Tuesday, August 31, 2010

Murano developer sued

"Fifty-one early buyers of condominium units at the 43-story Murano at 21st and Market Streets in Center City accused the building's developer Monday of inflating sales figures to boost unit prices.

In a lawsuit, the owners accuse Los Angeles-based Thomas Properties Inc., as well as real estate agents and others, "of misstatements and lies about the level of sales at the Murano, along with other misinformation about the property and the units, from the beginning of marketing in 2005 through August 2009."

"The defendants lied to buyers, lenders, appraisers and the public about how many units had been sold," according to the 445-page suit, which was filed by Andrew A. Chirls and Lauren Cates of Haines & Associates of Philadelphia. The amount of damages sought has yet to be determined, Chirls said.

Thomas Properties did not respond Monday to repeated requests for comment.

The suit filed in Philadelphia Common Pleas Court accuses Thomas and its agents of conveying "false impressions" about sales numbers, starting in 2005, often citing "presale" figures of 60 to 70 percent of the 302-unit Murano.

The defendants knew these impressions "would have - and did have - an impact" on unit prices as well as the demand for them, "including prices actually paid by the plaintiffs," the suit states.

The value of units in condo buildings partly depends on the total sales. Sales numbers also determine the willingness of banks to lend money to purchase those units.

In June 2009, when Thomas hired Accelerated Marketing of Boston to auction 40 Murano units, the developer had sold just 112 and had 12 others under agreement - a total of 41 percent.

A total of 178 units hadn't moved since the building opened in mid-2008, just as the real estate downturn was taking hold. The auction was designed to accelerate sales in a Center City market swimming in about 2,000 unsold new condo units.

The 40 auctioned units were sold at prices more in line with the realities of the current market, which has experienced a 7 percent decline in single-family home values since the boom ended in August 2007.

A comparison of per-square-foot prices of units closed in mid-2010 and in 2008 show reductions of about $100 per square foot in some, but not all cases.

Depending on location, condo prices in Center City range from $300 to $700, with Rittenhouse Square commanding the highest, said Realtor/developer Allan Domb of Allan Domb Real Estate.

Murano prices should be about $300 to $450 today, Domb said, because of its location in a primarily commercial area of Market Street.

Twelve units at the Murano closed in the second quarter of 2010, according to the Philadelphia Recorder of Deeds, at prices ranging from $395,000 to $885,000.

These units, and others sold after the Murano auction, have pushed the sales levels to 72 percent - 217 units sold or under agreement by this summer.

The suit also contends that the developer's sales agents told buyers such as plaintiff Russ Berenstein that all units would have floor-to-ceiling windows. Yet in 2005, before his unit was built, Berenstein was "steered to a unit" the defendants knew would not have such an amenity, the suit says.

Berenstein paid $842,000 for his 1,408-square-foot condo on Aug. 21, 2008, Board of Revision of Taxes data show.

Another plaintiff, Joyce V. Newman, was told in 2006 that her 18th-floor unit "would be worth $1 million" when the building opened.

BRT records show Newman paid $545,000 for her 1,091-square-foot unit July 14, 2008.

Two 1,091-square-foot units - one on the 14th floor, the other the 20th floor, closed in April 2010 for $462,000 and $480,000, respectively, deeds show.

The majority of the 51 buyers bought while the building was under construction.

The lawsuit, which along with prior coverage of the Murano can be found at http://go.philly.com/condos, alleges other misrepresentations. They include availability of parking spaces and that windows "were specially treated to become darker as the sun became less intense" and shades and curtains would be unnecessary.

In its June 30 quarterly report, Thomas, which also owns One and Two Commerce Square, said the increase in after-tax cash flow for January to June compared with the same period of 2009 "was primarily due to increased Murano condominium sales."

In that report, Thomas said that it had extended the construction loan secured by the remaining units at Murano until July 31, with the right to two six-month extensions."

Friday, August 27, 2010

Comcast Signs 6-Year Lease in Harrisburg

"Comcast leased 8,214 square feet of office space at 297 Care St. in Harrisburg, PA. The communications company will be in its new location for approximately six years.

The two-story office building is approximately 22,000 square feet and sits on more than two acres."

Financing Arranged at Two CVS Stores

"Non-recourse permanent mortgages arranged for two CVS retail locations. One CVS is in Philadelphia, PA, at $6.4 million, and the other is in Swedesboro, NJ, at $3.45 million.

The Philadelphia loan is fixed for five years at a 6.2% interest rate with a 30-year amortization. The Swedesboro loan is fixed for 20 years at 6.25% with a 20-year amortization. The loans were financed at 70% loan to value."

Memco Realty Co. Acquires Wilkes Barre Industrial for $5.5M

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

Located in a KOEZ zone, the 120,000-square-foot warehouse building was constructed in 2003 and sits on over nine acres. The buyer purchased the property to operate and occupy a manufacturing business."

Brandywine Realty says renovation of former post office for IRS complete

"Brandywine Realty Trust has finished a $252 million renovation of the former 30th Street post office in Philadelphia and a nearby garage on time and under budget, the company said Thursday.

Brandywine (NYSE:BDN) said in a statement that the completion of the post office site and $90 million Cira South garage means it will receive $256.5 million in loan financing it had already arranged. The post office site is leased to the Internal Revenue Service in a 20-year deal and the agency will move 5,000 employees into the facility next week. The garage has 1,662 parking spaces and 9,788 square feet of retail space."

Read more: Brandywine Realty says renovation of former post office for IRS complete - Philadelphia Business Journal

Sale of 109 Park Drive, Montgomeryville, PA

"109 Park Drive is a one story 24,000 SF industrial building situated on 2.675 acres. The building is expandable an additional 11,500± square feet and features 2,000 SF of office space with the remainder space boasting 23 + ceiling heights, heavy power, 2 over-sized drive-in doors and 3 over-head cranes. The building is strategically situated is suburban Montgomeryville with direct access to Routes 309 and 202 and minutes to the Pennsylvania Turnpike.

With the acquisition of this climate controlled facility, R.J. Linus Steel Services has become the premier production sawing facility in the Delaware Valley. Their policy is to work with their customers to develop specific sawing strategies that minimize waste and sawing time, keeping costs down.

In addition to production sawing, Linus offers additional services such as deburring, special packaging, and the application or rust preventatives. Bottom-line, Linus is able to handle all production sawing needs & saw cutting.

L.J. Linus which recently culminated in the purchase of this outstanding asset. The building was owned by the Mammana Family. No sale price was disclosed."

Golf cart repair shop given new life

"An industrial building in Conshohocken was sold and the new owner plans to convert a portion of it into apartments.

A residential development company, How Properties, bought the two-story, 10,000-square-foot building at 1145 Forrest Ave. for $739,000 from Diversified Equipment. How Properties plans to convert the old golf cart repair shop into 5,000 square feet of first floor offices for the company and five residential lofts on the second floor, said Gary Jonas, one of the company’s founders.

How Properties rents offices at 101 E. 8th Ave. in Conshohocken but wanted to find a property with lots of parking and possible conversion opportunities.

“We’ve been looking in Conshohocken but to find something in Conshohocken with parking is very, very difficult,” Jonas said.

The company was formed in 2002 and completed several residential rental projects throughout the suburbs and Center City and its surrounding neighborhoods. It completes about 15 projects a year. One of its biggest projects was Fairmount Square, a 10-townhouse community two blocks off of Broad Street.

How Properties focuses on infill sites and looks for three criteria when it decides to go into a neighborhood. First is nightlife.

“We want to rent to 25- to 30-year-olds living with a couple of their tenants, where the rent is affordable and they ... walk wherever they want,” Jonas said.

Second is being in proximity of a university so it can capture a ready-made market of prospective renters. Third is the presence of other major developers in an area.

“We don’t have the deep pockets to be a trailblazer,” Jonas said, adding that the company doesn’t bottom feed, buying foreclosed properties. “There is a successful business model that doesn’t feed off of the despair of others. We like to redevelop areas.”

Lastly and maybe most interesting is how How got its name. When Jonas and his partners were forming the company, they were debating about what to call it. They were in a bank at a meeting and saw the bank’s marketing moniker: The answer is yes, let’s figure out how.


Read more: Golf cart repair shop given new life by How Properties - Philadelphia Business Journal

5 Lease Transactions for GPX Realty Partners for a total 9,889 SF

"The new tenants at The Plymouth Woods are:

- JF Hillebrand USA, who will be occupying 1,193 SF. JF Hillebrand optimizes the global flow of beverages by using its people, specialist knowledge and technology to offer complete supply chain management solutions to a range of customers around the world.

- Pickering, Corts & Summerson, who signed a lease for 1,580 SF. The company provides professional engineering and land surveying services throughout Pennsylvania, New Jersey, and Delaware.

- Encoda, who signed a lease for 1,439 SF of space. Encoda is a software development company that concentrates on automating procedures for large medical practices. It markets its two patent-pending signature products.

- KenCrest who has leased 4,885 SF. KenCrest is a 104-year-old non-profit human services agency that is the largest provider of community-based services and support in the Delaware Valley and Connecticut for people with developmental disabilities.

Leasing space at the Evolve IP Corporate Center in Wayne, PA is:

- Fox Rehabilitation who signed a new lease for 792 SF of office space. Fox Rehabilitation provides physical, occupational and speech therapy for the geriatric population."

Brandywine Realty buys stake in Commerce Square

"Brandywine Realty Trust has upped its Center City presence and taken an ownership stake in Commerce Square, a two-building complex at 20th and Market streets in Philadelphia.

Brandywine, fresh off of buying Bell Atlantic Tower from Blackstone Group, is investing $25 million to become a 25 percent limited partner in both of the office buildings with Thomas Properties Group Inc. (NASDAQ: TPGI) The buildings, at 41 stories each, total 1.9 million square feet. The buildings were constructed by Thomas Properties, which had been the sole owner of the towers until now. Brandywine is based in Radnor and Thomas is based in Los Angeles and owns several office properties throughout the region.

The investment by Brandywine (NYSE:BDN) will be used to upgrade the buildings’ operating systems, common areas and other tenant amenities, as well as other projects that will strive to have the buildings reach LEED designation. Commerce Square is currently over 89 percent leased. Closing of the transaction is scheduled for the fourth quarter."

Read more: Brandywine Realty buys stake in Commerce Square - Philadelphia Business Journal

Thursday, August 26, 2010

Memco Realty Co. Acquires Wilkes Barre Industrial for $5.5M

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

Located in a KOEZ zone, the 120,000-square-foot warehouse building was constructed in 2003 and sits on over nine acres. The buyer purchased the property to operate and occupy a manufacturing business."

Wednesday, August 25, 2010

Answers to my interview with Rob Oryl from Value Nation

Rob's Blog: http://tiny.cc/0zhyr

"Wednesday, August 25, 2010
Interview with Joe O'Donnell owner of Omega Commercial Real Estate Inc.

What area do you service?
The office and industrial markets in Philadelphia and suburbs area. Mostly Montgomery and Chester Counties but I have completed deals in other parts of the country as well.

What is the number one tip you give all your clients?
If you are a landlord, get aggressive with your proposals immediately. Too many landlords are still playing the game with valuations and proformas from 2 or 3 years ago. Also, pay your bills and pay the brokers. I know it sounds basic but it can make or break your reputation. Real estate is like politics – it’s all local. Our brokerage community is small and if a landlord gets a reputation for stiffing brokers he is going to have problems in a good market and big problems in a bad market. If you are a tenant, explore the market early and often. Real estate is typically the number two company expense after payroll. There are great deals out there to be made. Time is your biggest asset when I comes to finding new space. Hire a professional. Use a COMMERCIAL real estate broker. Someone that practices commercial real estate on a full-time basis. We are seeing some “resi-mmercial” (residential focus, commercial pretenders) pop up since the residential market has slowed down.

If someone is considering leasing office space what points would you tell them to consider?
Besides call me?! It is very much a tenant’s market right now. There is a flight to quality for companies that can afford to move. Class B & C tenants are fleeing to Class A properties for little or no increase to what rent they are currently paying.

If someone is considering leasing retail space what are some points you would tell them to consider?
Avoid or limit the personal guarantee. PG’s are not common in office or industrial space but very common in retail. There was a landlord who wanted my tenant/client to sign a PG for the entire 10 yr lease. We disputed this because the landlord’s risk is mitigated after a few years. We won and lowered the rent, capped the operation expense and put together a great deal.

If a group member was trying to decide between leasing commercial space and buying something what should they know?
If you are an owner occupier there are some great financial programs out there for you including the SBA 504, USDA Financing and Economic development financing. You have to “run the numbers” and do an analysis. I can help people analysis and decide the best course of action.

Why did you go into business for yourself?
I come from a family of entrepreneurs. I tried working for other companies and did not like the way certain employers did certain things so I would move to another company. Then I realized the only way for me to be happy about how a company runs or performs is to own it.

What was your background before starting Omega?
Right out of college I worked for a staffing company. A lot of hours, little pay but great training. Then I worked for the family import/export business. That business went through a transition and the future was uncertain in 2002. It survived the transition but I stumbled into commercial real estate in the interim and haven’t looked back. I worked for a small tenant representation firm in Bala Cynwyd for 5 years and full service commercial real estate in Conshohocken for 2 yrs. I started OMEGA Commercial Real Estate, Inc. in October 2009 and am loving it.

What are you doing to develop new business?
I try and hit at least two B time (AM or PM) events per week. Staying in people’s faces is key in any economy not just a recession. I also am a big believer in email and direct marketing. Cold calling works to a certain extent but I get most of my business through referrals.

What is the biggest challenge you are facing and how do you plan on overcoming it?
The economy is tough right now. Most tenants are not moving in this market and money is tight for everyone, including some landlords. Completing a lease deal then finding out the landlord has no money to do what he or she promised or even worse they are losing their building to foreclosure. These are new recent experiences for me and all too real. Having agreements signed. Your eyes dotted and t’s crossed gives you as close to legal preparedness as you can get. As Warren Buffet says, “when the tide goes out you learn who has been swimming naked.”

Interested parties can contact Joe at www.OmegaRE.com , jodonnell@omegare.com or at his office (610) 616-4604.

This interview was conducted for the Original Solutions linkedin group (exclusively for business owners) : http://www.linkedin.com/groupRegistration?gid=3119421"

Brandywine invests $25M in Center City towers

"Brandywine Realty Trust has invested $25 million for a 25% interest in grey-stone-faced Commerce Square, twin 41-story towers totalling 1.9 million square feet of Class A office space in the 2000 block of Market Street in Center City.

(UPDATED: The deal would value the buildings' equity at $100 million, or around $53 a square foot. Brandywine boss Gerard Sweeney tells me a proper price would also include the building's debt, which totals $238 millon, or another $125 a square foot. That sets the building's total value at around $178 a square foot on a debt + equity financial basis; still less than half replacement cost, so encouraging to financial investors and discouraging to builders.)

Brandywine will own the buildings as minority partner with previous Commerce owner Thomas Properties Group of Los Angeles remaining in control. Brandywine's money - $5 million at closing, $20 million by the end of 2012 - "will provide substantial capital to improve these premier properties and maintain their position among the highest-quality buildings in Center City," Thomas boss James A. Thomas said in a statement. Thomas will "oversee" the investment, Brandywine boss Gerard H. Sweeney said.

The Henry Cobb-designed towers, built in 1987 and 1992 with an enclosed garden and a few postmodern angular stone flourishes, are 89% leased; tenants include Delaware Investments, Ernst & Young, Grant Thornton, and Wolters Kluwer, among others.

The deal follows Brandywine's recent $129 million ($125/sq ft) purchase of the former Bell Atlantic headquarters in a deal with Blackstone Group, New York, itself a bargain, compared to the $400/sq ft price of the city's last big tower, Liberty Property Trust's Comcast Center, in the mid-2000s."

Monday, August 23, 2010

Local Investors Acquire 10,090 SF Office CondominiumSuites at 1157 Phoenixville Pike in West Chester

"The buyers, Stephen F. Horstmann and Megan T. Horstmann Trust of December, 2008, purchased Suites 106 and 107. Park Valley Corporate Center Associates sold the property for $857,650 or $85.00/sqft.

Park Valley Corporate Center, is a 20 year old, two story, flex condominium building with suites currently available for lease or sale ranging in size from 1,000 to 14,785 SF of office and 2,854 to over 32,000 SF of warehouse. Features include ceiling heights of 18' to 20', 15 loading docks, one drive-in, gas heat, fully sprinklered with 100 parking spaces on site."

Park Valley Corporate Center is an exceptionally well-located facility at the center of the rapidly growing Route 202 Corridor within minutes of the Route 30 Bypass, Route 100 and the Pennsylvania Turnpike."

Phila. agencies to remain at 1234 Market

"Three related Philadelphia agencies have renewed a large lease at 1234 Market St. in Philadelphia, making the combined entities the biggest tenant in the building after SEPTA.

The Redevelopment Authority as well as the Philadelphia Housing Development Corp. and the Philadelphia Office of Housing and Community Development re-upped for 11 years on 70,000 square feet on floors 16 and 17 of the building.

The RDA looked at options within a two-block radius of City Hall but decided that staying put made the most financial sense. As part of the deal, the landlord plans to make significant upgrades to the building’s HVAC systems designed to meet LEED standards, and will provide a decent tenant improvement allowance to renovate the RDA’s existing space. In addition, the deal has the landlord implementing other “sustainable concessions” such as using recycled furniture, low VOC paint and carpeting as well as energy efficient lighting fixtures. The three agencies will temporarily relocate up to the 20th floor while work is done to the space."

DLMR sells 85,000 SF Office Building in Bala Cynwyd

"DLMR, sold of 101 W. City Avenue in Bala Cynwyd, PA.

The buyer was Goodman Properties. The property is a 2-story, 85,000 SF office building located at the corner of City Avenue and Bryn Mawr Avenue."

Added 9/8/2010:
"Jenkintown-based Goodman Properties acquired the office building at 101 West City Ave. in Bala Cynwyd, PA, from a private seller for $5.35 million, or about $70 per square foot.

The two-story, 75,000-square-foot building delivered in 1949. It is commonly referred to as the Van Sciver building after a furniture store that formerly occupied the space. There is currently one tenant occupying 18,000 square feet."

Five Lease Transactions completed in Philadelphia Suburbs -

- Kelly Teti Associates, LLP renewed their 2,493 SF lease at One Bala Ave in Bala Cynwyd, PA.

- IT4 Group, Inc. completed a new office lease at the Spring Mill Corporate Center located at 1100 E. Hector Street in Conshohocken, PA. IT4 Group leased 1,425 SF on the 2nd floor of the building.

- The Eminent Group, leased 1,209 SF of office space at 655 Business Center Drive at the Horsham Business Center in Horsham, PA.

-MedLaw leased 870 SF 3 Bala Plaza in Bala Cynwyd, PA. Plans to occupy the space are set for September 2010.

- Therapy Solutions, leased 2,200 SF of office space at 915 Montgomery Avenue in Narberth, PA. Therapy Solutions is a provider of comprehensive developmental and rehabilitative services for a wide range of speech and language disorders.

The Office Leasing Process

"An experienced and reliable tenant representative can make a huge difference in the successful outcome of your search for office space. A Tenant renting office space does so only a few times in his corporate life. Landlords rent space over and over again. Level the playing field by taking advantage of the availability of a good tenant representative.

In the long run, you will end up way ahead in not only the rent you pay but also in avoiding mistakes. Don’t be afraid to ask your broker questions to make sure they can perform for you.

•Are you free of any conflicts of interest if we work together?
•Are you a primarily tenant advocate or a listing agent?
•Do you have time to work on this project?
•What other projects are you currently working?
•What is your experience in finding properties like mine?
•How many tenant representation transactions have you
handled in the past 3 years?
•What is your negotiating philosophy?
•Are you knowledgeable about market conditions?
•How do you handle conflicts of interest, such as when you show me space that you or your company represents on behalf of a landlord?
•How would you describe your reputation in the business community?
•Can you supply references?
•How do you get paid? What commission you expect to receive?

Leasing Process and Timing

1. Define basic space requirements:
•Size and layout (office space calculator)
•Expansion and option space
•Price and term (market Information)
•Image and quality
•Geographical area
•Intangibles and goals
1 day

2. Selection / interview with support team:
•Space Planner
•Interior Design (if desired)
•Attorney / CPA
1 to 7 days

3. Determine alternatives available:
•General market knowledge of
"deals" available
•Search of database
•Verification of terms and conditions
•Review list of alternatives
7 to 14 days

4. Narrow down alternatives:
•Inspection tours of likely alternatives
•Selection of 3 - 5 best alternatives
•Space planning of best alternatives
•Review and re-draw of space plans
•Selection of top 2 - 3 alternatives
•Request for proposals on top alternatives
7 to 14 days

5. Analysis of proposals and alternatives:
•Financial analysis
•Layout efficiencies
•Intangibles and goal analysis
1 to 7 days

6. Final selection:
•Choose top alternative
•Establish terms required
•Prepare and present counter-offer
•Approve, re-negotiate, or select other alternative
•Review lease for business points
•Review lease for legal points
•Review Workletter
•Re-negotiate lease terms
•Sign lease
7 to 30 days

7. Tenant improvement build-out:
•Monitor progress
•Report progress
•Final walk through check
30 to 120 days

Time to Allow
Before Tenant Improvements 24 to 103 days
Including Tenant Improvements 54 to 194 days


The Second Biggest Mistake Made By Tenants

"The second biggest mistake made by tenants looking for office space is not allowing enough time for the process. Far too often tenants will not get started early enough and have to settle for less than they could have had otherwise. This applies to tenants who are looking for conventional space and not executive suite, virtual office space, or co-working space. Typically a tenant can be in these spaces as soon as the next day or at least within the month.

Tenants looking for conventional office space under 10,000 should get started at least 6 months prior to their move in date. This will allow enough time to find some good alternatives, negotiate the best deal and have any tenant improvements completed for an on time move-in. This is true even in a soft market. In fact, even more so since there will be many more possibilities to investigate.

For office tenants over 10,000 square feet, at least 9 months should be allowed. The larger the tenant, the more complicated the process and more time is needed."

Friday, August 20, 2010

Pennsylvania Wendy’s Portfolio Sells for $3.8M

"Valenti Mid-Atlantic Management sold three Wendy's restaurants in Eastern Pennsylvania to One Liberty Properties for $3.84 million, or approximately $512 per square foot.

The three retail buildings, located at 712 Penn Ave. in West Reading, 930 Lancaster Ave. in Reading and 743 East Main St. in Palmyra, total in 7,495 square feet. Wendy's occupies the buildings on 20-year leases with nine-year renewal options."

Thursday, August 19, 2010

Exeter Commons Sells for $53 Million

"A joint venture of Goldenberg Group and Ironwood Property Group sold the Exeter Commons Regional Mall in Reading, PA, for $53 million, or $147 per square foot, to a partnership of Cedar Shopping Centers and RioCan Real Estate Investment Trust.

The multitenant mall, located along Perkiomen Avenue in Bucks County, delivered in 2009 and is approximately 361,000 square feet in size. The property sits on a little over 106 acres with 1,600 parking spaces. Anchor tenants include Giant Food, Lowes, Target and Staples."

Interstock Premium Cabinetry moves to Bristol

"Interstock Premium Cabinetry Co. leased a 148,000-square-foot building at 6300 Bristol Pike in Bristol.

The company is consolidating two locations into the building and expanding. It had been in 77,000 square feet and 22,000 square feet in Feasterville. The new building will house executive offices as well as serve as a showroom, warehouse and distribution facility. The company makes wood kitchen and bathroom cabinets

An affiliate of Endurance Real Estate paid $15.9 million, or $41.33 a square foot, for a 384,695-square-foot industrial building at 9747 Commerce Circle in the Arcadia West Industrial Park in Weisenberg. Endurance bought it from an entity related to Higgins Development Partners and Pritzker Realty Group. The property was constructed in 2007 and Teva Pharmaceuticals occupies 55 percent of it. The remainder is vacant. Endurance of Bala Cynwyd, targets those type of value-add acquisitions

Two flex condominiums were sold in the Park Valley Corporate Center in West Chester for $857,650. The properties total 10,090 square feet and were bought by Stephen F. Horstmann and Megan T. Horstmann Trust. The seller was Park Valley Corporate Center Associates."

Southampton Shopping Plaza Sells for $20.3M

"A joint venture of Katz Properties and Paragon Realty Group purchased the Southampton Shopping Plaza in Southampton, PA, from a private seller for $20.25 million, or $137 per square foot.

Located on the Second Street Pike, the shopping center boasts a total of 147,639 square feet on just over 29 acres. Being 89% occupied, this property includes tenants such as Giant Food, Rite Aid and The UPS Store.

"The Giant supermarket is among the top performing grocers in the local market with increasing sales year after year," said Eric Wolf of Katz Properties. "We will aggressively target leasing the vacant spaces to quality retailers that will complement the products and services already offered by our existing tenants."

The new owners intend to update the plaza with a new facade and signage. Adding to its inventory, Katz Properties also recently purchased shopping centers in Maryland, Connecticut and New York."

Few tenants moving into Philadelphia's Center City offices

"Philadelphia's Center City office vacancy rate has topped 15 percent, the worst since 2004. That's up from less than 10 percent just two years ago.

"There's been a period of stagnation," with few tenants moving in as the economy slows.

Philadelphia's chemical industry has been pulling out: Arkema Inc. is consolidating its Center City offices at its King of Prussia labs. Sunoco Inc. is trying to sublet its headquarters as it sells off businesses and cuts staff. And Dow Chemical Co. has vacated parts of the landmark former Rohm & Haas Co. building on Independence Mall since it bought the firm last year.

Brandywine Realty Trust's $129 million purchase of the former Bell Atlantic building in a stock deal with Blackstone Group L.P. earlier this month "changes the dynamics of the market." Though national real estate values had fallen about 40 percent, building owners had mostly resisted cutting deals at lower prices, in hopes the market would recover. The surrender could spark more low-price deals - enabling buyers to cut rents and still turn a profit.

Brandywine will try to keep rents above $30 per square foot on the upper floors, but may accept less if it can rent larger blocks of space on the lower floors to big law firms looking for high-rise space as their old leases expire.

At least one corporate employer is still expanding. Comcast Corp. has sublet the 42d and 43d floors of the Bell Atlantic tower - a longtime hub for Comcast's rival, Bell Atlantic successor Verizon Communications Inc. - after the space was vacated by Aramark Corp., the Philadelphia-based food-service giant.

Aramark has been consolidating its workforce operations to its Market East headquarters and other existing Center City space, said spokeswoman Kristine Grow."

Wednesday, August 18, 2010

Expansion gets top certification

"SAP's new North American headquarters expansion in Newtown Square has been awarded LEED platinum certification by the U.S. Green Building Council, its highest ranking. At 218,000 square feet, the four-story office complex is believed to be the largest LEED platinum-certified building in Pennsylvania. Just 5 percent of all LEED-certified commercial projects are platinum. The building's water-management system is expected to save more than one million gallons a year."

Shopping center sold at auction

"Cherry Hill's Garden State Pavilions, with about $38 million in debt, was sold at auction Tuesday to the sole bidder - its lender. Bank of America, serving as trustee for a mortgage loan pool that included the shopping center, bought the property by bidding its credit. Richard O'Halloran, the attorney representing the bank, said the price was slightly less than the $38 million owed in principal, interest and penalties. A mostly empty line of storefronts sits between busy anchors at either end of the plaza on Route 70 and Cornell Avenue. The bank filed for foreclosure in May 2009 on the Pavilions, which opened in 1999 as one of two retail developments on the site of the former Garden State Park racetrack. Court records list the owners as Cherry Hill Properties 1, 2, and 3. Once the U.S. District Court approves the auction result, O'Halloran said, the bank will market the property for resale."

Friday, August 13, 2010

GM Sells Wilmington Assembly Plant for $20M

"Motors Liquidation Co., the holding company formed by General Motors (GM)'s bankruptcy, sold its Wilmington Assembly Plant to Fisker Automotive for $20 million, or $7 per square foot, via approval of a bankruptcy judge.

The 3 million-square-foot manufacturing facility at 801 Boxwood Road in Wilmington, DE, was shut down last July, resulting in the building's vacancy.

Fisker Automotive is spending $175 million to renovate the facility, beginning this year. The automaker intends to use the plant for the production of lower-cost plug-in hybrid cars with on-board generators."

Spotlight on Commercial Real Estate (Video)

CNBC this morning: http://www.cnbc.com/id/15840232/?video=1565748132&play=1

Thursday, August 12, 2010

Philly Deals of Note

"VAX-D Institute of Philadelphia renewed its lease for 5,317 square feet on the 18th floor of the Land Title Building at 100 S. Broad St. in Philadelphia. VAX-D is a nonsurgical back and neck treatment.

Bayada Nurses leased 4,990 square feet at 2401 Walnut St. in Philadelphia. Bayada Nurses plans to establish a pediatric administrative office close to the Children’s Hospital of Philadelphia at 34th Street and Civic Center Boulevard.

Blue Stone Real Estate Capital arranged financing for two Philadelphia properties. In the larger of the transactions, Blue Stone, as correspondent to Greystone Servicing Corp., lined up a 10-year, $29 million Fannie Mae permanent mortgage financing for the Navona, the apartment complex framing the Piazza at Schmidt’s Plaza. The building at 1050 N. Hancock St. in Philadelphia has 156 apartments and 16,000 square feet of retail space. The other loan was for $3.1 million in permanent financing for Dickinson Square, a 40,000-square-foot medical office complex at 1500 Columbus Blvd. in Philadelphia. The loan, provided by CT based Webster Bank, is fixed for five years."

Quaker Safety Announces Build to Suit

"Quaker Safety recently joined Gorski Engineering Inc. to break ground on a new 28,000 SF manufacturing and service facility at Northfield Business Campus in Richland Township, Bucks County. Gorski Engineering Inc. of Collegeville is the developer of Northfield Business Campus."

"I appreciate the hard work the Gorski team put in making this project possible and I am eager to move into the new facility," said Pete Nicholas of Quaker Safety. "We will employ more than 40 people when we occupy the new facility in November of this year." Quaker Safety is one of the leading manufactures of NFPA compliant garments for Structural and Proximity Fire Fighting. Since 1986 substantial research and development has enabled Quaker Safety to design and manufacture high quality turnout gear with a quick and reliable delivery schedule. Quaker Safety's rapid delivery, customer satisfaction and technical support remain unsurpassed in the fire service industry.

"Gorski Engineering Inc. of Collegeville, Northfield's developer, provided planning, design, construction and building service solutions to Quaker Safety. Northfield Business Campus is a 118 acre development. There is a 50 acre tract fronting on East Pumping Station Road and 68 acres of open space that preserves significant woodlands and provides riparian buffers. Jerry Gorski noted, "The development can house up to 400,000 square feet of building on the 50 acre tract, creating an opportunity for over 600 jobs."

"The supply constrained market of quality manufacturing buildings led us to search the build-to-suit market." "Gorski Engineering was able to design a new facility tailored to meet Quaker Safety s requirements and remain within the budget. The new 28,000 SF facility will allow for Quaker Safety s future growth."

Financing for both Northfield Business Campus and Quaker Safety's new facility is provided by Univest Corporation of Souderton."

Wednesday, August 11, 2010

Absolute Auction of One Meridian

"The Center City site that was once eyed for a Waldorf-Astoria is hitting the auction block. The property, where a fatal fire ravaged One Meridian Plaza in 1991, is 22,400 square feet — about a half acre — and could handle an 848,000-square-foot structure.

A Ritz-Carlton had been planned for the former One Meridian site, where a parking lot generates income.
The auction will be held Oct. 5 at the Union League of Philadelphia. The absolute auction means the parcel will be sold regardless of price. The property at 1441 Chestnut St. has an existing surface parking lot producing an annual net operating income of $650,000.

Mariner Commercial Properties bought the property nearly 10 years ago for roughly $12 million. Mariner Commercial, which is run by Tim Mahoney, and Brook Lenfest’s Brooks Capital Group were in a partnership to build the Waldorf on the site. The market for the hotel, which would have also had a portion of its units as condominiums, turned and the project was killed."

PRWT has Buyer's Remorse 2.5 Years after Purchase

"It is not as easy as it looks to run a drug manufacturing company. Or so PRWT Services Inc. has discovered.
The politically connected Philadelphia firm, which, among other things, runs impoundment lots for the Philadelphia Parking Authority, took a huge leap - and doubled its size - in 2008 when it bought a Merck & Co. Inc. factory in central Pennsylvania that makes bulk chemicals for the pharmaceutical industry.

Now, in an extreme case of buyer's remorse, PRWT has persuaded Merck to buy back the Riverside plant just 21/2 years later.

In a statement, PRWT blamed "the challenging business environment in the pharmaceutical industry." The company apparently had been unable to significantly expand the customer base for the facility beyond Merck, which had agreed to buy up to $900 million worth of product from the plant over five years.

Merck is repurchasing the plant, according to company spokesman Ronald Rogers, because its products were "critical to our supply chain."

"Most importantly, they were critical to our customers," he said. "We felt it was important to ensure that the supply chain continues."

Neither Rogers nor PRWT spokeswoman Sherri Kyle-Jones would provide a purchase price. Rogers said the sale will be completed Sept. 3. There will be a six-month transition while Merck resumes management of the facility, which is on the Susquehanna River about 65 miles north of Harrisburg.

The plant, known as Cherokee Pharmaceuticals L.L.C., employs 454 people and makes intermediate compounds for two antibiotics, Invanz and Primaxin. The site also makes Merck's cholesterol drug, MK524, and Avermectin, an animal dewormer.

Merck had operated the plant for 58 years before the 2008 sale. The purchase doubled PRWT's yearly revenue to about $160 million. The firm took over the plant at a time when big drug firms were increasingly turning to overseas manufacturers to save costs.

PRWT's purchase of the plant was a sea change for the minority-owned firm, which until that time had built its revenue largely on service contracts with local, state, and federal agencies.

PRWT runs call centers for E-ZPass in New Jersey and Pennsylvania's Child Support Program. The firm also handles customer service for the parking authorities in Los Angeles and San Francisco as well as Philadelphia.

Through its U.S. Facilities subsidiary, it cleans two Philadelphia prisons and manages locks and tunnels for the Virginia Department of Transportation.

Among its management team is George Burrell, an adviser to former Mayor John F. Street, and former Pennsylvania Gov. Mark Schweiker. Burrell is the company's general counsel. Schweiker is president of PRWT Business Process Solutions division."

Tuesday, August 10, 2010

White and Williams stays at One Liberty

"White and Williams, a Philadelphia law firm, has renewed its lease at One Liberty Place and will remain in the prominent trophy tower at 1650 Market St. for another 15 years.

The decision was part of a trend: It has been more common for tenants in the last couple of years to re-up in existing space rather then relocate.

The law firm signed on to roughly 120,000 square feet, which is less than the 131,000 square feet that it is currently occupying. The reduction in space will come from making its space more efficient, said Guy Cellucci, who will become the new chairman of the firm at the end of October when George Hartnett steps down.

“We looked at a number of other places that were very nice,” Cellucci said. “We love this location and we have a good relationship with the landlord.”

White and Williams has been in the 61-story, 1.2 million-square-foot building since 1990, when it moved in Columbus Day weekend. As part of the lease, it will have the option to take 18,000 to 20,000 square feet of additional space. It will occupy floors 15 through 20."

Friday, August 6, 2010

Bell Atlantic Tower sold to Brandywine Realty Trust

"Brandywine Realty Trust, a national, commercial real estate company, said Thursday that it had acquired one of Center City's most distinctive office buildings, the pink-tinged, 53-story high-rise known as the Bell Atlantic Tower, in a $129 million transaction.

The company said the deal would bring to 3.9 million square feet the total commercial office space it owns in Philadelphia, much of it in the Logan Square area, where the building, at 1717 Arch St., is located.

Taken together, the company said, the purchase from an affiliate of the Blackstone Group, which will become a 5 percent owner of Brandywine in the transaction, signals that Brandywine executives are confident about the ongoing vitality of the city's commercial real estate market.

"We think there are signs that the fundamentals are firming, and that the market is tending toward stability," said Gerald H. Sweeney, Brandywine's president and CEO. "Businesses throughout our portfolio are taking a more optimistic view. We are seeing tenants investing more dollars in their own space, and even though the unemployment numbers don't look good, businesses are starting to hire."

The property currently is 63 percent leased, Sweeney said, but the company intends to make $40 million in improvements and hopes to fill the space within a few years.

The tower, which Sweeney said will be rebranded as 1717 Arch, was built in 1990, and with its cascading layers of pink-tinged granite, now reflected off the adjacent Comcast Center, it instantly became one of Center City's best-recognized skyscrapers.

The Logan Square area, where Brandywine also owns buildings known as One and Two Logan Square, is a center for law firms and other professional-services companies, and typically commands the highest commercial lease rates.

Brandywine Realty Trust also owns the Cira Centre in University City and the IRS Philadelphia campus to be located in the renovated postal building adjacent to 30th Street Station.

In addition to Philadelphia's central business district, Radnor-based Brandywine owns commercial properties throughout the Philadelphia suburbs; in the booming Dulles corridor outside Washington, D.C.; in Richmond, Va., and in Austin, Texas, also a growth region.

"The Bell Atlantic Tower is a quality asset, and you have [an entity] in the form of Brandywine Realty that thinks it is a good time to make an investment in Philadelphia," said John Gattuso, regional director and senior vice president of Liberty Property Trust, which developed the Comcast Center. "What this is is a vote of confidence in Philadelphia and the national economy."

The purchase price for the 1,029,400-square-foot building works out to $125 per square foot. In the end, the company maintained, it will have purchased the building for less than 50 percent of the estimated replacement cost.

Despite the ongoing recession, high-value or so-called Class A office space is in relatively short supply in Center City, the company said. Overall vacancy rates in the city's central business district are 11 percent, but less for the most desirable space.

That, along with growth in the University City area and significant public investment in Center City, notably at the Convention Center, makes Philadelphia a more stable market than other regions of the country, said Sweeney.

"We think this is a very bullish statement on how we view Philadelphia's future," he said. "We view Philadelphia as being well-positioned to outperform the national real estate market."

Thursday, August 5, 2010

Liberty Property, Brandywine’s 2Q leasing activity

"Liberty Property Trust and Brandywine Realty Trust reported on local leasing activity for the second quarter.

Liberty (NYSE:LRY) signed 82,000 square feet in Malvern during the quarter and one of those deals involved an undisclosed tenant that renewed on 27,431 square feet and expanded by 21,894 square feet at 45 Liberty Blvd. Best bet is that it’s Microsoft Corp., which had been in the market for several months and already maintains space at that address.

Some of the other Liberty leases include: Stedi Inc., a restaurant company, leased 6,642 square feet of flex space at 16 Great Valley Parkway; Environetics Design signed a new lease for 1,200 square feet of office space at 10-20 Liberty Blvd.; and Fujirebio Diagnostics Inc. leased 13,000 square feet of lab, office and warehouse space at 201 Great Valley Parkway.

Brandywine (NYSE:BDN) wrapped up 262,059 square feet of leasing activity in Pennsylvania. Some of the major leases that got signed include: Lockheed Martin renewing 56,034 square feet at 640 Allendale Road in King of Prussia; Milestone Partners, a private equity firm, signed a new 12,517-square-foot lease at 555 East Lancaster Ave. in Radnor; Continental Bank re-upped on 12,280 square feet 620 Plymouth Meeting Executive Campus in Plymouth Meeting; United Phosphorus Inc., a company that makes herbicides, pesticides and related products, signed a new 11,978-square-foot lease at 630 Freedom Business Center, King of Prussia, where it maintains its headquarters; and Sundance Vacations renewed on 10,088 square feet at 620 Allendale Road in King of Prussia."

Phila. warehouse sells for $550,000

"A subsidiary of Glenn Distribution Corp., a wholesale foods distributor based in Pennsauken, N.J., sold its 170,105-square-foot warehouse and distribution center in Philadelphia for $550,000, according to property records.

The property at 4518 Tacony St. was bought by an entity going under the name of Tacony Chocolate Factory LP. However, it is BDDW, a furniture company based in New York that hand makes solid wood furniture. Towne Line Shoppes at 3 E. Evesham Road in Voorhees, N.J., traded for $1.25 million. The 8,500-square-foot strip center that also has a free-standing Dunkin’ Donuts was sold to an undisclosed buyer.

Paul Davis Restoration expanded into 3,000 square feet at 110 Darby Commons Court in Folcroft. Paul Davis Restoration is a franchise that focuses on emergency restoration services, property damage mitigation, reconstruction and remodeling for residential, institutional and commercial companies."

Comcast Takes 42,230 SF at 1717 Arch

"Comcast signed a sublease for the 42nd and 43rd floors at 1717 Arch St. in Philadelphia, a total of 42,230 square feet.

The 1.06 million-square-foot, 51-story office high-rise delivered in 1990 and was certified as an Energy Star Building in Spring 2010. Additional tenants include AmeriHealth Casualty Services, Norfolk Southern and CDI.

Comcast remains in the market seeking between 80,000 square feet and 90,000 square feet. Among its options for that much space include the Sunoco space at Mellon Bank Center as well as Centre Square. Binswanger is representing Comcast, whose own Comcast Center skyscraper is located at 17th Street and JFK Boulevard, in its search.

Founded in 1963, Comcast is the largest cable operator and home Internet service provider in the United States."

Carpenter Co. Purchases Warehouse in Allentown

"Carpenter Co. acquired the industrial building at 1100 Mill Road in Allentown, PA, from The Prudential Insurance Co. of America for $8.07 million, or $43 per square foot.

The 187,600-square-foot warehouse building was constructed in 2000 in the Lehigh Valley Industrial submarket. Carpenter Co. will occupy the entire facility."

Wednesday, August 4, 2010

Bottom Dollar Food Expands in Philly Market

"Bottom Dollar Food plans to open 21 stores in the Philadelphia market by the end of 2010. The soft-discount grocer will create over 600 jobs in the Philadelphia area, and bring additional options to customers in Philadelphia.

Bottom Dollar Food signed 21 lease deals of about 20,000 square feet each.
Bottom Dollar Food currently has 28 stores in North Carolina, Virginia and Maryland."

Sunday, August 1, 2010

Apple's first Philadelphia store

"The tall 20-something stood at the corner of 16th and Walnut Streets, squinting at his surroundings in the bright morning sun.

"Do you know where the new Apple store is?" he asked the man next to him, as he adjusted his backpack.

"There," the man said, pointing to a spot up Walnut, "but it doesn't open until 5."

It was 11 a.m., and at 1607 Walnut St., workers were rushing to finish the facade of the new store, some of it still hidden behind brown paper that kept the curious from sneaking a peek.

With hours to go before the first Apple store within the city limits opened, an almost festive atmosphere had begun to take hold of the venerable shopping district.

Even retailers sharing Walnut Street with Apple were energized.

"I'm beyond excited," said Ann Gitter, co-owner of KnitWit, the women's clothing chain with two stores within a block of Apple - at 1718 Walnut and 128 S. 17th St.

In fact, Gitter said she had been regularly popping in to Dana Bank's Town Home gift and jewelry store at 1616 Walnut, across the street from the Apple site, "to spy."

Bank said she actually went across the street last week and "knocked on the hard hat of one of the men working in front to find out when the store would open."

"I'm over-the-top about it," said Nick Berardi, president of the Rittenhouse Row organization and owner of the Richard Nicholas Hair Salon for Men at 1617 Sansom St.

The opening comes as business appears to be improving over 2009, which most retailers consider one of the worst years they have ever endured.

"Business has picked up since January, and this summer is much better than last," Gitter said.

Both she and Bank, who moved to her current location after several years on 19th Street, believe that Apple will boost traffic and bring more business for everyone.

Gitter said Apple would provide "husbands and boyfriends of my customers with something to occupy their time while they shopped."

For Linda Berman, owner of the Children's Boutique at 1702 Walnut, the arrival of the Apple store is just another example of the growing "user-friendliness" of the shopping district also known as Rittenhouse Row.

"Shopping on Walnut Street used to be intimidating" because the retail stores once catered primarily to well-to-do Philadelphians, said Berman, who has been in business for 43 years, the last 11 at her current location.

As Center City has grown in the last 15 years, retailers have tried to make shopping an easier and "much friendlier" experience, she said. Berman's children's clothing store, for instance, hosts birthday parties and has a changing room for babies.

The Apple store "will only increase the numbers of people who come here, drawing Drexel and Penn students and residents of other neighborhoods who would rather shop at this store than drive to the ones in the suburbs," Berman said.

Bank and Gitter said they'd be lining up at 5 to get a first look at the new store. "I'll see if I can get in earlier," Bank said, although not too hopefully.

Bank had company. A half hour before the door opened, hundreds had gathered outside the store, and 45 minutes after the opening, a line of 200 people stretched from in front of the store to 17th Street."