Thursday, March 31, 2016

PREIT Sells Four Underperforming Malls In PA, VA, And AL

by Steve Lubetkin,
PREIT sold four more underperforming malls in Pennsylvania, Virginia and Alabama, continuing its strategic exit from properties it regards as “non-core,” which had below-average sales, gross rents, and occupancy.

“PREIT has remained steadfastly committed to creating a high-quality portfolio that delivers outstanding results for our shareholders,” says Joseph Coradino, CEO of PREIT. “The disposition of these 13 malls redefines PREIT. With sales of $458 per square foot and remerchandising and redevelopment initiatives under way that provide a clear and realizable path to $500 per square foot, we are now a more compelling platform for retailers and investors, allowing us to continue to drive same-store NOI growth and strong shareholder returns.”

PREIT sold Lycoming Mall in Pennsdale, PA, which is anchored by JC Penney, Sears, Bon-Ton and Macy’s, to Kohan Retail Investment Group for $26.35 million, and sold a portfolio of three malls— Gadsden Mall in Gadsden, AL, anchored by Belk, JC Penney and Sears; New River Valley Mall in Christiansburg, VA, anchored by Belk, Dick’s Sporting Goods, JC Penney and Kohl’s, and Wiregrass Commons Mall in Dothan, AL, anchored by Belk, Burlington Coat Factory, Dillard’s and JC Penney—to Farallon Capital Management for $66 million, including $17 million in seller financing. PREIT senior vice president of corporate communications and investor relations Heather Crowell confirmed the buyers to

PREIT says the transactions indicate that its non-core mall disposition program is almost complete, and that only one remaining mall is being marketed for sale.

In November 2012, PREIT said it would reshape its portfolio by disposing of non-core properties, including its lower-productivity malls, to reduce debt, improve portfolio quality and drive operating results.

Since that time, PREIT has sold 13 lower-productivity malls and several power centers and land parcels, generating about $600 million in gross proceeds. The malls sold had substantially lower sales per square foot, gross rents, non-anchor occupancy, and were broadly responsible for decreasing PREIT’s net operating income an average of 10 percent in the year before their sales, the firm says.

Plaza at Cape May Court House Sells for $32.1M

Polimeni Realty sold the Plaza at Cape May Court House shopping center in Cape May Court House, NJ to RW Partners for $32.1 million, or roughly $196 per square foot.

The 163,629-square-foot, grocery-anchored shopping center was constructed in 1971 and renovated in 1994 in Cape May County. The property was 97.6 percent leased at the time of sale, anchored by Staples, ACME Markets and Marshalls.

USAA to Deliver 874,000-SF LVDC Next Month

USAA Real Estate is set to deliver next month on its 874,126-square-foot Lebanon Valley Distribution Center, built on-spec at 139 Fredericksburg Rd. in Fredericksburg, PA.

Located nearly one mile from I-78, the 874,126-square-foot, cross-docked distribution facility broke ground in October 2015.

It sits on 90 acres in the Harrisburg Area East Industrial submarket of Lebanon County and features ESFR sprinklers, 123 dock doors expandable to 155, two drive-in doors, 202 opposing trailer stalls, and benefits from a 10-year LERTA tax abatement program.

Wednesday, March 30, 2016

Here's Why the Real Estate Market Is 'Good' (Video)

New Jersey sets aside $100m for Exeter industrial fund

by Jon Peterson
The New Jersey Division of Investment is planning a $100m commitment to Exeter Property Group’s Core Industrial Club Fund I.

To date, the pension fund has invested 12% of its private real estate in industrial assets, compared with the NCREIF ODCE index’s 14%.

The US investor said that, with only nominal unfunded commitments in the industrial sector, it expected exposure to fall further.

The new commitment will allow it to rebuild the amount invested in industrial assets.
The commitment will represent 16.67% of Exeter’s planned $600m capital raise.

The new fund, aiming for a 8.5% return, will invest solely in US industrial properties.

Around 75% will be in bulk warehouses and multi-tenant logistics assets, and 25% in “last mile” distribution properties.

Exeter Property Group plans to focus on core and core-plus assets.

Any development the fund does would be limited to forward-funding of build-to-suit properties.

The pension fund said Exeter’s Core Fund I generated a 20.1% IRR and a 9% cash yield.

New Jersey is also planning a $100m allocation to the Wheelock Street Real Estate Fund V.

Wheelock is aiming for a $700m capital raise, with a $725m hard cap.

The opportunistic fund will invest in a variety of US properties, portfolios and operating companies through its hotel, retail and residential verticals or through joint ventures with leading operating partners.

Wheelock is co-investing 2.5% of total capital commitments, with the fund using 50% leverage.

Davis And Advance Complete Capital Improvements At Lansdale Industrial Building

by Steve Lubetkin,
The Davis Cos. and Advance Realty have completed extensive capital improvements at 2750 Morris Rd., a 675,000-square-foot property in Lansdale, PA. Located just nine miles northwest of Philadelphia, the property, a former Ford Motor Co. electronics assembly plant, offers 375,756 square feet of climate-controlled technology, warehouse, assembly and production space, and 70,442 square feet of office space, all with a heavily redundant power and climate infrastructure that one of the partners describes as “hardened.”

Over an 18-month period after purchasing the property in August 2014, TDC and Advance Realty installed new building systems, a new roof and upgrades to common areas, new lighting, landscaping, parking, circulation and exterior wayfinding signage throughout the entire complex.

“It was a build-to-suit for Ford Motor Co.,” Davis SVP of asset management Mark Bush tells exclusively. “So we brought some of those HVAC systems up to date which were circa 1989, and a new roof. We’ve really brought the common areas up to a more office environment, vs. a straight manufacturing facility.”

2750 Morris Rd. has what Bush describes as a “hardened” infrastructure because of its manufacturing legacy. The facility includes dual substation power feeds, chilled water and compressed air delivery systems and five diesel generators. Some of the chilled water cooling systems are being replaced with more efficient modern roof-based “cooling packages,” Bush says.
The diesel generators can supply the facility 10 megawatts of electric generating capacity, Bush says. “Because of that, we do offer temperature- and humidity-controlled environment, even off-grid, and that’s very important for pharmaceutical packaging, medical packaging, lab space, or even a data center infrastructure.”

Cafeteria space and locker rooms dating to the Ford manufacturing facility are likely to be demolished when a new tenant moves in, Bush says.

“With an ideal infrastructure already in place for world-class manufacturing and assembly, the capital improvement plan focused on ensuring an optimal work environment for tenants’ employees,” says Barry Quiner, Advance director of asset management. “We have high-quality tenants whose satisfaction requires not only a facility that is highly functional, but also an overall environment of comfort and safety, which we are committed to delivering.”

2750 Morris  occupies 84 acres with prime access and signage opportunities off the Pennsylvania Turnpike at Exit 31, and Routes 202, 309 and 63. Conveniently located between King of Prussia, Plymouth Meeting, Center City, Philadelphia International Airport and the Lehigh Valley, the property is close to a variety of shops, services, and dining options.

The property is currently home to: Valmet, Vygon USA, and Fox Group Inc.

Monday, March 28, 2016

Lutron Leases 28,000 SF in Center Valley

Lutron Services subleased 27,699 square feet in the office building at 3477 Corporate Pky in Center Valley, PA.

The 83,056-square-foot Saucon Valley Plaza building was constructed in 2007 within the Stabler Corproate Center.

Environmental firm relocates to Center City

Natalie Kostelni, Reporter
Philadelphia Business Journal

An environmental firm has relocated its offices in Fort Washington, Pa., to Center City.

GZA GeoEnvironmental Inc., an environmental and geotechnical consulting firm, has relocated into 4,629 square feet at 1515 Market St. in Philadelphia. They had been in space at 501 W. Office Center Drive.
The company will have an initial 10 employees working from the downtown office space and anticipate growing from there.
Full story:

Linlo Properties Acquires Harrisburg’s AT&T Building From Lexington Realty Trust

by Steve Lubetkin,
Linlo Properties has acquired the AT&T Building at 2550 Interstate Drive, an 87,000 square-foot class A office building in Harrisburg, PA, from Lexington Harrisburg, an affiliate of Lexington Realty Trust.

“This office building is one of a few highly sought after class A, large floor plate suburban office properties in the Harrisburg market. This deal aligned with the buyer’s recent aggressive acquisition strategy and highlights the strong demand for well-located Class A office facilities in the suburban Harrisburg market.”

Built in 1998, the building’s investment grade tenants include AT&T, Crump Insurance and AXA Financial.

Thursday, March 24, 2016

Pulmonary Medical Practice Acquires Medical Office In Lemoyne, PA

by Steve Lubetkin,
Pulmonary and Critical Care Medicine Associates, a major provider of pulmonary care in the Harrisburg area for four decades, has acquired a 23,000 square-foot office building from Drs. John and Jane Conroy for $3 million.

The office building, which will consolidate three medical offices into a single location, is located at 50 N. 12th Street in Lemoyne, PA.

“This transaction proves that independent, private medical practices are still very active in the suburban marketplace, looking for ways to optimize their occupancy strategies” says Shyk. “This new office location will allow PCCMA to house all of their providers and staff under one roof, while using much of the existing medical build-out of the property to save a tremendous amount of money on tenant improvements.”

PCCMA anticipates moving into their new medical office location later this year after renovations have been completed.

Wednesday, March 23, 2016

US Industrial CRE Demand: Strongest Ever?

by Brian Rogal,
The US economy may be growing slowly, but the industrial market just finished one of its best years ever, and 2016 is already shaping up to be another year of declining vacancy, rising rents and robust levels of new construction.

“The industrial real estate market has fully recovered from the shock of the financial collapse. The market has now experienced five straight years of positive absorption."

Speculative development has been slow to return, however, which Rosenberg attributes to “the freshness of the losses incurred from 2008 to 2010.” Industrial developers added about 49.5 million square feet of space to the market in the 4th quarter, much of it through build-to-suit projects. But with vacancy rates hitting historic lows in many regions, more speculative projects will start going vertical in 2016.

Overall vacancy in the US sank to just 6.4% by the end of 2015, the lowest rate seen in ten years, according to Colliers’ statistics. And absorption hit 252.3 million square feet for the year, more than the 201.9 million square feet of space added by developers, and besting the previous year, when users absorbed 225 million square feet.  

The tightening market has allowed landlords to push up rents significantly. Rents bottomed out at $4.53 in the third quarter of 2011, but have now risen for 17 straight quarters. Compared to last year, rents increased 6.2% to $5.39 per square foot. That is still below the peak of $5.63 reached in the second quarter of 2008, so the unbroken string of increases may continue for some time.  

Much of these gains, however, are due to the robust demand from only six metro areas. Los Angeles-Inland Valley, Dallas-Ft. Worth, Chicago, Atlanta, Philadelphia-Lehigh Valley and Detroit accounted for 34.1% of all US industrial demand in 2015. It’s not surprising that the first five are key players in the US distribution market, the most robust sector in the country.

Detroit, which accounted for 3.6% of US industrial demand, might be the only metro area on that list that surprises anyone. But “the car industry has been very healthy,” Rosenberg says, and the region is filled with auto suppliers that need to expand. And the fact that many big industry players don’t operate in the Detroit area creates opportunities for others. “Because it’s ignored by Prologis and groups like that, private investors can make a lot of money there.”

And from what Rosenberg has seen of the market this year, he expects 2016 will be another great year, barring any unforeseen shocks. “The demand is just the strongest we’ve ever seen.” If anything has changed in the last six months, it’s that vacancies have reached such a low point that “companies are fighting each other for space.” That’s obviously not true for all markets, he adds, but the vacancy rate in Los Angeles, just to pick out one example, has sunk to an incredible 1.6%. Therefore, for the rest of the year, “the spec spigot should be full-on.”

Kislak Completes $41.6 Million, 493-Unit Multifamily Sales In Lancaster, PA

by Steve Lubetkin,
The Kislak Company recently arranged sales of four multifamily properties with 493 housing units in Lancaster, PA for $41.6 million.

The separate transactions included the $20.6 million sale of Quail Run Apartments and Stone Mill Station Apartments with a total of 261 units that were sold together; the $16 million sale of Greenland Village, a 180-unit property; and the $5 million sale of City View Apartments, a 52-unit property. Kislak marketed all of the properties on an exclusive basis and company president Robert Holland represented all parties in the transactions.

“Central Pennsylvania remains a strong rental market and is attractive to multifamily investors because of its growing job markets and population, says Holland. “This growth fuels demand for multifamily housing and gives owners of multifamily properties rent growth year after year.”

Quail Run Apartments is a 136-unit apartment complex with private entrances and off-street parking. Constructed in 1965, the property is situated on 10.1 acres with 17 two-story buildings. Units feature walk-in closets, dishwashers, and balconies or terraces.  Approximately 67 percent of the units have been renovated.

Stone Mill Station Apartments is a 125-unit apartment complex. The property was built in 1966 on 5.3 acres with 11 three-story buildings. Amenities include individually controlled HVAC units, large spacious floor plans, walk-in closets, laundry facilities and off-street parking. Approximately 89 percent of the units have been renovated.

“Quail Run and Stone Mill are located close to one another, allowing the owner to provide multiple options and floor plans for prospective tenants as well as saving money by sharing some of the services between the properties,” says Holland.

Greenland Village is a 180-unit garden-style apartment complex adjacent to the 43-acre Flory Park. More than $1 million in capital improvements was invested over five years, including new kitchens and baths in 160 of the units.  The property has individual entrances. Greenland Village is located minutes from major highways Route 30, Route 220 and the Pennsylvania Turnpike.

City View Apartments is a 52-residential unit, six-story elevator mid-rise apartment building with balconies and on-site parking and garages. The property was built in 1965 and underwent significant renovations in 2010. The property is located one block south of Lancaster General Hospital and across the street from Lancaster General College of Nursing and Health Services. At the time of closing, the property was fully occupied.

“City View demonstrates the rising trend of tenants to moving back to cities. The ability to walk to a coffee shop or restaurant or shopping has become increasingly more popular with residents who don’t want to have to drive everywhere,” says Holland. “Lancaster’s downtown has had a renaissance while retaining its old world charm.”

Drexeline Shopping Center Sold for $30M

Drexeline Shopping Center Corp. sold the Drexeline Shopping Center at 4990-5100 State Rd. in Drexel Hill, PA to MCB Real Estate for $30 million, or about $113 per square foot.

Located at Route 1 in the Delaware County submarket, the 265,825-square-foot community center was built in the 1970s on 18.5 acres. The asset is anchored by ShopRite and is 80 percent occupied at the time of sale.

Monday, March 21, 2016

Tabula Rasa HealthCare Leasing 75K SF At Moorestown Corporate Center

by Steve Lubetkin,
Tabula Rasa HealthCare, which provides patient-specific, data-driven technology and solutions for health care organizations, is leasing 74,565 square feet in Keystone Property Group’s Moorestown Corporate Center in Moorestown, NJ, about 15 miles from Philadelphia.

“Conveniently located near the New Jersey Turnpike, I-295 and other major roadways, we found this prominent office complex to be an extremely attractive option,” says Calvin H. Knowlton, chairman and CEO of Tabula Rasa HealthCare. “We were looking for a property that could inspire our employees and accommodate our evolving needs. The convenience and indoor and outdoor amenities of Moorestown Corporate Center makes the property a perfect fit for our company.”

A three-building office property, Moorestown Corporate Center is comprised of 223,000 square feet of prime office space in western Burlington County. After acquiring the property in 2012, Keystone completed a wide range of capital improvements to the building’s interior and exterior, including new landscaping and upgrades to the lobby and common areas.

Situated on Route 38 near the New Jersey Turnpike and Interstate 295, the property is near various shopping destinations, including the Moorestown Mall and East Gate Shopping Center, as well as numerous restaurants and first-class hotels.

“With the property’s park-like setting and three-story atrium lobbies, Moorestown Corporate Center is an ideal headquarters location for dynamic, forward-thinking firms,” says Bill Glazer, president of Keystone Property Group. “Because of the aesthetic and functional qualities of Moorestown Corporate Center, our tenant mix includes prominent national firms like Allstate Insurance and Destination Maternity, and we’re pleased that Tabula Rasa HealthCare chose to bring its new corporate headquarters here.”

Saturday, March 19, 2016

What's Trending in U.S. Real Estate (Video)

Wayne Corporate Park has a New Owner

PDC-Old Eagle LLC and Long Wharf Real Estate Partners LLC, a branch of Fidelity, bought the 12-building Evolve IP Corporate Center at 983-999 Old Eagle School Rd. in Wayne, PA for $42 million, or about $106 per square foot.

GPX Realty Managemnet LLC sold office park, which totals 376,303 square feet built in 1981 in the King of Prussia / Wayne submarket of Philadelphia.

Local Developer Secures Construction Financing for Future Multifamily Development

Radnor Property Group secured $53.43 million in preferred equity and construction financing for its new luxury high-rise apartment community in the University City neighborhood of Philadelphia.

With financing in place, the developer has broken ground on its 16-story multifamily property that will be located at 3201 Race Street.

The loans  will consist of $18 million in preferred equity and a $35 million construction loan.

Construction is set to be completed in 2017 and will feature a combination of 164 one- and two-bedroom residential units along with nearly 14,000 square feet of commercial space. The featured property will reside on .68 acres and have access to I-76.

Wednesday, March 16, 2016

Isuzu Signs Full Building Lease in Jenkins Twp

Isuzu Commercial Truck of America, Inc. has leased 134,442 square feet of flex space in CenterPoint Commerce & Trade Park, taking the entire building at 401-475 Keystone Ave. in Jenkins Township, PA.

The auto manufacturer will use the flex space as a training and parts distribution center.

Completed in June 2015, the building sits on 13.8 acres in the I-81 Corridor Industrial submarket of Philadelphia. It features parking for 350 cars, 19 loading docks, one drive-in bay, heavy power and a 34-foot clear heights.

Royale Gardens Acquires First Ave Redevelopment Site in King of Prussia

Devon International Group sold the office building at 1100 1st Ave. in King of Prussia, PA to Royale Gardens LP, an investment group led by the Piazza family.

The 18.1-acre site is currently improved with a two-story, 148,000-square-foot office building located within the King of Prussia business park in Montgomery County, just off Rte 422 and adjacent to the I-276 and I-76 with access to the entire Philadelphia MSA.

The buyer plans to redevelop the property by managing the existing building and exploring the development of a mixed-use commercial component with possible medical office space, multi-housing, market retail or a boutique hotel.

"This is a rare and unique opportunity, you don’t find 18+ acres of developable land in the heart of King of Prussia anymore," said Vince Piazza. "I’m thrilled to be part of the redevelopment and transformation of Upper Merion Township."

Tuesday, March 15, 2016

Tracking Chinese CRE buyers in US (Video)

TCC And Clarion Partners Acquire, Plan Spec Build On 90-Acre Lehigh Valley Industrial Site

by Steve Lubetkin,
Joint venture partners Trammell Crow Company and Clarion Partners have acquired a 90-acre site at 4815 Hanoverville Road in Lower Nazareth, PA, for the development of Lehigh Valley Trade Center. Construction will commence later this month on two class A speculative warehouse/distribution buildings totaling more than 1.2 million square feet. Clarion Partners has acquired the property on behalf of a commingled fund that it manages.

“This project benefits greatly from its strategic location on the east side of the Lehigh Valley industrial market, with close proximity to a deep, high quality labor force as well as immediate access to what is perhaps the most important transportation infrastructure on the east coast,” says Andrew Mele, managing director with Trammell Crow Company’s NE Metro Business Unit. “TCC has a long history of delivering institutional quality, class A industrial real estate in the Valley and we look forward to starting this new project.”

Building A will total 947,000 square feet with cross-dock loading, 36-foot clear height, capacity for more than 240 loading dock doors and car and trailer parking ratios that are well above current market standards. Building B will total 297,000 square feet with rear loading and 32-foot clear height.

“This is our third speculative industrial project with TCC in this area,” says Joe Zingaro, vice president with Clarion Partners. “This market has all the fundamentals to support a project of this size and quality; demand for class A industrial space in the Lehigh Valley remains very strong across a variety of size ranges. The flexible, two-building design will allow us to see a diverse mix of tenant requirements.”

The project’s location along Route 22 provides immediate access to I-78 and I-476. The existing highway infrastructure allows users to easily reach New York, Philadelphia and the rest of the Northeast.

Monday, March 14, 2016

Millennials moving to the burbs (Video)

A Real Estate Plan Right at Home With Students, Seniors (Video)

PREIT Begins Redevelopment Of Exton Square Mall

by Steve Lubetkin,
REIT says it has begun the first phase of the redevelopment of Exton Square Mall.  The company acquired the land parcel underlying the existing Kmart store, enabling demolition and construction of the new Whole Foods, set to open in 2017.  Demolition will begin in early April.

Additionally, PREIT recently executed a lease with Round 1 Entertainment that will bring bowling, billiards, ping pong and other games.  Construction is underway for an anticipated opening prior to the end of 2016.  The tenant will occupy 58,000 square feet and will be located in the lower level of the former JC Penney store.  This entertainment offering will broaden the property’s appeal, attracting families and extend visits to the mall.

Located in Chester County, which has the highest per capita income in Pennsylvania, the trade area is home to 525,000 residents.  The property has visibility from Routes 100 and 30 and is easily accessed via Route 201 and the Pennsylvania Turnpike with over 38 million cars passing by annually.

“We have looked forward to the opportunity to reposition this well-located property with incredible demographics,” says Joseph F. Coradino, CEO of PREIT.  “These new additions will act as catalysts to continue to improve the merchandise mix and drive sales and NOI at the property.”

Wednesday, March 9, 2016

Clarion Hotel Conversion Complete

The former Clarion Hotel at 6821 Black Horse Pike in Egg Harbor Township, NJ has completed a conversion this month to an 84-unit affordable housing community.

The six-story building totals 229,644 square feet on 13.5 acres in the Outer Central Atlantic County MF submarket of Philadelphia. It now encompasses 16 one-bedroom, 43 two-bedroom and 25 three-bedroom apartments, and has achieved LEED certification.

WNC, a national REIT, provided $14.5 million in low-income housing tax credits (LIHTC) to fund the conversion.

Cira Square Sale Closes in Philadelphia

 The Korea Investment Corp. closed on the previously announced acquisition of Cira Square from Brandywine Realty Trust for $354 million, or about $407 per square foot.

The historic office building was originally constructed in 1935 at 2970 Market St. in Philadelphia, PA. Recently renovated in 2010, the building totals 870,262 square feet and is 100 percent occupied today, anchored by the Internal Revenue Service (IRS) in almost the entire building under a GSA lease with 15 years remaining.

In connection with the sale, Brandywine realized net sales proceeds of $350.2 million after closing costs. The company will report a gain of approximately $114.0 million in the first quarter of 2016.

Tuesday, March 8, 2016

Estes Express Lines Signs 77,987-SF Lease at 400 Capital Lane in Capital Logistics Center

by Steve Lubetkin,
Estes Express Lines has signed a 77,987-square-foot lease at 400 Capital Lane in Middletown, PA.  The 242,824-square-foot building, owned by a joint venture of Woodmont Industrial Partners and AEW Capital Management,  is now fully leased.

400 Capital Lane is part of the recently-renovated Capital Logistics Center — a six-building, class A, 1.55-million-square-foot industrial complex that is situated on more than 100 acres.  Building features include 30 dock doors, three drive-in doors, T5 lighting, a six-inch reinforced concrete floor and a standing seam metal roof.

In addition to 400 Capital Lane, the venture also recently completed capital improvements at 200 Capital Lane, the largest building in the complex. Currently, 400,060 square feet of space is available at 200 Capital Lane, which is equipped with T-5 lighting, an ESFR system, 87 dock doors plus two drive-in doors and 36-foot clear ceilings throughout.  Earlier this year, this building was awarded LEED Silver building certification for its efficient use of resources and its commitment to sustainability. The building has also been outfitted with 3,000 square feet of move-in ready office space.

As a leading freight service provider, Estes was looking for high-quality space that offered a sufficient number of docks.

“The ideal location of the Capital Logistics Center and the modernization of 400 Capital Lane were key factors in attracting Estes to the property,” says Eric Witmondt, chief executive officer of Woodmont Industrial Partners. “We look forward to a long-term relationship with the company.”

Located in Central Pennsylvania at the heart of the I-81 Distribution Corridor, the Capital Logistics Center fronts the Pennsylvania Turnpike and is less than a mile away from Harrisburg International Airport. The property is also near local FedEx and UPS facilities as well as Routes I-283, I-83 and 322.

U.S. Commercial Property Prices Drop for First Time in Six Years

by Kara Wetzel, Bloomberg TV

Values fell 0.3% in January from prior month, Moody's says
Decline is `significant milestone' showing shift in sentiment

U.S. commercial real estate prices dropped in January for the first time since 2010, a sign of weakening demand by investors after a six-year rally that pushed values to records.
The Moody/RCA Commercial Property Price Index slipped 0.3 percent from December, Moody’s Investors Service said in a statement Monday. The decline was led by office and industrial buildings, which each had a price drop of more than 1 percent.

“This is a significant milestone that signals that a shift in sentiment among commercial-property investors is under way,” Moody’s said in the statement.
Volatility in financial markets may be hurting real estate demand. Rates of return are falling and it’s “very difficult” to bundle and sell real estate loans, hindering debt financing for transactions, Jon Gray, head of real estate for Blackstone Group LP, said at a conference last week. His company is the largest private equity property investor, with about $94 billion under management in real estate.
The Moody’s index has almost doubled since its January 2010 trough and is about 17 percent higher than its previous peak, as low interest rates and rebounding economic growth fueled property demand. Prices have jumped the most for office buildings in top cities such as New York and San Francisco, more than tripling since the market’s bottom.

Sunday, March 6, 2016

Gateway Funding Renews Lease in Horsham

Full-service mortgage banking firm Gateway Funding Diversified Mortgage Services has renewed its lease for 33,205 square feet at 300 Welsh Rd. in Horsham, PA.

The tenant will continue to occupy the entirety of Bldg 5 in the Horsham / Willow Grove submarket of Philadelphia through 2023.

Arzan Pays $123M for Exton Whitelands Campus

90 North Real Estate Partners LLP, the London-based real estate unit of Arzan Financial Group in Kuwait, acquired the Saint-GoBain North American headquarters campus at 20 Moores Rd. in Malvern, PA from AEGON USA Realty Advisors LLC and J. Loew & Associates / E. Kahn Development for $123 million, or about $383 per square foot.

The office complex delivered in 2014 in the Exton/Whitelands submarket of Philadelphia. It totals 321,226 square feet and is occupied by the Saint-Gobain Corporation.

Thursday, March 3, 2016

Drexel University Partnering With Brandywine On Schuylkill Yards Development

by Steve Lubetkin,
Drexel University and Brandywine Realty Trust will partner on the multibillion-dollar, decades-long redevelopment of Philadelphia’s Schuylkill Yards project, a 14-acre master planned community.

Initial phases of the projected 20-year development plan will consist of 5 million gross square feet of mixed-use real estate on a 10-acre site next to Drexel’s main campus and adjacent to Amtrak’s 30th Street Station and Brandywine’s Cira Centre. This collaborative neighborhood will feature entrepreneurial spaces, educational facilities and research laboratories, corporate offices, residential and retail spaces, hospitality and cultural venues and public open spaces.

“Drexel has always believed there’s a superior use for this unique location — essentially the 50 yard line of the Eastern Seaboard — as a neighborhood built around collaboration and innovation. That’s why the University assembled these parcels, and the time is right to put this vision into action,” says Drexel president John A. Fry. “We’re looking forward to a generation of partnership with Brandywine Realty Trust. We selected them as master developer because of their nationally recognized expertise and financial capacity, and also their deep understanding of the project’s potential impact on Philadelphia. Schuylkill Yards is more than a large-scale development project; it will be the heart of America’s next great urban innovation district.”

The partners characterized the project as a long-term investment in Philadelphia and its University City neighborhood, with master developer Brandywine leading the development plan.

Plan of Schuylkill Yards project
Schuylkill Yards will be an integrated urban environment, offering a collaborative and connected community made up of educational and medical institutions, businesses, residents and visitors bound together by the pursuit of innovation. Situated adjacent to Amtrak’s 30th Street Station, the third-busiest passenger rail station in the country, Schuylkill Yards will be connected to Philadelphia’s international airport and the major cities along the Northeast corridor, making it a major innovation hub on the East Coast. Schuylkill Yards will also create a new gateway to Drexel University and University City, a thriving submarket with one of the highest concentrations of higher education and medical institutions in the nation, including the University of Pennsylvania and its hospitals, University of the Sciences, The Children’s Hospital of Philadelphia, University City Science Center and the Wistar Institute.

Drexel University conducted a national search advised by Jones Lang LaSalle, which resulted in the selection of Brandywine Realty Trust, based in Philadelphia, as the master developer for the site. Brandywine is one of the largest publicly traded, full-service, integrated real estate companies in the United States, with a core focus in the Philadelphia, Washington, D.C., and Austin markets.

“Drexel University and Brandywine’s shared vision for the continued renaissance of University City provides a strong foundation for a long-term partnership. Together, we will create a dynamic and world-class innovation hub to attract the brightest minds to our region,” says Gerard H. Sweeney, president and CEO of Brandywine. “Schuylkill Yards will undeniably transform Philadelphia’s skyline as new towers rise on the west side of the Schuylkill River. Brandywine’s existing Cira Centre, EVO and FMC Tower at Cira Centre South projects in University City will provide a synergistic connection to Schuylkill Yards, creating a seamless access point to Center City and strengthening the eastern edge of University City as a whole.”

As master developer, Brandywine will oversee an experienced development team that includes Gotham Organization, Inc. leading the residential development, and Longfellow Real Estate Partners leading the life sciences component. Schuylkill Yards will be the first project in Philadelphia for both firms. Brandywine and Drexel University jointly selected the design team consisting of SHoP Architects and West 8. SHoP Architects will handle the district planning and development of the architectural standards, and West 8 will be responsible for creating the public realm and development of the landscape standards.

The development of Schuylkill Yards will take place in multiple phases over the course of approximately 20 years. When completed, the site is expected to host a combination of repurposed existing buildings and new tower structures with world-class design and programming and a diverse network of public spaces to incorporate the natural world in the urban environment. Schuylkill Yards’ development will begin with the creation of Drexel Square, a 1.3 acre park at 30th and Market Streets, directly across from Amtrak’s 30th Street Station. The historic former Philadelphia Bulletin Building will also be reimagined by transforming the east facade with inside/out viewports and a dynamic front screen.

Schuylkill Yards reflects the partners’ commitment to driving inclusive economic growth in the City of Philadelphia. The project will create thousands of jobs and generate tens of millions of dollars in tax revenue. Schuylkill Yards will incorporate specific pathways for residents of adjacent neighborhoods to share in the employment and business development opportunities, benefit from neighborhood revitalization, and access services offered by the partners and community of Schuylkill Yards. Additionally, Schuylkill Yards is designated as part of a Keystone Opportunity Zone, providing future businesses and residents with tax benefits that will further stimulate economic growth.

“Schuylkill Yards is a big step forward in University City’s transition to a next-generation business district. It will provide our region’s current and future innovators with a central hub for collaboration and signal to the world that Philadelphia is ready for business in the 21st century’s new economy,” says Philadelphia Mayor Jim Kenney. “Drexel University and Brandywine are creating one of the most valuable assemblages of real estate in the nation, and all of Philadelphia’s residents, institutions, businesses and visitors will share in the prosperity generated by this new center of innovation.”

“Schuylkill Yards will bring new, innovative businesses and residents to Pennsylvania, and the potential economic impact is tremendous,” Pennsylvania Governor Tom Wolf says. “Those who choose to make Schuylkill Yards their home will have access to many of the most innovative companies, organizations and educational institutions in our state.”

Wednesday, March 2, 2016

CityView Commercial Closes on Palmer Park Mall

Pennsylvania Real Estate Investment Trust (PREIT) has sold the Palmer Park Mall at 123-141 Palmer Park Mall at the corner of Park Ave. in Easton, PA to CityView Commercial for $18 million, or about $39 per square foot.

Palmer Park Mall was constructed in 1972 and renovated in 1998. It sits on 50 acres in the Lehigh / Northampton submarket. It is anchored by Boscov's and The Bon-Ton, which occupy 314,000 square feet combined.

Understanding Suburban Markets Key, Say ULI Philadelphia Panelists

by Steve Lubetkin,
Understanding suburban residents is critical to producing reimagined and redeveloped communities outside the urban core, say panelists at the Urban Land Institute Philadelphia District’s “Contagious Urbanization: How the Suburbs are Embracing Mixed-Use and Density,” held today at the Union League Club.

Eli Kahn, principal of E. Kahn Development Corp., presented redevelopment plans for downtown West Chester and Devon. As someone who grew up nearby, Eli explained how he aims to create an “urban light” environment, by building walkable and transit-oriented developments that are desirable to those used to a bustling city atmosphere. As previously reported by,  Kahn successfully redeveloped a former insurance company headquarters in Malvern, PA, which was leased by building products company Saint-Gobain. Last week Kahn sold the property to Chicago developer 90 North.

Devon Yards, his latest project located in the former Waterloo Gardens property, includes the underground parking, an innovative commercial real estate choice, as well as trendy retail described as an “Urban Outfitters themed complex.”

Understanding what makes suburban real estate attractive to its target audience is essential to success, say the panelists.

James Mazzarelli, senior vice president at Liberty Property Trust, pointed out that the Great Valley Corporate Center is being rebuilt with the new decision makers – Gen X, Gen Y and other “digital natives” – in mind. By building active and collaborative work environments that fit into the increasingly common live/work/play lifestyle, Liberty Property Trust hopes properties like his can help set the bar for placemaking in suburban office spaces, he says.

Millennials and empty-nesters tend to have active lifestyles, so when redeveloping the Granite Run Mall, Michael Markman, president of BET Investments, says he knew they would have to incorporate public greenspaces. Markman says the roadmap for this project included speaking with key stakeholders and educating community members on their plans for what he called a “multipurpose desire destination” throughout the process. By building around a walkable courtyard that connects to the adjacent trail system, the new Granite Run Mall encourages patrons to live sustainably while still enjoying their leisure time.

Providing the community and government perspective, Terry Woodman, principal and special consulting projects and manager of East Whiteland Township (Chester County), gave insight as to how municipalities work with developers towards a common goal.

Suburbs are now ready to “put density where the infrastructure is,” she says, which is partly why so many mixed-use projects are in the works. As a veteran of the industry, Woodman stressed the importance of including the entire community in an open dialogue every step of the way. Developers, she says, should “work collaboratively with the township to build real estate, we can all ensure community value with a project.”

Panelists also fielded questions on the importance of public transit access, building for Millennials, young professionals and empty nesters, as well as addressing the “adult Disneyland” and other stigmas surrounding new mixed-use developments.