Waiting for a tenant
Summerdale tract draws interest, no developersJim T. Ryan
But real estate agents and economic development officials agree the 47 acres in East Pennsboro Township likely won't see an architect's plan, a bulldozer or a construction crew until late this year, if not 2013.
The project needs an anchor tenant, they said. Although developers are interested, large retailers are not building as many stores as they did five years ago and won't commit to such a project, agents said.
Ideas for developing the Summerdale tract into a mixed-use commercial center go back as far as 2004. The land at the intersection of Valley Road and Routes 11 and 15 was owned by the state until 2011 when the Cumberland County Industrial Development Authority acquired it for $2 million. The authority had sought the land since 2007. Last year, it began looking for development partners, and is still searching.
"As we were trying to get this deal done, the recession started and that didn't help," said Omar Shute, executive director of the Cumberland Area Economic Development Corp., also known as Cumberland County Economic Development that manages the authority's day-to-day affairs.
CAEDC continues to have fluid discussion with many developers, some looking to do office space and others looking for big-box retailers to be the anchors, he said. However, market demand — or rather the lack thereof — for such space is the largest factor in why something hasn't materialized yet, he said.
Real estate agents agree: The market for commercial development just hasn't rebounded as fast, despite evidence showing renewed interest in smaller projects along major arteries such as the Carlisle Pike.
Realistically, two years isn't a long time for the property to be on the market considering it was owned for decades by the state, said Drew Bobincheck, an agent with East Pennsboro Township-based Landmark Commercial Realty Inc. The firm was under contract with the authority in the past to help sell the Summerdale tract.
"It's an awesome piece of dirt," Bobincheck said. "It's just a matter of time before it's developed."
In 2011, a large developer from New York was highly interested in the property, but it couldn't nail down an anchor retail tenant, he said. In the past, large retailers would've built 100 stores in a year, but today they're only building 10. They're being selective about sights, sizes, risk and developer selection, he said.
The office development market is soft, too, he said.
"The problem is the economy is just not as good as it needs to be," Bobincheck said.
Without anchor tenants on office and retail space, developers won't get the financing from banks they need to build, said Jim Koury, a partner with Lemoyne-based RSR Realtors. Depending on the size of the building, developers might need a dedicated tenant or tenants to sign on to occupy 50,000 square feet of office space before the project can proceed, he said.
"Financing is a big part of it," Koury said. "It's very hard for even the biggest developer to get financing on raw dirt."
Without financing, a developer is going to need cash-on-hand to begin a speculative project, he said. It's most likely those type of projects will not return to the market until 2013, after the elections when the economy has improved and there's more certainty about government's economic policies, he said. Even then, speculation is going to be rare.
"Even if someone has a boatload of money, there's still risk involved," Koury said. "The economy could turn and that could put an end to the project without a tenant."
Shute said he's still optimistic for progress later this year. The upside of the Summerdale tract is it already has some basic infrastructure, including water retention and runoff systems left over from when the state intended to build a laboratory there, he said.
"That makes the site even more attractive for developers," Shute said.
Finding a developer, landing anchor tenants and beginning construction within the next year will take a lot of cooperation, even with a good location and pre-existing infrastructure, Bobincheck said.
"It's not 2007 where the landowner can pound their fist on the table and say, 'I want this for the property, take it or leave it,'" he said. "Everyone has to work together on these types of projects."