Tuesday, April 30, 2013

Oliver-Tolas Healthcare Packaging, Inc. buys 915 Pennsylvania Blvd, Feasterville, PA.

The 50,000 square foot industrial facility, situated on 2.5 acres, was sold for the owner Coren-Indik, Inc. and purchased by Oliver-Tolas Healthcare Packaging, Inc.  The new owner plans to renovate the building and use the facility to house their expanding operations.  The location, near Street Road and U.S. Route 1, provides easy access for both employees and trucks.

 The strong interest in the property in the last several months indicates improvement in the industrial real estate market.  “The previous owner out-grew the building and the new owner is expanding into it.  This business growth is a welcome sign of our strengthening economy and improving industrial real estate market.”   

Final Pieces of 1 World Trade Center to Be Placed


Monday, April 29, 2013

Recent CRE Deals

by Natalie Kostelni-Staff Writer, Philadelphia Business Journal

$15 million

Rotter Realty Group of Jenkintown paid $15 million, or just under $100,000 a unit, for Castle Club, a 158-unit complex at 254 W. Trenton Ave. in Morrisville, Bucks County. The property was 95 percent occupied at the time of sale and rents range from $900 to $1,200. Home Properties Inc. was the seller and had renovated the property, which was constructed in 1974. Jim Sheehan and Joe Verdejo, which formed IP Capital Advisors earlier this year, arranged the transaction.

39,674 sq. ft.

Crothall Services Group leased 39,674 square feet at 1500–1550 Liberty Ridge Drive with Liberty Property Trust in Chesterbrook Corporate Center in Wayne. Crothall was represented by David Morris and Dean Geis of NAI Geis Realty Group.

Drexel snags parcel it has coveted for decades for $9 million

by Natalie Kostelni-Staff Writer, Philadelphia Business Journal

Drexel University finally got it.
It took what some peg at 20 to 30 years, but Drexel bought the Firestone Auto repair property that sits right in the heart of the university’s campus in West Philadelphia.
The school paid $8.95 million for the triangular-shaped parcel at 3161-67 Market St. that sits between John F. Kennedy Boulevard and 32nd Street. The acquisition is part of Drexel’s 30-year master plan that was adopted last year.
“Basically, the boss said to get it and we went out and got it,” said Jim Tucker, senior vice president of student life and administrative services at Drexel. “It’s the hole in the center of the campus that we did not own. You don’t want a Firestone auto shop in the middle of your research university.”
The site totals 26,675 square feet, or a little more than a half acre. The existing building totals 19,443 square feet.
When Drexel took another stab at buying the site, it was rebuffed yet again. The school was told that auto shop was one of the highest grossing Firestone’s on the East Coast and there was no interest in selling. It took eight months of talking to different people at Firestone and Bridgestone to finally strike a deal, Tucker said.
Full story: http://tinyurl.com/busjvcc

Brandywine Realty Trust to build Radnor retail space

by Natalie Kostelni-Staff Writer, Philadelphia Business Journal

Brandywine Realty Trust is constructing a new building in Radnor that will house retail tenants and aims to round out amenities the company offers tenants at Radnor Corporate Center, where it owns 1.7 million square feet of office space.
The company is expected to start construction next month on an 18,000-square-foot structure at 200 Radnor-Chester Road. It has so far leased space to several tenants including: Estia, a full-service restaurant that will serve lunch and dinner; Pietro’s, which will serve casual fare; Jimmy John’s, a burger joint; and has 6,000 square feet left to lease. 

$20.5M rehab hospital to be built in Bucks County

by: John George Senior Reporter- Philadelphia Business Journal

Bucks County is getting its first stand-alone rehabilitation hospital.
St. Mary Medical Center plans to open a 50-bed, acute rehabilitation hospital in a partnership with Centerre Healthcare Corp. of Nashville, Tenn.
“We are always looking at community needs and what services we’ll need to be providing in the future,” said Greg Wozniak, president and CEO at St. Mary. “We saw the demand for rehab care was going to be a growing.”
Wozniak said the $20.5 million, rehab hospital will complement the St. Mary’s expanded programs in cardiology, neurosciences and orthopedics.
The construction cost for the rehab hospital will be shared by the two organizations.
St. Mary, part of Newtown Square-based Catholic Health East, decided to partner with Centerre Healthcare, he said, because it believed the company’s singular focus on clinical outcomes and quality was the best match for its goal of bringing the “highest level” of rehabilitation care to Bucks County.
Centerre Healthcare specializes developing and operating Rehabilitation Hospitals in partnership with leading Acute Care Hospitals.
Pat Foster, the company’s CEO, said St. Mary is his 12-year-old company’s 10th partner and second in Pennsylvania, where it already operates the 59-bed Lancaster Rehabilitation Hospital with Lancaster General Health.
Under the partnership, the 50 employees who now staff St. Mary’s inpatient rehabilitation-care department will become employees of Centerre Healthcare in the new hospital. Foster said he expects the hospital to expand to 150 employees “when we reach full capacity.”
The 55,000-square-foot medical center is being built on the other side of Newtown-Langhorne Road from St. Mary’s main campus in Langhorne on land formerly occupied by the Neshaminy Middle School.
The free-standing rehab hospital, expected to open next spring, will provide rehab services — physical, occupation and speech therapy along with neuropsychology --— for patients recovering from conditions such as spinal cord injuries, stroke, brain injuries trauma and orthopedic maladies.
Among its features will be therapy gyms; simulated home training environments an outdoor therapy courtyard that will have a putting green and basketball court, and walking path.
The hospital will have a self-contained, locked brain-injury unit to treat patients suffering from certain behavioral and/or cognitive issues that would put them at-risk in a less structured setting.
Lisa Haney, executive director of inpatient rehabilitation at St. Mary, said the opportunity to build a new hospital from scratch will allow it to create the best environments for the needs of all rehab patients — something that is not possible in the limited space the department has on the main campus.

Friday, April 26, 2013

Philadelphia's Industrial Vacancy Decreases to 9.0%

The Philadelphia Industrial market ended the first quarter 2013 with a vacancy rate of 9.0%. 

The vacancy rate was down over the previous quarter, with net absorption totaling positive 566,950 square feet in the first quarter. That compares to positive 136,987 square feet in the fourth quarter 2012. Vacant sublease space decreased in the quarter, ending the quarter at 2,083,524 square feet. 

Tenants moving into large blocks of space in 2013 include: Binney & Smith, LLC moving into 800,280 square feet at 3025 Commerce Blvd, Perdue moving into 223,750 square feet at 1801 Dulaney St, and The American Red Cross. moving into 119,310 square feet at 530 Herman O. West Dr. 

Rental rates ended the first quarter at $4.47, a decrease over the previous quarter. 

There was 2,978,919 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 8.6% from the previous quarter, with net absorption positive 47.23 million square feet in the first quarter. Average rental rates increased to $5.21 this quarter, and 166 industrial buildings delivered to the market totaling almost 16 million square feet. 


Brandywine Touts Development Projects in First Quarter Highlights

n reporting its financial and operating results for the first quarter, Brandywine Realty Trust highlighted several new development projects it started throughout the region. 

Brandywine is nearly finished with its redevelopment of 660 West Germantown Pike, a 154,392-square-foot office building it acquired vacant in the first quarter of 2012 for $9.1 million. The REIT has invested $14.8 million of the $18.5 million project, with the remaining $3.7 million to cover lease-up expenses. As of March 31, 2013, the property was 58.2% occupied and 77.5% leased. 

Next up in Plymouth Meeting, the Radnor, PA-based REIT expects to begin construction this quarter on its 50/50 joint venture with Toll Brothers on a $77 million, 398-unit multifamily development. Completion is expected by the end of 2015. 

In Philadelphia, Brandywine is developing a 33-story, 850-bed student housing tower called The Grove at Cira South in a 30/30/40 joint venture with Campus Crest Communities and Harrison Street Real Estate Capital. Total cost of the new development is pegged at $158.5 million. Approximately $8.5 million of Brandywine's $18.2 million, 30% share of the equity commitment will be satisfied by its contribution of the underlying ground lease parcel. Construction is underway with completion targeted for the third quarter of 2014. 

The REIT is also building a small, 17,884-square-foot retail center adjoining its various office properties in Radnor to provide additional services and restaurant options for existing tenants. 

Other significant highlights from the first quarter include the $87 million sale of One and Three Christina Center, a two-building, 632,797-square-foot office project in Wilmington, DE, by the joint venture in which Brandywine was a 20% partner. The pair of buildings were occupied by an affiliate of JPMorgan Chase, which bought them. 

Also during the first quarter, Brandywine completed the sale of Princeton Pike Corporate Center, an eight-building, 800,546-square-foot office park in Lawrenceville, N.J., for $121 million. The REIT used net proceeds from that sale to fund the remaining investment balance in One and Two Commerce Square, the massive two-building, 1,896,142-square-foot office complex in Philadelphia's Center City controlled by affiliates of the Thomas Properties Group. 

With the first quarter sales of the Princeton Pike portfolio in central New Jersey and One/Three Christina in Wilmington Brandywine is already 63% towards its goal of selling $221 million in assets in 2013 as it transitions its investments to a higher quality, more urban-oriented office portfolio. 

"During the first quarter of 2013, we continued to achieve outstanding results on operations, transactional activity and balance sheet management," Brandywine President and CEO Gerard H. Sweeney said in a statement announcing the REIT's results. "We achieved particularly strong results on same store NOI growth, rental rate increases and forward leasing, which reinforce our confidence in the 2013 business plan. 

It appears Brandywine has plenty of capital available for investment. In early April, the REIT raised $181.7 million in net proceeds through the offering of 12.65 million in common shares. To offset the dilution from the unplanned equity offering, Brandywine revised its FFO guidance for 2013 to a range of $1.35 to $1.42 per diluted share versus the prior range of $1.41 to $1.48. 


Wednesday, April 24, 2013

Better economy helps region's apartment market

"Modest" economic growth will benefit the Philadelphia region's apartment market during the rest of 2013, with vacancy rates falling and effective rents rising.

Developers will add 2,000 rental apartments to the market, almost doubling the 1,031 completed in 2012, the report said. Building permits for multifamily housing, a measure of future growth, will rise by 5 percent to 3,900, comprising both condominiums for sale and rental units.
(Last week, the U.S. Commerce Department reported that a 31.1 percent jump in apartment construction nationwide in March helped set new-home building on its fastest pace since June 2008.)
There will be two sources of renters for the region's market this year, Marcus & Millichap said. One results from increased employment: 36,800 workers have been added, expanding local payrolls 1.3 percent. The other source results from pent-up demand by young adults who have been living at home and are not ready to buy.
Center City will remain a focus for developers of luxury rentals, with many targeted to affluent buyers moving from the suburbs or seeking weekend getaways or pieds-à-terre.
Vacancy rates will decline to 4.8 percent regionwide, from 5.2 percent, after remaining flat in 2012. As a result, average effective rents will rise 2.1 percent in 2013, to $1,122 a month, the report said.
With prospects for higher returns so good, investor demand remains high.
Sales volume of apartment buildings was lower in the first quarter than in fourth as owners acted to avoid changes in capital-gains taxes.
With that behind them and "ongoing efforts to provide guidance on property taxes from the City of Philadelphia." it expects a higher volume of deals this year.

Keystone Filling Up Parkview Tower in King of Prussia

Keystone Property Group continues to sign office tenants in Parkview Tower, its nine-story, 220,513-square-foot office building at 1150 1st Ave. in King of Prussia, PA. Leases totaling just under 23,000 square feet were recently signed at the building, bringing the property to 93% leased. 

Recent transactions include a 12,327-square-foot lease renewal for Emerging Growth Equities, Ltd. A tenant in the building since 1999, the specialty investment banking and brokerage firm will relocate to a new location in the building. 

In addition, the U.S. General Services Administration signed a 5,400-square-foot renewal and expansion for the Department of Transportation, a tenant in the building since 2003. And A/Z Corp. renewed its 3,087-square-foot lease for a two-year term. 


Gladstone Commercial Corp Pays $5.7M for Delilah Office Bldg

Gladstone Commercial Corporation acquired the office building at 6725 Delilah Rd. in Egg Harbor Township, NJ for $5.65 million, or about $193 per square foot, following a long bidding process. 

The two-story, 29,257-square-foot office building was built in 1985 on 3.9 acres in the South New Jersey submarket of Philadelphia, part of the Delilah Office Park. It includes administrative and office space fully leased to AtlantiCare Health System, Inc., the region's largest non-profit healthcare organization, with 11 years remaining on the lease. 


Williams-Sonoma Leases Additional 751,000 SF at Middlesex Center

Williams-Sonoma, the specialty retailer of products for the home including cookware, decor, luxury furniture and the Pottery Barn brand, has signed a 751,450-square-foot industrial lease at Middlesex Center II in South Brunswick, NJ. 

The tenant, which already occupies the entire 1.35 million-square-foot Middlesex Center I building, is expanding in the Mid-Atlantic and will use the new space for warehousing, repair, assembly, storage and distribution of its consumer products. 

Middlesex Center II, under construction at 101 Middlesex Center Blvd., broke ground in December 2012 and is expected to deliver in July 2013 in the Exit 8A Industrial submarket of Middlesex County. When completed, it will feature four drive-in bays, 36-foot clear heights and 50-foot column spacing. 

IDI, a full-service industrial real estate company based in Atlanta, owns the 206-acre industrial park, which already includes plans for a 450,000-square-foot Middlesex Center III building slated to start construction in 2013. The company has nearly 7 million square feet currently under development in nine states, including several recession-hit cities where no new industrial product has been marketed. 


Tuesday, April 23, 2013

SECTV buys a 35,000 square foot office building in Bethlehem, PA

SECTV bought a 35,000 square foot office building in Bethlehem, PA. This 3-story building near the ABE Regional Airport was recently sold to SECTV for their media production operations. The sale was part of the restructuring strategy for the American Red Cross. The sale price was $2,325,000.

Friday, April 19, 2013

Philadelphia Real Estate (Residential) -Video


Philadelphia's Retail Vacancy Stays at 6.3%

The Philadelphia retail market did not experience much change in market conditions in the first quarter 2013. 

The vacancy rate remained constant at 6.3%. Net absorption was positive 40,514 square feet, and vacant sublease space increased by 91,278 square feet. In fourth quarter 2012, net absorption was negative 120,533 square feet. 

Tenants moving into large blocks of space in 2013 include: Weis Markets moving into 52,000 square feet at 2000 County Line Rd; Tractor Supply Company moving into 37,800 square feet at 870 US Route 15.; and Goodwill moving into 34,325 square feet at 201 E Baltimore Ave. 

Quoted rental rates increased from fourth quarter 2012 levels, ending at $13.85 per square foot per year. 

A total of 4 retail buildings with 59,481 square feet of retail space were delivered to the market in the quarter. 

This trend is compared to the U.S. National Retail vacancy rate, which decreased to 6.7% from the previous quarter, with net absorption positive 19.26 million square feet in the first quarter. Average rental rates increased to $14.48 this quarter, and 561 retail buildings delivered to the market totaling more than 9.3 million square feet. 


Thursday, April 18, 2013

1818 Market Gets New Tenant, Renamed 1818 Beneficial Bank Place

Original post from 4/10/2013: http://omegacre.blogspot.com/2013/04/beneficial-bank-is-moving-its.html

Beneficial Bank has leased 95,764 square feet on four floors at 1818 Market St. in Philadelphia, PA for a 15-year term. As part of the deal, the building will be renamed 1818 Beneficial Bank Place, with the tenant's name appearing on the southern and western elevations as well as prominent signage over the building entrance. 

Sovereign Capital Management Group owns the 37-story, 981,743-square-foot, Class A office building. It was originally built in 1971 on almost one acre in the Market Street West submarket of Philadelphia County, with renovations completed as recently as 2004. In addition to on-site banking, the steel tower offers a 408-spot parking garage, concierge, on-site management, and a gift shop and restaurant on the ground floor. 

"Beneficial is the oldest Philadelphia-based bank in the city. They have a wonderful location in the old Penn Mutual Building directly behind Independence Hall. While iconic, the location is not the best for a company seeking to engage Philadelphia business. By moving 12 blocks north, the Bank has the opportunity to magnify its identity in whole new ways. The city retains an important corporate presence and the job growth associated with that and the building is filled, allowing ownership to move forward with its plan."


Wednesday, April 17, 2013

Two Retail Condos at 10 Rittenhouse Sq Sell for $17M

iStar Financial, Inc. sold two retail condos totaling 16,000 square feet at 10 Rittenhouse Square to Allan Domb Real Estate for $17 million, or approximately $1,000 per square foot. 

Located at 130 S 18th St. in Philadelphia, 10 Rittenhouse Sq is a 485,000-square-foot multifamily building that contains five commercial condo units. The units that were purchased were a 9,707 square feet that is occupied by Barney’s Co-op, and a 6,293-square-foot space occupied by Serafina’s restaurant.


Allen Forge Shopping Center Sells for $9.3M

Trefoil Properties LP sold the Allen Forge Shopping Center at 850-890 S. Valley Forge Rd. in Lansdale, PA to A. Sheftel & Sons for $9,333,000, or about $180 per square foot. 

The 51,878-square-foot neighborhood center was built in 1967 on eight acres in the West Montgomery County submarket of Philadelphia. The center was renovated in 2007 and is anchored by a CVS drugstore and Pennsylvania Liquor Control Board Wine and Spirits. The asset is currently fully leased with a waiting list of interested tenants. 


Federal Realty CEO: No Negative Impact From Sequester


Tuesday, April 16, 2013

Vornado Sells The Plant for $203M

Vornado Realty Trust has completed two previously announced sales involving retail centers in California and Pennsylvania for an aggregate price of $263 million. 

The Plant, a power center located at Curtner Ave. and Monterey Rd. in San Jose, CA, sold for $203 million. The center totals more than 465,000 square feet of retail and office space on 52 acres in the San Jose Central submarket. The main buildings were constructed between 2006 and 2008, and include small shop space and anchors including Home Depot, Best Buy, Babies R Us, Bath & Body Works, and several casual and quick-service restaurants and outlots. 

In a separate transaction, Vornado sold a portion of the Gallery at Market East, located at 901-937 Market St. in Philadelphia, PA for $60 million. The four-story, 853,000-square-foot retail building was built in 1977 on 22 acres in the Market Street East submarket. It is part of the 1.4 million-square-foot shopping center known as The Gallery. 

The two sales resulted in net proceeds for the company of approximately $156 million after closing costs and repaying the mortgage on The Plant. According to a company release, the fully integrated equity real estate investment trust is expected to realize net gains of $69 million in the second quarter. 


Wells Fargo Monthly Economic Outlook - April (Video)


Saturday, April 13, 2013

Developers buy last Bethlehem Steel tract

An investment group has purchased an 88-acre tract of the former Bethlehem Steel plant for $3.6 million with plans to build warehouses on the property.

The land, a remote tract that had been part of Steel's coke works slag pile, is the last to be sold off by ArcelorMittal, which acquired Steel's assets in 2003 under the name Mittal Steel.

The investment group is led by John Tallarico of Bethlehem and Scott Hummel of Philadelphia. Tallarico said the property likely would support four 400,000-square-foot warehouses, small versions of the big-box warehouses being built in the adjacent Majestic Bethlehem and Lehigh Valley Industrial Park VII business parks.
"It's a great location near Interstate 78 and the improvements to Route 412," Tallarico said. "That area is really starting to blossom."

Earlier this year, city planners approved plans for a 677,000-square-foot warehouse at LVIP VII and a 1.7 million square-foot building at Majestic. Last year, Liberty Property Trust built a 1.2 million-square-foot warehouse in LVIP VII and also has plans for an 800,000-square-foot one.

Tallarico said the land opened up recently when Majestic, owned by California billionaire Ed Roski Jr.'s company, extended the Northampton County-built Commerce Center Boulevard deeper into the former plant.

The 88 acres is just south of the Majestic site and faces the Crayola distribution center that opened at Majestic earlier this year.

Tallarico said that back part would require some environmental remediation but the front part is "shovel-ready."
Neither Majestic nor LVIP VII is fully built out yet.

Liberty Leases 151,677 Square Feet Of Space In The Route 202 Corridor During First Quarter

Liberty Property Trust Leases 151,677 Square Feet Of Space In The Route 202 Corridor During First Quarter
New leases, renewals and expansions span six suburban office parks across the region.

Liberty Property Trust today announced that it welcomed six new customers and completed four renewals and three expansions during a busy first quarter of 2013.

"It was an extremely active first quarter - a tremendous way to start off 2013," said Tom Sklow, vice president and city manager, Liberty Property Trust. "Our suburban Philadelphia office parks experienced a surge of interest, especially at Great Valley Corporate Center as a result of the opening of the new four-way Route 29 Interchange on the Pennsylvania Turnpike, where commute times have been cut by as much as 25 minutes."

The largest new lease of the quarter was at Chesterbrook Corporate Center in Wayne. Crothall Services Group, leased 39,674 square feet at 1500 - 1550 Liberty Ridge Drive. 

The largest renewal was at Stoneridge Office Park in Exton, where Kidde Fenwal, Inc. renewed its lease of 12,376 square feet at 180 Sheree Boulevard. The company has been a Liberty customer since 2006.
Eleven more leases, listed by office park, are reported as follows.
Great Valley Corporate Center, Malvern
  • The Sherman-Williams Company signed a new lease for 15,529 square feet to relocate to the newly-renovated 7 Great Valley Parkway. The company, which has been a Liberty customer since 1991. The top floor of the building, which offers 20,000 square feet of space, remains available for lease.
  • Sanofi US Services Inc., which has been a Liberty customer since 2007 in this location, renewed its lease of 11,600 square feet at 75 Great Valley Parkway. 
  • Tela Bio Inc. signed a new lease for 11,460 square feet of space at 1 Great Valley Parkway. 
  • Total Facility, Inc. renewed its lease of 9,917 square feet of space at 420 Lapp Road, where the company has been a customer since 2003. 
  • North American Benefits Company leased 9,261 square feet at 20 Valley Stream Parkway. 
  • Novocure, Inc. has signed a new lease for 3,469 square feet of space at 2 W. Liberty Boulevard.
Renaissance Park in King of Prussia
  • Iceutica Operations, LLC, which has been a Liberty customer since 2011, has expanded at 3602 Horizon Drive, adding 6,262 square feet to its facility. 
  • At 2100 Renaissance Boulevard, S.R. Snodgrass, A.C. signed a new lease for 3,471 square feet. 
Brandywine Business Center in Radnor
  • Suburban Medical Laboratory, Inc. signed a new lease for 13,603 square feet at 620 Brandywine Parkway.
Chesterbrook Corporate Center, Wayne
  • Moksha 8 Pharmaceuticals Inc. renewed its lease of 7,141 square feet at 1550 Liberty Ridge Drive. 
Devon Park Drive, Devon
  • U.S. Investment Corporation expanded its lease by 7,914 square feet at 1170 Devon Park Drive. The company leases an additional 162,500 square feet of space at that location and has been a Liberty customer since 2008.

Thursday, April 11, 2013

Philadelphia's Office Vacancy Increases to 11.7%

The Philadelphia Office market ended the first quarter 2013 with a vacancy rate of 11.7%. 

The vacancy rate was up over the previous quarter, with net absorption totaling negative 285,641 square feet in the first quarter. That compares to negative 454,307 square feet in the fourth quarter 2012. Vacant sublease space increased in the quarter, ending the quarter at 1,326,929 square feet. 

Tenants moving into large blocks of space in 2013 include: GlaxoSmithKline moving into 205,000 square feet at 5 Crescent Dr; Auxilium Pharmaceuticals, Inc. moving into 74,516 square feet at Chesterbrook; and Healthcare Solutions moving into 57,055 square feet at Valley Forge Corp Center. 

Rental rates ended the first quarter at $20.87, a decrease over the previous quarter. 

A total of two buildings delivered to the market in the quarter totaling 505,170 square feet. 

This trend is compared to the U.S. National Office vacancy rate, which decreased to 11.8% from the previous quarter, with net absorption positive 14.57 million square feet in the first quarter. Average rental rates decreased to $21.36, and 168 buildings delivered to the market totaling more than 5.9 million square feet. 


Will Co-Working Erode Demand for Office Space?

by Beth Mattson-Teig
Co-working—the latest trend in workplace strategies—could be the catalyst that shakes up the staid office market.
The tradition of “one worker, one desk” may soon be a thing of the past. Companies across industries are eliminating offices, private work stations and cubicles in favor of team-oriented and shared workspaces.
“I think there is going to be a dramatic shift in how we use space."
Despite employees’ ability to work from anywhere, companies, especially knowledge-based companies, are refocusing on the importance of collaboration to foster ideas and innovation. Yahoo brought the issue front and center when it announced earlier this year that it would call its remote workers back to its company offices. Other tech companies, such as Google and Apple, have thrived on the mantra that “innovation doesn’t happen in isolation,” says Richard Kadzis, a vice president at CoreNet Global, an Atlanta-based association for corporate real estate professionals.
Businesses across industries are opting for office space that allows for greater interaction among workers. For example, management consulting firm Accenture completely revamped its offices in Minneapolis last year, replacing cubicles with a flexible floor plan that includes shared workspaces. It also increased its number of meeting rooms and added a café, all to increase collaboration between its employees. In the process, the firm downsized its Minneapolis office from about 70,000 sq. ft. to 41,000 sq. ft.
Such examples raise questions as to whether this new trend has staying power, and if so, how it will impact office tenants’ real estate decisions. Industry data shows that the physical footprint for office workers is shrinking. The amount of dedicated space per office worker has dropped from about 225 sq. ft. in 2010 to 176 sq. ft. in 2012, according to CoreNet Global.
“We have seen a trend toward what companies call a smaller, but smarter workplace,” says Kadzis.
In addition, a 2012 CoreNet Global survey of corporate real estate executives shows that companies are continuing to push for greater space efficiency. Overall, 40 percent of survey respondents said they expect the amount of dedicated space per office worker to be 100 sq. ft. or less in five years, while 29 percent expect the amount of space per worker to be less than 150 sq. ft.

Morphing office space

The shrinking office footprint supports two key trends. First, companies are striving to use real estate more efficiently to get an immediate bottom line impact. Second, it also reflects the shift in how companies are utilizing space differently to accommodate changing work patterns.
Certainly, companies have been testing alternative workplace strategies for years. Concepts such as hoteling, hot desks and home-based workers have been used for more than two decades. Yet to date, those trends have hardly revolutionized the office industry. What is different now is that advances in technology with mobile devices and cloud computing are enabling more flexibility in how and where people work. People no longer need to be tethered to their desks, notes Zlocki.
Shifting demographics also are accelerating change as companies work to accommodate a younger generation of workers. Gen Y, or the new Millennials as this group of teens, 20- and 30-somethings is often called, is a more tech-savvy, socially-centered workforce that has grown up with the concept of using technology to solve problems. Gen Y is not just driving the co-working trend, but they are also fueling a shift to a distributed work day. Unlike the traditional nine-to-five worker, younger professionals are distributing their work over the whole day, from perhaps 7 a.m. to 10 p.m. and more of that work is being done outside the office. The more flexible work schedule and telecommuting means that the number of people in an office varies more than if everyone was on the same schedule. This facilitates the sharing of space. Those trends are all influencing the continued evolution in the way people work, and ultimately the shift in demand for the type and amount of work space companies require, Zlocki adds. Those changes are creating a “triple bottom line effect,” where companies have the opportunity to use their real estate more efficiently, as well as improving the work culture and the work environment, he adds.

Staying connected

Co-working is creating demand for alternative workplaces―both in corporate settings and at third-party facilities. For example, workers can use apps such as Liquid Space to find a drop-in location. “You might not be working with anyone from your company, but you will be with like-minded people who also want to be with other people and talk about what they’re doing,” says Kadzis.
Small businesses and entrepreneurs are finding ways to connect with other workers at collaborative business centers such as Mission 50 Workspaces in Hoboken, N.J. Founder Gregg Dell’Aquila launched the collaborative business center about 15 months ago as a pilot program. The 3,000-sq.-ft. center offers a mix of open work stations and common area space along with private “phone booths.” Mission 50 currently has some 160 members who check in at different times to use the shared workspaces. The project has been so successful that Mission 50 is looking for additional space to open one or two new locations this year.
In addition, co-working is impacting how office space is configured.  For example, individual workstations might have room for a bump-out where workers can have space for a one-on-one meeting, or the configuration might shift with four desks set up with a two-top or a four-top meeting space. Between different work groups, there is more focus on creating break-out spaces or cafés, or more informal areas that can be used as meeting spaces. In addition, companies are adding more conference rooms of varying sizes, ranging from large team rooms to “huddle rooms” that can accommodate smaller groups to allow more meetings to take place within an office. “Collaborative work environments are where the work spaces of today and tomorrow are headed, but with a cautionary note,” says Kadzis.
Companies still need to strike a balance and not build too much collaborative space. It is still important to have dedicated space where people can have privacy to make phone calls or be able to concentrate on “heads-down” tasks without the distraction of other workers, he adds.
Full story: http://ht.ly/jWyQC

Sam Zell Talks Real Estate (Video)


Comcast Leases 110,000 SF at 2801 Valley Rd

Comcast has signed a deal to occupy 110,000 square feet of office space at 2801 Valley Rd. in Harrisburg, PA. 

The former Olivetti Underwood building is a 283,000-square-foot, single-story, multi-tenant office building on 27.3 acres. It was built in 1998 and has parking for 500. The property is conveniently located near the intersections I-81 and I-83, and was previously occupied by Earthlink. 

Lincoln Woods Apts Trade for $29.3M

BET Investments, Inc. acquired the 216-unit Lincoln Woods Apartments at 9801 Germantown Pike in Lafayette Hill, PA from TIAA-CREF for $29.3 million, or about $136,000 per unit.

The three-story, 10-building, 167,127-square-foot multifamily complex was built in 1991 on 22.8 acres in the Plymouth Mtg. / Blue Bell submarket of Montgomery County. The property offers a swimming pool, club house, fitness facility and access to public transportation. It was 98 percent occupied at the time of sale.

Berkadia Commercial Mortgage originated $25.5 million in acquisition financing through Fannie Mae's DUS platform. Jim Badolato, senior vice president with Berkadia negotiated the ten-year loan, providing 80 percent of the acquisition cost plus short-term capital budget.

Wednesday, April 10, 2013

Beneficial Bank is moving its headquarters to 1818 Market St.

Original article from Feb 2,2013: http://omegacre.blogspot.com/2013/02/beneficial-is-close-to-hq-decision.html

Looking for a new headquarters, Gerard P. Cuddy, chief executive of Beneficial Bank, the biggest and oldest bank still based in Philadelphia, has been cruising the tenants' market that is Center City's office-rental scene.

"We analyzed space in 28 buildings," Cuddy said Tuesday. "This is a good time to be a shopper looking for 100,000 square feet in Philadelphia."

On Wednesday, Cuddy plans to announce Beneficial's new headquarters: four floors of a 42-story tower at 1818 Market St., owned by Sovereign Capital Management Group, that will be renamed Beneficial Place. Runner-up was the former Dow Chemical headquarters on Independence Mall.

Beneficial will give up its current offices, spread through 11 suites in the former Penn Mutual complex overlooking Independence Hall and leafy Washington Square, for the EwingCole-designed tower in the glass-and-concrete heart of the city's modern financial district.
"We think it's a transforming move for us in terms of visibility and location," said Cuddy, who wants to boost business lending at Beneficial, better known as a mortgage and personal lender.

"Costs are marginally higher" in the area, where offices at equivalent buildings rent in the mid-$20s per square foot, he said. The exposure and convenience will be worth the additional cost, he added.

Beneficial also plans a ground-floor branch that will compete with neighboring First Republic and Bank of America locations. Cuddy wants to import the open spaces and customer financial "libraries" Beneficial has installed in its suburban branches in Devon, Springfield and Cherry Hill.

Architect D2 Partners, of King of Prussia, is laying out the headquarters space.

Monday, April 8, 2013

Rittenhouse Square properties trade for $17M

by Natalie Kostelni-Staff Writer, Philadelphia Business Journal
Allan Domb has added to his Center City retail holdings and bought for $17 million the commercial condominiums at 10 Rittenhouse Square that contain the Barney’s clothing store and Serafina’s, a restaurant.
The acquisition enhances Domb’s retail position on Rittenhouse Square and along the city’s two main retail corridors where he already owns a number of premier properties.
“These are two retail locations at Main and Main,” said Ken Mallin of Mallin Panchelli Nadel, who represented Domb in his acquisition of the Barney’s and Serafina properties. The seller was IStar Financial Inc.
IStar owns 10 Rittenhouse and at the end of last year decided to put the two commercial spaces on the market. Barney’s is at 126-132 S. 18th St. and it occupies two floors totaling 9,707 square feet. Its lease runs until August 2024. Serafina’s address is 130 S. 18th St. and sits in 6,293 square feet. The restaurant is on the hook for the lease until June 2026. The properties were sold as a package, and interest in them ran high.

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A lot of dirt being moved in King of Prussia

by Natalie Kostelni-Staff Writer, Philadelphia Business Journal

There’s a bit of a building boom under way in Upper Merion, where pockets of construction dot the township from one end to the other.
“It’s unbelievable there’s so much construction going on,” saidEric T. Goldstein, executive director of the King of Prussia District. “I would like to see more on the commercial office sector but that’s not a King of Prussia problem.”
The projects range from office to retail, small to large. The ones Goldstein’s group is tracking include:
• 100,000-square-foot special care center for Children’s Hospital of Philadelphia;
• 24,000-square-foot Container Store next to DeKalb Pike at The Court;
• 345,000-square-foot redeveloped Valley Forge Shopping Center at DeKalb Pike and Henderson Road that will be anchored by a 165,335-square-foot Target;
• Across from there, a Super Wawa totaling 6,000 square feet and a Chick-fil-A, totaling 4,800 square feet will open this fall where a PetSmart once stood;
• 7,150-square-foot tile showroom for Porcelanosa is under construction at the corner of DeKalb Pike and Long Road; and
• A gas station at 620 DeKalb Pike will be razed to make way for a 2,500-square-foot restaurant and 4,200-square-foot retail center.

Friday, April 5, 2013

Digital Realty on Data Center Trends: CEO


Former Gilmores Restaurant in West Chester Sells

The former Gilmores Restaurant located at 133 East Gay Street, West Chester Borough was sold. Gilmores operated in excess of a decade at the location and was known for its quaint décor and traditional French cuisine. Roots Café, led by Dan Cellucci, has purchased and will relocate to the property. Roots Cafe offers a local, farm-to-table menu and has established a strong following during its time in the Borough. Cellucci plans to expand his selections and will offer a full-service breakfast, lunch, and dinner menu. Additionally, the growing restaurant will offer BYOB service. The building is currently under renovations and plans are underway for outdoor patio seating in the rear of the property.

Equus Sells Highview Offices for $33M

TA Associates Realty acquired the Highview at Providence Corporate Center, a two-building office portfolio located at 200 and 400 Campus Dr. in Collegeville, PA from Equus Capital Partners, Ltd. (formerly BPG Properties Ltd.) for $33 million, or about $180 per square foot. 

Highview II is a four-story, 104,709-square-foot office building while Highview I totals 78,564 square feet on three floors. The two buildings were constructed in 2003 on 15.1 acres in the Norristown / Valley Forge submarket of Montgomery County, north of Philadelphia, in the 121-acre, master-planned Providence Corporate Center. 

An affiliate of BPG developed the two buildings as part of a build-to-suit for Wyeth Pharmaceuticals, which occupied the entire space until August 2010 when the company was acquired by Pfizer. In October 2010 IMS Healthcare backfilled nearly 87 percent of the space with a long-term lease at the complex, and is still the sole tenant there. 


Thursday, April 4, 2013

10 Questions to Ask Yourself Before Choosing an Office Space

Choosing office space can be very challenging because your decision will have so many repercussions for your business. The wrong location, for example, could cost you employees or clients. What's more, you have to base your choice on your company's future needs, not just your current situation.
Given that landlords prefer lease terms of three to five years, entrepreneurs should consider these questions carefully before signing on the dotted line:
Is there room for my company to grow? 
Any company must consider not only its immediate needs, but also growth and other factors that could change space requirements over the course of the lease. If you can't afford to take extra space to give you room to grow, try to negotiate a shorter lease term or add language to the lease that gives you the first right of negotiation on any adjacent space that becomes vacant. 
Is it the right location for my key employees?
Consider where your key employees live and whether the space is convenient for them. A long, expensive commute may push them to seek employment elsewhere. "When considering a move, you might want to let your key staff weigh in so you don't risk losing them."
Is the location convenient for clients? 
You also want your office to be accessible to clients, as transportation costs continue to rise and people may not be as willing to travel to patronize your business. If you leave an urban location for a cheaper space in the suburbs, consider whether the lower expenses will make up for the possible loss of clients. Even in the age of video conferencing and Skype, it's important that face-to-face meetings be manageable.
Does this office send the right signal?
Think about the signal you want to send when you pick your location. Your office space will be much more than a collection of cubicles; it also will be a sign to others of how much money you're making. "I've seen companies spend for a lavish space they're very proud of. They invite clients to see it, and the clients wonder if they're paying them too much for their services." On the other hand, if you don't spend enough, people may wonder about the financial health of your company. 
Are there hidden costs I'm not considering?
Calculate the full cost of the space–rent, utilities, construction costs, moving expenses, and other costs that may not be obvious. Because there can be hidden expenses, Riguardi recommends hiring a professional broker to help you understand your total outlay. "You have to look at the costs associated with the move, even restoration of the space you're moving from," he says
What is the parking situation? 
It's important to consider the amount of parking available at your proposed location, as well as the potential cost to employees and customers. If parking is tight, is there a place where employees can park so customers get the most convenient spaces? Negotiating special employee rates and validating customers' parking tickets are good ideas, but they need to be worked into your budget. "If it is difficult and costly for your employees or customers to park, they might not be your employees or customers for as long as you would like."
Is the office ADA compliant?
Before choosing a building, make sure the landlord is responsible for compliance with the Americans with Disabilities Act. "This could be an enormous cost. Why gamble?" For example, the law states that doors to office suites should be at least 32 inches wide and require fewer than five pounds of force to open, while carpeting in areas open to the public must be secured to the floor with a pile of less than half an inch.
Would I consider sharing an office? 
Sharing space with another company saves money not only on the office rent, but also on the cost of common areas like kitchens and bathrooms. For referral purposes, it's ideal to share with complementary businesses, such as an architect with a builder or a PR firm with a Web designer. There should be a formal agreement between tenants, even if it's month to month. Also, "if it is a good fit for you, you want to make sure the lease on the space you're sharing isn't going to expire anytime soon."
What if I sell my company during the course of the lease?
If you hope to sell your company, make sure the lease is clear about owner responsibility. Many leases force the original company and its owners to have liability in the future should the future tenant not perform. "There's nothing happy about selling your company only to find out two years later that the buyer hasn't paid the lease payments and now the landlord is coming after you for unpaid rent."
How secure are the lease and rental rate?
The last thing you want is to get established in a space, then find at the end of your lease that your landlord is renting the space to someone else or jacking the rent way up. One suggestion is negotiating language into the initial lease that gives you the option to renew. Although rental rates are usually negotiated at the time of renewal, you also can try in the original contract to cap any increase at no more than 5 percent. "Real estate is rebounding in many areas, which means rental rates are rising. If you can control how much, it's a stick in your court."
Read more: http://www.entrepreneur.com/article/226116#ixzz2PVggpgby


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Rockford Acquires Two Bldg Portfolio in Wyomissing

Rockford Capital Partners purchased its two properties at 1105 and 1150 Berkshire Blvd. in Wyomissing, PA from Blank Aschkenasy Properties LLC for $7.7 million, or about $80 per square foot. 

1105 Berkshire is a 69,440-square-foot office building on 6.6 acres with more than 80-percent occupancy by Travelers Property Casualty Corp. 1150 Berkshire is a 26,716-square-foot office building on 2.1 acres, and is 42 percent vacant.


Morgan Properties Secures $1.2 Billion Refi, Largest In Company's History

Morgan Properties closed a $1.2 billion series of loans to refinance a large portion of its multifamily portfolio. 

Berkadia Commercial Mortgage originated the financing of the 73 apartment communities, 71 of which are eligible for securitization through Freddie Mac’s K Deal Program. The underlying properties consist of a wholly owned portfolio of communities that comprise 13,799 units located in New York, New Jersey, Pennsylvania, Delaware and Maryland. 

Morgan Properties, which is based in King of Prussia, PA, owns and manages a portfolio of 30,000 units in 10 states throughout the country and is one of the largest private multifamily owners in the Northeast and Mid-Atlantic Region.