Friday, June 13, 2025

Logistics firm takes half of 28-acre spec warehouse project in one of year's largest leases

 By Ryan Mulligan – Reporter, Philadelphia Business Journal

A joint industrial venture between J.G. Petrucci Company Inc. and The Davis Companies has landed its first tenant, leasing nearly half of a 28-acre Delaware spec development.

AMS Fulfillment, a Southern California-based logistics company, is taking more than 181,000 square feet in a 10-year lease at the 361,770-square-foot development under construction in Bear. The site at 710 American Blvd. is expected to be completed later this year.

The deal is one of the largest in the region this year. Just three leases in the Philadelphia area outstripped 181,000 square feet in the first quarter, and none were in Delaware.

AMS Fulfillment also has a Delaware warehouse location in Newark and two in New Castle, along with one in New Holland, Pennsylvania.

Boston-based Davis Companies and Asbury, New Jersey-based J.G. Petrucci broke ground on the project in September 2024. The 710 American site sits next to a Dots Foods redistribution center about eight miles from I-95.

When finished, the sprawling warehouse will include 3,150 square feet of office space along with 50 trailer parking spaces and 250 car parking spaces.

At over 360,000 square feet, the project represents more than a quarter of the 1.53-million-square-foot industrial development pipeline in New Castle County, according to Colliers. The average asking rate for industrial leases in the county is $11.22 per square foot.

David Allen, a senior vice president at The Davis Companies, called the Greater Philadelphia region "one of the most rapidly growing industrial submarkets in the Mid-Atlantic."

Full story: http://tiny.cc/s1vm001

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Philadelphia industrial developers find relief as supply wave levels off

 


By Brenda Nguyen CoStar Analytics

After two years of supercharged development, Philadelphia's industrial construction boom has finally leveled off. The slowdown has helped demand catch up with supply, reducing the number of unoccupied warehouses across the metropolitan area.

Developers added over 57 million square feet of new industrial space across the Philadelphia metropolitan area since 2020, one of the largest market expansions nationwide. Four counties in Southern New Jersey, Burlington, Camden, Gloucester and Salem, accounted for more than half of this regional expansion.

The construction spree pushed Philadelphia’s availability rate for industrial space from a low of 6.2% in 2022 to a peak of 10.6% in mid-2024. Consequently, landlords found it harder than expected to secure tenants due to the increased competition and slower leasing activity in recent years.

The market has since turned a corner. The availability rate has dropped by 40 basis points to 10.2% in June, suggesting that tenant demand is finally catching up to the slower pace of new supply. Available inventory now totals 66 million square feet, an increase of 72% from 38.3 million square feet three years ago.

With construction activity moderating, Philadelphia's industrial market appears positioned for a more balanced year ahead. Landlords should find some relief as they face fewer new competitive properties hitting the market compared to the pace set over the past several years.


Wednesday, June 11, 2025

Amazon ramps up data center plans with $20 billion investment in Pennsylvania

By Randyl Drummer CoStar News

Amazon said it will spend at least $20 billion to build data centers in Pennsylvania, the latest investment announced this year as the tech giant builds out its global artificial intelligence and cloud computing capabilities.

The Seattle-based e-commerce giant plans to build data center campuses at the Keystone Trade Center in Bucks County's Fairless Hills, outside Philadelphia, and Salem Township in Luzerne County, a small rural town about 300 miles east of Pittsburgh.

The projects that include the facility in Salem Township, next to Talen Energy's Susquehanna nuclear power plant, will create a total of at least 1,250 jobs, according to the announcement by Amazon and Pennsylvania Gov. Josh Shapiro.

Amazon will use the data centers to power its Amazon Web Services cloud computing platform that provides data storage, IT services and AI-powered computing and analytics for businesses and other enterprises.

The initial investment from Amazon is "the largest private sector investment in the history of Pennsylvania," and sets the stage for other data center developments in the state, with "multiple additional Pennsylvania communities" under consideration, Shapiro said.

With the Pennsylvania projects, Amazon has now announced a total of at least $46 billion in data center investments this year, with $35 billion in projects announced just in the past week.

The tech giant last week said it would invest $10 billion to develop multiple facilities that will employ around 500 people in North Carolina.

Also last week, Amazon Web Services said it would spend $5 billion on data centers to support its newly launched cloud region in Taiwan, and in January, the company announced plans to spend at least $11 billion on data centers in Georgia.

Amazon plans to keep spending heavily on data centers this year, with “substantial capital” required to stay competitive in AI and cloud computing innovation, CEO Andy Jassy said in his annual letter to shareholders released in April.

“The faster demand grows, the more data centers, chips and hardware we need to procure, and AI chips are much more expensive than CPU chips,” Jassy said.

Amazon said that the vast majority of its planned $100 billion in spending on capital expenditures this year will be to expand AI capabilities in its Amazon Web Services cloud service. The company is also considering a $15 billion plan to add roughly 80 logistics facilities in U.S. cities and rural areas.

Amazon, Microsoft, OpenAI and other firms are spending hundreds of billions on data centers, even as Trump's tariffs threaten to increase development costs that could potentially stymie the nation’s booming AI industry.

The Salem Township and Falls Township data centers will be Amazon's first cloud computing and artificial intelligence in Pennsylvania. But the e-commerce firm is not new to The Keystone State.

Amazon has invested more than $26 billion in Pennsylvania since 2010, with a logistics footprint that now includes 23 fulfillment and sortation centers and 20 last-mile delivery stations, the company said.

"By expanding our cloud computing infrastructure, we're investing in Pennsylvania's future through new jobs, workforce development programs and community initiatives," David Zapolsky, Amazon's chief global affairs and legal officer, said in the joint statement with Shapiro.

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We're seeing a bifurcation of commercial real estate (Video)

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Monday, June 9, 2025

Historic Wanamaker office in Philadelphia slated for residential conversion after foreclosure

 By Katie Burke CoStar News

The new owner of the Wanamaker Building in Philadelphia is betting that replacing office space with homes will help turn around the struggling historic property.

TF Cornerstone, the New York investment firm that recently took control of the 1.4 million-square-foot property at 100 Penn Square East, across the street from City Hall, is planning to convert most of the office space at the 114-year-old building into residential use following a foreclosure auction that took place this week.

The result of the auction means TF now owns the entirety of the property and is better positioned to command its fate as the firm attempts to address pandemic-induced office demand challenges.

The company is planning to transform the sixth through 12th floors into about 600 apartment units. The fourth and fifth floors will remain office spaces, and the lower three levels will be preserved for retail use. The conversion plan echoes those made by other landlords and investors across the United States as many attempt to overhaul struggling office properties into newer and higher-demand uses.

More than 81 million square feet of office space is moving through the conversion pipeline, according to a new report from commercial real estate services firm CBRE, with more than 75% of those projects slated to become multifamily properties and spaces. Over the past decade, office-to-multifamily conversions have generated at least 33,000 housing units across the United States.

"As the building enters its next chapter under our helm, we [have] the opportunity to reimagine this iconic building in a way that respects its historic integrity and adds to the vibrancy of the Center City community,” TF Cornerstone Senior Vice President Jake Elghanayan said in a statement to CoStar News.

Office history

Similar to other older office properties throughout Philadelphia, the Wanamaker has struggled to find its post-pandemic footing as companies have both shrunk their real estate footprints and prioritized space in some of the city's newer and nicer options. At the time of the auction, the building's occupancy rate had fallen to about 20% after years of depressed demand and a string of large tenant move-outs.

The building — split between about 950,000 square feet of office space and a recently shuttered Macy's department store — was primarily owned by Rubenstein Partners, a locally based investment firm that paid $114 million for a 60% stake in the property in early 2017 when it was roughly 97% occupied, according to CoStar data.

The impacts of the pandemic and a string of large move-outs compounded vacancy issues for Rubenstein, ultimately resulting in its $124 million loan on the Wanamaker Building falling into receivership. The servicer slashed its appraised value from $185.7 million when the loan was issued in 2018 to less than $54.5 million, a roughly 72% drop.

While most lenders are hesitant to transition into landlords, TF Cornerstone began building up its stake in the historic building when it purchased a majority of the property's debt last year. The investment firm purchased the retail portion of the Wanamaker for $40 million in late 2019, when the space was still fully occupied by Macy's.

“Much like the major renovation of the building undertaken when the Wanamaker was last operated as a single department store, TFC takes seriously its role as the steward of this important civic building," Elghanayan said.

Shifting spaces

The investment firm has long hinted at an interest in overhauling the remainder of the property into something with a residential focus. Now that it owns those nine floors spanning upward of 954,360 square feet, TF Cornerstone finally has the chance to make those plans a reality.

The company plans to begin the apartment conversion in early 2026 with a two-year construction timeline.

While Philadelphia is far behind other cities across the country in terms of its conversion pipeline — Manhattan and Washington, D.C., are by far the leaders on that front — there has been a surge of activity over the past several years as officials streamline the permitting process and the demand for housing has outstripped that for aging office space.

Companies in the Philadelphia area handed back more than 7.6 million square feet of office space between 2019 and 2023, according to CoStar data, and rents have fallen alongside the decline in tenant demand.

What's more, office leases amounting to about 3 million square feet are set to expire through the remainder of this year, an amount that could prolong the market's recovery even as large employers such as Chubb, FS Investments and Vanguard have expanded their office stakes in the region.

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Halal food market to fill vacant Big Lots space in Northeast Philadelphia

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

As soon as Big Lots filed for Chapter 11 bankruptcy protection last September, property owner Roberto Pupo received unsolicited interest in leasing the retailer's location in Northeast Philadelphia.

The owners heard from national companies and grocery stores. Perna and Pupo considered chopping up the 23,774 square feet to accommodate multiple tenants. Ultimately, a single user emerged from within the Somerton neighborhood.

ASR Food Market, a family-owned Halal food market a block away, signed a long-term lease to backfill the entire Big Lots space at 15501 Bustleton Ave., just south of County Line Road and Philadelphia’s border with Bucks County, and plans to move in by September. With the move, ASR Food Market is quadrupling its space and breathing new life into the 75,000-square-foot shopping center. The food market currently occupies approximately 6,000 square feet at a former Wawa at 14101 Bustleton Ave.

“What you want in the center is a mix of complementary tenants,” Perna said. “This is a large space. Some of it is also going to be a draw to help generate activity for the other tenants.”

Other tenants at the shopping center include The Edge Fitness Clubs, Integrated Medical Care and Vibe DanceSport.

At its current location, ASR Food Market is open daily from 6 a.m. to 11:30 p.m., lengthy hours that were a selling point to Pupo, who moved to the U.S from Italy at age 17 and owns RP Jewelers at 717 Sansom St. on Jewelers’ Row in Old City.

“Somebody that works 18 hours a day, seven days a week, they can never lose money,” Pupo said.

Full story: http://tiny.cc/9vhm001

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