Thursday, September 30, 2010

The Pilot School Purchases 48 Acres in Wilmington

"The Pilot School acquired 48 acres located at 212 Woodlawn Road in Wilmington, DE, where it plans to construct a new school.

Woodlawn Trustees Inc. sold the land for approximately $4.5 million, or $90,980 per acre. While 32 acres are use-restricted by Woodlawn Trustees, the remaining 16 acres will be used to house a school for grades pre-kindergarten through early high school. Details about when the project will start haven't yet been disclosed."

Chicago real estate billionaire Sam Zell on jobs, M&A, Obama

"Chicago real estate billionaire and Tribune Co. publisher-in-bankruptcy Sam Zell was in Philadelphia on Monday, where he spoke to hundreds of students in a packed auditorium, plus a second lecture hall connected by video, at the University of Pennsylvania. Excerpts:

Innovation: "Build a better mousetrap and the world will come to you? That's a crock... There are many examples of (simple) products that have done much better than truly better products. It's all about being easy to execute...

Business education: "Econ 101, Supply and Demand... Nothing else really matters."

Liberal arts: His fellow University of Michigan graduate Arthur Miller's play, Death of a Salesman, did a "disservice" to American business: "He demonized the salesman as a womanizer, a drunk, as somebody staying in these dingy motel rooms and attempting to pitch his wares.. Truth of the matter is, nothing gets bought, everything gets sold, and an entrepreneur has to be a salesman... advocating ideas."

Who needs a degree: "There's a lot of people in college today that shouldn't be there." At one of his firms, Anixter International, "we make complex fasteners, we can manufacture them right outside of Chicago and be competitive with China. We're running two shifts. If we could, we would run three shifts. Except we can't find enough people in the Chicago area who know how to read plans, who can work in a manufacturing scenario... So we're going to set up a program at a local junior college to solve that.

"Here we are, 9% employment, or maybe 16%," depending on how you count, "and I'm sitting here with 300 jobs we could fill tomorrow" if there were trained candidates. While recent college grads go unemployed.

Mergers: Successful mergers "identify the redundancy" and cut extra people and facilities. That's why mergers work. There are no benefits from "synergy," a word that is supposed to describe how partners are greater combined than whole, but actually represents "mental masturbation."

Entrepreneurship: "If you aren't testing your limits every day then you aren't really discovering what you can do... The definition of a schmuck is someone who reaches his goals. An entrepreneur is someone who never reaches his goals... constantly adjusting his goals to reflect the current situation... testing his limits. Not more than one or one and a half percent" of people are entrepreneurial.

President Obama: "I'm from Chicago. Barack Obama came to my house for dinner. He's a brilliant man. But he's an ideologue. When you're an ideologue you don't see (business reality). There's no question he doesn't see it."

Obama's America: "We have a political situation in the U.S. today that for the first time in my life represents a challenge to the entrepreneur... to the freedom that our society has created. This never has been a society of people who aren't striving, who aren't trying to make a difference. What has made America different is our individualism...

"I'm very concerned that the current political environment and current situation is geared toward making the entrepreneur an endangered species."

What Obama should do: "Obama could start by announcing he's going to do nothing for the next 24 months... If I were President Obama I would repeal health care, I would repeal the Dodd (bank reform) bill, I would go back to where we were in January '09."

What he wrote to Obama aide Rahm Emanuel when Obama took power: "Dear Rahm, I met you in 1992. At the time you were working for the Clinton campaign. You sat me down and said, 'Sam, understand, the theme of the campaign is, 'It's the economy, stupid.' Well, guess what? It's the economy, stupid, and you ought to do nothing more than focus on jobs and the economy.

"He wrote back, 'You want to delay healthcare, you want to delay cap-and-trade?' I said, 'You bet...'"

The slow economy: "The economic 'malaise' is the result of the fact that people who have the ability (to invest), both resources-wise and emotionally, are uwilling to take the risks because there is no certainty, there is no conviction, on the part of the government, to leave us alone. Every time you turn around, the government has a new 2000-page bill" that limits business. "That's going to destroy America."

Where to invest: Even smart investors lose if they don't pay attention to "what risks they're taking. I'm buying (U.S.) distressed debt (because) I don't have any confidence in tomorrow for what the U.S. is going to do. "

"On the other hand, I'm buying equity outside the U.S. where it's much clearer where we're going. Confidence is the No. 1 ingredient. This administration... by bashing the business community... by destroying Las Vegas, by destroying the meeting business in this country (by limiting bankers' travel junkets during the bank bailouts)... those are all stupid gratuitious acts that have materially impacted the confidence level in this country..."

How to get more people working: "Unemployment will only be solved by the private sector. As soon as you see this administration get its foot off the neck of the private sector, you will see growth returning in the United States."

Wednesday, September 29, 2010

AMS Leases 40,500 SF in Keystone Industrial Park

"Asset Management Services signed a five-year deal for 40,500 square feet in the flex building at 311 Sinclair Road at Keystone Industrial Park in Bristol, PA.

The one-story brick building built in 1992 sits on 3 acres within the Keystone Industrial Park, which is about a 40-minute drive from Philadelphia International Airport."

CVS Pharmacy Building Sells for $3.6M

"The 10,125-square-foot building at 701 Dekalb St. in Norristown, PA sold this month with a long-term tenant in place. CVS Pharmacy occupies this building with a 25-year term remaining on their lease. The deal brought a sale price of $3.6 million, or $355.56 per square foot, and sold at a cap rate of 7.63%.

The seller was Specialty Development Group LLC. The buyers were 701 Dekalb Street Partners LP."

Toll Brothers Inc. has closed on two transactions and Two Penn Center wrapped up three leases

"Toll Brothers Inc. has closed on two local property transactions, according to real estate records. The Horsham housing developer paid $9.73 million for Applewood Meadow Associates Acquisition Corp., an entity that was developing Applebrooke Meadows with the Benson Cos. That subdivision is at Line Road and Paoli Pike in Willistown, Pa. Plans had called for the development of 144 houses. In the second transaction, Toll paid $24 million for parcels totaling 100 acres at Matrix Development Group’s Octagon Center. Toll will build 365 age-restricted residences at that project in Lower Makefield. Toll and Matrix declined comment ... Campus Apartments of Philadelphia will be involved in a multiphased upgrade to most of Shippensburg University’s on-campus housing. The first phase is a $63 million dorm that will house 900 students, a new wellness center and Honors College facilities that will break ground next year and be completed by the fall 2012 ...

Two Penn Center wrapped up three leases. Coleman Nourian Legal Search renewed on 3,872 square feet . DiClaudio & Diamondstein, a criminal defense legal firm, re-upped on 3,054 square feet. Thomas Kenney, a law firm that focuses on real estate and business law, took 3,750 square feet."

Two years after fire, O’Neill Properties looking to sell Conshohocken apartments

"O’Neill Properties Group is looking to sell the Londonbury apartment complex at its Millennium development in Conshohocken.

The King of Prussia real estate developer just this year completed the project, which has 309 high-end apartments at 203 Washington St.

The project wasn’t without its setbacks. In 2008, a spark from a welder’s torch at Londonbury’s construction site set off a massive blaze that destroyed what had already been constructed and spread to an adjacent apartment complex called Riverwalk at Millennium. No one was killed or injured. A little more than a year later, a $36.3 million settlement was reached between O’Neill and residents at Riverwalk that ended the claims stemming from the fire. At the time, the name of the Londonbury apartment complex was Stables at Millennium but the name was changed after the blaze.

O’Neill is putting the property up for sale at a time when investors have taken a liking to multifamily properties. Few new projects have come on line and investors believe apartments are a safe bet in a recovering economy. In addition, the median price of properties sold in the last year has risen 12 percent to $76,700 a unit. Sales activity among the property type is also expected to pick up.

“Low interest rates and greater availability of acquisition financing will continue to bridge the gap between buyers and sellers, leading to heavier deal flow through the remainder of this year and into 2011,” Marcus & Millichap said in its most recent report.

The complex has been available for rent since January and leased up nearly 40 units a month during the past quarter, according to a statement issued by the brokerages. The property consists of three buildings, a clubhouse and other amenities.

O’Neill Properties has struggled during the recession. It was hit with a $61 million judgment by Citizens Bank in November. Litigation from that judgment ensued and hasn’t been resolved."

SDI will begin moving into its new headquarters

"SDI Health will begin moving Monday into its new headquarters here, where it expects to initially house about 500 employees and has room to eventually add another 200 to 300 people.

“Who knows,” said Andrew Kress, CEO of SDI, “it could happen this year.”

Kress wouldn’t elaborate but the company is growing, he said. SDI took an 11-year lease on 118,000 square feet of a newly constructed $25 million, 143,000-square-foot building developed by Exeter Property Group. SDI has an option to lease the remainder of the 25,000 square feet. The building is one of the few build-to-suit projects to get completed in the last two years as new construction has all but come to a standstill as a result of the recession.

In today’s market, a new office building is a rarity as banks and other lenders remain skittish about financing construction projects, even with a so-called credit worthy tenant and long-term lease in hand. This was especially a problem at the time SDI began its search nearly two years ago at the height of the credit freeze.

Exeter has a $372 million real estate fund at its disposal and was able to finance the new building without tapping a bank loan.

Kress anticipates SDI’s growth over the next three to four years to be from new and old clients as well as through acquisitions. The company collects and analyzes data for mostly pharmaceutical companies though it has added a more diversified client base as health-care reform and health-care costs have come to the forefront. To that end, SDI has expanded to serve government, insurers and other entities that want to track and measure health costs. It has also grown by buying companies. In July 2008, it bought Verispan LLC."

Monday, September 27, 2010

Pyramid Transport Leases 104,000 SF in Seaford

"Pyramid Transport, a broker for the transport industry, signed a 5 year 104,000 square feet lease at 1801 Dulaney St., Building 2 in Seaford, DE. Occupancy is scheduled for October.

The 256,000-square-foot warehouse sits on over 41 acres in the Sussex County Industrial submarket."

Thursday, September 23, 2010


"Duraclean Cleaning Specialist, LLC, Leases 2,603 SF in Frazer, PA.

Duraclean Cleaning Specialist, LLC is a locally owned company which specializes in solving restoration, remediation and cleaning problems. This includes carpet, rug and upholstery cleaning, fire and water damage cleaning and restoration, mold and mildew prevention, inspection and removal. They will be moving from their current location in Malvern to this larger facility in the fall.

12 S. Bacton Hill Road is a two story, multi-tenant flex building. Situated on 1.30 acres and containing a total of 14,000 SF of rentable building space. Suite 4 consists of 928 SF of office and 1,675 SF of warehouse/storage with a drive-in door . Also available for use by the tenant is a 6' x 10' platform scissor lift with 12,000 lbs capacity to unload tractor trailers. This building was built in 2000 and is an energy efficient steel building with daylight panels in the warehouse which allows full light exposure.

The building is conveniently located on South Bacton Hill Road right off of Swedesford Road In the center of Frazer one block off of Lancaster Avenue (Route 30)."

Wednesday, September 22, 2010

Another $4B in PA taxpayer funds for local, private projects

"The $4 billion latest edition of Pennsylvania's capital budget appropriations bill contains fat cash grants to a string of Philadelphia developers and suburban institutions.

Developer Bart Blatstein's Tower Investments would pick up at least $95 million, for projects including a hotel and parking development at the Piazza at Schmidt's, a hotel and parking facility at 2d and Poplar Sts., and the purchase and redevelopment of the former state office building at Broad and Spring Garden, a project that's been held up for more than a year as Blatstein searched for financing. The state will borrow to help Bart buy the building, and taxpayers will pay it back over the years.

Other taxpayer-subsidized plans in the bill, from Gov. Rendell and our state legislators:

$25 million for developer Dennis Malomian's Village at Valley Forge shopping center, replacing the former Valley Forge golf course
$20 million for developer Albert M. Greenfield's Valhalla Brandywine Project, a private country club and resort in Wallace Township, Chester County.
$25 million for an unnamed developer to build "hotel and/or condominium" units near the Philadelphia Museum of Art
$25 million for another unnamed developer's "mixed-use development on North Broad Street"

$45 million for unnamed facilities the Keystone Industrial Port Complex in Falls Township
$11 million for NorfolkSouthern railroad to build a Navy Yard terminal and a trash-shipping station
$2 million for Spanish windmill-builder Gamesa to build more railroad track at its Langhorne plant

$100 million for a new library at Temple
$62 million for Lincoln University, the historically-black state school near Oxford in Chester County, to renovate Vail, Lincoln, Cresson and Azikiwe-Nkumrah Halls. That's more than legislators put aside for Penn State building projects, in this round.
$30 million for a new Life Sciences Building at Penn
$29 million for the University of Pennsyvlania's planned animal-health diagnostic laboratory at New Bolton Center near Kennett Square. (Plus $33 million for a similar lab at Penn State.)
$20 million for Immaculata Univesrity's new science building
$13 million for Delaware Valley College's new science building
$12 million for LaSalle University's busienss school
$10 million for a new business school at Holy Family University
$10 million for a research facility at Drexel
$3 million for the Lutheran Theological Seminary's Krauth Memorial Library

$10 million for a new Bucks County Welcome Center, by PennDOT

More than $200 million for improvements at Septa's Conshohocken, Croydon, Glenside, Jenkintown, Levittown, Paoli, 69th Street and Villanova stations, and to buy new buses and other equipment

$100 million to redevelop Norristown State Hospital's site
$10 million for a development on Norristown's Fornance Street
$10 milion to redevelop the former Montgomery Hospital in Norristown
$5 million for redevelopment of Norristown's former Sared Heart Hospital

$5 million for Ambler's Main Street project
$5 million for the Nicetown Community Development Corp.'s "revitalization project"

$25 million for Lankenau Hospital expansion
$6.6 million for Holy Redeemer Hospital projects in Montgomery County
$4.8 million for expansion at Aria Health Frankford Campus' emergency room
$3 million for Abington Memorial Hospital projects

More than $100 million for unnmamed developers to build housing, commercial projects and charter schools at more than 10 separate sites in South Philadelphia
$20 million for unnamed "economic development projects" in Bucks, Chester, Montgomery and Philadelphia Counties

$10 million for new buildings at the financially imperiled, state-subsidized Aker Philadlephia Shipyard
$45 million for other, unspecified "facilities" at the former Philadelphia Navy Yard site
$14 million to expand and renovate the National Constitution Center
$20 million for the proposed American Revolution Center
$10 million for the African American Museum
$10 million for The Plaza at Enterprise Heights
$7 million for a supermarket in Brewerytown
$10 million for a medical office buiding at Broad and Olney

$6.6 million for a hangar and terminal at New Garden Flying Field in southern Chester County
$3 million for improvements at what's now being called the Pitcairn-Willow Grove Air Field
$3.6 million for geothermal heating at state-owned Pennsbury Manor, Pennsylvania founder William Penn's Colonial mansion in Bucks County, now surrounded by trash dumps."

REITs ponder future for private developers

"To listen to the top executives from the region’s three top commercial real estate investment trusts — Brandywine Realty Trust, Liberty Property Trust and Pennsylvania Real Estate Investment Trust — the commercial real estate world made a dramatic and perhaps permanent change during the Great Recession. As publicly traded REITs successfully weathered the financial crisis, shoring up debt and securing equity, the entrepreneurial private developer has been left behind.

“I believe the private guys are spending more time talking to bankers than tenants,” said Bill Hankowsky, president and CEO of Liberty Property (NYSE:LRY), at a panel discussion Friday at St. Joseph’s University and arranged by the local chapter of the Urban Land Institute. Hankowsky later added: “I think it will be tougher to be the private, entrepreneurial real estate developer that we had 20 years ago. I think there’s a permanent shift in the marketplace.”

REITs are in a stronger position than their private peers, said Jerry Sweeney, CEO of Brandywine Realty (NYSE:BDN). Even so, he said, “We still face the same issues.”

Those issues include getting space leased, retaining tenants and striking good deals. During the recession, REITs have proved to be resilient and stable, creating a competitive advantage over some private developers who were highly leveraged, facing court judgments or foreclosure on properties or experiencing difficulty in renegotiating debt. Tenants now routinely want to review their landlord or a perspective landlord’s balance sheet. They want to know the landlord will easily have access to capital to fund tenant improvements and commissions, aren’t overly leveraged and can adequately maintain a building and respond to tenants’ needs.

Of course not all private developers have fallen into dire straits, but what REITs have shown, to Hankowsky’s point, is that the REIT platform has shown a competitive advantage during the last two to three years and he expects REITs to get bigger and own more.

It’s certainly something to watch as the recovery gains momentum to see which private developers will survive and in what condition.

One other notable take from the meeting was that the No. 1 near-term goal of each of the companies is to lease space.

For PREIT that has meant coaxing local and regional tenants into the mall, using mall space for alternative uses such as for health-care and education, and seeing more growth in malls with mixed-uses.

In spite of a decline in consumer spending, PREIT (NYSE:PEI) has seen sales increase year-to-date by 3 percent and close to 5 percent at malls where it completed major redevelopments. The Cherry Hill Mall, which saw Nordstrom’s move in, has had sales increase by 17 percent year to date. The Philadelphia company expects occupancy at the end of the year to hit 88 percent. “Not so bad is the new good,” said Joe Coradino, executive vice president at PREIT."

Developer stands to reap millions from state capital budget

"Philadelphia developer Bart Blatstein is poised to receive just shy of $100 million in state funds to help bankroll several development projects - including $25 million to refurbish an office building that he is trying to buy from the state.

The financing help for Blatstein's projects is included in the state's capital budget, which the legislature is expected to send to Gov. Rendell later this month.

Although Rendell still has the ultimate say over who gets funding, the inclusion of money for a well-known and successful private developer such as Blatstein has reignited criticism that the capital budget is turning into a cash machine for the wealthy and politically connected.

And there is little accountability - the identities of lawmakers who propose projects are not made public.

"I'm deeply disturbed by the state's recent trend of financing for-profit entities," said Rep. Michael O'Brien (D., Phila.), whose district includes two of Blatstein's projects that could get capital dollars.

O'Brien said he did not think it a good use of capital dollars, particularly amid the state's recession-ravaged economy that has led to steep cuts in social-service programs and funding for libraries and state parks.

Blatstein said his projects would create jobs, generate tax revenue, and help sustain revitalization in many city neighborhoods.

Aside from money to rehab the State Office Building at Broad and Spring Garden Streets, Blatstein is on tap to get $45 million to open a 45-room hotel with a banquet facility next to the Piazza at Schmidts in Northern Liberties and $25 million to build an 86-suite, boutique hotel at Second and Poplar Streets, also in Northern Liberties.

The State Office Building project would get $25 million from the capital budget. Blatstein wants to redevelop the office tower into a residential space and has been negotiating for months with the state to buy it for $23 million.

"These are shovel-ready projects that are going to create lots of jobs and tax revenue and keep everything going in developing neighborhoods," Blatstein said.

Rendell spokesman Gary Tuma said Rendell would look at Blatstein's projects once the capital budget bill reached his desk and decide then whether to fund them.

The capital budget generally contains money that the state borrows to improve public infrastructure or for projects that have some other public benefit, including ones that create jobs and stimulate the economy.

This year, portions of the capital budget have come under scrutiny for containing projects that do not appear to fall under that definition.

The governor generated weeks of negative headlines for designating $20 million for a new library on the campus of Philadelphia University named for U.S. Sen. Arlen Specter and a new policy center in Johnstown named for the late U.S. Rep. John Murtha.

Rendell also routed $9 million for the Ardmore Transit Center being developed by another big name in Philadelphia real estate: Carl Dranoff.

Blatstein's projects are included in a wish list compiled by the House when it passed a capital budget bill in the summer. That bill is now in the Senate and could be approved in the next few weeks. It contains hundreds of millions of dollars in projects, including $20 million for an upscale hotel and spa with a golf course in Chester County by private developer Albert M. Greenfield III.

Only a small portion of that will eventually get funded by Rendell.

Rep. Curt Schroder (R., Chester) said he voted against the capitol budget because "the danger is that the process becomes political - and that the projects that get the most attention are those with the best and highest-paid lobbyists."

It is unclear who in the legislature is sponsoring Blatstein because the capital budget process is cloaked in secrecy.

Generally, lawmakers insert projects into the capital budget, but the document does not identify who sponsors what project. The budget includes only the scantiest details on what each project is - sometimes, the only information available is an address and a one-sentence description of the overall nature of a project.

In Tuesday's interview, Blatstein would not identify his sponsor.

O'Brien said he wasn't the sponsor. Rep. Babette Josephs (D., Phila.), whose district includes one of the projects, said she wasn't, either.

Sen. Larry Farnese (D., Phila.) said he also was not the sponsor and was under the impression the Governor's Office had inserted the project. Tuma said it had not.

Regardless, Farnese said, he wants Blatstein to get the money because he has "a proven track record of success" and a long list of development projects that have helped revitalize city neighborhoods.

"This is going to be an economic boost to the city," Farnese said of the projects.

Blatstein is credited with helping to turn Northern Liberties into a destination neighborhood with hip restaurants, cafes, and galleries.

His company, Tower Investments, is developing a $30 million retail complex in the neighborhood, anchored by a Pathmark supermarket. Blatstein has said he intends to follow up over the next several years with additional projects, including high-rise apartment towers, townhouses, and a one-acre green park.

He is also the developer of the Piazza at Schmidts, the upscale commercial development bounded by shops, entertainment, and fancy residences."

Friday, September 17, 2010

The Hampshire Cos. Pays $6.3M for Allentown Shopping Center.

"The Hampshire Cos., along with MCB Real Estate LLC, has purchased the Airport Plaza at 1135 Airport Road in Allentown, PA, from an affiliate of the Rosen Group for $6.25 million, or about $75 per square foot.

The 84,000-square-foot shopping center is 95% occupied at the time of sale. It delivered in 1962 and is anchored by a 56,000-square-foot Redner's Warehouse Market.

Hampshire Cos. & MCB Real Estate represented themselves in the transaction."

Harrisburg Industrial Nets $1.6M

"A private seller sold 355 Eastern Drive in Harrisburg, PA, to Mark Two Properties LLC for $1.6 million, or $53 a square foot.

The 30,000-square-foot industrial building was built in 1991 on about an acre and a half. It has four loading docks, one drive-in bay and a clear height of 22 feet. The new owners will occupy the property."

Brandywine wraps up big rehab of post office

"Every weekend during the next four months, the Internal Revenue Service will move 400 to 500 of its employees from its facilities in Northeast Philadelphia into the newly renovated and redeveloped former U.S. Post Office at 30th Street in University City.

By the end of the year, roughly 5,000 IRS employees will be toiling away in two shifts at the hulking 862,692-square-foot building that takes up an entire city block and was constructed in 1934.

Last month, Brandywine Realty Trust finished a $252 million rehabilitation of the structure in what was one of the largest historic rehabs this year in the nation and one of the largest privately funded real estate developments done in the city this year.

While the project boasts significance in its sheer size and dollars invested, it is also expected to have a meaningful impact on that corner of Philadelphia. While the Cira Centre office tower and 30th Street Station serve as anchors to that pocket of University City, the infusion of 5,000 employees will help create a buzz of unprecedented activity in that area almost on a 24-hour basis.

“That was one of the things we wanted to do,” said Brandywine CEO Jerry Sweeney. “We wanted to activate 30th Street.”

Gone are the tractor-trailers blocking 30th Street as they backed into loading docks to unload mail that was sorted in what was a main distribution hub for the U.S. Postal Service. The spot where those loading docks once stood in a row has been transformed into an outdoor dining area off of the building’s newly installed cafeteria.

Another side of the building that used to be home to a surface parking lot has been turned into an outdoor play area to serve a 6,000-square-foot day care that will be run out of the building. A credit union and sundry shop will also be housed in the structure, which will also serve as a main East Coast IRS training facility, periodically bringing in an influx of visitors. On the inside, rows of cubicles now stand where forklifts used to transport mail around the building.

In general, the effort to transform the former post office into a fully functioning, modern office building that would meet strict security standards was monumental. To achieve the goal, the structure’s interior was totally gutted.

Ken Mitchell, an architect with Bohlin Cywinski Jackson, served as the executive project manager.

It was clear to Mitchell from the onset that most of the interior had to go and what would remain would be some existing stairs, the floors, columns and roof. The windows were particularly difficult to replace since they were originally huge, double-hung and made with a quarter-inch of glass, which is no good for security and energy reasons.

A solution was found that included two layers of laminated glass and two window inserts along with wiring across the windows to thwart glass from flying into the offices in the event of an explosion.

“Everything in it is new,” said Jeff Weinstein, vice president of construction at Brandywine. While conducting a tour of the building he pointed to new elevators, walls, windows, staircases as well as various sustainable features.

Though gutted, preservation of the building was paramount.

“We tried to save everything that was worth saving,” said Tony Rimikis, senior vice president at Brandywine.

For example, what Mitchell referred to as the “historic lobby,” or what was once the main area for postal transactions, was fully restored. For the most part, the area was in good condition but for some nicks in the marble and walls coated with soot from cigarette smoke, Mitchell said.

The walls, made of two kinds of marble, were cleaned, along with the travertine flooring and wood ceiling. Nickel-plated metal used for trim and on the transaction windows were polished and sconces were replaced with a lighting scheme that harked back to the era in which the building was constructed. Outfitted with a security desk, it is now one of the main employee entrances.

One challenge was trying to bring light into the cavernous five-story building in which each floor is 200,000 square feet.

“There are 21 acres of floor,” Mitchell said.

To solve that issue, a light well was cored out of the center of the building that slices the building and work areas in half. This allows natural light to funnel into the office space and lessens the density of each floor. Workers can access each floor by a staircase with a wooden guardrail that was installed in the center of the atrium.

“We wanted to have this monumental gesture to bring people up into the light well,” Mitchell said. “It’s a big building and we wanted to warm it up as much as we could.”

Among other issues, logistics between various city and state departments — from streets and historical to PennDot, as well as the Department of the Interior, IRS, and General Services Administration — was a feat and that doesn’t even address issues brought about from the building being raised 30 feet off of the ground because of train traffic.

While most of the attention was on the interior of the building, the fa├žade was cleaned and a bridge that connected an annex across the street was removed. That posed another set of issues when the developer and architect sought to match the limestone and granite used nearly 80 years ago to fill in the portion of the building ripped out. It was discovered the limestone was made with a process no longer used and the granite no longer exists. Replications were made to closely match the originals. In addition, new sidewalks, curbs, signage and security bollards were also installed.

“It’s nothing elaborate but very well done,” Weinstein said about the project’s outcome."

WP Realty’s Devon Village expansion under way

"WP Realty Inc. has started its planned expansion of Devon Village, the strip center off Lancaster Avenue that is anchored by Whole Foods.

The $2.25 million phase will be called the Shops at Devon. It will consist of a 3,300-square-foot building that WP is targeting for a restaurant and a second building totaling 12,800 square feet that will be marketed for retail tenants.

Ignarri Lummis of Cherry Hill is the architect and the project is expected to be completed by the first quarter of next year. The current center where Whole Foods leases space totals 80,000 square feet and was bought last October by WP of Bryn Mawr."

Thursday, September 16, 2010

Ceridian Takes 52,000 SF in Blue Bell

"Ceridian, a payroll, benefits and payment solutions provider, signed a seven-year sublease for 52,000 square feet at 480 Norristown Road in Blue Bell, PA.

The two-story office building totals 52,000 square feet and is in the Blue Bell Corporate Center. The property was originally built in 1967 and fully renovated in 2003."

Wednesday, September 15, 2010

Hitters Coop leases 12,000 SF

"Hitters Coop, LLC leased 12,000 SF flex space at 1500 Industry Rd., Hatfield, PA. Hitters Coop will be using the space for a baseball training academy and moving from its previous location at 252 Bethlehem Pike, Rt. 309 in Hatfield. Aggregate rental for the transaction exceeded $560,000."

W. W. Grainger, Inc. leased approximately 11,000 SF

"W. W. Grainger, Inc leased approximately 11,000 SF of the one story building at 701-15 Callowhill Street, (NW Corner of 7th & Callowhill Streets) Philadelphia, PA to W. W. Grainger, Inc. for a long term number of years for an aggregate rental in excess of $248,000.00. W. W. Grainger, Inc. will be occupying the building for the storage of commercial and industrial supplies and equipment and associated office use."

The Clark Group Leases 252,000 SF at 300 Quality Circle, Harrisburg, PA

"The Clark Group leased a 252,000 SF ProLogis warehouse located at 300 Quality Circle at the Blue Mountain Logistics Park in Harrisburg, PA."

"The property was previously a food-grade distribution warehouse and provided the ability for near immediate occupancy, with the added benefits of immediate access to I-81, a good amenities base, and strong labor."

Long term Lease negotiated a between Comflex, LLC, & Eastern Warehouse Distributors, Inc.

"Eastern Warehouse Distributors, Inc. signed for a 10,000 SF flex space at 252 Bethlehem Pike, Colmar, PA. Eastern Warehouse Dist. will be using the space for one of their Autoparts Warehouse locations and the lease represents an expansion of its occupancy for the last 10 years at the same location at 252 Bethlehem Pike, Rt. 309 in Hatfield. Aggregate rental for the transaction exceeded $450,000. Comflex, LLC, was the lessor."

Sherwood Steel, Inc., a sheet metal distributor, has extended their lease

"Sherwood Steel, Inc., a sheet metal distributor, has extended their lease long term for 12,447 SF at Crownwood Industrial Estates in Bristol, PA. Sherwood originally moved into the complex in 1997. Crownwood Industrial Estates, the former Corell Steel facility, has been developed into a multi-tenant industrial center with over 200,000 SF of space on 25 acres next to the PA-NJ Turnpike bridge in Bristol Township, PA. Realty Source, Inc., Conshohocken, manages the property for STD Associates, L.P."

12-year lease signed at Philadelphia Navy Yard- Tech Park

"A 12-year lease that was signed will backfill a vacant NASDAQ data center at the Philadelphia Navy Yard.

Philadelphia Technology Park will occupy 4775 League Island Blvd. in South Philadelphia’s Navy Yard Business Center. The sublease value was $11 million.

The 25,700-square-foot data center was built in 2007 by Liberty Property Trust (NYSE: LRY) for the Philadelphia Stock Exchange to lease While the facility was under construction, NASDAQ bought the stock exchange and decided not to occupy the building. The building sits within a Keystone Opportunity Improvement Zone, which gives tenants residing in there significant breaks on local and state taxes. Philadelphia Technology Park, or PTP, is a sister corporation to Baltimore Technology Park."

Temple breaking ground on architecture department building

"Temple University will break ground tomorrow on a $10 million building for the school’s architecture department.

The 45,000-square-foot building will be the last component to complete the Philadelphia university’s development of a mini-arts quad on its main campus off North Broad Street. It will join Tyler School of Art, the Boyer College of Music and Dance and the School of Communications and Theater.

The architecture building was designed by H2L2 of Philadelphia and is expected to be completed by next fall. The architecture department is housed in a building on 12th Street.

The project is part of Temple 20/20, a plan to reshape the main campus with several projects over the next decade. Already under way is the renovation and expansion of Pearson-McGonigle Halls. In October, the university will break ground on a new state-of-the-art residential/retail complex at Broad and Oxford streets."

Developer Gets Financing for Apt Project In Suburban Philadelphia

"Jefferson Apartment Group secured a $22.85 million, 36-month construction loan through Wells Fargo’s Real Estate Banking Group for development of Jefferson at West Goshen, a 230-unit luxury multi-housing community to be built in West Goshen, PA.

AEW Value Investors II, a value-added real estate fund sponsored by AEW Capital Management, L.P., provided joint venture equity for the project. The financing and JV equity were arranged by the Washington, D.C. and New Jersey offices of HFF (Holliday Fenoglio Fowler, LP).

Jefferson at West Goshen will be a four-story building with one-, two- and three-bedroom units averaging 1,024 square feet each. Community amenities will include a 5,600-square-foot clubhouse, resident pub room, business center, two-story fitness center, theatre room, swimming pool, grill area and dog park. The project, due for completion in 2011, is on 12.8 acres at the intersection of US Route 202 and South Matlack Street, about one mile from downtown West Chester and 25 miles west of downtown Philadelphia."

Thursday, September 9, 2010

Lawfirm Willig, Williams and Davidson Renews Its lease

"Willig, Williams and Davidson, a self-described union-side labor law firm, re-upped its lease at 1845 Walnut St. in Center City for another 12 years.

The firm will remain in 45,000 square feet in the 25-story building that sits right on Rittenhouse Square. It occupies the three top floors."

Carlino Development Group Acquires Warrington Office Bldg.

"Main Street Group Sells Stone Manor Corporate Ctr. Bldg. for $11.6M"

"Main Street Group sold the office building at 2800 Kelly Road in Warrington, PA, to Carlino Development Group for $11.61 million, or approximately $185 per square foot.

The three-story, 62,749-square-foot office building was built in 2007 and is part of the Stone Manor Corporate Center. The property is fully leased to Icon Medical Imaging and Liberty Dialysis."

Wednesday, September 8, 2010

Tenants, Landlords Could Face Dramatic Changes from New Lease Accounting Rules

"Changes in International Accounting Standards Could Transfer Up to $1.3 Trillion Onto U.S. Balance Sheets and Discourage Companies From Signing Longer Leases."

"Northrop Grumman Corp.'s decision in July to relocate its corporate headquarters from Los Angeles to a 14-story, 334,385-square-foot building it acquired in Falls Church, VA, was a huge economic development victory for Fairfax County and the state of Virginia. But the defense contractor's decision to buy rather than lease its headquarters building at 2980 Fairview Park Drive has also drawn renewed attention to a major international proposal that could effectively end off-balance-sheet treatment of leases.

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) on Aug. 17 released their long-awaited "exposure draft." The two accounting authorities have proposed requiring companies to record nearly all leases on their balance sheets as a "right of use" asset, and as a corresponding "future lease payment" liability. In a joint statement, the IASB and FASB said the proposals will greatly improve the information available to investors about the financial impact of lease contracts.

Under current International Financial Reporting Standards and U.S. Generally Accepted Accounting Principles (GAAP) guidelines, accounting treatment of real estate, office equipment or other leased assets differs depending on how the lease is classified. "Capital" or "finance" leases are accounted for as a sale and included on the lessee's financial statement. Contracts classified as "operating" leases, however, aren't recorded as assets or liabilities on a lessee's balance sheet. If adopted, the new accounting rules would require almost all leases to be capitalized on a firm's balance sheet.

The boards will accept public comment on the exposure draft through Dec. 15. If the IASB/FASB makes a final decision next year, the new rules will go into effect in 2013. According to some industry estimates, about 70% of the up to $1.3 trillion that would be transferred to U.S. corporate balance sheets under the new guidelines would be real estate leases.

Commercial real estate industry analysts say the proposed rules would have a profound and mostly negative impact on commercial tenants and landlords, with a steep learning curve amid the challenges for their brokers and other service providers. Many believe they will dramatically increase the complexity of lease arrangements and create a powerful incentive for tenants to sign shorter-term leases, while making it more difficult for owners to achieve the long-term leases favored or required by lenders and investors. It would also lead to more companies deciding to own their buildings instead of leasing them.

Mindy Berman, managing director of capital markets for Jones Lang LaSalle, tells CoStar that adoption of the new rules, as proposed, "would result in a huge change in leasing behavior."

"The leasing premium will be really diminished, especially for single-tenant buildings," Berman said. "Given the enormous administrative burden and the complexity of financial reporting that will result, single tenants will be asking the question, 'if it's going to be on my books anyway, shouldn't I own it?'"

Northrop Grumman said yes. Following a lengthy search, the defense and aerospace company announced it would purchase its future headquarters building in Virginia after two decades of occupying leased space in Century City, CA. That set off a round of industry speculation over whether other companies will follow suit in light of the new standards. Gaston Kent, a vice president of finance with Northrop Grumman, told The Wall Street Journal in July that buying the building "just made more sense in light of the [leasing] rules."

Under the proposed rules, tenants would have to capitalize the present value of virtually all "likely" lease obligations on balance sheets. FASB and IASB view leasing essentially as a form of financing in which the landlord is lending a capital asset to the tenant, who in exchange agrees to pay high interest costs up front, much like a mortgage.

Tenants would have to estimate their expected payments for contingent rents such as rates or escalations triggered by changes in a retailer's sales or the consumer price index (CPI). Tenants also would have to project the probability that they might exercise a renewal or termination option and re-assess lease terms and payments each reporting period.

"If you have to report all your future leases as a current liability, that's going to cause tenants to want to shorten their leases. And the problem with shorter leases is that it's harder to finance properties with long-term money," said Norm Miller, vice president of analytics for CoStar Group. "It's hard for an owner to ask a life insurance company for a 10-year loan when all your leases are three years. It's messy trying to estimate lease terms and payments; like trying to forecast the interest rate on a variable rate loan."

The proposed accounting rule changes could also affect lease renewal strategies. While retailers in prime locations likely won't want to forfeit renewal rights, office tenants may opt out of including renewal options in their lease contracts in order to avoid going through the complicated exercise of estimating their lease terms and rent payments, Berman said.

The accounting boards appear to believe that if leases are transferred to balance sheets, virtually all companies would choose to own rather than pay rent, Berman said. In fact, the word "rent" will not appear on financial statements.

Companies in buildings with multiple tenants such as downtown offices, however, often don't want to own their space. Technology, professional services and other companies that emphasize human capital want the flexibility to scale up and scale down according to their level of business activity, Berman said.

"Regulators have missed the point about why companies lease, which is about maintaining occupancy flexibility in location, size and duration, and deploying corporate capital into their business rather than into real estate," Berman said. "In the U.S., we don't have an orientation toward condominium ownership interest because we've got robust capital markets that make real estate relatively accessible compared to other countries."

The proposed standards will affect landlords as well, especially public entities with audited financial statements like real estate investment trusts (REITs). Major mall owners and other trusts will be required to go through the same analysis with every tenant in each of their buildings or malls, evaluating their likely terms of occupancy and contingent rental rates, Berman noted.

"Tenants are really going to get crushed in their overall expense load because they're going to go from a straight-line rent today, to a pattern where expenses run high early in the lease term to low at the end, crossing over at roughly the midway point," she said. "On a 10-year lease, our estimate is that the expense a company will show from real estate is about 20% higher than today."

For example, a retailer with a 5% profit margin whose rent is 6% to 8% of their total expenses will see its expense load increase by 25% to 30% in the early years of a lease, increasing their rental expense to between 7.5% and 10% of total revenues. At a time when retailers are just beginning to recover from the recession, that cuts as much as 2% from that already slender 5% profit margin, Berman said.

The new rules would require companies to constantly re-evaluate their use of space and their lease payment and adjust the initial estimate, and then re-amortize the asset based on the adjustment. One positive impact is that the new standards will force companies to re-evaluate the business case for why they lease versus own, and the changes will prompt communication between an enterprise's accounting and business units.

"There will be a lot of noise about this, but at the end of the day it will come down to an economic negotiation between two commercial parties," Berman said. "They'll probably wind up in the same place as today. But there will be a tug of war, at least until everyone gets used to the new paradigm."

With the changes likely to take effect in 2013, many companies are already beginning to negotiate leases that will commence at that time, and CRE professionals must learn and prepare now, Berman said. "The best thing that landlords, tenants and the brokerage community can do now is become familiar with these standards," she said. "Any prudent tenant should be factoring the change into their decision making today."

Tuesday, September 7, 2010

Quest Diagnostics inks a 12 yr, 136,900 square feet deal

"Quest Diagnostics finalized a 12-year lease on 136,900 square feet at 1001 Adams Ave. in the Valley Forge Corporate Center in Lower Providence. The company is relocating from a nearby building.

The lease marks one of the largest suburban deals to be completed this year in an otherwise dreary time for commercial real estate. Some other large deals in Philadelphia's western suburbs include Publicis Group, GSI Commerce and Navteq Corp.

The office property is owned by Delaware Valley Real Estate Investment Fund, a collection of local union-backed pension funds from the construction trades. The building was originally constructed as a build-to-suit for Lockheed Martin's global telecommunications division."

Mercury Media Leases 2,757 SF of Space at 550 American Avenue

"Mercury Media, the largest privately-owned, full service direct response media agency in the country, has leased 2,757 SF of office space at 550 American Avenue,
Suite 303, Valley Forge Square 1 in King of Prussia.

The Westover Companies are the owners/developers of Valley Forge Square 1."

"This is the first office in the Philadelphia area that Mercury Media has opened. They are headquartered in Marlboro, Massachusetts and have offices in Santa Monica, California. The Philadelphia branch will service all categories of short form DRTV with specialization in cross-platform direct response marketing and lead generation solutions for the package goods, financial services, healthcare and insurance industries."

Valley Forge Square 1 is a 30,000 SF Class A office building which was built by The Westover Companies in 1990. This is an attractive brick building with lots of windows which provide spectacular views of the countryside. Conveniently located less than one mile from the King of Prussia Mall, PA Turnpike, Routes 76, 202 and 422."

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Thursday, September 2, 2010

Parent of Pitcairn Properties files for Chapter 11

"The parent company of Pitcairn Properties filed for bankruptcy Wednesday, a move that will buy the Jenkintown real estate firm time to stave off a takeover attempt by an unhappy investor.

Pitcairn Properties Holdings Inc. filed for Chapter 11 protection in U.S. Bankruptcy Court in Delaware.

In a statement, company chief executive officer Salah A. Mekkawy described the filing as a "legal move to implement a fair and rational framework to restructure, but not reduce, the company's debt and capital structure."

The company listed $10 million to $50 million in debts. The company said it had about $800 million in real estate holdings.

Among PPH's largest outstanding debts is $7.56 million in dividends owed to an investment firm that has sued for payment.

The firm, PPH Investments L.L.C., is owned by Eric L. Blum. Blum, through his firm, has $50 million invested in Pitcairn. In his suit seeking payment, Blum contends that his investment agreement gives him the right to appoint a majority of Pitcairn's board. He is demanding to do so.

Pitcairn Properties has countersued, contending that Blum's demands would unfairly wipe out other Pitcairn stockholders and force the liquidation of $800 million in real estate at the worst possible time.

Jim Matour, Pitcairn's bankruptcy attorney, said Pitcairn was still a viable company, but one with the vast majority of its assets tied up in real estate and thus not liquid. Bankruptcy will permit Pitcairn the time to free assets to settle the debt to Blum.

Matour said he expected the company to file a reorganization plan this week.

"It is important to know that this filing has no impact on the day-to-day operations of the company," he said.

Said Mekkawy: "We look forward to a bright future and want to reassure our partners and investors that we expect to emerge promptly from reorganization pursuant to a plan that protects the value of the company even as it honors the obligations to all of its creditors."

Pitcairn Properties has roots in a fortune created by John Pitcairn, a 19th-century Scottish-born American industrialist who founded Pittsburgh Plate Glass Co., which later was known as PPG.

There are about 600 living descendants of John Pitcairn. About half have a combined $1 billion in the wealth manager Pitcairn Trust Co., which is unrelated to Pitcairn Properties.

Pitcairn Properties was created in 1968 to diversify the family wealth.

Among its holdings are 6 Penn Center in Philadelphia, the Eagleview Corporate Center in Exton, and Chesterbrook and Glenhardie corporate centers in Wayne."

Wednesday, September 1, 2010

Westinghouse seeks new Philly-area HQ

"Westinghouse Lighting is planning to sell its 230,000-square-foot world headquarters in Northeast Philadelphia, and find a new home, preferably nearby.

"It most likely will be smaller," says Kathleen Katz, senior director of marketing at Westhinghouse. The company moves its imported lightbulb inventory faster, ships goods pre-packaged, and doesn't need all the warehouse and product-finishing space anymore.

It would be convenient to stay in Philadelphia, but "we can walk into Bucks County," so that and other nearby locations are also possible, Katz told me. Before finding a new location, "we want to find out the market for selling the existing building," constructed by the former William F. Lotz & Co., builder to three generations of Philadelphia factory owners when the city was an industrial center.

They hope to sell the building for around $40 a square foot, which is around what new facilities are selling for in Pennsylvania's import-storage warehouse corridors along I-81 and I-78. It would cost $75/sq ft to replace the facility, he figures. "We think it's probably the premier piece of industrial real estate available in Philadelphia," Roddy added. But "it is a large facility" and such deals "don't happen overnight."

Liberty Property gets new line of credit

"Liberty Property Trust closed on a new $500 million unsecured revolving credit facility, replacing its previous $600 million credit facility that was scheduled to come due in January.

The new line of credit matures Nov. 1, 2013, and contains an accordion feature which allows Liberty to increase the amount up to $750 million. For this financing, Banc of America Securities LLC and J.P. Morgan Securities Inc. were joint lead arrangers and bookrunners. Liberty is an office and industrial real estate investment trust based in Malvern, Pa. …

Sun Center Studios will top off a 30,000-square-foot office building that is part of an overall $85 million project that includes movie studios on 33 acres off Concord Road in Aston. Production companies are expected to lease the office space. At build-out the facility will total 270,000 square feet … Obermayer Rebmann Maxwell & Hippel, a Philadelphia law firm, relocated its Cherry Hill office into 7,300 square feet at Woodland Falls Corporate Park at 200 Lake Drive East. The firm had been in 6,000 square feet at 20 Brace Road …

Pendent Systems bought 1670 Winchester Road, a 24,000-square-foot building in Bensalem, for an undisclosed amount. The company is a maker of pendants , canopy sets and cable parts used in fluorescent lighting suspension, track lighting, exit lighting and HID lighting markets."

Elizabethtown Apartment Complex Sells for $1.7M

"The Campus View Apartments in Elizabethtown, PA, sold for $1.7 million, or $53,125 per unit, in a sale between private investors.

Located at 955 Campus Road, the apartment complex contains 32-units and sits on three acres of land. It includes 24 garden-style two bedroom units and eight two-bedroom townhouses. This property was sold utilizing a 1031 Exchange with another investment property already under contract."

Brandywine Sells Exton Bldg. for $3.9M

"Brandywine Realty Trust sold the office building at 479 Thomas Jones Way in Exton, PA, to Dunn Twigger Co. LLC for $3.9 million, nearly $80 per square foot.

The 49,264-square-foot office building was constructed in 1988 on a 4.4-acre parcel in the Oaklands Corporate Center. The building was roughly 35% vacant at the time of sale. Dunn Twigger Co. will act as asset and property manager."