Friday, August 31, 2012

Vanguard buying 3 Malvern buildings adjacent to its headquarters cost $40 million

by Natalie Kostelni

Vanguard Group Inc. has solidified its presence in the Philadelphia suburbs and is paying an estimated $40 million to buy a three-building complex here adjacent to its current campus.
The buildings total 517,485 square feet and sit on 87 acres that would allow the mutual fund giant to expand by another 390,000 square feet in two additional office buildings.
The property is under agreement and is being sold by Pfizer Inc., a pharmaceutical company that inherited the buildings when it bought Wyeth Inc. Pfizer decided in 2009 it would no longer need the Malvern property and put it up for sale in 2010. 
While Vanguard was always a logical candidate to buy the site since it already maintains a large presence in that part of Chester County, a deal was long delayed after it took months to conduct environmental tests. Once those were finalized, Vanguard put the property under agreement. Vanguard continues to go through due diligence on the property and it should close later this year.
“It’s the old real estate adage,” said John Woerth, Vanguard spokesman. “Location, location, location. … It’s an opportunity to purchase an attractive property adjacent to our current headquarters at a favorable price.”
KlingStubbins designed the campus that Wyeth constructed between 2001 and 2003 as its “Information Services Center of Excellence.”
It includes a 312-seat full-service cafeteria, a 138-seat café, a state-of-the-art fitness center with showers and lockers and a 260-seat conference center. It has no plans to begin construction on any new buildings on the extra land it is buying.
Even though it is acquiring the campus, Vanguard is also seeking an additional 200,000 square feet of office space to lease, according to several real estate sources familiar with the situation. Some ideas that have been bandied about is having Vanguard potentially kick off another building at Liberty Property Trust’s Quarry Ridge development or have Liberty possibly razing some of its older flex buildings in its Great Valley Corporate Center and build anew to accommodate Vanguard’s needs.

Thursday, August 30, 2012

Keystone Mercy Inks Long Term Lease Deal

Pennsylvania’s largest medical assistance managed care plan, Keystone Mercy Health Plan, has signed a long-term lease deal to occupy approximately 85,000 square feet of office space at Plaza 1 and Plaza 2 in the International Plaza. 

1 and 2 International Plaza in Philadelphia, PA are both class A office buildings with a premier location adjacent to the Philadelphia International Airport. Both buildings are six stories high, and feature a corporate lunchroom seating 400 people, ample free parking, 24-hour manned interior and exterior security, spacious and modern corporate dining facility, and beautifully landscaped grounds. 

Wednesday, August 29, 2012

Cornerstone Real Estate Advisers LLC sell S. NJ Warehouse

"200 Birch Creek Road is a high quality warehouse/ distribution building containing 597,232 square feet, situated within the Pureland Industrial Complex in Bridgeport, New Jersey. The property was developed in 1990-91 by Emory Hill Development for the current tenant Becton Dickenson & Co., (exp. 8/13). Located at exit 10 of I-295, Southern New Jersey's primary north/south highway, the property benefits from extraordinary access to the Northeast US Distribution Corridor serving New York, Northern New Jersey,Baltimore, & Washington DC metro areas in addition to the Greater Philadelphia MSA. The building offers 25' clear, 42' x 42' column spacing, 2.1% office, 50 tailgates and 2 drive-in doors.

"Becton Dickinson’s consolidation of east coast operations into another market represented a unique opportunity for a value-add investor’s first entrance into the Southern New Jersey market,” Mr. Hines said.  “The lack of efficient, flexibly designed bulk warehouse/distribution availabilities, particularly 500,000 square feet and larger, along the I-95 Industrial Corridor was apparent in the high level of interest in this offering.”

The seller was Cornerstone Real Estate Advisers LLC of Hartford, CT and the buyer was Hillwood Investment Properties, a Perot Company, in a partnership with Brookfield Asset Management."

Sale of Brian Court Apartments in Ridley Park, PA

Friedman Realty Group Inc. has purchase the Brian Court Apartments in Ridley Park, PA for $2,000,000 from The Brian Court Limited Partnership. The property is located at 17 West Chester Pike.

Lower Bucks Hospital Sold

Prime Healthcare Services, the California-based, for-profit chain of 18 mostly West Coast hospitals and which recently acquired Roxborough Memorial Hospital, says it also plans to acquire 156-bed Lower Bucks Hospital in Bristol.

Prime will spend "at a minimum" $10 million for "needed capital improvements," company spokesman Edward Barrera told me, correcting the company's earlier statement that it would invest "up to" $10 million.
Prime, owned by chief executive Dr. Prem Reddy, has also made $3 million in working capital finance available to Lower Bucks, and will "honor all contracts, liabilities, and union agreements," which cover nurses and maintenance workers. Total staff includes 400 doctors and 1,400 "employees and volunteers."

Prime specializes in hospitals with "financial problems" that treat mostly poor patients and rely heavily on government reimbursement, said Albert Mezzaroba, the Lower Bucks CEO who closed the deal.  He told me the chain has a history of cutting expenses without cancelling medical programs, and gives special attention to bill collection. Mezzaroba said he wasn't sure Prime's long-term plans for him.
Lower Bucks filed for bankruptcy protection in 2010, and exited earlier this year after State Sen. Tommy Thompson convinced the legislature to use $14 million in casino table games profit payments from the Parx casino to fund part of the hospital's bond debt. SSG Group of West Conshohocken and the Saul Ewing law firm advised Lower Bucks.

Tuesday, August 28, 2012

2013 Commercial Real Estate Outlook w/ Joe O'Donnell & Matt Mittman

Metso Automation moving to different Lansdale, Pa.Site

Metso Automation USA Inc. leased 50,000 square feet of space off Morris Road in Lansdale, Pa.
The company, which supplies technology products to a range of industries such as mining, construction, pulp and paper, leased the space at 2750 Morris Road. The 650,000-square-foot building sits on 87 acres had been occupied by Visteon Corp. until it closed in 2009. The property is owned by BPG Properties Ltd.
Metso reduced its space needs to 50,000 square feet from 72,000 square feet. It is relocating from 1180 Church Road in Lansdale, Pa.

Friday, August 24, 2012

PIDC revising Navy Yard master plan

by Natalie Kostelni
The Navy Yard master plan, the 8-year-old document which has guided the South Philadelphia business park through $600 million in private investment, is being revised.

When the Philadelphia Industrial Development Corp. first unveiled the master plan for the Navy Yard in 2004, it had focused on 600 acres of the 1,200-acre site. The plan built on the property’s industrial history but also defined a mix of office, research, commercial and residential development that would eventually result in attracting as many as 30,000 jobs to South Philadelphia.

While it’s not quite there, progress has been made.

By the end of this year, 10,000 people will be working from the Navy Yard in mix of 125 different companies such as Urban Outfitters, Iroko Pharmaceuticals and Naval Ships Systems Engineering Station and Tasty Baking Co.

“There has been a lot of development that has occurred as a result of that plan,” said John Grady, president at PIDC, which oversees the development of the Navy Yard. “We felt it was time to take a step back and look at the plan for the future and we really want to understand where the next phase of investment should occur. We’re not talking about drastically changing the plan. The elements we already have there have seen strong market response.”

There are many moving parts to the Navy Yard. For example, Naval Ships Systems, considered an integral part of the Naval Surface Warfare Center, has grown over the last decade to have more than 1,800 employees. PIDC wants to make sure it preserves a portion of the site that will allow it to continue to expand.

PDIC now owns less than half of the 600 acres it did when the master plan was first drawn up. It conveyed a large swath of land to the state and regional port authority to accommodate port expansion. As a result, the new master plan will concentrate on about 350 acres.

While always part of the master plan, residential development is also something that will get renewed attention. The idea is to convert some of the historic buildings into residential use rather than create a free-standing residential community.
Full story:

After GSK moves out, Three Franklin Plaza will get a face-lift

by Natalie Kostelni

When GlaxoSmithKline moves out of Three Franklin Plaza early next year, Liberty Property Trust plans to extensively renovate the building, which is just 13 years old.

The eight-story, 225,000-square-foot building will get a fitness center, upgraded ventilation systems, new bathrooms and lobby as well as other improvements to common and other areas. Liberty, which owns the building, hasn’t pinpointed how much it intends to spend.

Even though work on the building won’t begin in earnest until next June, Liberty is already trying to land tenants to fill the soon-to-be-vacant space.

“We are marketing it to a range of users and have had advanced discussions with users,” said John Gattuso, senior vice president at Liberty. Gattuso anticipates the building will “most likely” be occupied by multiple tenants rather than a single company.
Some large Center City tenants milling about the market include FMC Corp., Drinker Biddle, Pepper Hamilton, Glenmede Trust and Beneficial Bank. Other smaller tenants are also in the market and a combination of them could help to chip away at the building’s vacancy.
Full story:

Thursday, August 23, 2012

Ocean Healthcare Acquires Buttonwood Hospital for $15M

Ocean Healthcare purchased the Buttonwood Hospital, located at 600 Pemberton Browns Mills Rd. in New Lisbon, NJ, from the Burlington County Department of Economic Development for $15 million, or $75,000 per bed.

The 200-bed psychiatric and nursing home was administered by the State Government for the past 150 years. It includes 170 long-term care beds and 30 psychiatric beds with average occupancy at 96 percent. The 156,372-square-foot building was constructed in 1986 on 22.3 acres in South Burlington County.

The hospital was sold to save nearly $4 million in property taxes and subsidize the $24 million in annual hospital operation costs due to declining federal insurance reimbursements.

In an auction held back in March 2012, Ocean Healthcare was the only bidder. Bidding was started at $15 million, and the sale finally closed August 14th. Conditions on the sale include keeping the current patients and operating the facility for at least 10 years. 80 percent of the beds are to be used for Burlington County residents, and 60 percent are reserved for Medicare and Medicaid residents. Medicaid payments account for more than 80 percent of the facility's revenue.

PREIT Raises $85 Million in Refi Proceeds

Pennsylvania Real Estate Investment Trust closed on three non-recourse loans of $402 million at an average interest rate of 4.06%, generating excess proceeds of $85.3 million.

The new loans replaced mortgage loan balances of $316.7 million carrying an average interest rate of 5.30%,
"We have now addressed all of the company's debt maturities through June 2013 and have created a reduced base of long-term, fixed-rate interest costs from which to grow earnings," said Andrew Ioannou, PREIT's senior vice president - capital markets and treasurer.

The company has completed $495.8 million of property-level financings to date in 2012, generating net proceeds of $102.9 million and a reduction in average interest rate of 129 basis points, from 5.54% to 4.25%.

The respective loans are secured by Cherry Hill Mall, Cumberland Mall and Christiana Center.

Cherry Hill Mall in Cherry Hill, NJ, is a 1.3 million-square-foot super-regional mall with sales per square foot of $630 as of June 30, 2012. Cherry Hill Mall is anchored by Nordstrom, Macy's and JCPenney and underwent a comprehensive redevelopment and renovation in 2009, transforming the center into the premier shopping and dining destination in southern New Jersey.

Cumberland Mall in Vineland, NJ, is a 944,000-square-foot regional mall anchored by JCPenney, Boscov's and Burlington Coat Factory with sales per square foot of $324 as of June 30.

Christiana Center in Newark, DE, is a 303,000-square-foot power center anchored by Costco and Dick's Sporting Goods.

Parents United For Better Schools Acquires Land

Parents United for Better Schools acquired 0.66 acres of land where it plans to expand The Mathematics, Civics & Sciences Charter School. The land consists of two parcels located at 1300 Buttonwood St. in Philadelphia, PA.

MGM Development Commercial Industrial sold the vacant land for approximately $2.7 million, at around $4 million per acre. According to the seller, the additional value of the land was donated as a "gift" to the non-profit charter school. The parcel is currently paved, being utilized as a parking lot for 100 cars located adjacent to the existing school building.

Wednesday, August 22, 2012

Sunrise Senior Living bought for $1.3B by Health Care REIT

Health Care REIT Inc., of Toledo, Ohio, said it had agreed to buy Sunrise Senior Living Inc., which has 14 sites within 30 miles of Center City, for $14.50 per share in cash, or $1.3 billion.
Health Care REIT also owns the real estate of Genesis Healthcare Corp., a Kennett Square operator of nursing homes and rehabilitation facilities, and Brandywine Senior Living, a Moorestown assisted living company. Sunrise is based in McLean, Va.

Tuesday, August 21, 2012

Science Center to construct building near Penn

by John George
The University City Science Center said Wednesday it is about to begin construction on an 11-story tower at 3737 Market St. in West Philadelphia, for which Penn Presbyterian Medical Center will be the anchor tenant.

The project is a joint venture between the Science Center and Wexford Science & Technology, is a private real estate investment and development company based in Baltimore.
The 272,700-square-foot building at the northeast corner of 38th and Market streets will feature outpatient medical facilities, ground-floor retail, and office and lab space for startup and growing companies.

Penn Presbyterian Medical Center, part of the University of Pennsylvania Health System, will occupy 155,700 square feet for orthopedics and outpatient medical facilities. In addition, Good Shepherd Penn Partners — a joint venture of the Penn heath system and the Good Shepherd Rehabilitation Network in Allentown — will occupy an additional floor-and-a-half in the building.
The Science Center and Wexford will control the remaining 88,000 square feet in the building for uses related to supporting tech-based innovation, entrepreneurship and economic development in the region.

Construction is expected to begin in September 2012 and the building, designed by Zimmer Gunsul Frasca Architects with UJMN Architects and Designers, is expected to be completed by June 2014.
Full story:

Pottstown Walmart Expansion needs more Workers

The Pottstown Walmart is getting bigger, and management is seeking new employees to work for the expanded store.

Richard Alphonso, manager of the 233 Shoemaker Road Walmart, located in Pottstown Center at Route 100 and Shoemaker Road, said the store is hiring approximately 50 additional associates to staff the store when its expansion into a Supercenter is complete this fall. He said it's possible future job opportunities may arise as well.
"We are excited to expand this Walmart in Pottstown and bring good jobs with career opportunities to the area," Alphonso said in a prepared statement.

The construction, which has been ongoing since the beginning of the year, will grow the store from 121,000 square feet to 178,000 square feet, according to Alphonso. The expanded store will have a deli, produce, meat, bakery, frozen and dairy section as well as expanded electronics and garden center, he said.
Though no set date has been given as to when the construction on the store will be complete, Alphonso said "fall" will be the time for a planned grand re-opening.
The store has set up a job application kiosk to facilitate the filling of the new positions, which include both full- and part-time opportunities. Alphonso said associates are needed to work in all areas of the new store, including supervisory positions.
Full story:

Monday, August 20, 2012

PhillyInc: Chesco's rally for shared space

So many business incubators and co-working spaces for small firms have opened in the Philadelphia area in the last three years that when two more sprouted this summer, it felt as if the region might be reaching a saturation point.
But considering that these two incubators are in Chester County and mark the first ones the county has had in many years, the question is: What took it so long to join the shared-space rally?
First, the particulars. Evolve IP L.L.C., a provider of cloud-computing technology and services, opened a 10,000-square-foot incubator for information-technology firms at its offices at 989 Old Eagle School Rd. in Tredyffrin Township earlier this month. Hankin Group opened a 40,000-square-foot incubator for biotech companies at 665 Stockton Dr. in Uwchlan Township in July.
Both privately owned incubators offer small amounts of space, from a few hundred square feet to several thousand. They provide the shared services, equipment and conference rooms that are standard fare at all incubators.
What makes these two a little different is they are located in Chester County's Keystone Innovation Zone, a state designation that provides certain tax advantages and other services to businesses. An enterprise that leases space would be able to tap the resources of the Chester County Economic Development Council's Ideas x Innovation Network (i2n), which runs the KIZs in Chester and Delaware Counties.
A big incentive is the availability of up to $100,000 in KIZ tax credits annually that a start-up could use or sell for cash, according to Mary Fuchs, co-director of i2n.
Not just any company can move into one of the KIZ incubators. To qualify, a business must be less than eight years old and operate in the life-sciences, information-technology or energy sectors, Fuchs said.
Despite having some of the best-known local high-tech addresses - Malvern, Exton, Wayne - Chester County didn't have dedicated small spaces available to attract the next generation of start-ups. Hankin Group, which had empty laboratory space available when 3-Dimensional Pharmaceuticals, a division of Johnson & Johnson, was shut down, and Evolve IP, which has grown to about 80 employees in only four years, responded to a formal request by the Economic Development County and agreed to host incubators, Fuchs said.
Though there are other incubators offering lab space and IT-intensive environments in the region, especially in Philadelphia, Chester County's economic-development officials are following a well-thumbed playbook.
The number of incubators in the United States has climbed to 1,250 currently from about 1,100 in 2006, according to the National Business Incubation Association. Linda Knopp, its director of policy analysis and research, attributed that increase in part to community organizations trying to stimulate economic growth and job creation.
Knopp said surveys show that the "graduates" of incubators tend to stay in the region where they started.

Subaru getting new distribution center in Jersey

NFI Real Estate will formally break ground this week on a 526,050 square-foot distribution center and training facility for Subaru of America.

The project will be constructed at NFI Park at Florence Crossings at 2020 Route 130 N. in Florence, N.J. Cherry Hill, N.J.-based Subaru took advantage of a program called Payment In Lieu Of Taxes, which is a tax incentive provided by Florence and will allow the company to get breaks on real estate taxes.

Friday, August 17, 2012

SLG Green CEO on Commercial Real Estate

Warrington welcomes new hotel

Homewood Suites by Hilton opened its new all-suite, residential-style hotel in Warrington this week.
The five-story, 96-suite hotel is owned by Bhavi Hotels LLC, managed by SMG Hotels and has 28 employees.
The hotel is one of several coming to the region. Mariott is building a 91-room, five-story hotel near Sesame Place in Middletown. And this fall, Philadelphia's Wurzak Hotel Group will open the $30 million Sheraton Valley Forge, a 180-room hotel.

Philadelphia's Select Top Office Leases for Q2 2012

The following is an account of the Philadelphia market's select top five office lease transactions for second quarter 2012.

Morgan, Lewis & Bockius LLP renewed its lease for 309,234 square feet at Market Street 1701 in Market Street West. The building is owned by Lexington Realty Trust.

Cozen O'Connor leased 193,136 square feet at One Liberty Place in Market Street West. The landlord is  Metropolis Investment Holdings, Inc.

Marsh, Inc. leased 102,608 square feet at Three Logan Square in Market Street West.

Accolade LLC leased 89,878 square feet at 660 W. Germantown Pike in Plymouth Meeting. Brandywine Realty Trust, the landlord,  was represented in-house.

Auxilium Pharmaceuticals, Inc. leased 74,516 square feet at Chesterbrook in Wayne. The landlord is Pitcairn Properties.

Wednesday, August 15, 2012

Cabot Properties Acquires K-Mart Dist Ctr

JP Morgan Chase & Co. has sold the K-Mart Distribution Center at 1475 Nitterhouse Dr. in Chambersburg, PA to Cabot Properties, Inc. for $44.8 million, or about $52 per square foot.

Part of the Chambers-5 Business Park, the single-story, 862,450-square-foot distribution building was constructed in 2001 on 50.1 acres in the Harrisburg Area West Industrial submarket of Franklin County. The property features 59 loading docks, 30-foot clear heights, and its red-striped walls are visible from I-81.

Ambler Office Bldg Sells for $3M

7 East Skippack Associates LP sold the East Bldg in the Whitemarsh Corporate Center, located at 7002 Butler Pike in Ambler, PA, for $3 million, or about $120 per square foot. Liberty Lutheran Services, a non-profit organization that provides a variety of social services for children, families, and seniors, will utilize the building as its new headquarters.

Built in 1972, the 25,000-square-foot, four-story office building is located in the Plymouth Mtg/Blue Bell submarket of Montgomery County. The building was renovated in 2009 and boasts abundant parking and on-site amenities.

Tuesday, August 14, 2012

Philly launches L&I website, Zoo to build $24M Parking Garage

by Joseph N. DiStefano

After what boss J. Anthony Hayden called a "tense" six-hour auction - on, during thunderstorms that threatened to reset the bids - MIM Hayden Real Estate Funds of Conshohocken has agreed to pay $11 million for Walnut Hill, a 155,000-square-foot office building at 150 Warner Rd. in King of Prussia.
That's just half what the building was worth when it last sold, six years ago, according to Hayden.
A bargain - or a sign of collapse? Liberty Property Trust, Brandywine Real Estate Trust, and other corporate landlords have been selling suburban offices as rents fall and vacancies rise.
"We understand why they are pulling out. But there are still strong suburban areas, like our Five Tower Bridge" in West Conshohocken, Hayden told me.
And 150 Warner? "It's sandwiched between 1000 Continental Drive and Liberty's Vanguard Building. Those buildings will not move below $30 a square foot" yearly rental. "But we can lease ours for the low $20s," and still improve the property, given the lower acquisition cost, according to Anthony J. Hayden, the chairman's son and partner.
The seller was CWCapital, special servicer for the lenders who took over Walnut Hill after occupancy fell to 50 percent and the previous owners let it go. The Haydens say they have three tenants already competing for the empty space at their new rate.
The neighborhood also includes the new Wegmans supermarket, plus the former Valley Forge golf course, where developer Dennis Maloomian hopes to build a hotel and medical center.
Is King of Prussia ready to build again? "It's just now beginning to wake up," Maloomian told me. Though, before the crash, "we were planning to build the lion's share of the project in one phase; now we are breaking it up into phases."
No sale
In South Jersey, Wal-Mart is more desirable than Gucci:
Canada-based RioCan Real Estate Investment Trust said Monday it plans to pay $52 million to buy out the owners and creditors of the four-year-old Deptford Landing retail development, which features a Wal-Mart, Sam's Club and PetSmart. Developer AIG Shopping Center Properties L.L.C. put the property in bankruptcy two years ago, after former tenant Circuit City failed.
By contrast, in an auction last week C-III Asset Management was unable to find buyers for the ritzy-boutique-laden Pier Shops at Caesars development willing to meet the $25 million bankers' buyback price lenders paid Taubman Co. two years ago to buy the complex back. Pier Shops had been appraised at over $200 million in 2007.
Look it up
The Philadelphia Department of Licenses and Inspections and the city Information Technology Office went live Monday with a rebuilt website at
The site lists, maps, and fetches reports on licensed building contractors, their constructions permits and violations, licensed rentals and places cited for renting without a license, vacancies, zoning and use permits, appeals, zoning applications, and even applications to have gun permits reinstated.
This is already public information, but it's cool to have it all in one place, and generally user-friendly.
Taxes at work
The Philadelphia Zoo has hired Conshohocken-based Shoemaker Construction Co. in partnership with Angelo R. Perryman's West Philadelphia-based Perryman Construction Services to build a 4-story, $24 million parking garage and bus station, the Centennial District Intermodal Transportation Center, which zoo officials hope will help boost attendance above last year's 1.2 million visitors.
The 683-space garage will nearly double parking at the historic zoo above the Schuylkill, and improve traffic flow at the Schuylkill Expressway (I-76) ramps nearby, according to the zoo, which sits smack on SEPTA city bus and trolley routes but can be a tough drive for suburbanites.
Where's the money coming from? $7.18 million from the Federal Transit Agency and Federal Highway Administration; $8.25 million from Pennsylvania's state Redevelopment Assistance Capital Program; $700,000 from the city; plus an $8.25 million loan from PNC Bank.

Shire CEO says company nearing decision on move from Chesterbrook

Shire P.L.C., which has grown from 100 local employees to about 1,100 since the specialty pharmaceutical company landed in Wayne in 2004, is nearing a decision on a likely move of its North American headquarters from Wayne to another spot in the region.
Shire chief executive officer Angus Russell said during a recent wide-ranging interview that the company needed a campus-like setting to handle its current workforce and future growth. Although he said he had met with Mayor Nutter on a variety of topics, including the move, Russell would not identify possible relocation sites, in the city or elsewhere.
Russell also said that Shire had cooperated with investigations of drug shortages and off-label marketing, that he agreed with critics who say illegal behavior by some drug companies will not change until top executives go to prison, and that his company can compete in the new health-care environment by offering distinctive medicine.
"We can't keep on this path of paying more and more for health care," Russell said. Sooner or later, consumers will have to pay a bigger part of the tab, he said. "When they do, the consumer will be more active, and that will drive competition in a healthy way. I think Shire recognizes that and we have a portfolio that plays to that."
Shire was started in 1986 in Basingstoke, southwest of London. In 2008, the company moved its corporate registration to Jersey, an English Channel island and British crown dependency, and put its headquarters in Dublin, Ireland. Both moves were for tax purposes. The company has about 5,000 employees in 29 countries.
Shire this month reported a second-quarter profit of $238.7 million, up from $205.5 million a year earlier, on revenue of $1.2 billion.
Russell, 56, was Shire's chief financial officer for nine years before becoming CEO in 2008. He has grown children in the United Kingdom from his first marriage, his fiancée lives in Montreal, and he officially lives in Florida for tax purposes. But he has an apartment here because he works mostly in this area when he is not traveling.
Asked about the $3.45 million Shire received from the State of Pennsylvania to set up in Wayne in 2004, Russell quickly says the company more than met the requirement that the company add 400 full-time employees.
Leases on Shire's four buildings in the Chesterbrook Business Center expire from the end of 2015 and through 2017. That leaves time, except that Shire wants to lease much more than the 450,000 square feet it has filled now. It wants a campus, with integration of offices and room to add more if it continues to grow.
"I don't want to move campuses every five to seven years," Russell said. "But I also don't want to have a bunch of empty buildings."
Endo Health Solutions Inc. received state money as part of its move from Chadds Ford, Delaware County, to the Atwater Corporate Center in Malvern, in Chester County. Atwater has room, along with a new taxpayer-funded exit ramp off the Pennsylvania Turnpike.
Philadelphia Deputy Mayor Alan Greenberger said Friday that the city suggested several sites, but that financial inducements did not come up because Shire was thinking on a "higher plane" about its real estate needs. "It wasn't so much us peddling as saying here are some possibilities and letting them test their premises of what they might want to do," Greenberger said.
Drugmaker GlaxoSmithKline P.L.C. has a building under construction at the Philadelphia Navy Yard that still has room.
"I know that," Russell said. "I know all the various sites in the area."
Russell worked for Zeneca and then AstraZeneca, which moved from Chesterbrook to Wilmington. He said North Jersey, which hosts several large health-care companies, was not a current possibility for Shire.
"My bias would be to stay in the Greater Philadelphia area," Russell said, without sharing a preference for Pennsylvania, New Jersey or Delaware.
According to a Securities and Exchange Commission filing, in 2009, Shire received a subpoena for documents from the U.S. Attorney's Office in Philadelphia and the Health and Human Services Office of Inspector General in an investigation of marketing practices of drugs, including Shire's top sellers Vyvanse, Adderall XR, Daytrana. The first two are approved for ADHD.
In 2012, the Federal Trade Commission and senators sought information about the recent drug-supply shortages, including with ADHD medicines.
Other federal prosecutors are looking at marketing practices for Dermagraft, a treatment for diabetic foot ulcers produced by Advanced BioHealing, which was acquired by Shire in 2011 and renamed Shire Regenerative Medicine in July.
Russell said that he told employees to give investigators all they ask for and that Shire had "complied entirely" with those requests. "I don't believe the government has any criticism of what we've shown them," Russell said, without predicting an outcome.
But a general complaint about the drug industry is that sometimes billion-dollar fines for illegal marketing are considered a cost of doing business and conduct will not change until top executives go to prison for harming patients or defrauding Medicare and Medicaid.
"I would agree absolutely," Russell said. "I've been in this industry for 33 years, and I don't like what I'm seeing in this industry. It upsets me. I can't sit here and say that and not be judged accordingly."

Friday, August 10, 2012

Phila. developer aiming to buy blighted landmark Divine Lorraine

"Developer Eric Blumenfeld is attempting to buy the derelict Divine Lorraine Hotel either directly from the current owners or at sheriff's sale in the fall, sources familiar with the negotiations say.
Blumenfeld, who has been credited with sparking a revival along North Broad Street, has had crews in the building to examine its condition since late July. If negotiations with the owners fail, sources said, Blumenfeld will work with the city and the bank that holds the debt on the Broad Street landmark to acquire it at a sheriff's sale in October.
Blumenfeld could not be reached for comment. But according to individuals familiar with the situation, the city, which is owed $838,129.60 in real estate taxes, could request that the property be put up for a sheriff's sale.
Amalgamated Bank, a New York-based bank that is owed more than $10 million, also could force a sale.
"There is a plan for an organized process to get the property in the hands of someone who will redevelop it," said one of the sources.
That plan would include converting the hotel into market-rate housing and a sizable amount of commercial space. The source said it is most likely that the project would include federal historic tax credits as part of its financing package.
The current owners include local builder Michael Treacy Jr.; a Dutch company, Sunergy Housing; and Michigan-based NSI Real Estate Group. In 2006, they bought the hotel and 3.7 vacant acres for $10.1 million. The economic downturn derailed their plans to restore the hotel and build new housing for a total of 900 units.
The current negotiations would involve a sale of only the hotel, with the land being "the subject of a separate transaction," the source said.
Earlier in the year, Blumenfeld floated the idea of using the land to build a campus for several public schools, a concept some observers have dismissed as unlikely given the Philadelphia School District's dire financial state.
Redeveloping the graffiti-laden building has been a priority of Mayor Nutter. For more than a year, his administration has been pressuring the bank and current owners to do something with the deteriorating structure.
Vandals have stripped the interior, broken windows, and covered the roof and walls with graffiti. Deputy Mayor Alan Greenberger has described the hulking structure at 699 N. Broad St. as "a billboard of blight."
After a fire March 6, the Department of Licenses and Inspections sealed the building's lower floors to prevent vandals from getting inside.
Opened in 1894, the 10-story Lorraine apartment building, which quickly became a hotel, was one of the city's first "skyscrapers." In 1948, the preacher Father Divine turned it into the headquarters of his International Peace Mission.
If Blumenfeld succeeds in buying the Divine Lorraine, it would mark the second time he has owned the 10-story property.
He acquired the hotel and adjacent land for $5.8 million in 2003 and sold it three years later to the current owners for nearly twice the price.
On North Broad Street, Blumenfeld, who founded EB Realty, has restored the old Botany "500" factory and Biberman Building into loft apartments.
In an interview last month, Blumenfeld called the development of North Broad his "passion" and predicted he would overcome whatever obstacles he might face. "I expect to do the next project, and next after that, and do it well."

Phila.-area commercial real estate: Sun shining brighter

by Natalie Kostelni
The suburban office market in the western suburbs got quiet and stayed quiet last year at this time.
In contrast, leasing activity has held steady this summer, and tenants of all sizes are in play and expected to strike deals later this year.

“The name of the game is consistent activity. It’s not over the top, but we’re experiencing steady, consistent activity.”

At 1000 Continental in King of Prussia, Mack has completed a 12,000-square-foot lease for FT Services and is close to completing another deal at 8,000 square feet that will bring the 202,678-square-foot building finally above 85 percent leased for the first time since it was completed in the third quarter of 2007.

Though a range of industries have wrapped up deals, pharmaceutical, bio, and medical-related companies are increasingly experiencing slow growth that has helped propel the market, Mack said. Others were finding that the primary demand drivers were “classic sectors – financial activities and professional and business services. This is a good sign.”

It’s a positive signal because most leasing activity during the recession had been educational and medical tenants, which help sustain the market but is “far from capable of sustaining a recovery for traditional office space.

Some of the leases that have been sealed up during the first half the year include: Frontage Laboratories leased 60,000 square feet in Exton; Accolade took 89,900 square feet in Plymouth Meeting; Airgas Inc. (NYSE:ARG) renewed 60,000 square feet in Radnor; NextDocs signed a lease for 30,000 square feet at Six Tower Bridge in Conshohocken; and Theorem Clinical Research signed on for 29,000-square-feet in King of Prussia and Delaware Valley Financial Group leased 49,000 square feet of space also in King of Prussia. An anomaly in the market but not short on heft, Dow Chemical signed a long-term lease on 800,000 square feet at Pfizer’s Collegeville campus.

The data can be a mixed bag depending on how it’s calculated. The vacancy in the suburbs dropped to 15.3 percent from 15.9 percent. But for King of Prussia, all of the submarkets saw positive absorption. Another report found vacancy declining by nearly 1 percent to nearly 13.5 percent during the first half of the year and is expected to continue to drop. We saw the overall vacancy rate decline in the suburbs to 18.6 percent.

Full story:

Miller Investment, Hayden snap up Walnut Hill, Exton real estate

This is an expansion story from 2 earlier posts:

by Natalie Kostelni

While local real estate investment trusts are unloading selected suburban office buildings, a local real estate fund has picked up a dozen of these properties as it banks on tenants wanting to occupy space in outlying areas.

A fund comprised of Miller Investment Management and Hayden Real Estate, both locally owned firms, bought Walnut Hill Plaza in King of Prussia. In a separate transaction, the Miller-Hayden partnership, along with the Davis Cos. of Boston, bought a dozen buildings in Exton. Both deals closed on the same day.

The local fund, called MIM-Hayden Real Estate Funds, paid $11 million for Walnut Hill, a four-story, 155,073-square-foot building at 150 S. Warner Road and across from a new Wegmans store.
Last summer Thomas Properties Group Inc. relinquished three of its suburban office properties — Four Falls Corporate Center, Oak Hill Plaza and Walnut Hill Plaza — in a deed in lieu of foreclosure. The Walnut Hill property was put up for auction in recent weeks.

“At the end of the day, we underwrote it and said we can spend $13 million on it,” said J. Anthony Hayden, chairman of Hayden Real Estate.

The fund ended up getting the property for $2 million less than it allotted and plans to plow roughly that amount back into the building on interior and exterior renovations. The building was 50 percent vacant when the fund bought it but the fund has already arranged an expansion with its tenant Susquehanna Bank, to grow their space to 22,000 square feet from 12,000 square feet, and is lining up some other leases to chip away at the vacancy.

“We think by the end of the year we will be fully leased,” said Tony Hayden Jr. “There’s more activity here than any other building we own.”
In the other transaction, the MIM-Hayden Real Estate Funds in conjunction with the Davis Cos. swooped in and bought 11 buildings within the Oaklands Corporate Center in Exton from Brandywine Realty Trust for $52.7 million. The portfolio consists of 10 single-story and one two-story office-flex properties totaling 466,719 square feet. The properties were 81.6 percent leased at closing.

The buildings were constructed between 1987 and 1999 and consist of: 412 Creamery Way, 429 Creamery Way, 436 Creamery Way, 440 Creamery Way, 456 Creamery Way, 457 Creamery Way, 467 Creamery Way, 468 Thomas Jones Way, 486 Thomas Jones Way, 111 Arrandale Blvd. and 481 John Young Way.
Full story:

Brandywine Realty trying to fill planned Cira South in Phila.

by Natalie Kostelni
Brandywine Realty Trust has relaunched an extensive marketing campaign of its Cira Centre South complex at 30th Street in Philadelphia as it attempts to seize on conditions that may finally get the long-awaited project under way.

This comes four years after the real estate marketing the Cira South campus. In early 2008, Brandywine was trying to lure BlackRock Group as an anchor tenant to the project but that never happened. It mothballed Cira South until financial markets stabilized, the economy began to improve and the office market started to show some signs it would support new construction.

“We did think there were enough signs of recovery that we wanted to get ahead of the curve and do the marketing campaign,” said Jerry Sweeney, president and chief executive of Brandywine. “We are having a lot of conversations with a lot of tenants in and outside of the region.”

The Radnor real estate investment trust redesigned its Cira South brochure and created a multimedia marketing campaign that went out to 650 companies outside of the Philadelphia area. It has also held presentations before companies and others to make them aware of the project and what Philadelphia has to offer.

The entire Northeast Corridor was blanketed with particular emphasis on New York, Northern New Jersey and the Washington, D.C., areas. The company is sensitive to trying to nab tenants outside of Center City since it came under fire for luring several downtown firms, such as a Lubert Adler, Dechert, Woodcock Washburn and others, to Cira Centre, which sits in a Keystone Opportunity Zone. The KOZ designation gives tenants who move into the space breaks on state and local taxes. Brandywine experienced some backlash from many downtown landlords and others who bristled when taxpaying tenants hopped across the Schuylkill River into the Cira Centre. Cira South has KOZ status until 2025.

“We have a large pool of square footage in Center City Philadelphia but to counter-balance that potential, we’ve kicked off the Northeast marketing campaign,” Sweeney said.
Brandywine owns One, Two and Three Logan Square as well as has an interest in the Commerce Square office complex and could draw tenants from there. Some firms renting space in Cira Centre need to expand and don’t have room in that 29-story, 731,000-square-foot complex.

Brandywine does have one tenant locked up. The University of Pennsylvania has already committed to a tad under 100,000 square feet. The trophy market is also playing into the situation.

“Large blocks of trophy space are scarce and that presents a development opportunity. All trophy tenants want to stay in trophy space and don’t want to take a step down.”

Tenants who fit into that category include: Drinker Biddle, which is now in One Logan Square; Pepper Hamilton, which is in Two Logan Square; FMC Corp., which is at Mellon Bank Center at 1735 Market St.; and Glenmede Trust Co., which occupies space at One Liberty Place at 1650 Market St., and reportedly looked at the idea of a Cira South move.

Some parts of the Cira South campus have been tweaked since it was first unveiled. The complex still consists of two towers — Cira South Walnut and Cira South Chestnut — however, some components in the buildings have changed.
Full story:

Upbeat on Singapore Commercial Property

Wednesday, August 8, 2012

Premier Office Solutions Acquires Industrial Bldg for $2.71M

Premier Office Solutions purchased the industrial facility at 601 Davisville Rd. in Willow Grove, PA from Davisville Road Investors LP for $2.71 million, or about $27 per square foot.

The 98,600-square-foot building was constructed in 1955 and is situated on 6.2 acres in the East Montgomery County Industrial submarket of Philadelphia. The property features 30 percent office build-out, 21-foot clear heights, 1,200-amp heavy power and parking to accommodate 200 cars.

Monday, August 6, 2012

Blue Bell Inn has been sold

The Blue Bell Inn, which grew out of a mid-18th-century house at a Montgomery County crossroads, has been sold to a developer who intends to refurbish it rather than submit it to a wrecking ball.

John Lamprecht, the restaurant’s chef and owner since 1963, confirmed that developer Bruce Goodman, a longtime customer, will assume control on Sept. 4. His partners in the transaction are Kevin Clib and Scott Dougherty, who own Bridget’s, a steakhouse, and KC’s Alley, a pub, in nearby Ambler. Before joining Clib, Dougherty worked for Lamprecht for 11 years as a maitre d’ and manager.

Goodman said the decision to buy the inn was driven as much by sentimentality as by business. Goodman and his Jenkintown-based company, Goodman Properties, owns and manages 125 commercial properties in the region. In addition to renovations that will include a larger outdoor seating area, Goodman said he planned to develop a separate building on the three-acre plot, at Skippack and Penllyn-Blue Bell Pikes.
Lamprecht, whose father, Johann Lamprecht, and uncle Karl Friedel bought the inn in 1945, said he would retire. “At 76, I need to quit doing those 15-hour days,” he said. The Blue Bell was among the first fine-dining establishments in central Montgomery County to offer outdoor dining. Even before the recession, Lamprecht carved out a lower-priced bistro to appeal to budget-conscious patrons.
Clib described the new menu, to start Sept. 4, as focused on fresh seafood, and added that he would retain some favorites such as Dover sole and onion rings.

Saturday, August 4, 2012

Federal Realty CEO on New Properties, Dividends & CFO Change

Bright spots in Center City space

by Natalie KostelniThough the overall Center City office market has lost some of the momentum it had when it closed out 2011, trophy and Class B office space have emerged at midyear as two sweet spots that may help define the future direction of the market.

Three significant Class B buildings have been targeted for apartment conversions, pulling more than 715,000 square feet of office space off of the market. Those buildings are: 1616 Walnut St., a 25-story, 279,770-square-foot property; 260 S. Broad St., which stands 21-stories and totals 330,000 square feet; and the Arch, formerly known as the Robert Morris Building, which totals 106,000 square feet.

The removal of that much space in that office category has helped push down the vacancy rate for Class B space to 10.5 percent at the end of the second quarter from 13.1 percent at the end of last year.

As the new owners of those buildings roll out their conversion plans, tenants have been forced to look elsewhere for new digs. That has meant, in most cases, seeking out other Class B and Class C space.
“There’s not a lot of places for all of those tenants in the B and C market. Tenants are finding space and it’s out there but it’s not plentiful. Unless you’re flexible, there’s not a lot of options.”
The dynamics playing out in the Class B market — shrinking inventory, limited space and demand — has meant pressure on rents.

“We have seen Class B rents tick up in certain submarkets. Brokers also expects as rents go up, concessions will continue to go down.
At the end of the year, Class B rents stood at $24.59 a square foot and are now at $25.51 a square foot.Tenants that are expanding also put some pressure on the Class B market. One company, whose firm owns five Class B office buildings in Center City, has seen a series of tenants add space as they grow.
“They aren’t noticeable, but we felt that taking them in the aggregate, it was meaningful."
At the opposite end, the trophy market has been affected by a string of large lease transactions during the first half of the year.

For example: Marsh & McLennan Cos. took 102,608 square feet at Three Logan Square; Cozen O’Connor took 200,000 square feet at One Liberty Place; Ballard Spahr stayed put in 190,000 square feet at Mellon Bank Center; and Reed Smith grabbed 115,000 square feet at Three Logan.

While those tenants and others have wrapped up their deals, other companies are looking for large blocks of trophy space, which is in short supply. Just 9 percent of the trophy market, which totals 6.35 million square feet, is available. Some of the tenants scouring the market include: Drinker Biddle & Reath seeking 175,000 square feet, FMC Corp. is scouting out 150,000 square feet, Pepper Hamilton is on the hunt for 150,000 square feet; Glenmede Trust wants 100,000 square feet; and Beneficial Bank is looking for 100,000 square feet.
Full story:

Kimco CEO: Fixed Amount of Quality Retail Space Now

Thursday, August 2, 2012

Tokyo Ultimate Moving into Mays Landing

Tokyo Ultimate Seafood and Sushi Buffet, a local Asian-themed restaurant, plans to open their doors at Wrangleboro Consumer Square, a 841,700-square-foot power center at 2300 Wrangleboro Rd. in Mays Landing, NJ.

The restaurant leased 10,000 square feet within the center, which was built in 1997 on approximately 76 acres in the Southern New Jersey submarket of Atlantic County.

The Crossings at Mill Creek Sells for $22.7M

Local multifamily property owner and manager Morgan Properties, along with institutional investor AIG, sold the 338-unit multifamily complex at 2000 Swarr Run Rd. in Lancaster, PA for $22.65 million, or about $67,000 per unit. The new owner, The Westover Companies, is a locally based regional real estate investment company that develops, owns, and manages multifamily, office, and retail properties across the Mid-Atlantic states.

Built in 1971, The Crossings at Mill Creek is a 327,604-square-foot multifamily community located in the Lancaster County submarket of Philadelphia. The property consists of 84 one-bedroom units, 170 two-bedroom units, and 84 three-bedroom units. Each unit has a full kitchen that includes a dishwasher and separate dining area. The majority of the units have washers and dryers. The community also has laundry facilities, swimming pools, and playgrounds.

Wednesday, August 1, 2012

FedEx to build distribution center in Delaware County

"The ground-shipping division of FedEx Corp. will build a $64 million automated small-package distribution center in Lester, Delaware County.

The center, when it opens in September 2013, will be one of the 50 largest that FedEx Ground operates in the United States and Canada, company spokesman David Westrick said.

Ground will be broken for construction at 10 a.m. Thursday for the 211,000-square-foot plant on Tinicum Island Road in Tinicum Township, near Philadelphia International Airport.

FedEx Ground, based in Pittsburgh, is the small-package ground-shipping division of FedEx Corp.

The new plant will employ 70 and be one of 500 local pickup and mail-delivery stations operated by FedEx Ground.

FedEx already has a ground-package distribution center on Townsend Road in Philadelphia, where packages arrive in trucks, are sorted, and then are shipped on trucks to various locations.

The new facility will operate the same way.

"In the mornings, vehicles are dispatched to make deliveries in the area with packages that came in overnight," Westrick said. "In the evening, packages that were picked up from local businesses during the day are sorted and sent out to go all over the country.

"All our packages are on the ground, similar to parcel post."

FedEx Corp., with headquarters in Memphis, has three divisions: FedEx Express for air packages, FedEx Ground, and FedEx Freight.

The volume handled by FedEx Ground has doubled in the last 10 years to more than 5.6 million packages daily. The ground carrier had $9.5 billion in revenue in fiscal year 2012 and 59,000 employees.

"When we open in September 2013, we are expecting to have 70 people there," said Westrick. Forty will be new hires, and the rest will transfer from 14300 Townsend Road, Westrick said.

"Some of the activity from the existing facility will move into the new facility, thus we need some of those employees," he said.

The new FedEx Ground facility is part of a nationwide network expansion, in which 11 major hubs have been added and 500 other distribution centers have expanded or relocated since 2005, the company said."