Friday, April 29, 2011

Target store is targeted for center in Valley Forge

by Peter Van Allen

"UPPER MERION — A stretch of Dekalb Pike could see some new retail blood in coming months.

A Target store under discussion for the Valley Forge Shopping Center is moving forward, while a Wawa and Chick-Fil-A are being talked about for the site of a former Petco, according to township officials and others with knowledge of the sites.

While the Wawa idea is still in the early stages and has not been formally proposed, engineers for the Target are undergoing studies and a formal proposal is expected soon, said Upper Merion Township Planner Rob Loeper.

“The project is moving forward. It’s taking a little longer,” said Loeper.

That’s good news for the retail stretch, which is just two miles from the King of Prussia Mall but a world away when it comes to consumer foot traffic.

While the nation’s second-largest mall has been able to attract the likes of Crate and Barrel, Urban Outfitters and Nordstrom, the stretch of Dekalb Pike, also Route 202, is wrestling with the vacancies of Petco and, across the street in the Valley Forge Shopping Center, 14 of the 38 retail locations, including a former Marshall’s store. Vacant stores range from 1,200 square feet to 32,000 square feet.

The 250,000-square-foot shopping center is anchored by Bed Bath & Beyond and Michael’s Arts & Crafts.

Within a five-mile radius of the shopping center, there are 74,000 households, with median household income of $76,000, according to Storetrax data provided by Metro Commercial Real Estate, which handles leasing for the retail center. An estimated 31,000 cars a day pass the site.

Eric Goldstein, executive director of the King of Prussia Business Improvement District, said new retail would be welcomed, though the organization hopes to work with developers to improve the quality of future development.

“Well, of course, the BID welcomes new retail projects to an already vibrant retail community, but we are hoping that future redevelopment efforts begin to pay more attention to [Route] 202 as King of Prussia’s Main Street,” said Goldstein, former director of University City District.

“What I mean by that from a land-use perspective is we would like to see more of the building masses on these projects pushed closer to the street with real efforts made to address quality improvements for pedestrians such as sidewalks, street trees and pedestrian-level street lighting.”

A formal proposal for a Wawa and Chick-Fil-A has not been made. Early discussion revolves around a so-called “super” Wawa store, which typically has a larger footprint and sells gasoline. The Wawa-based convenience store chain has 570 locations, including 200 with gasoline sales. Atlanta-based Chick-Fil-A, which has 1,500 restaurants, opened 80 locations last year.

The proposal for the Target would include tearing down much of the lower end of the Valley Forge Shopping Center, allowing for a big-box store but also additional parking. Some existing retail tenants would be relocated or would close. Negotiations with retailers affected are under way, Loeper said.

Target of Minneapolis has 1,750 stores. At present, the nearest Target stores are in Audubon and Plymouth Meeting.

“Because the [King of Prussia] mall is such a regional magnet, I think anyone with an attractive site plan is going to benefit from being near there. It can only add value,” said Paul Decker, president of the Valley Forge Convention & Visitors Bureau."

Law firm Conrad O’Brien jumping to Centre Square

by Natalie Kostelni

"After spending more than 20 years in the same offices at 1515 Market St. in Center City, law firm Conrad O’Brien will relocate to Centre Square.

The firm will move into its new 44,000-square-foot space this fall.

The deal is another hit for 1515 Market, a 20-story, 520,000-square-foot building that has experienced recent defections. And for Centre Square, the lease chips away at some 400,000 square feet of vacancy in the 1.8-million-square-foot building.

Conrad O’Brien signed a 12-year lease. It will occupy the 39th floor and a portion of the 40th, putting it at the top of the tower. Commonwealth REIT is the landlord. The 39th floor was left vacant by Lincoln National and the 40th floor became empty when Saul Ewing reshuffled its space in the building and renewed its lease there.

The firm looked along the West Market Street corridor and narrowed down to staying put, Three Logan and ultimately deciding on Centre Square.

“The views are terriffic and it’s a big upgrade for them,” Murray said. “They’ve been in their space for 21 years and were looking to start fresh and put a new stamp on their image.”

Patridge Architects is designing the space.

The firm expects to grow at Centre Square over the long term.

“We’ve enjoyed our time [at 1515 Market] but looking forward to the next decade and potentially up to the next 20 years at Centre Square,” said Nicholas Centrella, managing partner at the law firm. “Centre Square is a building that can accommodate our intended growth for the next 10 years, it is going to be fully renovated with major conference room ability. We think it’s a terrific opportunity at a great building with reliable ownership.”

For 1515 Market, the move puts another dent in the building’s occupancy, which has about 15 percent vacant. Zarwin Baum departed the building for 24,000 square feet at 1818 Market St.

“We’re sorry to see them go,” said Stockton Real Estate Advisors, which owns 1515, about Conrad O’Brien. “When Zarwin left, we made a conscious decision to be selective and focus on smaller tenants, which are better for a building like 1515. It creates diversity.”

The building is also facing another hurdle: A $70 million loan backed by 1515 was sent to a special servicer earlier this month. The loan matures in January and Stockton is current on its payments, according to Paterno and Trepp Ltd.

“It’s the only way to get a dialogue with a lender is to have a loan transferred to a special servicer,” Paterno said. “We anticipate we will restructure and extend the note.”

Stockton bought 1515 in 2007 for roughly $75 million. It’s not unusual for the loan, part of a tranche of commercial mortgage-backed securities, to be in special servicing. Lenders and borrowers continue to work out loan issues, negotiating new terms in some cases and in others, taking over the loan and property.

“The building was bought at the height of the market and landlords thought they could push rents up, tenants would continue to grow and the economy would continue to grow. When existing tenants grow, those are their most profitable deals and the tenants are captive. You know what? Tenants didn’t continue to expand, and when the market stalls, you’re also competing against sublease space in your building.”

The scenario is also “symptomatic of the balance of the market." An entrepreneurial landlord is competing with a deep-pocketed real estate investment trust who can spend lots of money on steep tenant improvement costs and other renovations, making it even more challenging for the little guy to compete.

“Well-capitalized landlords can successfully attract a law firm because it takes a lot of money to move a law firm.” “Any law firm that has been in its current space for more than 10 years has an obsolete design for the way you operate today. I think for a law firm that has been in their space for 20 years, there are different efficiencies gained in starting from new that help defray any costs of moving.”

The lease is a win for Centre Square, which continues to backfill about 400,000 square feet of space, most of which was vacated by Comcast Corp. when it moved to its new headquarters.

“This will take more than 10 percent of that vacancy,” said Dyer, about the law firm lease. “This deal comes on the heels of significant renewals in the building.”

Center City Krispy Kreme opens next week

"Krispy Kreme Doughnuts will open its first Center City store on May 4, the franchise group said Monday.

The store, which will be at 41 S. 16th St., will open at 6 a.m. The first customer through the door will receive a dozen “original glazed” doughnuts every week for a year.

The local franchise group for Krispy Kreme is Dough Nuts for Dough Nuts LLC, which opened its first area location in the Fox Chase section of Philadelphia in November.

It plans to open stores in Collingswood, N.J., and Bensalem, Pa., in late summer or fall.

Krispy Kreme, founded in 1937, is based in Winston-Salem, N.C. It has 640 stores worldwide."

Wednesday, April 27, 2011

Market Trend: Philadelphia’s Office Vacancy Decreases to 12.0%

"Net Absorption Positive 416,169 SF in the Quarter

The Philadelphia office market ended the first quarter 2011 with a vacancy rate of 12.0%.

The vacancy rate was down over the previous quarter, with net absorption totaling positive 416,169 square feet in the first quarter. Vacant sublease space decreased in the quarter, ending the quarter at 1,901,517 square feet.

Rental rates ended the first quarter at $20.95, a decrease over the previous quarter.

A total of three buildings delivered to the market in the quarter totaling 43,400 square feet, with 1,512,440 square feet still under construction at the end of the quarter."

Monday, April 25, 2011

CHOP stays put and adds space in Wanamaker Building

by Natalie Kostelni

"The Children's Hospital of Philadelphia has finally put another piece of its real estate in place and will remain in the Wanamaker Building in Center City.

In addition to renewing at the building, the hospital will also expand by a significant amount.

A year ago CHOP launched a comprehensive assessment of its real estate needs in the suburbs and downtown and has been chipping away at figuring out where it should be housing employees, researchers and satellite facilities. So far, it has made lease deals in Center City and University City but continues to deliberate what to do in the King of Prussia area.

In its latest deal, the hospital signed a new lease on a total of 252,000 square feet at Wanamaker at 100 Penn Square East. It had been occupying 192,000 square feet in the building and is expanding by roughly 60,000 square feet.

While Wanamaker was always an option, CHOP had also considered relocating to Centre Square at 15th and Market streets and 10 Penn Center at 1801 Market St. In the end, Wanamaker won out.

“It’s the best option for CHOP,” said Doug Carney, interim senior vice president of facilities at the hospital.

Terms of the deal weren’t disclosed other than that the lease was for the “long term.”

Though the hospital did look elsewhere, some brokers and other real estate observers had expected CHOP to remain in the Wanamaker building, although the expansion came as a surprise.

“It was anticipated they were going to renew.”

The hospital has a lot of moving parts, including two sites it bought over the South Street Bridge it can eventually develop, Smith said. If and when CHOP decides to go forward with building its master plan, Smith speculates Wanamaker and 3535 Market St., where CHOP signed last fall a five-year lease on 226,000 square feet, could eventually see “holes” open up.

“It depends on how the other buildings are priced out,” Smith said. “At the end of the day, it’s a cost exercise.”

The expansion part of the lease does help the Central Business District absorb some excess space in the market. Even though the lease doesn’t figure into first quarter data, the CBD is showing some slight signs of improvement. It saw vacancy stay flat at 14.2 percent compared with the end of the year and average rents rise by 75 cents a square foot in Class A, B and C space, according to first quarter data.

Absorption, or the amount of space that was taken off of the market, is in positive territory, however, it is concentrated in Class A space where tenants continue a flight-to-quality. Top-tier buildings experienced 233,191 square feet of positive absorption in the quarter while Class B and Class C were both negative, the research said."

555 City Ave. locks in tenants

by Natalie Kostleni
"BALA CYNWYD — The Philadelphia office of Beasley Broadcast Group Inc., which owns 92.5XTU country radio station and Wired 96.5, is among a handful of tenants who have renewed leases at 555 City Ave., securing the property’s occupancy for the long term.

Beasley moved to the building in 1990 and extended its lease on 15,000 square feet for another 15 years. The decision came after the company considered other options in the office submarket.

“The location is ideal from an operational standpoint as well as for our sales department,” said Natalie Conner, vice president and market manager at Beasley Broadcast Philadelphia. “But when it’s all said and done, this is home for lots of reasons. We have a longstanding relationship with these people, and they made it very clear they wanted to keep us here.”

Other tenants also renewed. New York Life signed for 22,000 square feet, Group Dynamics stayed on for 9,600 square feet, MetroNetwork extended its lease on 7,000 square feet, and Kerby Jewelers will stay in its lease until 2015 on 350 square feet with plans to renew after that.

Alan Castle, who owns Kerby Jewelers, moved into what is commonly referred to as simply “555” 21 years ago.

“I based it on traffic and an upscale neighborhood,” Castle said. “I needed people with disposable income and even in a down time, everyone who comes to my store is working. The building has proved very successful for me. They will carry me out of here.”

Castle is so keen on 555 that he made up T-shirts made with “Kerby Jewelers, 555 Building, Bala Cynwyd” emblazoned on them.

“In Europe or the Jersey Shore, people will stop me when I’m wearing the shirt and tell me they know the building,” Castle said. “It’s a landmark.”

The building’s distinctive blue rooftop 555 sign can be seen from the Schuylkill Expressway and afar. Though not a towering skyscraper, it’s prominent. It helped spur additional office development in Bala Cynwyd and establish it as one of the region’s most desirable office submarkets.

The Rubin family, which has been entrenched in Philadelphia real estate for decades, bought seven acres on which 555 is located in 1963 for $100,000 an acre. At the time, Bala Cynwyd was considered a distant suburban outpost though it was just across the street from Philadelphia. A Marriott stood where 401 City Ave. now sits and the Rubins thought maybe another hotel would be a good fit for the land.

The hotel would be called La Ronde. It would be a round structure with a revolving restaurant at the top that would compete with the Kona Kai restaurant at the Marriott that always seemed busy and a place to celebrate special occasions. La Ronde was never constructed.

At the time, a young Ron Rubin was working with John A. Robbins, who was constructing strip centers throughout the region. Rubin, now chairman and CEO of Pennsylvania Real Estate Investment Trust, a Philadelphia real estate company, handled leasing the small shopping centers Robbins built. Robbins ended up serving as a mentor for Rubin.

While the hotel concept never materialized, an idea to construct an office building came about. Bala Cynwyd had some offices at the time but they were all mostly occupied by companies such as Gulf Oil, Esso, Liberty Mutual and General Refractories Co. as headquarters or for local offices.

The Robbins and Rubins teamed up to construct the building. Robbins, who also ran a construction company, designed it as an 11-story, 128,000-square-foot structure. He borrowed the money to move forward with the project and had the idea to call the building 555 City Avenue, according to Rubin. It sounded good enough and the name stuck.

The building would cost $4 million to construct and was built on speculation with no tenants lined up to occupy the space. It opened in 1964 with a restaurant called the Red Coach Grill that was owned by Howard Johnson’s. Its first tenant was Sherwin Williams, which took a floor for a district office at $3 a square foot, less than the asking rate.

“Four dollars was what we were renting space for,” Rubin said. “We were getting killed.”

The strategy to lease up the building was simple and is still relied upon today by Bala Cynwyd landlords.

“We were trying to pull tenants out of Philadelphia because of the tax situation and we had a hell of a time,” Rubin recalled. “We struggled.”

With the lure of lower taxes and free parking, which a tenant couldn’t get downtown, 555 finally leased up with a bevy of small tenants. It took two years.

Among the companies that moved in were New York Life, John Hancock and First Pennsylvania, which also built a branch in the building. First Pennsylvania was the financial institution that lent the developers the money to fund the construction of 555. When the Red Coach eventually moved out, Charley’s Place replaced it and now Houlihan’s fills the 9,350-square-foot restaurant space. The building’s occupancy rate has steadily remained around 95 percent throughout the years and rents now stand at $31.50 a square foot.

One other facet of the building that also has remained steady for the past 47 years is the 50-50 partnership formed between the Robbins-Sablosky families and the Rubins to own 555.

“It’s a great building and a great partnership,” said Chris Robbins, whose grandfather was John Robbins and who now runs the Robbins Cos."

Realty Check: Commercial Space

Sunday, April 24, 2011

Styron Moves Its HQ and Changes Its Name

"No sooner had Styron L.L.C. moved into its new corporate headquarters in Berwyn than it announced a name change is in the offing.

Styron, the plastics and chemicals business with about $5 billion in 2010 revenue that Dow Chemical Co. sold for $1.6 billion in June, has picked Trinseo as the name it will adopt this year in the 30 countries where it operates.

To me, the name Styron seemed like a good fit because the company’s products, which are used in making home appliances, autos, carpets, consumer electronics, and more, were largely tied to (chemistry alert!) polystyrene and the styrene monomer.

But as Styron president and CEO Chris Pappas said in a news release: “We are much more than that.”

While I would’ve suggested adopting Styron ’n’ Things, the private company, now owned by Bain Capital Partners, hired the New York office of the branding firm Landor Associates, which wrung Trinseo from the word intrinsic.

At any rate, the company moved into about 23,000 square feet in an office building at 1000 Chesterbrook Blvd. in February. It has 75 employees there. (Would they be called Trinseons?)

That’s actually a higher head count than the 40 to 50 people the company had predicted in July when Styron announced the relocation of its headquarters to the Philadelphia area from Midland, Mich.

In all, Styron has about 2,100 employees worldwide."

Original Styron blog post:

Thursday, April 21, 2011

Monroe Systems Inks 48,000-SF Lease in Bristol

"Monroe Systems For Business, a calculator company, leased 48,000 square feet in the Keystone Industrial Park in Bristol, PA.

The single-story, 108,000-square-foot industrial building at 2530 Pearl Buck Road was constructed in 1992 in the Bucks Industrial submarket."

Oxford Rise Apartments Sell for $30M

"Oxford Rise LLC sold the 216-unit Oxford Rise apartment community in Glenmoore, PA to Preferred Apartment Communities, Inc. for $30.2 million, or approximately $140,000 per unit.

The 75,000-square-foot apartment complex was completed in 2009 and has a current occupancy of nearly 95 percent."

Springdale Plaza Sells for $5M

"Springdale Center LLC purchased the Springdale Plaza shopping center at 1900 Green Tree & Springdale Rd. in Cherry Hill, NJ for $5 million, or about $119 per square foot.

The 42,000-square-foot neighborhood center offers such services as dry cleaning, banking, restaurants, a salon and other retail shops. It was built in 1972 and sits on 5 acres in the South Camden County submarket of Philadelphia.

The property was 80 percent leased at the time of sale. The buyers of this property plan to update and modernize the center."

Lehigh Gas Sells Service Station for $3.7M

"Broadstone Real Estate LLC has added another investment property to its REIT portfolio. 1830 Easton Road in Somerset, NJ was purchased as a sale leaseback investment for $3,695,363, or more than $421 per square foot, with a reported cap rate of 7.99%. A new 20-year, triple-net lease was signed by the seller with a 1.5-percent annual rent increase.

The subject property includes an 8,571-square-foot, four-unit strip center and a gas station with a 200 square foot kiosk. This property sits on 1.87 acres and was built in 1992.

The seller, Lehigh Gas sold this property as one of the forty stores in which they have chosen to monetize."

Monday, April 18, 2011

Domtar Paper Inks 299,000 SF Lease in Langhorne

"Domtar Paper, a paper manufacturer, signed a five-year lease for 299,000 square feet in the warehouse building at 16 E. Cabot Blvd. in Langhorne, PA.

The one-story building in the Bucks County Business Park delivered in 1972 and sits on approximately 20 acres. The site has over 100 parking spaces, 18 loading docks, and four drive-in bays.

Domtar Corporation started in 2006 and has approximately 8,500 employees in 10 mills across the United States and Canada."

Lehigh County Industrial Sells for $11.1 M

"Endurance Real Estate Group LLC acquired the Lehigh Consumer Products building at 2834 Schoeneck Rd. in Macungie, PA for $11.1 million, or about $41 per square foot, from Wind River Investments LLC.

This Lehigh County industrial building was built in 1997. It totals 270,000 square feet on almost 30 acres, and features 32-foot ceiling heights."

Union National Community Bank Sells Lancaster Property for $10.9M

"Union National Community Bank sold the 360 seat acoustical auditorium building in Lancaster, PA to The Pennsylvania State Department of General Services for $10.9 million, or approximately $173 per square foot.

The 63,000-square-foot building was built in 2008 in Lancaster County submarket, and was 94 percent occupied at the time of sale.

The seller closed this location after the company went bankrupt. The buyer chose this property so they could have a downtown presence. The property will be used for additional classrooms and community events."

Friday, April 15, 2011

Aegon HQ site to get a revamp

by Natalie Kostelni
"A partnership plans to redevelop a vacant two-building office complex here once occupied by Aegon Group and market it as a prospective headquarters to companies seeking to have a ready-made campus setting with room to expand.

E. Kahn Development Corp. and J. Loew & Associates Inc., both of Downingtown, in conjunction with Aegon, an international life insurance and pension company with a local presence, will take on the project at 20 Moores Road and spend an initial $8 million to totally redo the exterior of the 236,704-square-foot complex. Four additional buildings can be constructed on the 65 acres and in all more than 500,000 square feet of space can be developed. Approvals are already in place for any new office construction.

“We’re elephant hunting,” said Eli Kahn, one of the developers involved.

Several large tenants are searching for space in the western suburbs and the market is getting tighter when it comes to available large, contiguous blocks of space. The market is also starting to show other favorable signs with a positive net absorption of 295,900 square feet of space and a slight drop in the overall vacancy rate to 21 percent from 21.5 percent, according to first-quarter data.

The submarket where the Aegon sits in is showing overall negative absorption, according to the Smith Mack research. The Malvern-Exton-West Chester area saw a negative net absorption of 48,600 square feet in the first quarter compounded by the negative net absorption of 33,820 square feet during the fourth quarter. Overall vacancy rates are also on the rise, climbing to 23.3 percent and rental rates are down to $19.78 a square foot.

That doesn’t deter Kahn, who believes there is a need in the market for this type of project.

“I’m not interested in competing with all of the space in Great Valley,” Kahn said. “We’re looking for a company that wants its own building but not in a corporate park.”

Parts of the office market are in a state of flux and that may affect demand for a development such as this.

Sanofi Aventis has announced plans to vacate space in Great Valley Corporate Center, Vanguard Group is looking to buy nearby office buildings, and with Cephalon Inc. a takeover target, additional space could crop up. In fact, Cephalon occupies space next door and across the street from the Aegon parcel.

The existing two-building complex was originally constructed for National Liberty Life Insurance in the early 1970s when that part of Chester County was still rural. It was designed by renowned architect Vincent Kling and an interesting feature is the steel used to frame the building is exposed on the exterior. While the steel beam facade was different and blended into the wooded landscape, the beams rusted instead of turning an attractive patina. They stained the windows. It also gives the building a dark, dated look.

The design also complemented the landscape in other ways. For example, the two connected, four-story buildings were raised to allow a pond-fed stream to run underneath them as well as to give occupants windows with sight-line views into surrounding woods.

Over the years, National Liberty morphed into Aegon and the company installed new mechanical systems in 1998-99 but left the exterior untouched. Kahn plans to put a new facade on the building. A design by Bernardon Haber Holloway Architects shows the exterior steel beams covered with a sleek glass wall. The interior of the space will be revamped once a tenant has been secured. Kahn will also wait to go full bore on the exterior redevelopment after gauging tenant interest.

Aside from the office buildings, the property includes an existing 5,700-square-foot guest house called “Ashlawn,” as well as a 4,600-square-foot training center. At one point, 1,400 Aegon employees worked from Moores Road.

Aegon vacated the buildings four years ago when it leased 90,000 square feet in a newly constructed building at 300 Eagleview Blvd. in Exton. It signed a 10-year lease on that building, which was developed by Kahn. At the time, the company didn’t know what it was going to do with the property but retained ownership of it."

CertainTeed-Saint Gobain will remain in Wayne

by Natalie Kostelni

"WAYNE — CertainTeed Corp. and the North American headquarters of its parent company, Saint-Gobain, will remain in its buildings on East Swedesford Road here for the “foreseeable future.”

The company sent an email out to employees Friday that ended speculation it might relocate to new offices.

The decision to stay comes after nearly two years of evaluating its space needs. Remaining at 750 E. Swedesford Road has implications for the office submarket. If anything, it will likely trigger some tenants currently milling about in the market to re-examine their real estate options.

Many real estate observers had anticipated the building supply company to sell its current campus of four structures totaling 175,000 square feet and relocate. That would have freed up the Swedesford Road site to be bought and redeveloped. One scenario had the Children’s Hospital of Philadelphia committing to relocating its King of Prussia operations to newly constructed buildings on the property that could eventually be expanded into a medical campus.

Doug Carney, interim senior vice president of facilities at CHOP, said the CertainTeed-Saint Gobain property was under consideration but so were other options in the King of Prussia area and Route 202 Corridor and they are still in the mix.

“As you would expect there are lots of moving pieces,” Carney said, noting that the hospital is not looking to make a hasty decision on its long-term needs and strategy in that area..

Some in the real estate industry aren’t surprised that CertainTeed and Saint-Gobain are not moving, saying the companies have gone through this joint exercise several times over the years; each time arriving at the same conclusion. Others are miffed since it had reportedly narrowed down where it would consider relocating. Some options were: BPG Properties Ltd.’s Ellis Preserve in Newtown Square; an existing building owned by Brandywine Realty Trust on Swedesford Road in Malvern; and a new building to be constructed at Liberty Property Trust’s Quarry Ridge in Malvern.

Saint-Gobain and CertainTeed have decided to remain at their current headquarters building in Valley Forge and have consequently ended their search for new premises, said Karen Cawkwell, vice president of communications at Saint-Gobain, in an email.

It wanted to find a building “within easy reach of Valley Forge so that our employees would not need to relocate,” Cawkwell said. “Unfortunately, despite an extensive search, we have been unable to find a building that meets our requirements and have concluded that the timing is not right for a move. We therefore expect to remain in our current premises for the foreseeable future — at least the next several years.”

The company will launch a series of capital improvements to its existing buildings but nothing on the scale of totally redeveloping them.

Saint-Gobain and CertainTeed established a joint venture in 1967, and CertainTeed became wholly owned by Saint-Gobain, a French conglomerate, in 1988. CertainTeed moved its headquarters to the Swedesford Road properties from Ardmore in 1970 and occupied the space ever since. Roughly 525 CertainTeed and Saint-Gobain employees work there."

Wednesday, April 13, 2011

Blatstein seeks Plan B for N. Liberties Pathmark

"The Northern Liberties developer behind a planned Pathmark supermarket has asked a bankruptcy judge to clear the way for a different supermarket to open, if need be, at the old Schmidt's Brewery, where Pathmark holds a lease but has not yet opened its store.

"I petitioned the courts to have them do that a month ago," Bart Blatstein said Wednesday of efforts to enforce or dissolve his lease with Pathmark, whose parent company, A&P, has been in bankruptcy since December.

"Leave," Blatstein said. "I've got a bunch of operators that want to go there."

In a motion filed in March in U.S. Bankruptcy Court in the Southern District of New York, Schmidts Retail L.P. asked for a ruling to compel A&P to assume or reject its lease on the Northern Liberties site near Blatstein's Piazza development.

Delays since A&P filed for bankruptcy are having ripple effects across the newly constructed project - an L-shaped center that would contain a second-story supermarket, with national chain retailers at street level. Delays also threaten the developer's financing obligations, according to court filings.

Pathmark's delays are affecting the ability to sign leases with other tenants, according to the motion.

"Schmidts' ability to rent other retail space in the Redevelopment Project has now virtually disappeared because prospective tenants and real estate brokers are concerned about whether Pathmark will occupy the premises," the motion said.

"This delay puts Schmidts in danger of breaching its financing obligations as to, and its leases with other tenants in, the Redeveloment Project," the developer said, and is hurting efforts to potentially sign a different supermarket operator, too.

Blatstein's motion came amid upheaval from the bankruptcy filing by Great Atlantic & Pacific Tea Co. Inc., which has stalled Pathmark's plans to open in the 52,000-square-foot-space he built in the heart of resurgent Northern Liberties.

A&P spokesman Eric Andrus declined to comment Wednesday on the company's intentions regarding the Northern Liberties site.

But a Schmidts executive, Adam Lisausky, said in an affidavit filed with the court that Pathmark officials told him they want to abandon ties to the project.

" ... the Debtors and their financial advisors have engaged in discussions with me and other executives at Schmidts regarding the Debtors' sale of the furniture, fixtures, and equipment already installed in the Premises to Schmidts," Lisausky said in the affadavit. "These discussions have also involved the timing of the Debtors' anticipated rejection of the Lease."

Blatstein's group and Pathmark entered into their lease agreement in September 2008 for what would represent the redeveloped neighborhood's only full-scale supermarket. Schmidts constructed the new Pathmark as part of a larger retail development and turned over the property to the grocer on Feb. 7, the filing said.

The Pathmark sign is up, but the store is not yet open for business. And over the last few months, its parent company has announced a slew of closures - not grand openings - across its mid-Atlantic holdings, including some area Pathmark and Superfresh stores, as it attempts to clean up its balance sheet.

Matt Ruben, president of the Northern Liberties Neighbors Association, said that residents were eager for the supermarket to open, but that word in recent weeks was that Blatstein was working on a Plan B to replace Pathmark, if necessary.

Ruben said he was confident Blatstein would fill the space sooner than later.

"If it's not a Pathmark, it will be something else," Ruben said. "My impression is that they intend to do everything in their power to open a supermarket at some time in that location.

Blatstein, the man most often credited with transforming Northern Liberties from a discarded industrial patch to a haven of homeownership for a generation of younger, aspirational Philadelphians, would say little about what other supermarket chains he was courting for the site.

But given that there has been considerable population and income growth in Northern Liberties in recent years - and no big supermarket yet in the immediate vicinity - he expressed confidence that another chain would be eager to slip into the space that has been built.

"It's beautiful," Blatstein said, "and it's ready to go."

Another grocery chain would be in place and ready to open "this summer," he said, while declining to elaborate on whether negotiations were under way.

A hearing on the Schmidts motion is set for April 28. A&P has until April 21 to file a response to Blatstein's request."

Tuesday, April 12, 2011

Dr. Martens to open store on Walnut

by Natalie Kostelni, Staff Writer

"The Center City store will look like this one in SoHo.
Dr. Martens, the British-made boot that factory workers wore but later defined punk rockers, skinheads and other rebels, is opening a store on Walnut Street in Center City.

It will serve as the shoemaker’s fifth retail outlet in the United States and second on the East Coast.

The company signed a long-term lease on 3,800 square feet at 1710 Walnut St. on Rittenhouse Row after exploring several spaces.

“They didn’t want a cookie-cutter vanilla box or a mall look. They couldn’t find that in a lot of locations and there isn’t much available in Rittenhouse.”

The space at 1710 Walnut had been occupied by The Gap before it moved to 15th and Chestnut streets and was most recently vacated by Design Within Reach, a contemporary furniture store that closed.

Dr. Martens, which had traditionally been sold in other outlets, has maintained a flagship store in Portland, Ore., where its North American headquarters is located. It uses that shop to test new products. The company, however, began to sign leases to open additional retail outlets three years ago.

“There had been a resurgence in the brand in fashion,” said Mike Vincent, chief operating officer of Dr. Martens. “The trend, in general, has come back.”

Particularly with its boots. Taking a cue from the uptick, the company decided to seize on it.

“In a down economy, we ran into buildings that retailers were running out of,” he said.

It plans to open stores in key markets and cities in the United States and envisions having roughly no more than 10 locations. The SoHo section of Manhattan and Philadelphia will be the only two sites along the East Coast. The Philadelphia store will be the first to offer a new line of Dr. Martens’ apparel and accessories.

“I love it and the energy is there,” Vincent said about the Rittenhouse Row location. “We look at the demographics, energy and vibe of the city and we’re really excited by it.”

In addition, the company also tracks Internet sales and saw a robust business in the city, and it didn’t hurt that Vincent had gotten familiar with Philadelphia while his daughter attended law school at the University of Pennsylvania.

“We haven’t heard a peep out of them in years,” he said about Dr. Martens but is intrigued by its seeking to boost its retail presence.

“Converse, which has been around forever, is talking stores and is a neat brand pushing into the marketplace. One that didn’t work well was Esprit,” Steinberg said. “It remains to be seen how Dr. Martens will do.”

Dr. Martens will invest up to $500,000 to renovate the space, which aims to have a similar look to its SoHo store. Greenlight Architecture of New York is the designer. The store is scheduled to open in November.

Friday, April 8, 2011

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Mormon Church buys property near temple site in Philadelphia

by Natalie Kostelni

"It’s a done deal for the Mormon Church.

The church has closed on the purchase of 1601 Vine St. in Center City, paying roughly $12.5 million for the parcel that sits next to a site where it plans to construct a new temple at 17th and Vine streets. The church bought the 2.1-acre site from Hudson Realty Capital, a New York investment firm that controlled the property. (Last year, the church bought the land it will use for the new temple for $7.5 million.)

The Philadelphia Redevelopment Authority signed off last month to designate the church as developer for the property. The church hasn’t decided what to do with the site. It viewed the deal as an opportunity to buy the site now and eventually devise plans for it.

The church will assume the current zoning on the site, which can accommodate a large development. Four years ago, Grasso Holdings proposed a $315 million, 1.8-million-square-foot project that would have included two buildings. One structure was a 46-story tower that would have had a 250-room Intercontinental Hotel and 250 residential units. A second building would have had 300 residential units, and also included 130,000 square feet of retail space. Those plans were ditched."

Thursday, April 7, 2011

Avantor Performance Materials Inks 10-Year Deal

"Avantor Performance Materials, a high-performance materials and chemical manufacturer, signed a 10-year lease . The lease is for 57,000 square feet of office space at Saucon Valley Plaza, located at 3477 Corporate Parkway in Center Valley, PA. Avantor had outgrown its current location at 222 Red School Lane where it currently occupied 30,800 square feet.

The three-story office building totals 83,056 square feet completed in 2009. The building is in the Lehigh/Northampton submarket of Philadelphia."

York County Office Bldg Sells For $2.7M

"Sovereign Bank has agreed to a sale-leaseback of its 52,500-square-foot office building with the City of York for $2.7 million, or roughly $51 per square foot.

The property at 101 S. George St. in York, PA is a three-story office facility. It was built in 1978 on a 1.32-acre parcel in York County. Sovereign Bank will lease back the south wing on the first floor."

GSK renews in King of Prussia, new Razorfish digs

by Natalie Kostelni

"GlaxoSmithKline renewed a huge lease in King of Prussia at the same time it entered into its celebrated deal with Liberty Property Trust to build a new building at the Navy Yard.

The pharmaceutical giant (NYSE:GSK) renewed a lease for 197,000 square feet of office space at 2301 Renaissance Blvd., according to Malvern-based real estate investment trust Liberty (NYSE:LRY).

Liberty also renewed Merion Publications, a health-care magazine publisher, for 76,000 square feet in two buildings at 2900 and 3100 Renaissance Blvd.

In other Liberty deals: Dynamic Solar signed a new lease for 6,745 square feet at 1550 Liberty Ridge Drive in its Chesterbrook Corporate Center in Berwyn, Arris renewed its lease of 4,770 square feet at 650 E. Swedesford Road in Wayne, and Avanceon has signed a new lease for 16,000 square feet at 180 Sheree Blvd. at Stone Ridge Office Park in Exton

The Ayer has sold all of its condominiums. It was in 2005 that Goldenberg Group of Blue Bell and Brown Hill Development of Huntingdon Valley bought the building at 210 W. Washington Square that was the former headquarters for N.W. Ayer, a well-known advertising agency that came up with some memorable slogans. Among them: When it rains, it pours. A diamond is forever. Reach out and touch someone.

At any rate, back in 2007 the development team initiated a $75 million conversion of the former office building into 56 high-end condos ranging from $700,000 to $2 million-plus. In what is clearly a reflection of the state of the residential market, the sale of the final Ayer condo closed in late March, four years after it opened its doors.

Razorfish, an interactive marketing firm, is moving on up to the Wanamaker building at 100 Penn Square East in Center City from 417 N 8th St. The firm signed on to 23,587 square feet at the building and will employ 125 people there. The building is owned by Amerimar Enterprises … NetApp Inc., a storage and data management provider, signed a lease for 5,479 square feet at Valley Forge Office Center off Swedesford Road in Wayne for a new office location and will move into its new space in June. Laser Spine Institute expanded in the building by nearly 2,000 square feet and will now total 11,736 square feet. The two leases bring the six-building, 484,000-square-foot complex up to 85 percent occupied ...

Orbach Group of Englewood Cliffs, N.J., bought Hamilton Court East for $15.5 million. The complex off Exit 6 of the Pennsylvania Turnpike in Bensalem is comprised of 15 buildings with 192 units."

Friday, April 1, 2011

How to get $1 Billion for $7.8 Million

Capmark To Sell $1 Bil. Debt Advisory Business for $7.8 Mil.

"Capmark Financial Group Inc., a bank holding company in Chapter 11 bankruptcy reorganization, plans to sell its interest in its non-bankrupt real estate debt investment advisory group business (Capmark Structured Real Estate Partners LP) for $7.8 million to an affiliate of Pacific Coast Capital Partners LLC.

The fund commenced operations in August 2006 for investing in U.S. real estate debt, including mortgage loans and securities, opportunistic loans, and high yield commercial mortgage backed securities. As of Dec. 31, 2010, the fund had called capital contributions of $1.06 billion.

There will be a bankruptcy court hearing on April 11 to approve auction and sale procedures. If the judge agrees with the schedule, other higher bids will be due April 22, followed by an auction on April 26."

Tilden Ridge Shopping Center Now Open

"The celebration of the grand opening of Tilden Ridge, a 400,000-square-foot regional shopping center was on March 15th. The center is located in Hamburg, Pennsylvania at the intersection of Route 61 and Route 78.

The developer, Ironwood Property Group from West Conshohocken, PA, has been working on Tilden Ridge for nearly six years. The center is 98 percent pre-leased with Wal-Mart Supercenter and Lowe's Home Improvement as anchors."

Farmers Insurance enters area, opens training center

by Jeff Blumenthal

"Los Angeles-based Farmers Insurance Agency, the nation’s third-largest insurance agency group, has moved into the Philadelphia region by opening a training and recruiting center here, where it plans to hire 100 agents this year and 500 within the next five years that could lead to as many as 2,500 new jobs in southeastern Pennsylvania when each agent hires staff. There are also plans to open a training and recruiting center in Cherry Hill in December, where the agency has similar growth plans.

Farmers signed a seven-year lease for more than 26,000 square feet of space at the end of last year and then opened the operations center, which it calls Agency Point, in January. It is home to more than 40 managerial and administrative employees and will be the center of growth for it to recruit and train agents as well as market the company.

Trainees will work out of the space at 1000 Continental Drive for a year — which includes a week of training in Farmers’ California headquarters to learn about business ownership and company history — before opening their own storefronts in various locales in southeastern Pennsylvania. Farmers will most likely avoid Center City for expansion but said it plans to spread its wings in the suburbs.

Matthew Dudash, director of Agency Point in the new southeastern Pennsylvania office, said the plan will be to hire 100 agents per year over the next five years, with each agent hiring between two to five staff. That could mean up to 2,500 new jobs in the region with another operations center opening in Cherry Hill at the end of the year with similar growth plans for South Jersey.

Formed in 1928, Farmers is one of the largest auto and home insurers in the nation and also offers life insurance and specialty policies for boats, recreational vehicles and jet skis. Most of its business lies west of the Mississippi River and it considers Allstate, Nationwide and State Farm its chief rivals.

Allstate spokesman Brett Ludwig said competition is always good for the market.

Allstate has 231 agents in southeastern Pennsylvania and averages 1.7 staff per agency location. It also has a training center in its local headquarters in Malvern that employs about 500 administrative staff.

Pennsylvania is the first new state Farmers has entered in 20 years. Dudash said the region was selected as Farmers’ entry point into the East Coast because of the large population and what it perceived to be a strong business environment.

“The demographic is ideal,” Dudash said. “It’s an established community with growth opportunity.”

Farmers has similar expansion plans for North and South Jersey at the end of this year and New York and Baltimore next year.

Dudash has been with Farmers for 15 years in Los Angeles and Las Vegas but is a Lehigh Valley native. He said he tested the Agency Point concept for Farmers in Ohio a few years back and found the agents it produced have a high success rate. So the company adopted it as its distribution model.

Dudash said Farmers has recruited by way of career fairs, job boards and advertising and has generated a great deal of interest."

Supermarkets are staging a comeback in sections that were once forgotten

"After years of neglect, Philadelphia’s neighborhoods are seeing a surge in retail development — anchored by supermarkets.

Hunting Park West, Cobbs Creek, North Philadelphia, Germantown and Parkside have gotten or are expecting new supermarkets and in-line retail, including restaurants, pharmacies and dry cleaners. Some aging suburbs have also gotten upgrades of late.

The latest plan is for the Bakers Square Shopping Center, a 200,000-square-foot complex planned around the former Tasty Baking Co. baking plant, at Hunting Park Avenue, Fox Street and Roberts Avenue. It will be anchored by a Browns Superstores ShopRite supermarket — the first in the neighborhood in decades. Other retailers will include Kicks USA, Hair Buzz, Ross and, nearby, Restaurant Depot.

“When we first looked at the Tasty Baking parcel, we thought it was a great site for retail. There was no retail within two miles. You couldn’t get a cup of coffee in the neighborhood,” said Mike Grasso, principal at Ardmore-based Metro Development Co., which is developing Bakers Square.

A fall 2012 opening date is planned.

Elsewhere, Cobbs Creek Shopping Center, at 58th and Balitmore, will undergo a $4 million upgrade, with the addition of a Sav-A-Lot supermarket and a Family Dollar store, said Patrick J. Burns, president and CEO at Drexel Hill-based Fresh Grocer, which will develop the supermarket.

Burns said his company also plans to replace an unprofitable Fresh Grocer on Chelten Avenue in Germantown with a new Sav-A-Lot supermarket. The surrounding shopping center, which will have complementary retail, will be redeveloped at a cost of $14 million. A completion date at year’s end is tentatively planned.

The city is not the only area reaping the benefits.

In Darby Borough, in Delaware County, Fresh Grocer and Metro Development teamed up to open Darby Shopping Center, the borough’s first shopping center in more than three decades and its first supermarket, a Sav-A-Lot.

In New Brunswick, N.J., Fresh Grocer is going to be an anchor tenant in a $95.3 million downtown redevelopment effort, known as New Brunswick Wellness Plaza.

Fresh Grocer is also talking to Atlantic City about developing what would be the casino city’s only full-service supermarket.

While urban shopping has gotten a lift of late, two urban shopping centers may have laid the groundwork.

In 2007, in the city’s Parkside neighborhood, Goldenberg Development Co. teamed up with the nonprofit West Philadelphia Financial Services Institute to open a Park West Town Center at 52nd and Jefferson. The $50 million shopping center, anchored by Loews Home Improvement Center and ShopRite, received funding from the state Department of Commmunity and Economic Development along with financing from Wachovia Bank.

Another groundbreaking development, North Broad Street’s Progress Plaza, was actually a remake of a 1960s-era shopping center owned by Progress Investment Association, a nonprofit started by the Rev. Leon Sullivan. The center, which dated to 1968, was renovated at a cost of $16 million and reopened in November 2009, anchored by Fresh Grocer.

Burns of Fresh Grocer said many of the areas where it has developed supermarkets were “food deserts” — neighborhoods with no supermarket and few options for fresh food. It is not uncommon for the market to go into areas that haven’t had a supermarket in 20 years, as was the case of New Brunswick, or even 40 years, as in the case of Fresh Grocer’s store near LaSalle University.

“We like going into ‘food desert’ areas and offering fresh foods and fresh produce,” said Burns. “People enjoy having a brand-new center.”

A common thread in the urban shopping centers is cooperation with neighborhoods and elected officials, but also the presence of incentives.

With the Darby Shopping Center, developers were able to secure federal “new market” tax credits, which allow taxpayers to receive a credit against federal income taxes on investments in designated low-income areas. The tax incentive, in turn, made the project more attractive to lender Beneficial Bank.

Likewise, Park West Town in Parkside received new market tax credits, which helped bring Wachovia on board.

In the case of the Cobbs Creek Shopping Center, state Sen. Anthony Williams was helpful in securing “RCAP dollars,” or state-subsidized loans offered through the Redevelopment Assistance Capital Program. The RCAP dollars have been under fire from state conservatives, who complain that a greater share of funds go to Philadelphia.

In Atlantic City, the supermarket project is being encouraged with help from the city, state and Casino Reinvestment Development Authority.

At Bakers Square, the developers have applied for but not received RPAC dollars as well as new market tax credits. It got preliminary financing from Firstrust Bank. Stores at the center will serve an area of 61,000 residents, plus the employees at Temple University Health Systems and Pep Boys corporate offices.

“Someone from Temple called us and said [the employees] want restaurants,” said Gregory R. Bianchi, a vice president at US Realty Associates Inc., which handles leasing at Bakers Square.

As an economic driver, the ShopRite at Bakers Square will have 300 employees; it is not known yet how many will be needed at other retailers. Yet local elected officials praised the project.

“Projects of this nature are essential to create and maintain neighborhood revitalization,” said Councilman Curtis Jones Jr., 4th District.

“In the midst of a tough budget season for Philadelphia and the state, the development of the future Bakers Square shopping center is a perfect example of why we need to make investments in our communities,” state Sen. Vincent J. Hughes, D-Philadelphia/Montgomery, said.

The Food Trust, a Center City-based nonprofit, has been pushing for more supermarkets in the city, particularly in poorer neighborhoods.

The demand means developing in the city is different from trying to build a parcel in the suburbs, where neighbors often have many choices but less and less open space, said Grasso of Metro Development."

“It’s night and day. With Valley Square [Shopping Center] in Warrington, it took five years [to get OKs]. I went to meetings with a flack jacket on,” Grasso joked. “Here people get excited about it. This neighborhood is completely different.”

Cosmetics company will take Jones space, creating 200 jobs

by Natalie Kostelni,

"Estée Lauder Cos. Inc. is growing its presence here, having secured a long-term lease on a large warehouse that will bring at least 200 jobs to Lower Bucks County.

The cosmetics company signed a 15-year lease on a 241,977-square-foot industrial building at 250 Rittenhouse Circle. The building is owned by Lexington Realty Trust of New York.

The building adds to Estée Lauder’s already significant presence in Lower Bucks, where it occupies in excess of 700,000 square feet of warehouse and distribution space. The company first set up a distribution center in Bristol some 20 years ago and steadily added space.

“The [Rittenhouse Circle] site was chosen due to the proximity of our other Pennsylvania locations,” a company spokeswoman said in an email. “Our Pennsylvania location provides a desirable geographic location for shipping and receiving due to its access to major roads and highways.”

The Rittenhouse Circle facility will handle logistical and warehouse operations.

The company declined to disclose how much space and how many employees in total it has in Bucks County, saying it doesn’t keep track of each number of employees at each location. People familiar with its operations there believe it’s more than 700,000 square feet.

The company first looked at the building more than a year ago and explored whether to tap the benefits offered by a Keystone Opportunity Zone that ran with the property. An opportunity zone gives a business breaks on some state and local taxes. After some time, the company stopped pursuing the building and another major company from New Jersey began to explore using the building but never consummated a deal, said Bob Cormack, executive director of the Bucks County Economic Development Corp.

In the end, Estée Lauder swooped in.

The company did not receive any money from Cormack’s organization or from the state, according to Cormack and State Sen. Tommy Tomlinson’s office. “I think it’s a great sign for Lower Bucks County that the company is expanding and that it sends a message that Lower Bucks is a viable area to do business,” Cormack said. “It’s an excellent move.”

Lower Bucks has a strong labor force that companies seek out that is proximate to the New York area as well as has access to major arteries running along the East Coast, Cormack said.

Estée Lauder, which will move in the second quarter, helps to fill a gap left by Express Scripts Inc. when it decided in December to close down a plant in nearby Bensalem and lay off about 500 workers. Express Scripts was looking to move into the building after the Department of Community and Economic Development designated the property in 2009 as an opportunity zone.

Express Scripts was considering relocating to the building from Bensalem. Estée Lauder has not applied to get the opportunity zone tax benefits, said Sean Schaffer, spokesman for Tomlinson, who was instrumental in getting the opportunity zone for the site to begin with. While the company declined to provide how many new jobs it would be creating at the site, Schaffer was able to confirm it was around 200.

The lease also fills space vacated by Jones Group Inc. The apparel company had the Rittenhouse Circle building, which sits on 15.6 acres, constructed in 1982 as its headquarters and distribution space. Jones vacated nearly four years ago."