Sunday, December 26, 2010

Former Bryn Mawr Trust Bldg Sells for $1.4 Mil

"Scott Lustgarten and Dan Polett purchased the retail building at 312 E. Lancaster Ave. in Wynnewood, PA, from Bryan Weingarten and Randall Stein for $1.4 million, or about $554 per square foot.

The 2,527-square-foot retail building was constructed in 1970. It is in the Philadelphia market."

New Leases Signed and a $6.7M Sale

"GWSI Inc., a general warehousing and transportation services company, has undergone a growth spurt and signed on to a large warehouse lease at the Riverbridge Industrial Complex in Chester.

The company started out in the third quarter in 90,000 square feet in Building A at Front and Lloyd streets and signed onto a long-term lease on 200,000 square feet. Industrial Investments Inc., owns the building. The lease is valued at more than $2.5 million. GWSI is based in Delaware County.

P.J. Fitzpatrick Inc. signed on for 10,880 square feet of flex space at 450 S. Henderson Road in King of Prussia. The home remodeling company is based in New Castle, Del. It will use the new King of Prussia facility as a central warehousing and distribution point for the Delaware Valley area.

Panda Express is taking space on the concourse level at Comcast Center at 17th Street and John F. Kennedy Boulevard in Center City. The tenant signed a 12-year lease. Liberty Property Trust is the landlord.

Navien America Inc., a supplier of boilers, water heaters, air conditioners and other equipment, leased an 11,424-square-foot office building at 325 Route 70 in Cherry Hill.

Avnet Inc. leased 17,372 square feet at Four Greentree Center in Marlton, N.J. Liberty Property owns the building. Avnet will use the space for their regional sales office. The company is a distributor of electronic components, computer products and embedded technology.

A 13,965-square-foot Walgreens traded for $6.7 million, or a 7.3 percent cap rate. The building at the corner of North Kings Highway and Chapel Avenue in Cherry Hill., was constructed this year and has a 25-year lease on it that just started in August."

New Home for Philly Produce Market

"Nine years after the Philadelphia Regional Produce Market began looking for a new home, it's finally about to get one.

The 686,000-square-foot building is nearly complete - a bright and airy indoor mall that will cater to the public, commercial chain stores, small mom-and-pop groceries, restaurants, schools, and government buyers.

The concourse, under a quarter-mile-long skylight, will be lined with fruit and vegetable shops where consumers can purchase strawberries, lettuce, or pears by the crate or case at wholesale prices.
Twenty-six merchants will move from their antiquated quarters at the 51-year-old produce terminal in South Philadelphia in February to the new market at 6700 Essington Ave., across from the auto mall and near the airport.
The market is divided into eight sections, each the size of a football field. Upstairs are offices where sales staffs will sell and trade fruits and vegetables around the world.

Downstairs is the display market and warehouse, which traces its roots to William Penn and the wharves on Dock Street, now the site of the Sheraton Society Hill hotel.

The $218.5 million public-private financing includes $152.5 million from Pennsylvania, a $50 million loan from American International Group Inc., a $12 million low-interest loan from Pennvest, a $3 million grant from the federal Department of Housing and Urban Development, and a $750,000 job-creation grant.

Under the deal, the port authority owns the 48-acre site for 40 years. After that, the market can buy it for $1, assuming it has paid all its rent.

Produce Market: Vital Statistics686,000 square feet; 1,294 feet in length (just under a quarter of a mile)

$218.5M Cost

$1.6B Yearly projected sales

1,500 Permanent jobs

500 Peak construction jobs

26 Vendors

224 Enclosed refrigerated docks

33-50 Temperature range in degrees Fahrenheit among the vendor stalls"

Thursday, December 23, 2010

2011 Commercial Real Estate Outlook

2011 Commercial Real Estate Outlook Video 5:51
A look ahead to the commercial real estate market in 2011

Larry Silverstein's Real Estate Outlook Video 5:20min
Larry Silverstein, president and CEO of Silverstein Properties, shares his outlook on both commercial and residential real estate with CNBC.

Property Recovery Outlook: Video 4:45mins
Discussing bright spots in commercial real estate, with Hessam Nadji, Marcus & Millichap managing director.

Monday, December 20, 2010

One-Time Biotech Start Up Chooses to Grow in West Philadelphia

"Integral Molecular, Inc., a biotechnology company launched at the University City Science Center in 2001, is more than doubling its space with a new 10-year lease at the West Philadelphia research park.

Integral Molecular will expand its operations from the Science Center's Port business incubator at 3701 Market Street to 10,000 square feet of custom-designed, state-of-the-art lab and office space at 3711 Market Street. Integral Molecular is a platform-based biotechnology company that is committed to providing innovative products and services to leading biotech and pharmaceutical companies.

The company said it chose to stay at the Science Center due to its proximity to key resources and collaborators at nearby universities, its convenient central location with easy access for employees and available tax incentives. The decision ensures that several dozen high-tech jobs will remain in the city.

“The Science Center has been a source of support from our inception and has enabled us to grow at a sustainable pace for the last nine years,” says Benjamin Doranz, co-founder and CEO of Integral Molecular. “We couldn't have started without them, and we're pleased to be able to continue our relationship with them as we expand into 3711 Market. Our expansion represents an exciting time for Integral Molecular that will allow us to keep up with customer demand for our products and services while continuing to develop additional products focused on cellular and viral membrane proteins.”

“Our goal in incubating companies is to provide them with the support they need so they can focus on growing their businesses,” says Science Center President & CEO Stephen S. Tang. “Not only are we thrilled to see Integral Molecular reach this milestone, but we are especially pleased that they have chosen to remain at the Science Center. Their presence here contributes to the vibrancy of our campus and University City. In addition, it highlights the role of the Science Center as a catalyst for economic development in the city and region.”

Friday, December 17, 2010

Comcast inks new lease

"Comcast Corp. has signed a 10-year lease for 90,000 square feet over four floors at Centre Square.

The company is renovating the entire space in the building at 15th and Market streets. The arrangement gives it some room for future expansion over a few floors.

Comcast had already been in a portion of the Centre Square space. It was subleasing three floors totaling about 68,000 square feet from PNC Bank but only using a small portion of it. That sublease was scheduled to expire in May but instead of letting it come to an end, Comcast decided to sign a new deal directly with the landlord, HRPT Properties Trust, according to sources familiar with the transaction. In addition, the cable company took an additional 22,000 square feet."

Temple University Buys Multi-Family Complex

"Temple University acquired a multi-family portfolio in Philadelphia, PA from Messiah College for $4.23 million, or $846,000 per unit.

The portfolio consists of two row homes at 2025 and 2029 Carlisle St. and three town homes at 2016, 2024, and 2025 N. Broad St. The properties total 30,552 square feet and will be used as part of Temple University's long-term campus development project."

Hotel Furniture Liquidators Leases 50,000 SF

"Hotel Furniture Liquidators signed a five-year lease deal for 50,000 square feet of warehouse space at 2222-2230 Castor Ave. in Philadelphia.

The 139,000-square-foot warehouse facility was built in 1966, and sits on 5.7 acres in the Kensington Industrial submarket."

Drexel Pays $4M for Office Bldg in Philadelphia

"Drexel University College of Medicine acquired the eight-story office building at 1427-1433 Vine St. in Philadelphia for $4 million, or about $61 per square foot, from Tenet Healthcare Corporation.

The medical office building was delivered in 1939 and renovated in 1982. It totals 65,821 square feet and sits on 0.2 acres in the Market Street West submarket."

Wednesday, December 15, 2010

Richland Plaza in Quakertown Has New Ownership

"APS Associates, LLC. has acquired Richland Plaza, located at 751 S. West End Blvd. in Quakertown, PA. The 206,575-square-foot property was sold for $13.475 million, or $65 per square foot.

Richland Plaza was built in 1975 on 18.5 acres, and was renovated in 1997. Ollie’s Bargain Outlet and CVS anchor the shopping center, which was 100 percent leased at the time of sale."

Emerald Ridge Apartments Trade for $13.5M

"New York Community Bancorp, Inc. sold the Emerald Ridge Apartments to Trent Court Realty Holding Company for $13.5 million, or $35,904 per unit, in an REO transaction.

Located at 101 E. Gibbsboro Rd. in Clementon, NJ, the two-story, 28-building property was delivered in 1972 on 25 acres with on-site parking. The 376-unit complex is comprised of 108 one-bedroom units, 122 one-bedroom with a den, and 146 two-bedroom units. Some of the amenities include air conditioning, balconies and patios, and dishwashers.

The occupancy rate was approximately 70 percent at the time of sale, and the property required more than $1 million in capital improvements."

Mattress Retailer Inks 132,000-SF Deal in Philly

"Sleep Factory signed a five-year lease deal for the entire warehouse facility located at 3800 Frankford Ave. in Philadelphia.

The 132,000-square-foot industrial building contains 17 loading docks and sits on 4.9acres in the Kensington Industrial submarket."

Tuesday, December 14, 2010

Wednesday, December 8, 2010

Two Major Industrial Sales in New Jersey and Georgia Buck National Trends

"Reno, NV-based Dermody Properties and DP Partners announced the sale of two industrial buildings from its national portfolio. A 599,500-square-foot building in Logan Township, NJ sold for $35.5 million ($59 psf), and a 689,400-square-foot building in Savanna, GA sold for $20.6 million ($30 psf).

The building in Logan, NJ, located at 1150 Commerce Blvd. in the LogistiCenter at Logan, sold to a financial institution at a 7.39-percent CAP rate. The class A property was built in 2008 by DP, and was immediately occupied by Kimberly-Clark, a major producer of consumer health and hygiene products including Kleenex and Huggies."

Monday, December 6, 2010

Farmers Insurance Inks 27,000-SF Long-Term Deal

"Farmers Insurance Exchange has signed a long-term lease for 26,588 square feet in King of Prussia, PA.

Located at 1000 Continental Dr., the 202,678-square-foot, class A, LEED Silver certified building sits on six acres and was completed in 2007.

Northwestern Mutual Financial Network recently signed a 15,000 square foot lease deal; which, along with the Farmers Insurance deal, will bring the property to over 70-percent occupancy."

Friday, December 3, 2010

FASB Accounting Rules Could Hit Commercial Leases

The new FASB rules of how reporting commercial lease liability can affect their balance sheet. Not super entertaining but well explained VIDEO (7 mins):

Bear Supply Leases 40,000 SF in Pennsauken, NJ

"Bear Supply, an Illinois-based distributor of home building materials, leased 40,000 square feet in Pennsauken, New Jersey.
The one-story, 121,000-square-foot industrial building, located at 8295-8301 National Highway, was constructed in 1975 in the Camden County Industrial submarket."

Wednesday, December 1, 2010

Insalaco Development Group Makes Investment Purchase

"Insalaco Development Group purchased 700 S. Ridge Ave. in Middletown, DE from Westown Town Center LLC for $5.925 million, or approximately $400 per square foot.

The 14,820-square-foot retail building is located on Route 301 and was constructed in 2009. The property sits on 2.26 acres and contains ample parking. Walgreens fully occupies the property on a 25-year, triple-net lease, currently in its second year."

Tuesday, November 30, 2010

Commercial RE Markets Stabilizing, Picking Up Slightly In 2011: NAR Chief Economist

"Lawrence Yun, Chief Economist for the National Association of REALTORS® sees a stabilizing commercial real estate sector for 2011, affecting retail, office and multi-family.

“The basic fundamental of rising commercial leasing demand, resulting from a steadily improving economy, means overall vacancy rates have already peaked or will soon top out,” he said. “The outlook for the office and industrial markets has moderated with modestly declining vacancy rates expected as 2011 progresses, while the retail sector should hold fairly steady. Still, high vacancy rates imply falling rents.”

Yun anticipates a rise in household formation from an improving economy, which will increase demand for housing, both ownership and rental. “Multifamily housing is the one commercial sector that has held on relatively well in the past year, and can expect the best performance in 2011,” he added.

“Apartment rents could rise by 1 to 2 percent in 2011, after having fallen in 2009 and no growth in 2010,” Yun said. “This rent rise therefore could start to force up broader consumer prices as well.”

Improving Commercial Vacancy Rates
The Society of Industrial and Office Realtors, in its SIOR Commercial Real Estate Index, an attitudinal survey of more than 400 local market experts, shows vacancy rates are slowly improving, but rents continue to be soft with elevated levels of subleasing space on the market. The SIOR index, measuring the impact of 10 variables, rose 1.6 percentage points to 42.6 in the third quarter, but remains well below a level of 100 that represents a balanced marketplace. This is the fourth straight quarterly improvement following almost three years of decline. The last time the commercial market was in equilibrium at the 100 level was in the third quarter of 2007; the index now matches where it was at the beginning of 2009. Fifty-nine percent of respondents expect improvements in the office and industrial sectors in the current quarter.

Commercial real estate development continues at stagnant levels with little investment activity, but is beginning to pick up in many parts of the country.

Office Markets
NAR’s latest COMMERCIAL REAL ESTATE OUTLOOK offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data were provided by CBRE Econometric Advisors. Office vacancy rates are on the decline. In the office sector, where a large volume of sublease space remains on the market, are forecast to decline from 16.7 percent in the current quarter to 16.4 percent in the fourth quarter of 2011, but with very little change during in the first half of the year. The markets with the lowest office vacancy rates currently are New York City and Honolulu, with vacancies around 9 percent. All other monitored markets have double-digit vacancy rates.

Annual office rent is expected to decline 1.8 percent this year, and then slip another 1.6 percent in 2011. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be a negative 3.7 million square feet this year and then a positive 16.4 million in 2011.

Industrial Markets
Industrial vacancy rates are projected to decline from 13.9 percent currently to 13.2 percent in the closing quarter of 2011. At present, the areas with the lowest industrial vacancy rates are Los Angeles, Salt Lake City and Kansas City, with vacancies in the 8 to 10 percent range. Annual industrial rent is likely to fall 4.0 percent this year, and decline another 3.4 percent in 2011. Net absorption of industrial space in 58 markets tracked should be a negative 25.1 million square feet this year and a positive 134.0 million in 2011.

Retail Markets
Retail vacancy rates are expected to change little, declining from 13.1 percent in the fourth quarter of this year to 13.0 percent in the fourth quarter of 2011.

Markets with the lowest retail vacancy rates currently include San Francisco; Orange County, Calif.; and Honolulu, with vacancies in the 7 to 8 percent range.

Average retail rent is seen to drop 3.4 percent in 2010 but largely stabilize next year, slipping 0.3 percent in 2011. Net absorption of retail space in 53 tracked markets is projected to be a negative 0.5 million square feet this year and then a positive 5.0 million in 2011.

The apartment rental market – multifamily housing – is expected to get a boost from growth in household formation. Multifamily vacancy rates are forecast to decline from 6.4 percent in the current quarter to 5.8 percent in the fourth quarter of 2011. Areas with the lowest multifamily vacancy rates presently are San Jose, Calif.; Miami; Boston; and Portland, Ore., with vacancies in a range around 4 percent. Average apartment rent is likely to rise 0.2 percent this year and another 1.4 percent in 2011. Multifamily net absorption should be 85,200 units in 59 tracked metro areas this year, and another 147,000 in 2011."

Best yield might lie within commercial real estate?

Great video on CNBC:

Thursday, November 25, 2010

Loads of surplus lab space hitting the market

"More than 1 million square feet of laboratory and research space is hitting the real estate market as two major pharmaceutical companies shift their operations and other smaller life science companies lose funding and fold up.

Sanofi-Aventis will move out of 350,000 square feet of office and lab space in the Great Valley Corporate Center in Malvern and Centocor Ortho Biotech Inc. will vacate 300,000 square feet in Radnor, of which more than half is research space.

And Pfizer Inc. is looking to lease out 480,453 square feet of lab space in Collegeville, where it took over the former Wyeth campus and decided to close the research and development facilities.

The abundance of space coming available highlights how the region is flush with large pharmaceutical and life science companies but that strength can make it vulnerable when firms within the industry merge, downsize or reorganize operations.

“We’re looking at a vacancy rate in this type of space that is still relatively speaking pretty low, but we have been bombarded by a spate of mergers that has freed up a lot of capacity all at once."

It’s not just the mergers that have edged up the amount of life science space coming on the market. Several factors are at work. Some young companies have found it difficult to get additional rounds of funding to stay afloat and have decided to wind down. Many companies have started to work on more of a virtual model, curtailing the need for additional lab space.

“The biggest thing we see as far as trends is you have companies willing to collaborate together, and moving forward we will see a lot more collaboration.”

In the case of Sanofi-Aventis, the company decided to close its Great Valley R&D headquarters by next July as it shifts employees and other functions to its main corporate offices in Bridgewater, N.J. At one point, the drug company had 750 scientists and researchers working from Malvern. Now there’s 400 or so.

Sanofi-Aventis leases 400,000 square feet in Malvern from Liberty Property Trust. Of that space, about 100,000 square feet is for labs. The company will keep a small presence in Great Valley, signing a long-term lease on 50,000 square feet. The lease on the bulk of the space expires at the end of next year. Liberty has already begun actively marketing the space.

Down the road in Radnor, Centocor is vacating in phases the 300,000 square feet at 145 King of Prussia Road and relocating those operations to buildings it owns in Spring House, Montgomery County, said Brian Kenney. The current building Centocor leases in Radnor has 183,110 square feet of research space and 115,325 square feet of office space. It is owned by BioMed Realty Trust.

Just last year, BioMed Realty sought and received township approval to construct a new building totaling 81,636 square feet to accommodate an expanding Centocor but that project never happened.

Centocor is also departing from 160,000 square feet of office space it leases at 955 and 965 Chesterbrook Blvd. in Wayne. Those employees are also heading to Spring House; between its Radnor and Wayne locations, more than 1,000 employees will be making the move.

“We see these moves as a way to leverage space that we own while enhancing collaboration across our research and development scientists so that we can maintain a long-term footprint and continued scientific innovation in the Pennsylvania area,” Kenney said in the e-mail.

After Pfizer completed its acquisition of Wyeth, the pharmaceutical company decided it no longer needed the nearly 500,000 square feet of research space, which includes 315 science labs, in Collegeville at Routes 422 and 29.

“There are doing a lot of startup work and spin-offs. That’s what we see in a down market.”

When pharmaceutical or bio companies lay off employees and even those at the executive level, it leads some jobless workers to seek out venture capital funding and establish their own companies.

For example, a 21,000-square-foot building owned by Alexandria Real Estate Equities Inc. that Genaera Pharmaceuticals Inc. had occupied in Plymouth Meeting is under contract by a life science user who is also looking at the building as an investment. Since May a 40,000-square-foot building off Electronic Drive in Horsham has been on the market for lease . A life science tenant is seriously considering leasing 15,000 square feet of it.

These types of companies also see a benefit in being near each other, making the space in Malvern attractive for prospective tenants. Even though Sanofi-Aventis is leaving, Centocor, Orthovita and Fujirebio Diagnostics Inc. remain in Great Valley.

The bigger blocks, such as the Pfizer lab space in Collegeville, will likely be filled by multiple tenants rather than one big one and companies who want to move out of older space into more modern lab space, Brown said. He also envisions space, such as the Centocor site in Radnor, as an opportunity for a landlord to create a suburban version of the Science Center, where fledgling bio companies land and grow. The site sits on two rail lines, at a major crossroads and in a desirable community that would help attract talent.

“I’d love to see a collective effort by the region to create a couple of centers outside of the center. That’s the way some of these larger chunks are going to get filled.”

Wednesday, November 17, 2010

Office tenants moving on up

"Marshall Dennehey, a law firm with offices in 1845 Walnut St., has zeroed in on relocating to 2000 Market St. after 19 years in the same building overlooking Rittenhouse Square.

The firm, which has 119 attorneys in Philadelphia, considered a dozen different office towers before narrowing its list down based on price and location, said Pete Miller, chief operating officer.

“The folks at 2000 Market have been very aggressive and the economics of the move are attractive,” Miller said, without divulging any details because a deal is still in negotiations. The building will also allow Marshall Dennehey to consolidate into a contiguous block and make the offices more efficient.

Indeed, 2000 Market could use a big lease like Marshall Dennehey. The firm would backfill about 130,000 square feet being left by Arkema Inc., which is emptying out of five floors at the building and moving its 300 Center City employees to a renovated building the company owns at 900 First Ave. in King of Prussia. Arkema had been in 2000 Market 17 years.

The current state of the downtown office market, with rising vacancies, negative absorption and falling rents, has allowed some tenants that have resided in the same, modest offices for decades to move up to a fancier business address on the cheap. As market conditions remain challenging, the trend is expected to continue.

In Center City, vacancy rates rose in the third quarter to 14.85 percent, which is 5.9 million square feet. The vacancy in Class B space is even greater at 16.23 percent and on the rise. “B buildings will struggle to maintain occupancy as the Class A owners work aggressively to lease” the space they have empty, the report said.

“It depends on the extent of the renovation and the economics of deals,” “Sometimes the renovations you have to do to your space are so extensive that people decide they’d rather move over a weekend rather than live through 18 to 20 months of a renovation, eating your dust. And sometimes in a market like this when you have buildings so stressed, a landlord will provide enough to offset the cost of moving.”

Klehr Harrison, which moved into 1835 Market St. this year after a decade at 260 S. Broad St. Klehr moved into space that had been occupied by another former law firm and came already decked out, leaving few renovations that needed to get done.

The Reinvestment Fund is considering leaving the Cast Iron Building at 718 Arch St. where it has been for more than two decades. It is the largest tenant in the 105,000-square-foot building but is looking to lease 22,000 square feet uptown at 1700 Market St. in a 15-year deal, according to market sources.

Drucker & Scaccetti, in some form other another, has spent the 33 years at 1845 Walnut St.

Two years ago, the tax consulting firm decided to take a look at other office space throughout Center City and examined 20 buildings along Market Street.

“We love the Rittenhouse location but wanted a modern building with better air quality,” said Ron Drucker, one of the firm’s founders.

Its search list included a building with a restaurant, one with enough space to allow it to consolidate on one floor, and competitive terms on a lease. Drucker & Scaccetti found what it was looking for. After three decades in the same space, the firm signed a 12-year lease on 17,742 square feet with an option to grow to 22,000 square feet at 1600 Market St., and moved its more than 50 employees at the end of last month. It grew from about 13,500 square feet.

Some of tenants who are moving may leave with fond memories of their old locations. “We’re going to miss this,” said Miller at Marshall Dennehey. “Rittenhouse has become a jewel.”

Not so for Drucker & Scaccetti. “We’ve moved on,” Drucker said."

Mitchell & Ness opening new Phila. store

"Mitchell & Ness Nostalgia Co. in Philadelphia will open a “flagship” location Nov. 19, the company said Thursday.

The new, 2,800-square-foot store will be at 1201 Chestnut St. in Center City, about a block from its current location, which will close after the holidays.

It will feature two floors of authentic, vintage sports apparel from Major League Baseball, the National Basketball Association, National Football League, National Hockey League and college sports. The store will also feature historic sports images and memorabilia, plus a new-school touch, the playing of classic sports footage on 47-inch, flat-screen televisions.

Mitchell & Ness was founded in 1904 as a golf-and-tennis company by Frank P. Mitchell, a tennis-and-wrestling champion, and Charles M. Ness, a Scottish golfer, according to the company’s online history. At various times, it provided uniforms for the Philadelphia Eagles, as well as the Athletics and Phillies baseball teams.

Inspired by a customer, in 1983 the company created Mitchell & Ness Nostalgia Co. to recreate authentic “throwback” jerseys. In 1987, Sports Illustrated featured Mitchell & Ness in an article, “Baseball flannels are hot.” In 1988, Major League Baseball created its Authentic Cooperstown Collection, giving Mitchell & Ness exclusive permission to make vintage jerseys. The NBA, NFL and NHL all followed suit, granting Mitchell & Ness licensing deals."

RPS Signs Long-Term with HUB

"ReSearch Pharmaceutical Services Inc. (RPS) signed a long-term lease for 25,517 square feet at 475 Virginia Drive in Fort Washington, PA. The landlord is HUB Properties Trust."

Capitol Interior Products Leases 38,000 SF

"Capital Interior Products leased the entire warehouse facility located at 201 Erie St. in Camden, NJ.

The 38,400-square-foot industrial building sits on 17 acres in Camden County and features 12 loading docks and a 23-foot ceiling height."

Shadow Lawn Pays $9.75M for Lancaster Industrial Bldg

"Shadow Lawn, a Pennsylvania-based property investment firm, acquired the City Line Business Center in Lancaster, PA, from Thermal Solutions Products, LLC for $9.75 million, or about $60 per square foot.

The fully leased manufacturing building located at 1175 Manheim Pike in Lancaster, PA was delivered in 1989. The property totals 161,000 square feet and sits on eleven acres."

Walgreens Inks 645,000-SF at ProLogis Park 33

"The nations largest drugstore retailer, Walgreens, signed a lease deal to occupy 510,000 square feet of existing distribution space at 3850 Prologis Parkway in Nazareth, PA. ProLogis has also agreed to expand the space occupied by Walgreens by adding an additional 135,000 square feet of space to the building.

The ProLogis Park 33 Building One is a class A distribution facility totaling 930,000 square feet. The building was completed in 2008, and sits on 75 acres. The property features 63 loading docks and 32-foot clear ceiling heights."

Thursday, November 11, 2010

Cedar Shopping Centers Pays $13.4M for IRS Bldg

"Cedar Shopping Centers, Inc. acquired the 230,000-square-foot IRS office building in Philadelphia for $13.38 million, or about $58 per square foot, from 11501 Roosevelt Partners, LP.

The single-story office building was delivered in 1969 at 11501 Roosevelt Blvd. It totals 230,000 square feet and sits on 9.7 acres in the Northeast Philadelphia submarket."

Wednesday, November 10, 2010

Krispy Kreme opening this week in Northeast Philadelphia

"Krispy Kreme Doughnuts is back in the Philadelphia market.

After a five-year absence, a new local franchisee will open the first Krispy Kreme Tuesday at 6 a.m.

The store will be at 7855 Oxford Ave. in Fox Chase.

The franchise group, Dough Nuts for Doughnuts LLC, has development rights for southeastern Pennsylvania, South Jersey and northern Delaware. It is led by Keith Morgan, former CEO of Horsham, Pa.-based AAMCO Transmissions, and Brian Zaslow, a former vice president of marketing at Philadelphia-based Aramark.

Krispy Kreme Doughnut Corp. (NYSE:KKD), which is based in Winston-Salem, N.C., has 560 locations worldwide.

An earlier effort to expand in the Philadelphia market ended in December 2005, after a Chapter 11 bankruptcy filing and the closure of four area stores.

At the new location, customers will be enticed with a 24-hour drive-through window and promotional gifts."

Hersha bets $250M on hotel recovery, NYC, KofP deals

"Members of the Shah family, who control Hersha Hospitality Trust, are betting the economic recovery, and corporate overnight travel, are coming back fast.

Today they arranged to borrow up to $250 million from TD Bank and other lenders, almost double their old $135 million credit facility. Hersha has also sold five hotels in New England's Connecticut River Valley, upstate Pennsylvania, and other slow-growth markets. They'll use the money to buy more hotels in the New York, Philadelphia, Boston and Washington areas, says chief executive Jay H. Shah.

Founder and chairman Hasu P. Shah remains in Hersha's Harrisburg headquarters. But his Ivy League-educated sons, CEO Jay and President Neil H. Shah, now work from the Penn Mutual tower in Philadelphia's historic district, closer to the company's East Coast growth markets.

Also yesterday the Shahs opened their newest hotel, a $150-a-night Park Hyatt, on the renovated King of Prussia site where they formerly ran a $120-a-night Mainstay Suites.

"We have taken a bet on the recovery," Jay Shah told me. "We're relying on the corporate transient traveler in the Northeast markets. You've got the recovery in financial services. You're starting to see signs of life in the pharma industry."

The strategy shows early signs of paying off: In 2008 Hersha bought New York's Tri-Be-Ca Hilton Garden Inn at $400 a room; the price today, Shah estimates, would be closer to $500, boosting the company's valuation.

At around $6 a share, Hersha stock remains down at the same price it fetched in the early 2000s. But it's up 132% for the year, vs. 39% for other real-estate investment trusts and 46% for other hotel REITs, according to Bloomberg LP. Unlike many REITs, Hersha didn't cut its dividend, Shah notes, and hopes to boost it.

The recession has changed some hotel practices. By selling distant hotels, Hersha has been able to centralize engineering and maintenance in its major markets. The chain has left coordinator and assistant coordinator jobs vacant. The Hyatt Park has a staff of just 30, for 129 rooms.

The Hyatt Park idea is also post-2008. Instead of trying to draw a fancy marquee restaurant, it's room service by the laptop and flatscreen: "The rooms are larger, it's a work-eat-live concept. Generation Y likes to work while it's eating, while it's watching television. It's more of a Starbucks feel. But with deeper wood finishes."

Sunday, November 7, 2010

Checkpoint Systems moves corporate HQ to Philadelphia

"It’s not often a company with more than $800 million in annual sales establishes its headquarters in Philadelphia.

Even rarer is one that doesn’t make a big deal over it.

Checkpoint Systems Inc., a company that’s long had its headquarters in Gloucester County, moved its chief executive and about 20 other people into Center City in mid-August.

No press conference with the mayor. No news release announcing the move. Just the notation of a new “principal executive office” on the first page of recent Securities and Exchange Commission documents and a new dateline on this week’s earnings release.

Checkpoint, a maker of anti-theft and inventory-tracking systems for retailers, now shares the 24th floor of One Commerce Square, 2005 Market St., with Dolchin, Slotkin & Todd P.C., a small law firm.

Those executives and staff moved from 101 Wolf Dr. in Thorofare, where the company has about 250 employees in its research-and-development, accounting, human resources and other departments, according to Bob Powers, Checkpoint’s vice president of investment relations.

So we’re talking about a small office, equivalent in size to one touted by Mayor Nutter in an Oct. 18 news release for the Neiman Group, an advertising agency that received low-interest financing and tax credits from the city to expand its offices at 1619 Walnut St.

But having a New York Stock Exchange-listed technology company plunk its global headquarters smack in the middle of the city is quite a surprise. After all, doesn’t Philadelphia possess a lousy reputation when it comes to business-tax burden?

I asked Powers about that. “If it was so onerous, we wouldn’t have done it,” he said.

Could it be that Philadelphia’s office market functioned in almost free-market fashion? An office building had some empty space. A company scouted for a prime address at a good price. It signed a lease and moved in.

From his Market Street offices, chief executive officer Rob van der Merwe runs a very global enterprise, with 5,785 employees as of the end of 2009.

With operations in 30 countries, Checkpoint generated only 34 percent of its $772.7 million in 2009 net revenues from the United States, Puerto Rico, and the Dominican Republic.

Retail theft is a global problem. An annual study funded by Checkpoint found losses from shoplifting by customers and employees totaled $107.3 billion in 2010, down about 5.6 percent from the previous year.

Checkpoint and its competitors, such as Tyco International’s ADT Worldwide unit, peddle a variety of defenses to merchants. Retailers spent $26.8 billion on “loss prevention and security” in 2010, up 9.3 percent from 2009, states the study done by Joshua Bamfield, director of the Centre for Retail Research in Nottingham, England.

Checkpoint had been contemplating a headquarters move three years ago, Powers said. But the financial crisis and recession and Checkpoint’s own restructuring delayed those plans.

Still, acquisitions made in recent years were starting to cause a space crunch in Thorofare as various functions were relocated there, Powers said.

Landing that year-to-year lease in the diamond-topped One Commerce Square became the solution.

It doesn’t sound like a long-term commitment to me, but maybe the city can employ its own loss-prevention methods to make sure Checkpoint remains happy with its choice."

Friday, November 5, 2010

DGI Services, LLC, in leased 80,000 square feet

"DGI Services, LLC, in leased 80,000 square feet of the 108,000 square foot building located at 540 Pedricktown Road, Pureland Industrial Complex, Bridgeport, New Jersey.
The building offers approximately 5,600 square feet of office space and features mostly 24' clear heights, 100 percent wet sprinkler system, fifteen (15) tailgate loading doors, one (1) drive-in door and four (4) rail doors. The facility is conveniently located just minutes from Exit 2 of the New Jersey Turnpike, Commodore Barry Bridge, Interstate 95 and the Blue Route.

DGI Services, LLC are a single-source provider of integrated direct marketing campaigns. The company offers a wide range of direct marketing projects from small-cell mailings to full scale, multichannel campaigns."

Two Industrial Leases Announced Totaling 40,000 Sf In Philadelphia Area

"Richmond Waterfront Industrial Park, LLC, leased KanCo Metals, Inc. 30,000 sf at 4710 Bath Street. The new tenant is a scrap metal recycling company in PA and NJ that purchases and sells non-ferrous metals such as copper, brass, aluminum and insulated wire. This is a consolidation of the company s operations at the Frankford Arsenal due to redevelopment.

In the second transaction, Bridge Industrial Center Associates leased 10,000 sf to M.J. Electric, LLC at 2251 Fraley Street in Philadelphia. This national company was founded in 1959 and specializes in electrical and instrumentation construction and maintenance. M.J. Electric provides an experienced technical and professional management team capable of directing the electrical instrumentation effort from project concept through its completion."
"Driving Passions Collision Center lease 409 Business Park Lane, Allentown, PA. The facility was formerly used as an auto repair shop. The lessee, Driving Passions Collision Center, relocated from a smaller and older to a larger and newer facility. It is a family owned business, part of the Allentown Area Corvette Club and a lease was signed for five years."

Select Rx has leased 10,221 sq. ft.

"Select Rx has leased 10,221 sq. ft. of office and air conditioned flex space at 165 Veterans Way in Warminster. The one story building features 53,000 sq.ft. of air conditioned office and warehouse space at Franklin Commons, a mixed use office and technology park."

Thursday, November 4, 2010

Neighborhood Center Sells For $2.35 Million

"KNC Property acquired the 24th Street Shopping Center at 2528-2546 S 24th St in Philadelphia from a private investor for $2.35 million, or $69 per square foot.

The one-story, 34,200-square-foot general retail building is a neighborhood center located in the South Philadelphia submarket."

Avalon Carpet & Tile Inks 24,000-SF Deal At Henderson Square

"Avalon Carpet and Tile has leased the former Staples space in Henderson Square, located at 310-314 S Henderson Road in King of Prussia, PA. The tenant signed a 10-year deal for 24,000 square feet, and is expected to take occupancy this spring.

Henderson Square is a 102,360-square-foot shopping center located in Montgomery County, just north of the Pennsylvania Turnpike."

PPD to expand former Merck vaccine-testing lab in Wayne

"PPD Inc., a North Carolina-based contract research organization, plans to expand a Tredyffrin Township laboratory it bought from Merck & Co. Inc. at the end of 2008 and create 86 jobs.

The Pennsylvania Department of Community and Economic Development announced Wednesday that the state would provide $608,000 in funding for a $25 million project planned by PPD.

When PPD acquired the 130,000-square-foot vaccine-testing laboratory in Chester County from Merck, it hired the lab's 80 employees. According to a statement issued by the state, PPD intends to renovate the lab at 466 Devon Park Drive, buy new equipment and provide employee training.

The company would create at least 86 jobs within three years, according to the state.

Under its transaction with Merck, PPD agreed to supply testing services to Merck for five years. According to PPD's 2008 annual report, it paid $25.2 million for Merck's lab.

With revenues of $1.42 billion in 2009, PPD is one of the largest providers of outsourced services to the pharmaceutical industry. It employs more than 10,500 people worldwide.

"With a large concentration of pharmaceutical and biotechnology companies based in the northeastern United States, expanding our laboratory operations in Wayne builds on our ability to serve clients in this region more effectively," said Lee Babiss, PPD's executive vice president of global laboratory services, in the statement.

Pennsylvania provided a $275,000 opportunity grant, $74,700 in job training assistance, and $258,000 in job creation tax credits."

Monday, November 1, 2010

Coatesville sees cycle track on parcel

"For six years, a parade of developers has systematically dashed Coatesville's revitalization hopes for a centerpiece tract known as "the flats."

Proposals for the approximately 25-acre property at Lincoln Highway and Route 82 have included condos, a lumberyard, a power plant, and a grocery store, all of which produced dead ends for the struggling former steel hub.

Now on the table is the East Coast's first indoor cycling velodrome.

Last month, the proposal generated an uncommon response from the public at a City Council meeting: hearty applause.

The equally enthusiastic council unanimously approved a 90-day purchase-option agreement for a National Velodrome and Events Center on the tract, part of which hugs Brandywine Creek.

The Velodrome Management Group wants to build a 200-meter, banked track in a 100,000-square-foot arena that would also serve as a cycling training center and a venue for concerts and other sporting events.

The promoters include David Chauner, an Olympic cyclist known for bringing the Philadelphia International Championship to Manayunk's now-famous "Wall."

"The sport is exploding," Chauner told the Coatesville audience.

The closest velodrome is in Lehigh County's Trexlertown; however, because it lacks a roof, it is a seasonal operation.

"I think it is absolutely the coolest thing to come along since I've been involved with the RDA," said Patrick C. O'Donnell, solicitor for the city's Redevelopment Authority.

The authority bought the land in 2004 for $1.7 million when the G.O. Carlson steel plant closed. Across Lincoln Highway, ArcelorMittal, a steel company based in Luxembourg, employs about 800 workers at what was the vast empire of Lukens Steel, whose workforce once exceeded 6,000.

"It doesn't conflict with the steel plant and could give the city international recognition," O'Donnell said. "Who knows? Coatesville could produce the next Tour de France winner."

He cautioned that the proposal was far from a done deal. During the 90 days of the purchase-option agreement, the buyers will need to come up with conditions and a purchase price agreeable to the city. In addition, several of the acres lie in Valley Township, and parts of the plan also require approval there, O'Donnell said.

The velodrome proposal's history reinforces the speed bumps that could lie ahead.

For starters, Coatesville rejected the same project in February 2006, when the city was reeling from a failed golf-course plan. The unpopular proposal was so audacious in its quest to seize a family homestead in a contiguous municipality that it garnered national headlines.

By November 2006, the velodrome's promoters had settled on a location in Montgomery County's Lower Providence Township. But funding woes derailed the project.

In August, the promoters had productive discussions with Caln Township, a Coatesville neighbor, but failed to strike a deal.

In an interview last week, Chauner, who also heads the Pro Cycling Tour, a cycling and marketing event management company, said he was optimistic that an agreement could be negotiated in Coatesville.

"We're a lot further along than we've been before, and we have a solid financial partner," he said. "We don't envision any insurmountable problems."

Chauner credited Crosby Wood, the financial backer, with bringing the project back to the city.

Wood, a principal in Wilson Wood L.L.C., a private equity firm, told the City Council that he also runs a real estate company that has been buying property in the city and is committed to its rebirth.

USA Cycling, the national governing body for the sport, listed 2,611 licensed racers in Pennsylvania in 2010 and 69,000 nationwide, said Andrea Smith, a spokeswoman for the group.

David Mitchell, president of the Pennsylvania Cycling Association, the state affiliate of USA Cycling, said he believed that the Coatesville facility would be welcomed, and that the region could support two velodromes.

Ron Ruggiero, a 25-year cyclist, who heads the Tri-State Velo Cycling Team.

"It's a very good thing," he said, stressing the benefits of youth training. "Really great riders have come out of the track programs in Lehigh County." His only gripe? "I wish it were closer to Philadelphia."

"I think everyone agrees it's a good thing," Mitchell said. "It would continue to grow the sport."

Chauner estimated annual revenue for the projected $15 million project at $3.5 million to $4 million. He said that 50 to 100 jobs would be created in addition to the construction crews, and that the project would draw ancillary businesses such as bike shops and physical-therapy centers.

The center would have 2,200 permanent seats, and could add 1,500 to the infield - the area inside the track - for non-cycling events, Chauner said. Cycling demands would fill 103 evenings a year, leaving plenty of time for other activities, he said.

Unlike the failed proposals for the site, the velodrome would be a "destination" facility, Chauner said. "People will come to Coatesville specifically for this," he said.

Mitchell agreed, saying he continues to be amazed at how far people travel to Trexlertown, citing one group that rode nine hours from North Carolina for a race.

Chauner recalled how publisher Bob Rodale decades ago sought his help in building the Trexlertown facility, which at the time was dubbed Rodale's "white elephant."

Within three years, they created "the best outdoor velodrome in the world," Chauner said. "To this day, Lehigh County points to it as one of their best attractions."

City Council President Ed Simpson said he remembered being excited by the proposal the first time around.

"I'm just as excited now," he said."

REITs: Overvalued? with Scott Rechler

CNBC Video: (start video at minute 4:30)

Sunday, October 31, 2010

Commercial Real Estate Turnaround

Video on CNBC 10/26/2010:
Debating whether commercial real estate is back in business.

Financial Accounting Standards Board (FASB)- Lease Changes

Potential Financial Accounting Standards Board (FASB) changes on how a company reports it's lease liability on its balance sheet.

Friday, October 29, 2010

Teva Pharmaceuticals got $4.7 million in state aid for new Philadelphia facility

"Teva Pharmaceuticals USA said Thursday that $4.7 million in state aid helped persuade the pharmaceutical giant to put its new distribution facility in Philadelphia's Bustleton neighborhood, where the company hopes to employ 500 people in the next five years.
Teva, a fast-growing maker of generic drugs, expects to employ 250 people initially at the proposed $295 million facility.

The 1.2-million-square-foot distribution buildings will sit on 136 acres at 1 Red Lion Rd., formerly home to Budd Co.'s railcar division, which closed in the 1980s.

William Marth, chief executive officer of the Israeli company's American operations, said government officials from many places had tried to lure the facility.

Teva favored Philadelphia and Pennsylvania for many reasons besides the state grants and tax credits, Marth said, but, mostly, because "it's our home."

Teva's U.S. headquarters are in North Wales. The new distribution center will not affect those operations, Teva officials said. The company also had considered Willow Grove and Warrington for the new facility.

The Island Green Country Club now at the Red Lion Road site will close, said Greg Rogerson, principal of J.G. Petrucci Co., which is working with Teva on the new facility.

In April, Teva announced that it was eliminating some jobs at its Sellersville manufacturing plant, but the company has not said how many employees were affected.

At Red Lion Road, the company will construct three buildings for distribution, warehouse, and office space. Marth said he expected it to open in 2013.

Mayor Nutter said the construction phase should employ 400 to 600 workers.

Gov. Rendell, who also attended Thursday's news conference announcing the deal, said he believed Teva would employ as many as 1,000 people there in 10 years.

For now, however, Teva says total employment at the Red Lion Road site will reach 500 in the next few years.

Rendell's projections were based on Teva's strong growth. It is the world's largest maker of generic drugs, which are expected to continue to gain market share as patents expire on brand-name products.

Teva Pharmaceutical Industries Ltd. specializes in developing and selling generic and proprietary drugs. It had 2009 revenue of $13.9 billion and net income of $2 billion. Marth said he expected revenue to hit about $16 billion in 2010.

Acquisitions have fueled much of that growth. In 2008, Teva acquired Barr Pharmaceuticals Inc., a maker of generic birth-control pills, for about $7.5 billion.

Generics are federally approved medications that contain the same amount of the active ingredient as brand-name drugs. They are significantly less expensive, making them a popular choice as consumers and businesses seek ways to lower health-care costs."

Point Roll Inks 28,000-SF Office Deal in King of Prussia

"Point Roll, Inc., a leading provider of digital marketing solutions, has signed a lease for 28,638 square feet of office space at 3200 Horizon Blvd.

Located in Renaissance Park, the 90,000-square-foot, single-story office building sits on over 10 acres of land located in the heart of King of Prussia."

King of Prussia Industrial Bldg Sells for $3.6M

"Brandywine Realty Trust sold their industrial building located at 630 Clark Ave in King of Prussia, PA to Red Sea Group for $3.16 million, or about $72 per square foot.

The single-story, 50,000-square-foot brick building was delivered in 1960. The facility features approximately 25 percent office and 75 percent warehouse space, and sits on a little more than three acres of land."

Price Chopper Bldg in Wilkes Barre Sells For $10M

"Ventura Development sold 245 Wilkes Barre Township Blvd in Wilkes Barre Township, PA to H & R REIT for $10 million, or approximately $171 per square foot.

The 58,500-square-foot supermarket retail building has been fully occupied by Price Chopper since 2008, with 23 years left on a 25-year term. The facility was completed in 2008, and sits on 12.15 acres of land with ample parking."

Johnson Controls headed for Valley Forge Corporate Center

"Audubon Land Development signs a third tenant at Forge Avenue in Valley Forge Corporate Center. Audubon has recently completed a lease for the Forge Ave property with Johnson Controls. Johnson Controls will occupy 33,765 square feet for its York Heating and Air Conditioning parts center and office at 950 Forge Avenue. Johnson Controls Inc. is scheduled to open in mid November. Johnson is projecting to employ 20 full time personnel at the site.

Johnson joins Solar Roofing Systems Inc. and Broadwing Communications leaving only 54,000 Square Feet available for lease at the Forge Avenue property. The Forge Avenue property formerly known as the Seton Center is located within the Valley Forge Corporate Center in Lower Providence Township. The convenient location with access to major highway Route 422, Route 76 and the PA Turnpike offers tenants the location and amenities desirable in today's commercial real estate market."

Toll Bros. kin buys Chesco apartments at $99,000 each

"Millview Apartments, a 350-unit complex on the heights above PA 82 on the north end of Coatesville, sold for just $34.5 million, or $99,000 a unit (and $95 a square foot), to Paradise Property Group, a group including Jeff Franz, son-in-law of Toll Bros. boss Robert Toll, the same local developers who last year purchased Oxford Gateway near West Chester.

Builder Carl Chetty, of Kennett Square, at first considered selling the units as condominiums, but rented them instead, and put the project on the market for $42 million in 2007.

Property values plunged that year, and occupancy also fell to a low of 70% in the recession. But the proprtion of occupied units recovered to 93%, before a September fire damaged a 22-unit building at the complex. The fire didn't affect the price because the building was insured, he told me.

"We got a lot of offers," Thomson added. He said the buildings sold at a modest capitalization rate (rent/price) of between 6 and 7 percent.

The units fetched half what Korman group managers paid for units at Cornerstone Terrace in Exton in 2008, before the worst of the real estate collapse. Exton is wealthier, closer to corporate job centers, and generally pricier than Coatesville."

Tuesday, October 26, 2010

Why You Need a Tenant Rep

"DIY…. when Leasing Office Space is a Risky Approach. The process of securing office space for your organization, whether it is a new location or extending a lease at your current location is a complex and time consuming process filled with numerous opportunities to make a decision that doesn’t best compliment your business objectives.

Tackling this process without the benefit of an experienced tenant
representative to guide you the process and structure a transaction that best
serves your operational needs and financial objectives only increases the
chances of making the wrong move.

It is typically the smaller organizations who end to take the do-it-yourself approach, probably because they either
(1) don’t understand the value of the service; or
(2) have a misconception that by eliminating the tenant representative’s fee, they will get a better deal.

What Benefit does the Tenant Representative Provide?The logic behind tenant representation is that in order to reach an equitable
solution to a particular need (leasing office space), the corporate tenant needs
access to market information, transaction expertise and negotiation skills equal to that of the landlord who utilizes professional representation.

A Tenant Representative will:

Analyze your space needs: The tenant rep can assist you in determining your space needs ranging from the optimal amount of space required as well as evaluating various layout options. This will prevent you from spending time
evaluating buildings or negotiating for space that doesn’t best serve your
needs, as well as prevent you from leasing too much space. The building owner or
his agent is not in the business of economizing your office space.

Identify and investigate all property options: This involves more than getting on-line and scanning listing services for availabilities. A tenant rep can identify a property that is not an obvious choice to meet your needs resulting
in lower costs. A tenant rep will know the market inventory, where deals are
being signed and under what leasing terms. They can also provide insight as to
how various building owners operate their properties and the various features of
a particular property.

Create leverage in the negotiation process: Even in a tight market, competition for your tenancy is the great equalizer in negotiations. A tenant rep will implement an effective negotiation strategy designed to win the concessions that
meet your actual needs and structure the best leasing terms attainable in the
marketplace. The mere presence of a respected tenant rep sends a message to
Landlords that you will see all opportunities in the marketplace and you have
someone in charge that understands all the nuances of the process.

Protect your interest in lease negotiations: The tenant rep knows ins and outs of the real estate transaction including all the provisions contained in a leaseagreement. A real estate lease is complex legal document with provisions that contain significant financial implications beyond the rental terms. How operating expenses are handled, interruption of basic services, sublease
provisions, the list goes on and on.

Provide a buffer between you and the Landlord: Lease negotiations can be difficult as each party is attempting to extract concessions (dollars) from each other. The tenant rep can handle the difficult and sometimes tough conversations that arise in the negotiation process and keep emotions out of the dynamic. After all, you have to live with the Landlord for years to come after the dealis done.

Manage and coordinate all the participants in the process: The leasing process involves many participants beyond the Landlord and Tenant to include the building owner’s agent, architect / space planners, interior designers, engineers, contractors, construction managers, property managers, office furniture vendors and lawyers. A single point of contact who understands the process and the role of the various participants in the process best serve the tenant.

These are just a few benefits the tenant representative provides to the
corporate office space user and if I were to note them all, this would be a book
and not a blog post. The tenant rep is an expert in evaluating, selecting and
negotiating for office space. Even the very largest corporations with full
fledged real estate departments and experienced real estate professionals on
staff utilize tenant representatives and understand the costs savings achieved
by utilizing a tenant rep far exceed their fee that is almost always already
budgeted into the rental rate by the building owner.

It is hard to argue to the point that a professional tenant rep will help you
achieve better results in a process the business owner only does every 3 to 10
Originally posted 10/16/2010 by Coy Davison, Houston, TX

Performance Radiator Pacific Leases 51,774 SF in Harrisburg

"Performance Radiator Pacific signed a seven-year lease for 51,774 square feet in 3400 Industrial Road, Harrisburg PA.

The one-story Class A office building totals about 294,450 square feet in the Lucknow Industrial Park."

Monday, October 25, 2010

Crisis on Main Street

Chris puts on great videos. This one is great.

Lankenau Hospital to start big expansion

"One of the region's largest suburban hospitals, Lankenau Hospital is set to embark on a half-billion-dollar expansion it says will position it to attract more patients and operate more efficiently.

Groundbreaking is set for later this week on work that will include renovation of the existing 331-bed hospital and construction of a five-story, $208 million, 96-bed pavilion and a 1,308-car parking garage and central utility plant. The hospital has already revamped two cardiac-catheterization labs and two inpatient units and begun roadwork on Lancaster Avenue.

Jack Lynch, president and chief executive officer of Main Line Health, which owns Lankenau and four other hospitals, said the work was fueling a "renaissance" on Lankenau's 92-acre campus. He said the current building was aging and needed to be upgraded to include private rooms and newer technology. Because Lankenau is converting some double rooms into singles, it will have a net increase of only 55 beds, for a total of 386.

Lynch said he believed a revamped Lankenau could attract more patients from throughout the region, particularly those going to other community hospitals. Paoli Hospital, which is also owned by Main Line Health Inc., saw more patients after it opened a $124 million pavilion last year.

"We also understand that with health-care reform, there's going to likely be a decrease in demand for inpatient beds," Lynch said, "but we believe there's an opportunity to capture increased market share."

To put the $529 million project in perspective, an entirely new community hospital being built outside Norristown is expected to cost $355 million. Work on that facility, which is a joint project of Albert Einstein Healthcare Network and Montgomery Hospital Medical Center, began in September. That hospital will have 146 beds.

Lankenau is building at a time when a tough economy has flattened admissions at many hospitals - including Lankenau - and health-care reform threatens to put serious pressure on prices.

"Before the economy changed, projects like this were a dime a dozen," said Alan Zuckerman, president of Health Strategies & Solutions, of Philadelphia. "Then the economy changed, and everything just about was put on hold."

In the last three to six months, he said, bigger hospital building projects started "bubbling up again."

Hospitals sometimes have to invest in new technology, and private rooms are almost a requirement now because of concerns about privacy and dangerous germs that could spread between patients, Zuckerman said.

But he said he thought it was risky to spend millions now because big employers would demand lower prices from hospitals even if the government did not. Hospitals will have to pay more attention to lowering costs, not just attracting more patients. "It's all changing," he said. "It just hasn't changed yet."

Consultant Gerald Katz agreed that reimbursements will go down, but he said that Lankenau needed to make improvements to continue attracting suburban patients. "It needs to be upgraded, without question," he said, "and parking's a problem."

Lynch said Main Line Health leaders debated whether to go ahead with the project, but they decided the work had to be done and "the construction environment was never going to be any better than it is today."

Main Line Health will pay for most of the work with reserves and cash flow, Lynch said. A capital campaign will account for less than 10 percent, and the project will require only $30 million in debt.

Lynch said he worried that health-care reform would tighten bottom lines so severely that many hospitals would not be able to reinvest in their buildings. Even if reform reduces the number of patients staying overnight, he said he thought the region's aging population would need Lankenau enough to support this investment.

The new pavilion will focus on cardiac care, starting with diagnostic tests. Patient rooms were designed to be comfortable and safe for patients and family members, efficient for employees, and big enough - 325 square feet - for teaching new doctors and housing in-room computers. Equipment is laid out identically in each room so nurses and doctors can easily figure out where things are. Patients should need to travel less between various tests and procedures.

Lynch said he thought the new rooms would reduce infections and increase efficiency, both of which will reduce costs.

The entire campus, which includes research and medical-training facilities, will be called Lankenau Medical Center."

Hershey Trust bought neighboring land for well above market value

"The Milton S. Hershey School, whose mission for 100 years has been educating impoverished children, is also the owner of Pumpkin World USA, a roadside attraction north of Hershey where you can buy vegetables, country crafts, and gourds galore.

Pumpkin World sits rather humbly on a 27-acre tract off Route 39, but to the members of the board of the charitable Hershey Trust, which administers the school, the property had value well beyond its bucolic charms.

So in 2006, the Hershey Trust paid a total of $8.6 million in school money for Pumpkin World - a sum more than nine times greater than the property's fair-market value, according to the Dauphin County tax office.

Officials of the Hershey Trust defend the purchase as part of a land-buying strategy to provide "buffer land" for an expansion of the Hershey School campus, and say Route 39 was a fast-growing commercial corridor.

Nonetheless, it is the second purchase of property at what would seem a highly inflated price. The other was $12 million for a money-losing golf course, on which the board then spent $5 million more to build a clubhouse and restaurant/bar.

The deal for the struggling Wren Dale Golf Club was reported by The Inquirer on Oct. 3 and included the fact that Richard H. Lenny, then the chief executive officer of the Hershey candy company, was an original investor in Wren Dale who profited from the golf course's sale.

A spokesman for state Attorney General Tom Corbett confirmed an investigation into a land deal the trust made Oct. 6, without specifying that it was the golf course. Deputy press secretary Nils Frederiksen said the investigation began in September, but sources familiar with the investigation say the Attorney General's Office has not requested records from the trust.

The attorney general is the only official - except people in the trust - who can challenge decisions by the trust in Dauphin County Orphans Court.

Corbett is the Republican candidate for governor. The chairman of the Hershey Trust is LeRoy S. Zimmerman, the former two-term attorney general and a political ally of Corbett. Other prominent Republicans, including former Gov. Tom Ridge, serve on Hershey-related boards and earn hundreds of thousands of dollars a year in director fees.

Frederiksen said Friday that he could not comment on the status of the investigation.

He has said the Attorney General's Office does not "micromanage" charities or run them day-to-day. As to whether it was appropriate for the trust to buy Pumpkin World, Frederiksen said the legal standard is: "At the time the decision was made, was it in the authority of the trust, was it an informed decision, and was it the product of due diligence?"

The purchases of Pumpkin World and Wren Dale Golf Club would seem to violate the strictly worded directives of Milton S. Hershey, the billionaire philanthropist who founded the candy company. His deed of trust emphasizes that the Hershey Trust must spend money only on the direct care and education of the students of the Hershey School. School officials say using the golf course as buffer land to ensure student safety falls under Milton Hershey's mission regarding care of children.

The Hershey realm, which includes the chocolate company and an entertainment company, is complicated. Each is directed by its own board but both exist, in the wishes of Milton Hershey, to subsidize the school, which is administered directly by the $7.5 billion trust.

One complexity in the Pumpkin World purchase was that a third party had an agreement to develop a portion of the property into a Jungle Joey's water park, which could compete with Hersheypark.

If buying Pumpkin World with school money was a hedge against a potential competitor for Hersheypark, that would seem counter to the directives of the deed of trust.

The Pumpkin World property fair-market value of about $920,000, listed in a state tax document, was based on a 2002 county assessment and adjusted for inflation.

County estimates in Pennsylvania are not perfect, but the difference in the property's sale price appears to be well beyond any standard error ranges. Based on data from the State Tax Equalization Board, the Dauphin County estimates of value are typically within 25 percent of actual sales.

The charitable trust has not said whether it independently appraised the property, which includes several buildings and a retail store selling Amish and homemade crafts, lawn ornaments, pumpkins, and gourds. It said that it bought the property as a buffer to ensure student safety between the community and new student housing, and that it bought other property in the area as investments.

"Paying eight to nine times the assessed value requires an extraordinary explanation," said Robert Sitkoff, a Harvard law professor and national expert on trusts. "For example, a competing bidder and a credible private appraisal, plus an urgent programmatic need for the property might justify the purchase."

Sitkoff said trustees in a charitable trust are held to a high standard. "You can be whimsical, feckless, or irresponsible with your own property. But when you are a fiduciary, you are managing the beneficiary's property, hence you must act prudently and in the best interests of the beneficiary. As regards a charitable trust, what this means is that the trustees must act prudently and in the best interests of the charitable purpose and the attorney general is meant to enforce these obligations."

It "strains credulity" that the trust would earn an investment return paying the price it did for Pumpkin World, said William Brown, visiting professor at the Duquesne University School of Law. "Zany with a capital Z," he said of the Pumpkin World purchase.

Pumpkin World was bought while the institution was spending hundreds of millions of dollars to boost its real estate holdings, renovate buildings, and construct student housing. That expansion is now on hold because of the economy. The school enrolls poor students free of charge.

Hershey Trust officials declined to comment directly on Pumpkin World. In an open letter to the community posted on the Hershey School website Oct. 18, Zimmerman said he believed the attorney general would find that the institution acted properly in its land dealings and that the deed of trust gave the charitable board flexibility in buying land.

Zimmerman said the land around its new campus "was of prime interest to developers, and we wanted to ensure that we acquired the critical land we needed for the school's use before we lost the chance to do so."

He noted that the school and its trust board "are required to look at every decision through the lens of perpetuity. We are keenly aware that our actions today must position the school for the students of not just this century, but the next." The school has expanded its enrollment to 1,800 students from 1,250 in 2004, he noted. "We believed this land was absolutely necessary as we planned not just for our current growth, but for potential growth 50 to 100 years from now," he said.

Regarding the investors in Wren Dale who were facing substantial losses before the trust bought the course, Zimmerman said: "Some have suggested that the trust company purchased the property to bail out wealthy friends. It is unfortunate that improper motives are sometimes ascribed where they don't exist."

Though the school says it acquired Pumpkin World and Wren Dale as buffers for student safety, the real estate has been useful to Hershey Entertainment & Resort Co., a for-profit subsidiary of the Hershey School.

Hershey Entertainment, a major leisure and amusement company, operates Hersheypark, Hotel Hershey, the Hershey Lodge, a campground, and golf courses. The company exists to financially support school operations through cash dividends. Since 2006, Hershey Entertainment has generated more than $1 billion in revenue and returned only $2 million in cash dividends to the school, according to IRS records and the Hershey organization.

After buying the Wren Dale course for $12 million, the Hershey School built a $5 million clubhouse, restaurant, and bar on the property, and then leased it to Hershey Entertainment at below-market rates. It is open to the public.

The Inquirer initially reported that the trust bought Pumpkin World from its longtime owner, the Retherford family, for $7.5 million. But the purchase from the Retherfords was only the first part of the transaction, according to property records.

When the trust agreed to buy the roadside market, the Pumpkin World owners were talking with local developer Nick Pendolino, who had proposed the water park on part of the property. Pendolino's partners were his wife, Jodi, and another couple, Donald R. Walker Jr. and Kimberly S. Walker.

Jungle Joey's was to be a Chuck E. Cheese-like facility with an indoor pool, 125-room hotel, and children's restaurant. Hersheypark is about a mile from the planned site.

In a phone interview last week, Pendolino said the Hershey Trust bought Pumpkin World from the Retherford family without his knowledge. Earl Retherford Jr., who runs Pumpkin World, did not return several phone calls seeking comment.

Pendolino said the "thought crossed our mind" that the trust wanted to eliminate potential competition for Hersheypark. But trust officials told him they wanted it for buffer.

The trust agreed to honor his contract with the Retherfords to buy 6.7 acres of the site. Pendolino, in turn, agreed to offer the trust the tract if he opted to sell.

The trust bought Pumpkin World for $7.5 million in February 2006 and then sold the 6.7 acres to Pendolino for $2 million in May 2006, according to property records.

In August, the trust repurchased the same property for $3.1 million, netting Pendolino and his partners more than a 50 percent investment gain in about four months.

Hershey Trust spokeswoman Connie McNamara said, "The new owner presented the trust company with a valid sales agreement in 2006 for $3.1 million. The trust company decided to exercise its right of first refusal." Pendolino said he had an offer from a hotelier for the $3.1 million.

He declined to name the hotel."

Friday, October 22, 2010

Home-energy firm to locate at Navy Yard

"A British company that specializes in home-energy overhauls will locate its U.S. operations in Philadelphia, the latest green company to sign up for the Navy Yard Clean Energy Campus.

Mark Group, which calls itself the United Kingdom's largest installer of domestic energy-saving solutions, announced today that it would open its American headquarters in the former Navy Yard in South Philadelphia.

The company, based in Leicester, England, employs 1,400 people. It said it expects to hire more than 300 people in the next three years as it establishes U.S. operations to sell and install home-energy efficiency systems, including weatherization improvements and renewable-power options.

Gov. Rendell's office offered the company $3.3 million in incentives, including a $2 million Pennsylvania Industrial Development loan, a $500,000 opportunity grant, a $638,000 job-creation tax credit, and $143,550 from WEDnet, a web portal aimed at training and educating workers.

Rendell, Mayor Nutter, and economic-development officials from agencies such as the Philadelphia Industrial Development Corp. and Select Greater Philadelphia welcomed the company at a Navy Yard ceremony today.

Mark Group's services are aimed at individual homeowners, as well as builders, architects, and public authorities. It says it has made two million British properties more energy-efficient since it was founded in 1974.

It also recently expanded operations to Australia.

The Navy Yard Clean Energy Campus is attempting to establish itself as a national center for research, education, and the commercialization of energy-related technologies.

Some of the development's potential has taken longer than promised to be realized.

HelioSphera US, a Greek solar-cell maker, announced last November that it would break ground in 2010 on a Navy Yard manufacturing facility. Rendell promised $49 million in state inducements.

The $500 million plant - which, it was said, would employ 400 people after a projected opening in 2011 - is still on the drawing board.

"They are continuing to work on raising their private financial commitments necessary to move forward with the development," said John Grady, executive vice president of the Philadelphia Industrial Development Corp."

Sales Market Recovery Lags

"Like other property types, industrial sales transaction volume, measured as a percentage of the total market, remains far below historical averages, and well below the trough of the recession 10 years ago. Most markets are plagued by poor liquidity, though a few, including Raleigh-Durham, Richmond, VA, Washington, D.C., Inland Empire, Tampa/St. Petersburg and Charlotte, are seeing higher square footage sold as a percentage of their total market size. Buyers and sellers remain at odds on selling versus asking prices, though the number of properties withdrawn from the sales market by discouraged sellers is starting to level off.

The CoStar Repeat Sales Index, which measures the price differential between properties that have sold more than once, shows that industrial prices remain in decline, though larger investment-grade properties are seeing some price appreciation in the bifurcated market. Those investors returning to the market prefer the safety of those well-leased higher-end properties.

The largest industrial sales in the third quarter were portfolios, with three of the top four acquired by REITs, including the purchase of seven data center properties in Arizona, California and Virginia by Digital Realty Trust from Rockwood Capital for $725 million. Portfolios made up 40.6% of total sales volume in the third quarter.

While bullish on the recovery long term, industrial CRE brokerage executives sampled by CoStar are cautious about what they see as uncertain signals from the economy.

"The summer may have proved to be an inflection point in the industrial leasing market, but we are cautious about the mixed signals we are seeing in important leading indicators, and what they are telling us about the overall direction of the U.S. economy right now," said Craig S Meyer, Jones Lang LaSalle managing director and head of industrial real estate for the Americas.

While there's still significant activity in the big-box sector, manufacturing has lost some of its momentum as inventories have stopped growing as fast, Meyer said. Consumer confidence is being constantly tested and supply chains are expected to run leaner going forward. While imports and cargo volumes through gateway seaport and airport markets have improved, it's uncertain whether these higher volumes are sustainable, Meyer said.

"We are expecting rents to continue to decline through 2011," he said. "The worst of the declines may be over, and while there are pockets of organic growth now beginning to develop, demand has not firmed significantly enough throughout the entire industrial market to envision an overall or sustained uptick yet."

"It will be a long process toward recovery, but the worst appears to be behind us," said David Bercu, principal in the Chicago office of Colliers International.

"The first step was landlord capitulation on rental and sale prices, which started its rebound second-quarter 2010. Owners have acknowledged that prices have dropped approximately 30% since the peak of 2007 and met the market," Bercu said.

Recent economic data indicates a slowdown in manufacturing and a reduction in inventories, however, which could have a direct impact on industrial real estate, Bercu said."

Warehouse Market Sees Gains As Absorption Increases, Vacancies Improve

"Add another commercial property type that is now on the path to recovery. The U.S. warehouse market joined the office market in clear recovery mode after logging another quarter of positive absorption and improving conditions as the national industrial vacancy rate edged down slightly for a second consecutive quarter.

Similar to its office market counterpart, the industrial real estate market is also seeing the pace of recovery vary quite a bit from market to market, according to CoStar Group's Third Quarter 2010 Industrial Real Estate Review & Outlook.

Recovery is slower to take root in the sales market and probably won't be as robust as some would like to see. But with so little new warehouse supply on the horizon, any growth in demand could quickly cause the rate of recovery to accelerate, CoStar Senior Director of Research and Analytics Jay Spivey said in a webinar presentation this week with Hans Nordby, Director of Advisory Services.

"We could be surprised at the level of recovery, given the low levels of supply we've seen," Spivey said.

Seven of the previous eight quarters prior to second-quarter 2010 posted negative absorption. The market has bounced back since earlier this year, absorbing 10 million in the second quarter and 8 million square feet in the third quarter. While far from broad-based, "it's official - we're in recovery," Spivey said.

Leasing activity remains steady. The amount of gross square footage leased quarterly has been a "picture of stability" through the downturn, even spiking to a decade high of 620 million square feet in 2009, one of the worst years for the economy on record. The Inland Empire, (positive 5.6 million square feet), Philadelphia (+5.1 million), Houston (4.6 million) and Phoenix (3.2 million) topped the list for net space absorbed, with Chicago and Cincinnati tied for fifth at 2 million.

While four of the top six markets reporting positive absorption are large distribution hubs, not all the major distribution regions are doing well. Some of the largest, Atlanta, the San Francisco Bay Area and Los Angeles, all posted negative absorption exceeding 5 million square feet in the quarter. New York, Dallas, Chicago and New Jersey also gave back significant space. Seven of the eight markets with the highest negative absorption have been hit hard by the housing and manufacturing busts.

The good news for the market, Spivey said, is that very few warehouse construction starts are on the books for the next couple of years. New supply will hit another all-time low in 2010 -- so low that any significant growth in demand as the economy improves could cause a fairly dramatic decline in vacancy rates, quickly accelerating recovery in the warehouse sector.

A look at the percentage of submarkets with declining vacancies in the third quarter shows how fast industrial occupancy is poised to rise as a result of constrained supply. Submarkets vacancies are a leading indicator for the national warehouse market because they generally start to decline much sooner than the national rate.

Almost 55% of the nation's industrial submarkets saw falling vacancy rates in the third quarter. During the last recession in the early 2000s, it took about 11 quarters to reach that level of submarket recovery, largely due to the huge amount of new space that hit the market early in the decade. With limited supply, declines in submarket vacancy have been much steeper in the current cycle.

Quoted rents have declined steadily for two years in the current downturn, about 11%, a larger drop than the last recession. With quarterly occupancies rising in about half the nation's industrial markets, rent declines appear to be bottoming.

CoStar forecasts relatively mild absorption in the industrial sector through 2014, much lighter than the huge spikes in both absorption and supply that marked the last recovery. "Overall, we're going to see improving fundamentals, declining vacancies and rising rental rates," Spivey said."

Thursday, October 21, 2010

Kimpton completes purchase of Lafayette Building

"Kimpton Hotels has closed on buying the Lafayette Building for $11.5 million. That paves the way for the hotel company to convert the building into a new high-end hotel. See articles on the topic here and here.

Between the new National Museum of American Jewish History and a redeveloped Lafayette building, the area across from Independence Mall will become stabilized and once the hotel opens a couple of years from now, there will be a whole new feel to that part of the historic area."

SMH Leases 50,000 SF in Harrisburg

"Systems Material Handling, a distributor and manufacturer of lift truck replacement parts and accessories, signed a seven-year lease for 50,000 square feet at 1530 Bobali Drive in Harrisburg, PA.

The one-story industrial building totals 110,000 square feet."

Cabot Properties, Inc Adds Another Property to Investment Portfolio

"Cabot Properties Inc recently purchased 12285 McNulty Road in Philadelphia for $3.58 million, or just under $48 per square foot. The property was about 85% occupied at the time of sale.

12285 McNulty Road is located in the Byberry East Industrial Park and easily accessible from I-95 and the Pennsylvania Turnpike. The 75,000-square-foot industrial building on 7.20 acres has 75 parking spaces and was built in 1988. The property has a maximum ceiling height of 25 feet, nine loading docks, five levelators and four drive-in bays."

Friday, October 15, 2010

York Pennsylvania Retail Building Sells for $3.2M

"Lancaster County Bible Church purchased 951 North Hills Road in York, PA for $3.2 million, or approximately $143 per square foot, from Sutliff Chevrolet.

The 22,336-square-foot retail building is currently an auto dealership. However, the new owner plans to convert the property into a church. Lancaster County Bible Church, based in Manheim, PA, provides worship services."

Philadelphia Industrial Park Building Sells for $2.95M

"Volvo Construction Equipment North America, Inc., sold the industrial buildings located at 10430 Drummond Road in Philadelphia to Weldenfield of VA for $2.95 million, or about $60 per square foot.

The building located on 3.8 acres in the Philadelphia Industrial Park offers 49,556 square feet of warehouse space. The property, an investment purchase by a private investor, was vacant at the time of sale."

Stein Realty Co. Purchases Warehouse in Telford

"Stein Realty Co. acquired an industrial building at 375 E. Church Avenue in Telford, PA, from Oldcastle Glass Inc. for $2,525,000, or about $34 per square foot.

The property is a one-story 73,690-square-foot warehouse building on 6.37 acres of land. It was constructed in 1980."

Tuesday, October 12, 2010

West Chester U, M&T and more....

"West Chester University broke ground on a $28.6 million recreation center that will total 72,575 square feet and include a fitness center four times the size of the current fitness facility. Aside from regular fitness equipment, the facility will have a three-story climbing wall, spinning rooms, meditation areas, social lounges and a “hydration” station with a refreshment area that includes a juice bar, where a glass and “green wall” will create indoor and outdoor terraces. Construction is expected to be completed by August 2012

M&T Marketing leased 4,168 square feet on the 37th floor at 1818 Market St. in Philadelphia. Newmark Knight Frank Smith Mack represented the landlord while PernaFrederick Real Estate represented the tenant …

Metcalfe Architecture & Design won an AIA Pennsylvania award for its design of a 450-foot walkway in the treetops at Morris Arboretum. The jury who designated the project for the award said the 450-foot tree canopy walk transports visitors from walking on the ground to walking in the treetops five stories above the forest floor …

Beech Interplex Inc. broke ground on a new student housing project that will house international students, visiting scholars and researchers at Temple University. The building will be called Beech International Apartments at Temple University and will contain 100-apartment units and feature a cafĂ©, conference space and other retail shops … KanCo Metals, Inc., a scrap metal recycler, leased 30,000 square feet at 4710 Bath St., Philadelphia. The company buys and sells nonferrous metals such as copper, brass, aluminum and insulated wire and will be consolidating its operations from the Frankford Arsenal."

Thursday, October 7, 2010

Broadview fills KOP building

"Broadview Networks signed a big lease for space at Valley Forge Park Place, filling up one of the buildings at the redeveloped complex off Route 422 in King of Prussia. The building had sat empty for a couple of years and Broadview’s 10-year lease stabilizes it.

The company, based in Rye, N.Y., took 57,200 square feet at the two-building, 155,000-square-foot office center at 1016-1018 W. 9th Ave. Broadview will be shrinking when it relocates from 2100 Renaissance Blvd. in Gulph Mills, where it is subletting 100,000 square feet. Keystone Property Group, which owns the buildings, renovated the properties that once housed Nova Care Inc. Lincoln Property represented Broadview Networks in the transaction. Other tenants in the complex include Reed Elsevier, Goddard Systems Inc., and Oracle USA Inc. ...

Joseph Levine & Son Inc., a well-known Jewish funeral home in the Olney section of Philadelphia, has sold its North Broad Street building. The structure at 7112 N. Broad totals 17,000 square feet and includes two chapels. It sits on two acres and can accommodate 50 vehicles. The Levines sold the property for an undisclosed price to Batchelor Brothers Funeral Services, which is making its first foray into the Philadelphia area. Batchelor Brothers is based in Rochester, Pa. The Levine family said it was difficult to sell the building but its business plan called for it and it continues to expand in the suburbs. In spite of the sale, Levine said in a statement that it and Batchelor will continue to operate out of the facility ...

FNK Enterprises sold a one-story, 24,000-square-foot industrial building at 1670 Winchester Road in the Bridgewater Industrial Park in Bensalem for $1.05 million. Pendant Systems Ltd. bought the property and will be relocated from a nearby 12,000-square-foot building off Blanche Road. Pendant Systems manufactures pendant lighting ... Duraclean Cleaning Specialist leased 2,603 square feet of warehouse space at 12 S. Bacton Hill Road in Malvern, relocating from smaller quarters.

Versa Fit leased 5,800 square feet on the sixth floor of 1529 Walnut St. in Center City, marking the first time the company has had a Philadelphia training facility. The personal training facility is based in Voorhees, N.J., and is expanding into the region."

The Biggest Mistake Made By Tenants

"The biggest mistake made by tenants looking for commercial office space is not engaging the services of a tenant representative; thinking it will cost them money. It doesn’t. A good tenant representative, is invaluable in making sure you find the right alternative, negotiate the best possible deal and avoid costly mistakes. They do this every day and only get paid when you get what you want. And you don’t even have to pay them. It costs you nothing. Most Landlords hire listing agents and the tenant rep will share in that fee. If there is no tenant rep, the listing agent keeps the entire fee and you are on your own. Tenant rep services will save you money by making sure you do it right with solid information and advice.

Many tenants don't understand what a good office tenant representative does. A tenant rep does more than just find office space. A good tenant rep will coordinate the entire office leasing process from helping you define your needs all the way to ensuring your space plan works for you. In between, an office tenant rep will not only find suitable alternatives, help you negotiate the deal, but also help with information, advice, space planning and lease review."

Manufacturing Company Moves Into Hanover Industrial Estate

"Mericle Commercial Real Estate Services sold 1058 Hanover St. in Wilkes Barre, PA, to Memco Realty Co LTD for $5.45 million, or just over $45 per square foot.

The 120,000-square-foot industrial building with quick access to I-81 and State Route 29 was constructed in 2003. The property on 9.6 acres has heavy power, 32-foot ceilings, 50 parking spaces. The building was 50% vacant at the time of sale but is now fully occupied by the buyer's manufacturing business."

Wednesday, October 6, 2010

Once site of big plans, parking lot sells for just $12 million

"An ordinary-looking parking lot at 1441 Chestnut St. that just two years ago seemed destined for hotel greatness - a Waldorf Astoria set amid a $420 million condo/retail/restaurant complex - went on the auction block Tuesday at the Union League.

"Going once. Going twice. Sold for $12 million!" exclaimed Douglas Johnson, of CB Auction Services. He hammered the winning bid made on behalf of Brook Lenfest, of Brooks Capital Group L.L.C. in Bala Cynwyd, a onetime Waldorf project partner.

Fourteen Forty-One Chestnut certainly has location going for it - it sits on prime Center City real estate directly behind the Ritz-Carlton and its condo tower. And the site, zoned for 848,000 square feet of building space, has great potential - that was never in dispute.

But what to build on this half-acre - and when - is being affected by the economic forces of the times. Auctions such as Tuesday's are increasingly being used throughout the United States to determine the market value of properties in major cities, such as Philadelphia, where there have been very few similar sales lately.

For example, Chicago Auction Services recently sold an Indianapolis Holiday Inn. It is set to auction a Holiday Inn at the St. Louis Airport later this month and a Dallas, Texas, spa site with many potential alternative uses next month

Lenfest, son of prominent businessman and philanthropist H.F. "Gerry" Lenfest, heads NetCarrier Inc. of Lansdale, a local-exchange carrier, and is president of Brooks Capital Group - a venture-capital firm specializing in early-stage investments. In April 2009, he bought out the 50-percent stake of his former Waldorf development partner, Timothy J. Mahoney III.

Mahoney, president and chief executive officer of Mariner Commercial Properties Inc., of Ardmore, said today's soft hotel and condo markets, as well as tight financing, prompted him to give up on his dream of building the 58-story Waldorf at the site, even though he had spent years and millions of dollars assembling the land.

When the project was first announced in October 2008, it was billed by Mahoney as a hybrid between the Four Seasons and the Residences at Two Liberty that would open in summer 2012. Planned for the posh tower were upscale stores, a signature restaurant, seven floors of valet parking, a spa, and 136 luxury condos starting at $1 million, all to be situated above the five-star hotel.

Mariner Chestnut Partners L.P., an affiliate of Mahoney's development company, was the listed seller at Tuesday's auction.

Lenfest already owned 85.5 percent of the Mariner Chestnut partnership; two others owned the other 14.5 percent. The auction liquidated that partnership, leaving Lenfest as sole owner and developer.

The price the land fetched Tuesday was about the same as he paid for it a decade ago, Mahoney said - then it was $11.2 million for the purchase and $800,000 paid to the City of Philadelphia to make a legacy-development agreement "go away."

"Needless to say," Mahoney said, "after 10 years of development expenses and six years of litigation, we spent many millions more than that [$12 million] figure."

Asked after the auction what the land should have brought, he said, "I thought it should have gone for above $15 million, but that tells you where the market is today. It's a very tough market.

"That property can't be just a surface parking lot," Mahoney said. "You have to put something on it, but that's difficult, if not impossible in this type of market. There's just no financing."

The Waldorf Astoria is one of at least nine major Center City hotel projects shelved or canceled because of frozen lending markets. The dearth of new hotel development has become a cause of concern for city tourism and convention officials, who say the expanded Convention Center, scheduled to open in early March, will need new hotels to support it.

When reached Tuesday afternoon, Lenfest was mum about his plans for 1441 Chestnut St. He wouldn't say whether it would eventually house a hotel, only that it was too early to tell.

Paul Galanis, managing director of Auction Services, said Tuesday's sale set a new benchmark. "There hasn't been a property like this sold here in four years," he said.

Those wanting to bid Tuesday were required to bring a $250,000 certified or cashier's check. Lenfest was not at the auction; William Luterman, chief investment officer of Brooks Capital Group, attended on his behalf.

Luterman, "Bidder No. 1066," stood near the back as the auction got under way at 11:05 a.m.

The floor bid was $4 million. From there, the bidding went up by $500,000 increments, as hands went up in the audience of about 75 people, almost exclusively men in expensive suits.

"Five million dollars. . . . Do I hear $5.5 million?" Johnson asked at rapid-fire speed. "Come on, do I hear $6 million?"

By 11:12 a.m., Luterman's bid of $12 million was declared the winner. He walked out quietly after signing the documents proclaiming Brooks Capital the new owner of 1441 Chestnut.

Something else did the talking, Johnson said:

"The market came here and spoke today."