone.com