Friday, December 30, 2011

Job Growth a Key Driver of Commercial Real Estate Demand?

Former Majestic Building Sells to Biotech Company

"The former Majestic Athletics apparel manufacturing building located at 100 Majestic Way, Bangor, PA has been sold to BioSpectra, a manufacturer of biological buffers and laboratory reagents for the biopharm and biotech markets.
The 142,000 square foot facility features office, manufacturing and warehouse space which will allow the new owner to expand its operations. Transaction is valued at $1.5 million.

All Star Baseball Academy signs new lease in NJ

"All Star Baseball Academy leased 11,190± SF at 3 Esterbook Lane, Cherry Hill, Camden County, NJ. This marks their 4th location."

Qualcare Alliance Signs $9.7M Lease in NJ

"Qualcare Alliance Networks, Inc. signed a lease for 30,492 square feet of office space at 100 Decadon Dr. in Egg Harbor Township, NJ. The 15-year, $9.7 million lease is expected to commence in April 2012.

Columbus 1 at Expressway Center is a 41,600-square-foot, two-story office building constructed in 1987 on 5.5 acres in the Southern New Jersey submarket of Atlantic County. Expressway Corp Ctr is a two-building office park that is now 100 percent occupied with Computer Science Corp., the other tenant.

Qualcare is the largest full service provider-sponsored managed care organization owned and operated in New Jersey with more than 600,000 members enrolled in a full range of self-funded managed care products. It is majority owned by 12 New Jersey hospital systems and physician organizations."

Thursday, December 29, 2011

Philadelphia Media Network Signs 125,000-SF HQ Lease at 801 Market

"Pennsylvania Real Estate Investment Trust has secured a lease with Philadelphia Media Network, Inc. to occupy 125,000 square feet at 801 Market Street in Philadelphia. PMN, owner and publisher of The Philadelphia Inquirer, Daily News, and, is expected to take occupancy of its third-floor headquarters space in summer 2012.

The iconic building delivered in 1868 as Strawbridge & Clothier's flagship store. PREIT redeveloped the 13-story, 927,931-square-foot, class A office and retail property in 2009, focusing on historic preservation and sustainability, leading to recent LEED Gold Certification and a US Green Building Council award for operating efficiency. The building anchors The Gallery at Market East, also owned by PREIT, and located above the city's mass transit system providing employees, shoppers and residents with direct access to the Philadelphia suburbs and southern New Jersey.

"Bringing Philadelphia Media Network to this Center City location reestablishes 801 Market as a premier address and signals the resurgence of Market East and The Gallery," said Joseph F. Coradino, president of PREIT Services LLC and PREIT-RUBIN, Inc.

PMN's move is the latest development in the renaissance of the Market East submarket in Center City. PMN will work with PREIT to incorporate large-format digital advertising and a dynamic digital messaging system on the exterior facade designed to reach thousands of people daily. PMN's 600 employees will join 750 from the Commonwealth of Pennsylvania that have occupied three floors in the building since 2009, in addition to 1,200 employees utilizing office space on the upper floors.

Iron Hill to Open 9th location, 1st in Philly

"Delaware-based suburban brewpup chain Iron Hill plans its ninth location and its first inside Philadelphia city limits at 8400 Germantown Ave., former Express store site, in Chestnut Hill, next Wednesday Jan. 4. Owners Kevin Finn, Kevin Davies and Mark Edelson plan to open the restaurant at 4 pm in time for the dinner rush. It's the chain's ninth location, with five others in PA, two in DE, one in NJ.

Iron Hill takes its name from the landmark Appalachian outcrop (complete with state park and Revolutionary War-era mine) that greets northbound drivers on I-95 as the blow through the state line tollbooths at the Maryland border, not far from Iron Hill's original home in University of Delaware student-ridden Newark, Del."

Monday, December 26, 2011

Mad Money's Cramer goes shopping for REITs

Republic First Bancorp sells commercial real estate loans

"Republic First Bancorp said Wednesday that it has completed the sale of $59 million of commercial real estate loans and foreclosed properties to a single investor.

The company, parent to Republic Bank, said the transaction will dramatically reduce non-performing asset balances and significantly improve credit quality metrics while still leaving it with strong capital ratios.

The loans and foreclosed properties to be sold had a book balance of $45.1 million and included $28.4 million of non-accrual loans and other real estate owned. Net proceeds amounted to $30.6 million and Republic First said it expects to incur a loss of approximately $14.5 million in the fourth quarter as a result of the sale. Excluding the completion of the loan transaction, Republic First said it was projecting an estimated profit of approximately $1.1 million for the quarter.

Republic First of Philadelphia has struggled in recent years with elevated nonperforming loans. The bank has become more retail-friendly in recent years since Commerce Bank founder Vernon W. Hill II came aboard as an investor and adviser a few years ago. It has also attempted restructuring its loan portfolio away from commercial real estate into more commercial and industrial loans.

Republic First and Harrisburg-based Metro Bancorp terminated a 2008 merger agreement in April 2010 after not receiving regulatory approval. Since that time, the bank has turned its attention toward strengthening its balance sheet.

“During that time period we have transformed Republic into a new bank with a new brand, new management team, renovated store locations and a retail model focused on fanatical customer service,” Republic First Chairman and CEO Harry D. Madonna said. “We have strengthened our capital position and brought stabilization to the balance sheet in an incredibly challenging economic environment. We believe this transaction represents the final step in completing the transformation and we anxiously look forward to building out our model to serve the customers in our market.”

Republic First said the loan sale will improve its percentage of non-performing assets to 1.8 percent in the fourth quarter compared to 4.83 percent in the third quarter. The bank also said its capital ratios are strong enough for it to pursue its growth and expansion plans. Republic First currently has 13 branches located in Abington, Ardmore, Bala Cynwyd, Plymouth Meeting, Media, Philadelphia, Voorhees and Haddonfield."

Sunday, December 25, 2011

The top 10 Philadelphia real estate stories of 2011

by Natalie Kostelni

"It’s that time of year to take a look back at some of the biggest real estate stories that happened throughout the region. I’d like to hear from you to see what you think are some of the top stories or take issue with the ones I selected. Please feel free to email them to me at

Here’s my top 10:

• GlaxoSmithKline moving its Philadelphia operations to the Navy Yard.

• Liberty Property Trust Latest affiliate buying the surface parking lot at 18th and Arch streets where the American Commerce Center had been proposed.

• GlaxoSmithKline getting major property reassessments of its Lower Merion and Collegeville facilities. In Upper Merion, the school district, township and county settled the case for $6 million and in Collegeville it was $6.5 million, record amounts.

• The rise in new multifamily construction throughout the region.

• Endo Pharmaceuticals moving its headquarters to Atwater and Shire Pharmaceuticals looking at its options for a possible new home.

• Four Falls in receivership.

• CHOP makes some decisions on its real estate needs. It adds space at Wanamaker and finally decides to build its suburban campus on the old golf course site in King of Prussia, which is still in negotiations.

• Two Penn Center comes on the market, the first downtown office building to do so since 2007.

•Brandywine Realty Trust buys 1919 Market St. in Philadelphia.

•The owner of the Inquirer and Daily News takes $1 million from the state and nearly $3 million in subsidies from the city to help it move to the former Strawbridge & Clothier building on East Market Street."

Brian O’Neill and Citizens Bank settle litigation

"Citizens Bank of Pennsylvania and developer Brian O'Neill of O'Neill Properties Group have announced a settlement of all litigation between them.

The terms and conditions of the settlement are confidential.
 O'Neill, one of the Philadelphia region's most prolific developers of residential and commercial properties, had filed a lawsuit against Citizens, one of his company's primary lenders, in January 2010, claiming that it breached its financial commitments to him.

That action was part of a deteriorating relationship between bank and developer, with Citizens Bank having secured a $61 million judgment against O'Neill in November 2009 for default on an office-construction loan for his still-largely incomplete Uptown Worthington mixed-use project in East Whiteland Township, Chester County."

Thursday, December 22, 2011

Optimation Technology Inc. Leases 6092 Square Feet in Exton

"Optimation Technology, Inc. has leased a 6,092 SF flex suite located in the Pickering Creek Industrial Park, 180 Gordon Drive, Suite 110, Exton, PA.

Aggregate rental of the lease was in excess of $327,000.

According to their website, "Optimation Technology, Inc. is unique in their ability to provide complete engineering, automation, construction and maintenance services, from the conceptual stage, through prototyping, all the way to full production-scale operations. Optimation's engineers, designers and skilled tradespeople work together to successfully deliver thousands of projects each year through the US and the world". They are Headquartered in Rush, NY. They will be moving into their new facility early 2012."

Fry Communications Leases 147,000 SF in New Kingstown

"Fry Communications, a production and advertising company, signed a lease for about 146,500 square feet at 36 E. Main St. in New Kingston, PA.

The single-story, class A industrial building totals 146,590 square feet was constructed in 1981 and is owned by the Seagis Property Group."

Oaklands Festival, Exton Sells for $24M

"WP Realty, Inc. has sold the Oaklands Festival at Exton retail shopping center to Paramount Realty Services, Inc. for $24 million, or roughly $167 per square foot.

The multi-building retail development located at 400 - 470 W. Lincoln Hwy in Exton, PA totals 143,391 square feet. The center was 93 percent leased at the time of sale. It was built in 1991 on approximately 20 acres in Chester County."

Tuesday, December 20, 2011

Philadelphia Commercial Real Estate Review - Year End 2011

by Eric Stretch
Executive Summary
The commercial real estate market in greater Philadelphia continues to face challenges from a stalled employment market but has enjoyed activity from the manufacturing uptick posted during the end of last year and beginning of this year. As such, the industrial market is well into the recovery phase while the office market waits for the financial activities and professional and business services, the classic demand drivers for office space, to gain an uptick in employment. Rents across the board remain depressed and tenants in the market can still achieve discounted pricing below the market highs posted in 2007. Concession packages have shown signs of shrinking of late, but on a geographic basis where stronger markets have seen free rent written into deals dwindle as of late. Overall, the remainder of 2011 is expected to witness positive demand for all product types, albeit modest in some areas and for some products, and landlords should expect to begin filling vacancies, but at a much slower pace than any recent post-recessionary period given the depth and breadth of the greater economic downturn.s

Greater Philadelphia Regional Office Market
The greater Philadelphia office market may have bottomed out late last year given three consecutive quarters of occupancy gains. Driven by employment, office activity has been slow over the past three quarters while near-term future demand is expected to remain muted over the next year or so. Not surprisingly, the main culprits for the recent downturn in the market have been financial activities and professional services firms which posted nearly 1 million square feet of tenancy losses since the beginning of the recession. Offsetting this to some extent has been the nearly 800,000 square feet of space absorbed from the education and healthcare sector. In fact, this business sector accounts for nearly all the net occupancy gains posted in the greater Philadelphia Region since early 2008.

While the overall market appears to be in a state of flux, performance varies significantly from a geographic perspective. The downtown Philadelphia market certainly follows the greater trend having only just begun to shed some of the vacancy added to the market during the recent past. But a look toward the western suburban submarkets reveals quite a different story. Aggressive pricing by some area REITs drove demand during 2009 and 2010, positioning this area well where vacancy is near pre-recessionary levels. Activity in the northern suburbs is strikingly different where vacancy still hovers well over the 20 percent mark. Large retractions early on in the downturn from the likes of Unisys and GMAC pushed vacancy higher while the general market demand deterioration that followed the greater economic downturn added more and more supply to an already saturated market. In the southern New Jersey market, exposure to the greater financial meltdown was evident as large wholes appeared in the inventory from shuttered IndyMac operations and downsizing from Cendant Mortgage. This market continues to suffer from retracted demand and is not expected to fall into a recovery mode until at least next year, if not later.

Greater Philadelphia Region Industrial Market
Recovery persisted in Philadelphia’s regional industrial market, evidenced by the seventh straight quarter of occupancy gains. The vacancy rate fell to 9.3 percent, while the availability rate trended similarly, falling to 13.5 percent and down 90 basis points since its most recent peak in the first quarter of 2010. On a product-type basis, market measures do not translate universally. Claiming most of the occupancy gains during the past nine quarters is warehouse/distribution space where occupancy grew by over 12 million square feet. Furthermore, almost all of this sector’s gains occurred along the I-81/78 Corridor, outside of Philadelphia’s adjacent counties, proving recovery to be clustered by geography as well. Manufacturing space enjoyed a spike in activity from the middle of 2010 to the first quarter of 2011, but mirrored the sentiment contained in the Philadelphia Federal Reserve Banks Business Outlook Survey from July as manufacturing space posted near-zero occupancy growth in the second quarter. Manufacturing firms are somewhat optimistic about hiring plans over the next six months, but the effects this may have on real estate will be muted with little loss or gain in vacancy expected for the remainder of the year.

Average asking rental rates remain flat. During the recession and the months following, landlords opted to keep asking rents near peak levels in order to maintain leverage during lease renewal negotiations. While this strategy worked, new deals were often signed at 25 to 50 percent below asking rents and included significant amounts of free rent. Currently, asking rents remain artificially high, but to a much lesser extent. Free rent still is written into new leases, but amounts decreased toward the ½ month to 1 month per year of term with longer deals tending toward 1 month per year of term. Until the recovery is broad based across geographies and product types, tenants looking in less active submarkets can still demand lower rents with significant concessions."

Keystone Property Group Pays $22M for Citizens Bank Center

"Pennsylvania-based Keystone Property Group has paid $22 million for Citizens Bank Center, a 221,686-square-foot office tower in Wilmington, Delaware. The firm has purchased the 18-story property located at 919 N. Market St. from the Receivership Estate Over Specific Assets of B&R 919 LLC.

The office tower is 80% occupied. James Wellschlager and Jonathan Carpenter from Cassidy Turley's Capital Markets Group based in Baltimore negotiated the deal on behalf of the seller."

PREIT adding Charming Charlie at Plymouth Meeting

"Pennsylvania Real Estate Investment Trust said Monday it is adding a new tenant at the Plymouth Meeting Mall.

The Philadelphia-based company (NYSE:PEI) said Charming Charlie will open in the spring in 12,000 square feet in the “outdoor lifestyle retail wing” of the suburban Philadelphia shopping center that also includes Whole Foods and Orvis."

Sunday, December 18, 2011

Comcast Expands in Philadelphia

by Natalie Kostelni
"Comcast Corp. has taken an additional chunk of office space at Three Logan Square in Center City.

The cable giant leased three more floors at 1717 Arch St. and occupies five floors and roughly 100,000 square feet in the building, which is situated nearly across the street from its headquarters at 1701 John F. Kennedy Blvd.

This is the third time in just over a year that Comcast has expanded. In August 2010, it leased 43,000 square feet at 1717 Arch. Comcast grabbed another 90,000 square feet at Centre Square late last year. In its latest expansion at 1717 Arch, it added roughly 60,000 square feet of space. It now has about 200,000 square feet of space outside of its headquarters.
They went from 450,000 square feet in Centre Square to 1.3 million square feet. They have more than doubled over the last five years. This is a company that has grown by leaps and bounds.”

The company was initially supposed to occupy 534,000 square feet at Comcast Center but later added in 2005 another 338,000 square feet while the building was under construction.

But for pockets here and there, the company occupies most of Comcast Center, a 1.2 million-square-foot building, and doesn’t have room to take additional space in the tower. Though it expanded its downtown footprint before its acquisition of NBCUniversal, it has continued to grow.

Comcast leased the additional space at Three Logan because it is considering having some teams who require contiguous space locate there, said John Demming, spokesman at Comcast. While it has some room at its headquarters, it doesn’t have any contiguous blocks of space that would accommodate those departments.

The company’s growth does not yet translate into new construction.

Comcast owns a small parcel adjacent to Comcast Center and earlier this year an entity affiliated with Liberty Property Trust, which developed Comcast Center, bought a surface lot at 18th and Arch streets that many in the commercial real estate community believe is being eyed for another tower for Comcast.

On the heels of Reed Smith signing a 115,000-square-foot lease (full story:

 in the building combined with the Comcast lease and other deals, Three Logan continues to attract tenants. In a statement put out last week by Brandywine Realty Trust, which owns Three Logan, the company said it completed five leases in recent months at the building totaling 224,426 square feet and 462,236 square feet through the beginning of the month. All of that activity brought the occupancy of the tower to 88 percent. The company said its “leasing pipeline continues to be very strong with several additional transactions in advanced stages of negotiation” at the building. The firms taking up the most space at the building are Reed Smith with 115,000 square feet, Janney Montgomery Scott with 146,321 square feet (full story:  and Comcast with roughly 100,000 square feet."

Full story:

CHOP begins big dig

by John George

The biggest excavation project in Philadelphia history is taking place in West Philadelphia.

The Children's Hospital of Philadelphia is spending $150 million preparing part of the old Civic Center site for an outpatient-care center that will sit on top of a five-story underground parking garage. The pediatric medical center’s expansion plans for ambulatory care, however, extend far beyond the city.

In an interview last week, CHOP President and CEO Dr. Steven Altschuler said in order to thrive under health-care reform, through which the government is shifting from a fee-for-service to risk-based model of paying providers, the hospital is planning to significantly enhance where and how it provides outpatient care.

CHOP’s board in September approved a $2 billion spending plan that includes, in addition to the 500,000-square-foot outpatient-care center at its main campus, a new ambulatory-care center in King of Prussia, where two existing care sites will be consolidated, and another in Central Jersey, where CHOP plans to open a facility on the campus of Princeton HealthCare System’s new $450 million hospital in Plainsboro.

The King of Prussia center will be part of the Village at Valley Forge, a new development on Swedesford Road near a new Pennsylvania Turnpike ramp at the Valley Forge exit. The facility will initially be about 100,000 square feet, and have the ability to expand based on demand.

The outpatient center at Princeton HealthCare’s new Plainsboro hospital will start out at 25,000 square feet and have the ability to expand to 100,000 square feet.

CHOP also plans to expand and renovate its existing specialty care and ambulatory surgery centers it operates in Voorhees, N.J., and Chalfont.

In addition, Altschuler said, consideration is being given to building another outpatient-care center along the Route 1 corridor south of Philadelphia or in northern Delaware.

“We are looking to enlarge our outpatient network in general,” he said. “Wherever possible, we want to move care from an inpatient setting to an outpatient setting. It’s socially responsible. It’s fiscally responsible. And it creates a better experience for patients and their families.”

Alan M. Zuckerman, president of Philadelphia health-care consulting firm Health Strategies & Consulting, said CHOP’s investment in ambulatory-care centers make sense.

“We are going to have a big shift from inpatient-oriented care to outpatient care, so you are going to see all children’s hospitals doing this,” Zuckerman said.

He said CHOP’s challenge is, as a specialty hospital, it has to cover a service area much larger than that of a general acute-care hospital. That means a larger investment in satellite campuses.

Altschuler said CHOP never considered any other site for its Philadelphia ambulatory-care center, set to open in phases starting in the spring of 2015, because the expectation is the facility will handle the most complex cases. The institution wanted the outpatient center — which will start with eight floors, but could grow to 16 depending on demand — to be on the main hospital campus where its specialists and researchers work.

“We want to be able to engage with multiple specialists at the same time” when providing care to patients admitted to the hospital and those being treated on an outpatient basis, he said.

CHOP’s other plans for the $2 billion spending package OK’d by its board include the $30 million Nicholas and Athena Karabots Primary Care Center at 48th and Market streets in West Philadelphia. Altschuler said other primary-care centers are under consideration.

The hospital is also allocating about $400 million for information technology expenditures across its network. CHOP entered into a deal last month to establish a joint genome center with BGI of China to conduct large-scale human genome sequencing and bioinformatics analysis in Philadelphia — with a goal of developing genomics-based personalized medicine for patients.

The hospital is also looking to expand partnerships with existing providers, such as the alliance it formed at the start of this year with Virtua, where it can bring its specialists out to other locations.

Altschuler, who came to CHOP in 2000, noted the hospital is able to focus on outpatient care now because the first part of his tenure was spent renovating its inpatient facilities and growing its research capabilities.

The hospital spent more than $2 billion over the past decade on projects that included adding 14 floors to its Abramson Pediatric Research Center, renovating and expand of its south and west patient-care towers, building a new fa├žade for the hospital’s main entrance, and, last year, opening the $500 million Ruth and Tristram Colket Jr. Translational Research Building — a 12-story facility that houses pediatric research labs for cancer, diabetes, epilepsy, blindness and hemophilia.

In October, CHOP sold $270 million in tax-exempt bonds issued by the Hospitals and Higher Education Facilities Authority of Philadelphia to help fund the new ambulatory care center.

Moody’s Investors Services affirmed its Aa2 rating — its second-highest rating — on the hospital debt, totaling $795 million after the financing, that same month.

Lisa Martin, senior vice president for Moody’s public finance group, said the rating is based “on CHOP’s national prominence among children’s hospitals in terms of clinical strengths and research capabilities, leading market position in the greater Philadelphia region, exceptional patient demand with high occupancy levels and volume growth, very good investment position and strong operating margins.”

In fiscal 2011, the report notes, CHOP posted a 4 percent operating margin and 13 percent operating cash-flow margin. Moody’s also noted the hospital’s revenue growth has averaged 8 percent over the past five years. It revenues topped $1.8 billion in fiscal 2011.

Martin said CHOP’s challenges include the ambulatory-care center project that will elevate capital spending, growing its research subsidies and having a concentrated payor mix that is dependent upon Medicaid and large commercial payors (most notably Independence Blue Cross).

Altschuler said coping with spending in Medicaid reduction is a huge issue for all children’s hospitals now that more than half of the patients treated at such facilities are covered by some type of medical assistance program. At CHOP, 37 percent of the patients are coverage by Medicaid. The creation of its network of specialty care centers in the Philadelphia suburbs and South Jersey, he said, has helped CHOP improve its payor mix by bring in more patients covered by private insurance.

CHOP has taken other steps to diversify its revenue base.

It developed an international medical tourism business to attract patients from other countries. That business, Altschuler said, has grown to $60 million a year in revenues from $6 million two years ago.

The hospital also started a management consulting business to work with other children’s hospitals nationally and internationally. “We will not invest our own capital in facilities abroad,” Altschuler said, “But we think through partnerships we can increase our global footprint.”
Full story:

Friday, December 16, 2011

Willow Grove shopping center sold

"The Real Estate Equity Co. of Englewood, N.J., has acquired the Best Buy shopping center in Upper Moreland for $14.6 million.

The 71,000-square-foot shopping center is also home to Pier 1 Imports. The acquisition was partly financed by The Provident Bank in Iselin, N.J.

The company, also known as TREECO, owns or has interest in 20 properties in New Jersey, Pennsylvania, Florida and New York.

Additional coverage:
"Goodman Properties sold the Best Buy Shopping Center at 1130 - 1134 Easton Rd. in Willow Grove, PA to The Real Estate Equity Company LLC for $14.6 million, or about $200 per square foot.

The 72,934-square-foot retail property sits on about 6.6 acres and boasts a parking ratio of 4.74. In addition to the anchor tenant, Best Buy, the building is also occupied by Pier 1 Imports. The shopping center is located less than one half mile from of the Pennsylvania Turnpike."

Thursday, December 15, 2011

Multi-Family Housing a Real Estate Hot Spot

Comeback in Commercial Real Estate?

Bond Family Partnership LP acquired two industrial flex for $2,865,000

"Bond Family Partnership LP acquired two industrial flex assets in Manheim, PA totaling 105,392 square feet for $2,865,000, or about $27 per square foot.

The properties, both located in Lancaster County's Manheim Borough, immediately off Route 72 just 15 miles south of the Lebanon-Lancaster Interchange Exit 266 on the PA Turnpike and six miles north of Route 30 and I-283 in Lancaster, include:

311 W. Stiegel St. - a 76,129-square-foot building on 2.2 acres. Included in the sale was 411 West Stiegel St., a parking lot consisting of 48 surface spaces, and 106 South Penn St. with another 43 parking spaces. These properties were purchased from Arbee Realty Trust for $1,733,325.

102 S. Heintzelman St. - situated on 4.3 acres, it consists of a 29,263-square-foot building. This property was purchased for $1,131,675 from M&H Investors LLC.

Fenner Drives, a leader in reinforced Polymer technology, has long-term leases at both buildings, which sold with a reported capitalization rate of 8.8%."

Gamesa Tech Corp Moves HQ to Northbrook Corporate Center

"Gamesa Technology Corporation is moving into 74,297 square feet at 1150 Northbrook Drive in Trevose, PA. Gamesa will be consolidating a few area offices and relocating its US headquarters to this location sometime between April and May 2012.

The four-story building totals 107,500 square feet of class A office space in the Northbrook Corporate Center. The property was developed by Acorn Development Corporation in 2007 and was foreclosed on earlier this year."

Copley Place Apts Trade for $6.7M

"While in the final stages of foreclosure, New York Community Bancorp sold Copley Place Apartments to Lindy Property Management Company for $6.7 million, or about $42,000 per unit.

The 184,736 square foot apartment community located at 7400 Haverford Ave. in Philadelphia offers 158 units with a mix of one- and two-bedroom units in two buildings. The units were reported to be very large and the complex includes balconies, central air and a swimming pool. The property was 60 percent occupied at the time of sale."

Tuesday, December 13, 2011

Two Sales Totaling Over $14 Million

"Two prime multi-family buildings were sold. Lofts at Liberty, located at 1600 Chestnut Street in center city Philadelphia, contains 54 units plus street level retail. The second property, located at 3717-3719 Chestnut Street in the heart of the University City district, has 29 units in 24,498 square feet, with some off-street rear parking.
"The sale of these two properties is an illustration of the current strong demand for multi-family properties. Multi-family properties are currently popular commodities because they offer stable investments with growth potential for their buyers. With rental rates rising and the current unstable condition of the single family housing market, the multi-family market is strong. Many private capital investors have become disillusioned with the "bungee cord" stock market and are turning to real estate as a more sensible investment strategy. Investing in multi-family product is a secure and sensible form of capitalizing on current market conditions."

The center city building was owned by Beneficial Partners, LP and sold to Pearl Properties. The property, located in CBD at 1600 Chestnut Street is directly across from Liberty Place. The building was built in 1954 and underwent major renovations in 2002. Situated in a prime center-city location it offers excellent long-term leasing opportunities. At the time of sale, the property was 100% leased.

The University City building was owned by 3719 Chestnut Corporation and sold to the Cathedral Church of the Savior. The property is fully occupied and is a desirable long-term investment for the buyer because of its location adjacent to the University of Pennsylvania and Drexel University and the strong collegiate occupancy that offers."

West Chester Property is Selected as Pilot Program for Bank of America Merrill Lynch SBA Financing

"Bank of America Merrill Lynch and SeedCo PA, an arm of the Chester County Economic Development Agency, and the developer, Lincoln Park Partners, L.P., announce the newly formed Preferred Lender Program to streamline the delivery of the Small Business Administration (SBA) 504 Loan Program.

The property, Lincoln Independence Park, is a reclaimed 13-acre Brownfield site in West Goshen Township that has been redeveloped as industrial flex condominiums to provide ownership opportunities for local, small businesses. The SBA 504 program offers up to 90% financing for real estate, property improvements, and business equipment and inventory.

The property was developed in an effort to provide small business owners the opportunity to own their place of business. "Real estate is a precious commodity in West Chester and Chester County. Often times, it is not economically feasible to create ownership opportunities for smaller properties. Units are available in increments of 2,700 SF with loading docks or drive-in access.

The property is also located within the Keystone Innovation Zone (KIZ), which offers tax incentives to hi-tech and bio-tech related businesses. Additionally, each unit is equipped with separate utilities and assigned parking. The flexible (flex) units are designed to be utilized as part office and part warehouse space.

The park is currently over 65% occupied with a variety of companies to include manufacturers' representatives, contractors and tradesmen, medical research, and distributors."

Pg 26 - Montco Chamber of Commerce Real Estate section

MCD11 Winter Newsletter 1-52_WEB

Monday, December 12, 2011

Sly Fox Brewery Acquires Building in Pottstown

Sly Fox Brewery acquired a 32,000 sq. ft. Class B flex building on 5.2 acres. The property is located at 331 Circle of Progress Drive in Pottstown, Pennsylvania.

The buyer, Sly Fox Brewery will be relocating their brewery from Royersford, Pennsylvania. The property was purchased from Charles Moyer.

QPSI Inks 157,500-SF Lease at Lehigh Valley South

"Quality Packaging Specialist International LLC (QPSI) signed a long-term lease deal for 157,500 square feet of industrial space at the Lehigh Valley South Distribution Center, bringing the building to 100% occupancy when the tenant takes possession in the first quarter of 2012.

QPSI is a leader in packaging and supply chain logistics, specializing in the pharmaceutical, healthcare and consumer goods industries for more than 35 years.

The building was developed in 2008 by Trammell Crow Company and is owned in a joint venture with a Clarion Partners co-mingled fund. Located at 7570 Industrial Park Way in Lower Macungie, PA, near I-78 and the Pennsylvania Turnpike, the building totals 315,000 square feet of class A industrial space and features a 32-foot clear height, 50-foot column spacing, ESFR sprinkler system and trailer storage."

Philadelphia's Industrial Vacancy Increases to 9.4%

"The Philadelphia Industrial market ended the third quarter 2011 with a vacancy rate of 9.4%.

The vacancy rate was up over the previous quarter, with net absorption totaling negative 302,960 square feet in the third quarter. Vacant sublease space increased in the quarter, ending the quarter at 3,621,608 square feet.

Tenants moving out of large blocks of space in 2011 include: RR Donnelley & Sons Company moving out of (686,000) square feet at York Business Center, Borders Distribution Center moving out of (598,474) square feet at 1501 Distribution Dr, and Allen Distribution moving out of (535,000) square feet at 7533 Industrial Park Way.

Rental rates ended the third quarter at $4.44, a decrease over the previous quarter.

A total of three buildings delivered to the market in the quarter totaling 768,577 square feet, with 145,770 square feet still under construction at the end of the quarter.

This trend is compared to the U.S. national industrial vacancy rate, which decreased to 9.6% from the previous quarter, with net absorption positive 43.11 million square feet in the third quarter."

Saturday, December 10, 2011

New theater stage coming to Norristown

"A new theater is coming to downtown Norristown next fall. The professional stage company Theatre Horizon plans to open a 120-seat house of its own, a $900,000 project being funded by private donors and audience members, plus Norristown and Montgomery County.

The company's cofounders and artistic directors, Erin Reilly and Matthew Decker, will officially announce the new theater, to be housed in the former Bell Telephone building next to the county courthouse at DeKalb and Penn Streets, at the opening Friday of Voices of Christmas. The show is running at the Centre Theater, a general-arts facility in Norristown.

Horizon has rented the top floor of that building for about half its seven-year existence; the company has staged shows in seven venues since its first production, The Laramie Project, in the auditorium of Upper Merion High School. Theatre Horizon is one of the region's fast-growing professional suburban companies, and this year it won four Barrymore Awards - its first ever in the region's professional theater awards - for its 25th Annual Putnam County Spelling Bee.

Horizon has never had its own theater. "We really need a year-round home for our educational programs and a place where we can expand our productions," Reilly said. "The new theater will allow us new possibilities."

To help pay for the theater, Horizon was awarded a $200,000 grant from Norristown and Montgomery County revitalization funds. The company believes dining, parking, and other costs to audience members and the theater will return more than $65,000 a year to the borough.

The 1920s-vintage Bell building had been a line-switching station until about 15 years ago, then sat empty. Four years ago, two developers, Bob Kaufman and Mount Airy restaurateur Ken Weinstein, bought it, decided it would be appropriate in the arts district Norristown was trying to create along four blocks of DeKalb Street, and looked for an interested arts group. "Theater Horizon responded with enthusiasm," Kaufman said Thursday.

The stage company serves 600 students in education outreach in schools, and runs a program for autistic children. "Our energy will continue to grow with a new space," Decker said in a separate phone interview, "and we'll help to rejuvenate Norristown."

Friday, December 9, 2011

Toll Bros. buys New Market property for $5 million

by Natalie Kostelni
Toll Brothers Inc. paid $5 million to buy the former New Market Pavilion site in Society Hill and plans to move forward with a new condominium project there.

The derelict property at 410 Front St. has been an eyesore for two decades even though it sits in one of the fanciest neighborhoods in Philadelphia. Attempts to develop it over the years have failed. Toll continues to work with the Society Hill Civic Association and other city agencies to complete the approval process.
The company is going through the approval process to construct a multiphased residential complex on a deteriorating parking garage at 24th and South streets that it bought five years ago. The estimated $60 million development would have 127 units in a mix of condos and townhouses, Emmons said. If all goes according to plan, it will demolish the garage and break ground this January or February on the first phase. The project is expected to take three years to complete depening on market conditions.
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Reed Smith moving to Three Logan tower

by Natalie Kostelni

"Reed Smith is relocating its Center City offices to Three Logan after spending more than 20 years at One Liberty Place.

The law firm signed a long-term lease on 115,000 square feet on floors 28 through 33 at the signature office building owned by Brandywine Realty Trust. Terms of the deal weren’t disclosed and Brandywine declined comment.

The lease means one of the big tenants fishing around Center City for office space has landed, leaving fewer large blocks of contiguous trophy space for them to consider even though it does open up a large chunk in One Liberty.

At the beginning of the year, nearly a dozen big downtown office tenants totaling more than 1.5 million square feet — enough to fill Comcast Center and then some — began to have early conversations about their office prospects and begun to assess what space is or, what they fear, isn’t available. Since then, three of these tenants have secured leases and the others continue to mill about.

The Reed Smith lease, added with some other deals, also means Brandywine has made significant inroads to chip away at the empty office space that had plagued Three Logan. At the end of September, the 53-story, 1 million-square-foot building was 67.2 percent leased, according to Brandywine’s quarterly report. When Janney Montgomery Scott moves in to 146,321 square feet at the building, it will be 82.1 percent occupied, and this deal will mean the building will be more than 90 percent leased.

Reed Smith started its search in earnest a year ago and considered seven buildings, said Patricia A. Hiltibidal, chief of office services at the firm, in a statement. It then narrowed the list based on some of its requirements.

“Office moves of this magnitude are long and challenging,” Hiltibidal said in the statement. “We needed a turnkey solution with little disruption to our busy attorneys and Three Logan accomplished that.”

The firm will move in early 2014.

Reed Smith occupies floors 23 through 28 and portion of the 22nd floor of One Liberty. It had been in the 58-story skyscraper at 1650 Market St. since it opened in 1987. “There are a lot of moving parts in the Double A market. I think certainly the Double A market continues to get a lot tighter and vacancies Double A market is single digits.”

Though space in the fanciest office buildings is diminishing, most believe it’s not enough to kick off new construction since lack of rental growth doesn’t support it.

“New construction happens when rates get well north $40 a square foot,” Cauffman said.

Though, Reed Smith lease punches a 150,000-square-foot vacant hole in the 1.2-million-square-foot building, downtown office brokers believe it will have a good opportunity to get leased up. One Liberty has about 88,213 square feet already vacant, which is about 7.4 percent of the total building’s square footage.

“I think Liberty will be fine. It’s a Class A building with Class A management and a Class A location. It won’t take long to backfill that space. There are lots of big guys looking and not a lot of big blocks of space, so you have to nail down your opportunities. That’s always been the case in Philadelphia with trophy space.”

One Liberty has faced defections before. For example, Duane Morris moved out of 215,000 square feet in 2004. “We wish we could have kept Reed Smith but we’re not concerned that we can’t fill that hole. We’re already talking to three different people about the space.”
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Thursday, December 8, 2011

WeiserMazars to 27,000 SF Lease in Fort Washington, PA

WeiserMazars LLP, one of the nation's 25 largest accounting and advisory firms, will open a new 27,000 square foot office in Fort Washington, PA.

The new office, located at 501 Office Center Drive in Fort Washington, will officially open in the spring of 2012, and will initially house approximately 100 employees who are relocating from the firm's current office in Horsham, Pa.

501 Office Center Drive in Fort Washington is a 114,000 square foot, Class A, four-story, multi-tenant office building with on-site management and a deli.

The new office will expand WeiserMazars' footprint in Pennsylvania as the firm grows its auditing and advisory services in the real estate, private equity, insurance, manufacturing and non-profit sectors.

Fishbein & Co. joined the firm in January 2010, and several LECG Corp. practice groups also became part of WeiserMazars in early 2011.

"Our new regional office will support our growth as we continue to hire new professionals to build out our practice areas," said Kathryn A. Byrne, partner-in-charge of the Pennsylvania office. "We are particularly excited that our new office will be completely paper-free."

SunOpta Food Signs 101,250 SF Lease

SunOpta Food Inc. has agreed to a long term lease of the entire facility at 7108 Daniels Drive in Upper Macungie Twp., Lehigh Co., PA.
The building owner is J.G. Petrucci Co., Inc. (JGPCO).

Built in 2001, 7108 Daniels Drive is a single story building on 9.05 acres. It features a 4,806 sq. ft. office and 24' to 26' clear ceiling heights.

SunOpta will utilize the 101,250 SF facility to produce a range of natural and organic fruit-based consumer packaged products utilizing innovative packaging formats.

SunOpta Food Inc. specializes in sourcing, processing and packaging of natural and organic food products, integrated from seed through packaged products; with a focus on strategically significant vertically integrated business models.

"The collaborative effort from all parties involved was paramount to completing the deal - 20 days from first inspection to lease execution," said Peter Polt of JGPCO.

BJ's For Sale in Oaks, PA

Marcus & Millichap Real Estate Investment Services has been awarded the exclusive BJ's Wholesale Club located at The Marketplace at Oaks in Oaks, PA, is being listed for sale. It is a 119,689-square-foot, absolute net-leased. The asking price is $27,620,538 or $230/sf.

BJ's has almost 13 years remaining on a triple-net lease with an impressive 8 percent rent increase every five years according to the brokers, with the next increase set to occur in November 2014.

While BJs doesn't report individual sales for this location at this time, it is believed the store is well performing due to the demographics in the area. It is located just off the expanding Route 422 corridor and was constructed in 2008 as a build-to-suit for the tenant. The 2 million-square-foot Marketplace at Oaks shopping center is co-anchored by a Lowe's Home Improvement, Target, and Regal Cinemas.

Wednesday, December 7, 2011

Bottom Dollar Coming to Ambler

Thomas Celona
"A grocery store is coming to Ambler Borough.

Nearly three years since the Acme on Butler Avenue closed its doors, the borough has announced a Bottom Dollar Food will be built in 2012. Borough officials delivered the good news during borough council's committee meeting on Tuesday.

"It's just something we've desperately needed and missed, and we're just excited to have another store investing in our community and opening up," Borough Manager Mary Aversa said Wednesday.

Moreland Development has struck a deal to build the grocery store at the former Knopf Motors property at 219 E. Butler Ave., according to Aversa.

The agreement on the property just occurred within the past couple weeks, and plans for the store will now move to the review stages.

"We've gotten plans within the last week," Aversa said. "They're preliminary plans. We're still working through a lot of things."

The proposed grocery store would be approximately 17,000 to 18,000 square feet, according to Aversa.

The plans will have to go before both the planning commission and zoning hearing board, according to Aversa. The zoning hearing board will hear the application from Bottom Dollar Food at its Dec. 15 meeting.

The developers are looking to get through the process quickly and bring the store to the borough.

"They're very anxious to get started," Aversa said.If all goes to plan, the developers have said the store could be completed by as early as this spring, according to Aversa.

The borough has been without a grocery store since Acme, formerly located at the present-day spot of CVS Pharmacy at 272 E. Butler Ave., closed Jan. 29, 2009.

Since Acme's closing, many residents have voiced their concern about the lack of a walkable grocery store — a concern borough council heard loud and clear.

"This has been a priority of borough council, and they've given me the direction to do what we need to do to facilitate this to make it happen," Aversa said.

Aversa said the new grocery store will be an important piece of life in the borough and be a major plus for many residents who are elderly or like to walk to the store.

"I think it's critical," she said. "It really gives us back our walkable community."

Monday, December 5, 2011

Legendary Deal Makers Richard LeFrak and Wil Ross on Economy

New Apartment Complex, with 385 Units, Coming to Conshy

A new apartment community is coming to Conshohocken in 2012. The community, the Courts at Spring Mill Station, will be at the corner of 1101 E. Hector Street and North Lane in what has been Reilly Foam. Home Properties, which already owns Sherry Lake Apartments in Conshohocken, states on its website:

Home Propertie has two land parcels under contract. Courts at Spring Mill Station is located in Conshohocken, PA, a suburb of Philadelphia. The project is on land that the Company holds a purchase option on and is in the middle stages of the entitlement process for approximately 385 apartment units, with all approvals expected by the end of 2011. Construction is expected to begin in the first half of 2012 and total estimated costs are approximately $79 million.

Friday, December 2, 2011

Chester County Pediatrics lease 4,000sf in Exton

"Chester County Pediatrics, P.C., led by Dr. David Cooper and Brenda Souder, R.N., recently leased 4,000 SF at the Commons at Oaklands, 690 West Lincoln Highway, Exton, PA , a new office condominium development in West Whiteland Township. The Practice has served Chester County families for over 30 years and has locations in Exton, Avondale, and Parkesburg.

"We are extremely excited about our new office space. The space will allow us to serve our clients into the future in a more efficient and improved manner" commented Dr. Cooper. "Chester County Pediatrics will complement the well-established medical community within the complex" stated Souder.

Brisk sales for industrial buildings

by Natalie Kostelni

"Drew Court, King of Prussia is a 146,906-square-foot industrial complex here, has sold after being on the market for about six months.

Though the property lingered, it wasn’t for lack of interest. More than 20 groups took a look at it; 11 different offers were made.

Endurance Real Estate Group of Bala Cynwyd paid $9.25 million for Drew Court at 420 and 440-480 Drew Court. Ajax Partners of Lexington, Mass., was the seller. The property has eight tenants and is fully occupied.
“It’s stabilized and we thought we were getting a great asset at a great price,” said William A. White, CEO of Endurance.

Though not a tremendous amount of commercial real estate is trading these days, industrial is one property type that has seen steady activity. Investors view industrial buildings as stable, attractive commercial real estate that can provide steady long-term returns. One transaction had Industrial Income Trust buying a portfolio from TA Associates that included 13 buildings in Montgomery and Bucks counties for more than $36 million.

While real estate investors have driven the bulk of transactions, we have seen companies seize on some industrial properties for their own use.

“Interest rates are good, their business is good and they thought it was a good time to buy,” he said. “Prices are also down 10 to 15 percent from 2006 and 2007.”

For example, NCC Automated Systems, after renting for a number of years, bought a 27,900-square-foot building on 10 acres at 255 School Road in Souderton, moving out of 20,000 square feet it had been leasing. Volpe Enterprises was another firm that decided to buy. The home remodeling and roofing company bought a 40,000-square-foot property at 217 Church Road in North Wales for $1.8 million.
KSG Industrial is another example. The company had been leasing 8,000 square feet when a 12,500-square-foot building a block away at 837 W. Third St. in Lansdale came up for sale. KSG bought it for $650,000.

Investors, though, are scouring the market for good deals such as Drew Court, which marks Endurance’s third acquisition in the last 16 months.

“It’s highly functional real estate,” Hines said. “Even in the downturn, this property always leased.”

For a company that needs easy and quick access to major arteries, Drew Court’s location is highly desirable by tenants. It’s only a mile to two miles from any of the interchanges of Route 202, the Pennsylvania Turnpike and the Schuylkill Expressway. Because of this, occupancy has always been high at the property and rents strong.

None of the tenants’ leases expire until 2013, which was another feature that attracted Endurance to acquire the property. Some of the larger firms occupying space in the complex include Pinnacle Textile, OBO Bettermann and Shingle Belting. Rents have gone as high as $7.50 a square foot compared to an average of $5.06 a square foot for the suburbs.

Leasing activity for industrial space in the western suburbs has also picked up and that is also helping to propel the market.

The vacancy rate has dipped to 8.5 percent at the end of the third quarter from 9.2 percent at the end of last year and more than 1 million square feet has been absorbed. The tightest market is Chester County with 5.9 percent and that’s slightly up from the beginning of the year when it stood at 5.6 percent.
Companies have been “trading up” to better quality or better located buildings. For example, Reilly Foam subleased 145,000 square feet at 1001 Trooper Road in Lower Providence and is moving from Conshohocken. Lyon Conklin & Co. took 82,750 square feet at 550 S. Henderson Road in King of Prussia and is moving and expanding from 61,200 square feet in Montgomeryville. Centurion Medical Products leased 97,200 square feet at Gehman Road in Harleysville.

In South Jersey, more than 1.5 million square feet of lease deals have been sewn up, including 290,000 square feet at the Barrington Business Center by Computer Sciences.

“It has been a good six months and overall it has been a pretty good year across the region. It isn’t quite 2006 all over, but certainly an improvement over the last three years.”

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