Hinerfeld Commercial Real Estate, Scranton, PA

The 12-story SNB Plaza Building at the corner of Lackawanna Avenue and North Washington Avenue in downtown Scranton was sold to Scranton Tower Associates. They were represented in the transaction by John T. Cognetti, SIOR, CCIM of Hinerfeld Commercial Real Estate.

The historic building clad in white terra cotta tile and designed in the early “skyscraper style” popular in the early 1900s, is one of the tallest buildings in Scranton’s skyline. Formerly the home of Scranton National Bank, the ornate first floor and mezzanine is currently occupied by a financial institution with the upper floors of professional offices.

Cognetti noted that this sale marks the continuation of sales of Scranton’s landmark buildings to investors both local and out of state looking to take advantage of the resurgence in downtown property values in the last five years. This property is in the center of the revitalization of Lackawanna Avenue. Both new construction and history rehabilitation have occurred in this area recently. Cognetti said that with the $15 million Lackawanna Avenue Historic District and the Intermodal Transportation Center projects due to begin soon, the avenue will return to its prominence as Scranton’s center for retail, business and entertainment.

Security National Properties-Atlantic sold the property for $1.1 million. The new owners’ immediate plans are to increase occupancy above 85 percent with long-term plans tied into the growth of the avenue.

- Courtesy of Northeast Pennsylvania Business Journal

It has been stated that one person’s gain is another person’s pain.

This appears to be the situation with the housing market in NEPA, particularly in regard to shelter for the poor.
Mike Hanley, executive director of the United Neighborhood Centers (UNC) of Lackawanna County, explains that Money magazine is predicting that Scranton will soon become one of the fastest growing metro areas in the United States. This growth is currently creating some side effects that Hanley’s organization must deal with.

“Yes, economic growth like this is good for the business community,” says Hanley. “But, what about the poor caught in the squeeze as prices for regional housing escalate? This growth has not been good for the poor and working poor.”

(more…)

The cost of doing business can be much higher for the poor, with a wide variety of businesses offering needed goods and services that are priced at higher than optimum levels.

Popular opinion indicates that many of these businesses are preying on individuals who have placed themselves in unfortunate economic circumstances. Others proclaim that these merchants occupy a vital area of commerce, and are assuming substantial risk while doing so.

John Cognetti, owner of Hinerfeld Commercial Real Estate Services, says that the arguments with higher-priced lenders and rental centers are all part of a good two-sided issue.

“Some of these businesses are performing legitimate services for their customers. Others are not, and are charging too much,” says Cognetti. “There are both sellers and buyers who abuse the system, and it works both ways.”

(more…)

Positive changes in downtown Scranton prompted a group of local investors this week to purchase the SNB Plaza at Lackawanna and Washington avenues.

The group led by Taylor contractor Carl Scartelli purchased the 49,000-square-foot building for $1.1 million.

Mr. Scartelli said development downtown and the pending reconstruction and streetscaping of Lackawanna Avenue made the building a good investment.

(more…)

SCRANTON, PA. — John Cognetti of Hinerfeld Commercial Real Estate has represented both the buyer, Hoffman and Kozlansky Realty Co., and the seller, Scranton Products, in the $2.4 million sale of an industrial facility in Scranton.

Scranton Products has sold a 223,000-square-foot industrial facility in Scranton, Pa., to Hoffman and Kozlansky Realty Co. for $2.4 million.

Located off Interstate 81 at Davis Street, the facility includes a one-story building and a two-story office addition. Hoffman and Kozlansky Realty Co. plan to lease the majority of the space to the Comtec division of CPG International and Olympia Chimney Supply.

- Courtesy of REBusinessonline

Building 52 at Glenmaura Plaza couldn’t have cut the ribbon at a worse time — 2000, start of the dot-com crash.

But now, the third office building erected by Sordoni Construction Inc. in Moosic is nearly fully rented for the first time.

The demand for office space in Northeastern Pennsylvania is the strongest it’s been since the late 1990s, when the dot-com crash emptied offices and the Sept. 11, 2001, attacks gave office-based companies second thoughts about expanding.

“The market moves in 10-year cycles, and we are moving out of the trough,” said John Cognetti of Hinerfeld Commercial Real Estate.

Companies that would have purchased or built their own buildings when interest rates were rock bottom are looking to rent now that rates inched up, Mr. Cognetti said.

With the exception of a 5,000-square-foot corner section, the Sordoni building is nearly full thanks to Compression Polymers Group renting an entire floor for its corporate headquarters, Lehigh Valley Physicians Group moving in, and the expansion of existing tenant Deluxe Digital Studios.

There are still big vacancies — even at Glenmaura Corporate Center, the region’s premier suburban office park. The Bank of America building has 20,000 square feet for rent and the former State Farm building has 15,000 square feet.

Large tracts still wait for development, but empty lots are moving to private hands. In recent weeks, two local private developers made moves to buy more property although neither had immediate plans. Sordoni purchased land near its other office buildings. Mericle Commercial Real Estate Services exercised an option on property owned by the Scranton Lackawanna Industrial Building Co.

Building 52 is a microcosm for the nation, where office space has been filling up from coast to coast. This year office building construction slowed and higher interest rates made purchasing property more expensive. Companies who needed space looked for leases.

“We see vacancies decreasing across the board and rental rates gaining strength,” said Brain Velky, vice president of the Chicago-based Real Estate Research Corp.

In Wilkes-Barre, a 47,000-square-foot, one-story office building near the Wachovia Arena that had been occupied by the state has generated interest from two companies looking for a call center, said John Augustine, vice president at the Greater Wilkes-Barre Chamber of Business and Industry.

The Jewelcor Building, one of Wilkes-Barre’s newer privately-owned office buildings, is just about full.

In Wilkes-Barre, office space inquiries increased three-fold over the last three years, Mr. Augustine said, mostly from technology, service firms or computer operations.

The shiny glass fortresses in suburban office parks have an advantage over older downtown buildings.

Companies looking for downtown office space usually want free, contiguous parking, which makes leasing space in parking-challenged buildings such as the Wilkes-Barre Center difficult.

Even buildings that have parking, such as the Citizens Bank building, face an uphill battle as potential tenants look to suburban plazas for offices. The professional offices that provided the bread-and-butter of downtown landlords have migrated to suburban strip plazas and medical complexes.

Building office space without a ready tenant is risky. For one, office space costs about three times as much to build as warehouse or factory space. The average construction cost for Class A office space is more than $100 per square foot. Other types of commercial real estate cost about $50.

After an office building is up, it could sit empty. Sordoni got burned by putting its third building up just before the office space market collapsed. Unlike office space, which is limited to office or service uses, other commercial space is more flexible. For example, a 150,000-square-foot industrial building could be used for manufacturing, distribution, even retail.

“Building office space is a chicken-egg thing,” Mr. Augustine said. “You don’t want to stick your neck or your money out there.”

The region could benefit from being isolated from major metro areas.

Risk of natural disasters in the South and West and of terrorist attacks in places such as New York City and Washington, D.C., has prompted huge increases in insurance costs there, in some cases as much as 300 percent, Mr. Velky said.

- Courtesy of The Times-Tribune

Business associations find the Patriot Act may result in some burdensome regulations threatening their ability to do business. These groups endorsed amendments limiting the federal government’s ability to access confidential business records. One of the organizations to sign the endorsement was the National Association of Realtors (NAR).

NAR says that real estate corporate profits and agent revenue in second-home and vacation communities have dropped off due to new government security policies.

In a letter to U.S. Senator Arlen Specter (R-Pa.), who chairs a committee reviewing the Patriot Act, NAR and other business groups complained that confidential records about customers and employees, trade secrets and other proprietary information can be obtained too easily by government officials.

NAR identified two specific areas of concern for the real estate industry.

First, the definition of “financial institutions” includes “persons involved in real estate settlements and closings” and is too broad.

The other concern is that Patriot Act provisions for access to business records are vague and can result in unwarranted seizures.

Real Estate settlements and closings may eventually be regulated under anti-money laundering rules and the federal government may seize records with little state jurisdiction, NAR warns.

NAR outlines several points of which real estate practitioners should be aware.

Although the Patriot Act focuses on money laundering activities, there is no need for real estate professionals to implement anti-money laundering programs at this time, NAR says. Financial institutions will be required to implement a customer identification program and may ask a real estate professionals client for personal information to complete a financial transaction.

Both NAR and PAR (Pennsylvania Association of Realtors) acknowledge realtors have responsibilities under the Patriot Act. Their responsibilities, however, differ depending on the type of transaction and the level of involvement by the broker or agent they say.

John Cognetti, president of Hinerfeld Realty Company in Scranton and active member of several industrial realty organizations, says the real estate sales process will get more sophisticated, requiring more controls, but he does not feel real estate business is threatened.

Pennsylvania is already on the forefront of regulating real estate transactions as part of consumer protection efforts, Cognetti says, so many of the safeguards of the patriot act are already in place.

Cognetti does not hear many complaints by real estate professionals concerning the Patriot Act at this time. He adds that may support it.

One area that will be an immediate concern, Cognetti says it will become necessary to define, in detail, where to place the responsibility off all the stakeholders involved in the real estate trade. Banks, realtors, local governments, buyers, sellers and title companies will all have to evaluate their responsibilities.

Cognetti does not for see the cost of businesses rising – only the stack of necessary paperwork. This change is just another in a long list of changes over the last 10 to 15 years.

- Courtesy of the Northeastern Pennsylvania Business Journal

With signs the commercial real estate market in Northeastern Pennsylvania has heated up, Hinerfeld Realty in Scranton has ditched selling homes to focus exclusively on selling offices, stores, warehouse and factories.

The high-profile real estate firm, which has operated separate commercial and residential divisions, has gone all commercial and is now known as Hinerfeld Commercial Real Estate. Hinerfeld president John Cognetti said he saw a cooling of the residential market and more commercial sales opportunities.

The big change has been in the last five years, Mr. Cognetti said, as private groups invest in the area. Private companies for many years didn’t want to risk their investment in Northeastern Pennsylvania. That started to change in 2002, when First Industrial Realty Trust opened the region’s first privately owned industrial park in Covington Township. Since then, other private companies and real estate investment trusts have invested here.

Chicago-based Verus Partners, for example, has developed several “flex” buildings for sale or lease to others. Outside groups have purchased shopping plazas and malls.

“These people are looking at Northeastern Pennsylvania as a place to make money,” Mr. Cognetti said. “Ten years ago, groups like this wouldn’t return phone calls from Northeastern Pennsylvania.”

One of Hinerfeld’s competitors in commercial real estate, Wilkes-Barre-based Mericle Commercial Real Estate Services, began putting up its own buildings to lease and sell and has plans for a business park, Center Point, in Pittston Township. Another commercial real estate firm, NAI Mertz, has also been more aggressive.

Money will likely continue to flow into commercial real estates, said Barb Bush, marketing director with Real Estate Research Corp.

Real estate has regained respectability among investors with returns of 7 to 9 percent. Companies, she said, have money and access to money.

“An awful lot of money is still flowing into real estate,” she said. “Yet, there is still so much capital out there.”

Mr. Cognetti feels the residential real estate market will cool as interest rates rise. The home market has gotten competitive, as aggressive new firms such as Weichert Realtors and Semian & Gress Real Estate open offices.

Being commercial-only may also give Hinerfeld more credibility with out-of-town clients. “Commercial has always been my passion and our specialty,” Mr. Cognetti said.

- Courtesy of The Times-Tribune

After homegrown firms have gone it alone for years, local real estate and economic development professionals welcome the growing interest from outside companies.

For-profit firms First Industrial Realty-Trust of Chicago, Verus Partners and Higgins Development Partners of Rosemont, Ill. and others have entered the market within the past few years, buying properties and constructing buildings for sale or lease.

“We’ve never had that many private developers,” said John Cognetti, president of Hinerfeld Commercial Real Estate in Scranton.

(more…)

In Northeastern Pennsylvania industrial real estate is located primarily in the Counties of Luzerne, Lackawanna, and Monroe with some properties in Wayne, Pike, Susquehanna and Wyoming Counties. This makes up the Northeastern Pennsylvania industrial market.

In the last twenty years, ninety five percent of industrial building in Northeastern Pennsylvania has occurred along the Interstate corridors of I-81, 380, 84, 80, 476 and US Route 6 (the Casey Highway). This has occurred for several reasons. First, increasing congestion on I-95 and the New Jersey Turnpike, second, the North American Free Trade Agreement; third, the availability of less expensive land; fourth, from I-81 you can go east, west and northeast at points where I-84, 380, 78 and 76 cross; fifth, the need for inland distribution points for imported goods.

The Interstate 81 corridor through Pennsylvania has become the major distribution point for the Eastern United States and Canada. There are three segments to the corridor. The southern segment is the Harrisburg Metro area. The central segment is the Schuylkill/Carbon Counties and the Northern Segment is Northeastern Pennsylvania.

The effect is that Northeastern Pennsylvania is making its debut as a national industrial real estate market. Twenty nine years ago when I started in real estate, industrial developers were non-existent in this market. Industrial parks with a few exceptions and industrial buildings were built on speculation by the various chambers of commerce. Fifteen years ago, local developers Mericle and Sordoni ventured into the then uncharted waters. Today this market has attracted major players such as First Industrial, Verus, Higgins,Equilibrium and Arcadia. Tomorrow there will be more.

When the industrial market is quantified, vacancy and absorption rates are factual and not assumptions we will know we have arrived.

In the meantime from my viewpoint, there continues to be strong demand for logistics/ distribution buildings with several very major projects soon to be announced from Scranton to Hazleton. Also there has been an increase in demand for manufacturing facilities, a type of building that this area always had a good supply of. For both of these types, supply and demand are in balance. For a while flex space was not in such demand, in the last few months we at Hinerfeld Realty have noticed an increase in the number of inquires for this type of space.

Current demand for industrial land is surpassing supply. Plans are being made to bring some new sites to the market but that takes time.

The bottom line is that not only because of demand but add the increase in construction costs, values are increasing for new and existing buildings and existing industrial land values are beginning to make us blink.

We are coming onto the stage so don’t miss the action.

- John T. Cognetti, SIOR, CCIM, CRB, President & Broker/Owner, Hinerfeld Realty Company

-First published in NJPA Real Estate Journal.