Impact of Commercial Real Estate – When a company closes shop

When a company closes shop

Within the past few months news sources including the Reading Eagle, Eastern PA Business Journal and various other local publications have made mention of a number of companies deciding to close their facilities in the local marketplace. This has a few obvious impacts including job loss and tax revenue loss, but a large problem that is sometimes overlooked is what do we now do with the vacant real estate.

The majority of the time these facilities, especially manufacturing plants are designed and built for a specific function.

On many occasions these properties will end up being retrofitted for another use, which will ultimately affect the sales price. Some of the larger companies will even sell the property below market value to just get it off of their books.

This not only has a direct impact on the subject property but also an impact on the rest of the market. Especially when it comes to appraisers trying to value other assets in the marketplace!

The positive is that there are certain items within a facility which can be a benefit, including water/sewer capabilities, cranes, power infrastructure, rail, etc… When these facilities have their equipment still in place, it allows the Broker to market to a certain demographic. This could be a good problem to have as it allows you to target a certain company and offer what most sites cannot include a turn-key operation and workforce that is in place. A perfect example of this scenario is when Advanced H20 Water Closed its doors In 2007 and another bottling company purchased the assets, equipment, leased the building, and hired a number of the former employees.

Unfortunately this does not happen all the time, in most cases the equipment is auctioned off, and the buildings are placed on the market for sale or lease! Without the equipment or specialized  infrastructure you are now marketing a general warehouse or industrial facility and not separating yourself from the rest of the marketplace. This tends to lower the rental rate, increase the incentives that are offered, and increase potential tenant improvement allowances. All of the items listed directly affect the value of the asset and value of market.

What we hope as a community is to concentrate not only on attracting new industry but work extremely hard at company retention. As a Broker we earn our fees by filling vacant real estate, however we want nothing more than to show what industry we have and what employers are expanding; this shows market strength and stability. We need to spend just as much effort on company retention as we do on attracting new businesses.

By assisting our local companies to expand we will ultimately help all aspects of the community.

There are various organizations in Greater Reading that do just that;

The Greater Reading Chamber of Commerce

Berks Economic Partnership

Greater Berks Development Fund

Industrial Development Authority

Reading Redevelopment Authority

NAI Keystone Commercial & Industrial, LLC

And many more!

If you are interested in learning more about these organizations please give us a call and we will put you in touch with the respective party.

Article by Bryan Cole of NAI Keystone Commercial & Industrial, LLC

For More Information about Local News, Market Intel, or Commercial Real Estate Opportunities; visit

Bryan E. Cole | Senior Associate
NAI Keystone Commercial & Industrial, LLC

direct: 610-370-8502

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NAI Keystone is a full service commercial and industrial real estate firm located in Reading PA; We handle buyer, tenant, and landlord representation throughout Pennsylvania and with the association of our global partners we can assist in locating product throughout the country.