Wednesday, April 30, 2014

Investor Acquires Pineview, Waverly Court Apts for $11.4M

A local investor acquired the Pineview and Waverly Court Apartments in Philadelphia, PA from Pearl Properties LLC for $11.35 million, or about $247,000 per unit. 

Pineview Apartments is at 339-349 S. 13th St. and Waverly Court is located at 412-426 S. 13th St. Both buildings have a combined 46 units.

A&E Real Estate Ptnrs Pays $3.9M for Upper Darby Office

A & E Real Estate Partners LP acquired the office building at 6800-6816 West Chester Pike in Upper Darby, PA for $3.85 million, or about $63 per square foot, from Kimco Realty Corporation. 

Originally constructed in the 1920's, the five-story, 60,728-square-foot office building was 96 percent leased at the time of sale.

The Fine Print

By Natalie Kostelni, Staff Writer for the Philadelphia Business Journal

10,920 s.f.
Radio One signed a new seven-year lease on 10,920 square feet at 333 E. City Ave. in Bala Cynwyd.  Janet Giuliani of Tishman Speyer represented the landlord.
6,500 s.f.
Educational Data Systems Inc. renewed for eight years on 6,500 square feet at the Land Title building at 100 S. Broad St. in Philadelphia. .
4,024 s.f.
In another deal at the Land Title building, Perspective Consulting leased 4,024 square feet for eight years. 
A 20,200-square-foot flex building at 191 Heller Place at Bellmawr, N.J., sold for $800,000. by Korman Commercial Properties. The buyer, 191 Heller Place,  arranged a 10-year lease on the building with TBT Group, a biosensing technology company headquartered in New York.
8,000 s.f.
Universal Hospital Services, a medical equipment management company, leased 18,000 square feet at 8000 Commerce Parkway in Mount Laurel, N.J. UHS is relocating from 14 Stow Road in Marlton, N.J.

Monday, April 28, 2014

Market Trend: Philadelphia Retail Vacancy Down to 6.0%

The Philadelphia retail market experienced a slight improvement in market conditions in the first quarter 2014. 

The vacancy rate went from 6.2% in the previous quarter to 6.0% in the current quarter. Net absorption was positive 1,175,336 square feet, and vacant sublease space decreased by 8,554 square feet. In fourth quarter 2013, net absorption was positive 629,439 square feet. 

Tenants moving into large blocks of space in 2014 include: ShopRite moving into 90,000 square feet at Wishing Well Plaza; LA Fitness moving into 52,248 square feet at Collegetown Shopping Center; and Lehigh Hospital moving into 50,041 square feet at 1309 Blue Valley Dr. 

Quoted rental rates increased from fourth quarter 2013 levels, ending at $13.90 per square foot per year. 

A total of 9 retail buildings with 140,422 square feet of retail space were delivered to the market in the quarter, with 209,580 square feet still under construction at the end of the quarter. 

This trend is compared to the U.S. National Retail vacancy rate, which decreased to 6.5% from the previous quarter, with net absorption positive 24.41 million square feet in the first quarter. Average rental rates increased to $14.63, and 779 buildings delivered to the market totaling almost 12.5 million square feet.

Montco economic groups combine forces

by Jessica Parks

Montgomery County announced a sweeping merger designed to put all of its public and private economic-development efforts under one roof. 

The Montgomery County Economic Development Corp. - a private board that administers state grants - will be dissolved and its operations reconstituted within the county Commerce Department.
The department will take on the economic-development agency's executive director, David Niles, its staff and operations, and will offer membership to all of its existing business members.

According to a county news release announcing the agreement, funding will initially come from the economic-development corporation, and "the operations will not add to the county's expenses or add liabilities to the county's balance sheet."

The new arrangement will eliminate some duplications and competition between the previous public and private agencies, county Board of Commissioners Chairman Josh Shapiro said. "The MCEDC and the county have not historically worked together in a coordinated fashion," its chairman, Richard Young, said.
After meeting with county officials and discussing ways to work together, Young said, the board determined merging was "the best way to ensure the continuity and sustainability of our programs and to secure significant benefits for our members and the corporate community in general."

"Montgomery County now has one vision, one brand, and one entry point for businesses to access vital resources," Shapiro said. 

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Friday, April 25, 2014

Liberty to Break Ground on Navy Yard Project

by Natalie Kostelni, Staff Writer for The Philadelphia Business Journal
Liberty Property Trust and Synterra Partners are scheduled to break ground this Friday on a new 75,000-square-foot building at the Navy Yard Commerce Center in Philadelphia.
The building at 4000 S. 26th St. is fully leased to three tenants. EcoSave, an Australian company, leased 20,000 square feet and Clinigen, based in the United Kingdom, leased roughly 10,000 square feet. Both will use the site as their respective U.S. headquarters. WuXi AppTec Inc. will expand by 45,000 square feet of the building, bringing its total space with Liberty in the Navy Yard to 130,000 square feet.
The structure is expected to be completed by this December. Two companion buildings in the park, 4020 and 4050 S. 26th St., are also fully leased.
Full story:

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Thursday, April 24, 2014

Ten developers vie for 862-acre Willow Grove air base

by Natalie Kostelni, Staff writer for the Philadelphia Business Journal

Ten real estate firms have signaled they are interested in redeveloping more than 800 acres at the former Naval air base in Willow Grove, Pa.
The companies range from residential developers to those that do mixed-use projects. Some of the developers are from the region while others are from outside of the Philadelphia area.
The competition will be stiff. It’s seldom a property comprised of several hundred acres comes available for development in a mature suburb just outside of a major metropolitan area.
The companies that responded to a request for qualifications from the Horsham Land Redevelopment Authority include:
  • American Real Estate Development of Souderton, Pa. The company was established by a former executive of TH Properties, a residential developer that went through Chapter 11 bankruptcy during the recession.
  • A group comprised of Avalon Bay Communities Inc., an apartment developer from Arlington, Va., Pulte Group Inc., a home builder from Bloomfield Hills, Mich., and Paramount Realty, a Lakewood, N.J., retail developer.
  • Catellus Development Corp., a mixed-use developer from Oakland, Calif.
  • Hankin Group, a mixed-use developer from Exton, Pa., better known for Eagleview Corporate Center in Exton that also has a planned mixed-use community.
  • LCOR, a mixed-use developer from Berwyn, Pa.
  • Lennar Corp., a national home builder based in Miami.
  • NVR Inc., a Reston, Va., home builder.
  • O’Neil Properties Group, a King of Prussia, Pa., developer that also does mixed-use development. Some projects the company has done locally are Uptown Worthington in Malvern, Pa., and several apartment complexes in Conshohocken, Pa., and along the Main Line, and office buildings throughout the suburbs.
  • Realen Properties, a Berwyn, Pa., developer that has dabbled in mixed-use developments in the suburbs and in Center City. Realen is currently involved with the Village at Valley Forge, a mixed-use project in King of Prussia where a Wegman’s is located.
  • Toll Brothers Inc., a residential home builder based in Horsham. The company does single-family and multifamily development.

Full story:

Wednesday, April 23, 2014

Patriot Equities Acquires Vacant Industrial in Lancaster

Patriot Equities LP acquired the Old Sycamore Industrial Park building at 2919 Old Tree Dr. in Lancaster, PA from Avir Corporation for $3.5 million, or about $15 per square foot. 

The single-story, 240,528-square-foot industrial building was constructed in 1985 in the Lancaster County Industrial submarket of Philadelphia. It was vacant at the time of sale. The buyer is reportedly going to renovate the property, and obtained financing for the acquisition and construction.

Atlantic City's Claridge Hotel Sells for $12.5M

TJM Property Management, Inc. purchased The Claridge Hotel at 1900 Pacific Ave. in Atlantic City, NJ for $12.5 million, or $25,000 per room, from Caesars Entertainment Corporation. 

The 300,000-square-foot hospitality building was originally built in 1929. The hotel consists of 500 guest rooms and is one of the tallest structures in Atlantic City. The hotel was originally a casino/hotel; however at the time of sale all of the gaming floors were removed. Due to deed restrictions, gaming floors will not be re-added.

JV Pays $2.9M for Columbia Industrial

ImageFirst Healthcare Laundry Specialists and JHB Subsidiary Lancaster LLC acquired the industrial building at 1060 Prospect Rd. in Columbia, PA from Buckeye Corrugated, Inc. for $2.9 million, or about $39 per square foot. 

The 75,000-square-foot warehouse was built in 1969 on 5.5 acres in the Lancaster County Industrial submarket of Philadelphia. It was renovated in 1998 and features 15 loading docks, two drive-ins, 22-foot clear heights and 50-foot column spacing.

Tuesday, April 22, 2014

LinkedIn Signs Major Office Lease in San Fran

Those who follow @GlobeStcom on Twitter and @GlobeStLIVEmay have seen a post teasing the announcement, but has learned that LinkedIn has signed a lease for the entire 26-story building under construction at 222 Second St. There has been speculation for quite a while who would fill that space, as previously reported, and now we have the answer.
The City’s Office of Economic and Workforce Development estimates that the nearly 450,000 square feet of office space can accommodate approximately 2,500 jobs in San Francisco, said San Francisco Mayor Edwin M. Lee in making the announcement today. “As a national leader in job creation, San Francisco is the perfect home for a company that is connecting people to jobs, and I am pleased that LinkedIn is significantly expanding their presence here,” said Mayor Lee. “LinkedIn’s decision to grow in the Innovation Capital of the World demonstrates, once again, investor confidence in our City.”
Tishman Speyer Co-CEOs Jerry Speyer and Rob Speyer, says that they are pleased to welcome LinkedIn to its roster of tenants. “Our objective is to build the very best, sustainable office properties in the best cities around the globe, meeting the high quality space needs of leading organizations. We have had great results in San Francisco, successfully delivering signature office and residential properties to the market in the past several years, with more on the way.”
Headquartered in Mountain View, LinkedIn has been steadily increasing its presence in San Francisco. LinkedIn currently has 135,000 square feet at One Montgomery Tower and soon will be occupying 87,000 square feet at 505 Howard St.
“With this new building, LinkedIn is committed to expanding in San Francisco, giving us even more access to some of the most talented professionals in the world across a variety of functions, including technology, sales, and operations,” says LinkedIn Head of Workplace Jim Morgensen. “We look forward to San Francisco becoming a larger part of our growing Bay Area presence.”
The new 222 Second St. was designed and is being constructed for LEED Gold certification, and will be ready for occupancy in early 2016. Along with other on-site and area amenities it will feature 8,500 square feet of public space.
“Today’s San Francisco office market is thriving, with companies recognizing the many advantages of a state-of-the-art building in a downtown location,” says Tishman Speyer senior managing director Carl Shannon. “This building was planned and designed accordingly, and we think LinkedIn is a perfect fit.”

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Saturday, April 19, 2014

Market Trend: Philadelphia Industrial Vacancy Rises to 8.8%

The Philadelphia Industrial market ended the first quarter 2014 with a vacancy rate of 8.8%. 

The vacancy rate was up over the previous quarter, with net absorption totaling negative 173,516 square feet in the first quarter. That compares to positive 5,032,863 square feet in the fourth quarter 2013. Vacant sublease space decreased in the quarter, ending the quarter at 1,359,371 square feet. 

Tenants moving into large blocks of space in 2014 include: Walmart Distribution moving into 1,200,000 square feet at 2785 Commerce Center Blvd, Amcor Rigid Plastics moving into 480,000 square feet at West Park Distribution Center, and Excel moving into 200,225 square feet at 101 Commerce Dr. 

Rental rates ended the first quarter at $4.52, a decrease over the previous quarter. 

A total of three buildings delivered to the market in the quarter totaling 214,056 square feet, with 9,801,800 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 7.8% from the previous quarter, with net absorption positive 46.96 million square feet in the first quarter. Average rental rates increased to $5.39, and 279 buildings delivered to the market totaling almost 27.8 million square feet.

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Friday, April 18, 2014

Drexel Grad Nick Schorsch REIT CEO Takes on New York City (Video)

‘Vintage’ Shopping Center Sold in Bucks County

by Antoinette Martin, the New Jersey and Philadelphia editor for
The Fairless Hills Shopping Center here was acquired by The Klein Group of Florham Park, NJ, for $9.5 million.
The price equates to $50.13 per square foot for the 189,489-square-foot shopping center at 500 Lincoln Highway in the Bucks County community. The seller was Earle W. Kazis Associates, Inc., a real estate holding company based in New York City. 
Fairless Hills Shopping Center is anchored by Pathmark Super Center and Big Lots. The property had been owned by the original developer since its construction in 1971 and was 100% leased at the time of sale. Tenants included Retro Fitness, Tuesday Morning and Family Dollar.
The property is located on the US-1 Business Route, less than three miles from the Oxford Valley Mall, the largest mall in Bucks County,
“Fairless Hills Shopping Center has tremendous upside in enhancing the aesthetics as well as the tenancy in the area, which is the second-largest retail submarket in the Philadelphia suburbs." 
He said Fairless Hills Shopping Center is one of the oldest retail centers in the market. While many other “vintage shopping centers” in the area were re-developed over the last ten years, “this one was missed, creating much demand regionally for the value-add opportunity presented as it traded for the first time.”

Graham building at 15th and Chestnut in Center City purchased

by Natalie Kostelni, Staff writer for Philadelphia Business Journal

The special servicer overseeing a defaulted loan on the Graham building in Center City has decided to take a deal to sell the note on the office property.
C-III Asset Management had an option to buy the note on the 240,634-square-foot building at 30 S. 15th St. and has exercised that option, according to Commercial Real Estate Direct and Trepp Inc. The building is also known as One Penn Square West.
In June 2006, an entity going under the name 30 S. 15th Associates bought the 25-story building for $35 million. That group consisted of a partnership of Grasso Holdings of Philadelphia and the Union Labor Life Insurance Co.-USA Realty Fund of Washington, D.C. The union fund served as the general partner, according to Pennsylvania Secretary of State records.
How much C-III paid for the building is uncertain. A $28.3 million loan, which was originated in 2006, was outstanding on the building, according to Trepp data. An appraisal was done last June that valued the property at $20.2 million.
Full story:

Smooth-On Relocating to Lehigh County

Acco Brands Corporation sold the flex building at 569 Lower Macungie Rd. in Macungie, PA to Smooth-On Inc. for $3.5 million, or about $10 per square foot. The buyer, currently in Easton, PA, will relocate its headquarters to Macungie in the fourth quarter 2014. 

The 358,325-square-foot property is comprised of 10 interconnected buildings on 18 acres in the Lehigh Valley Industrial submarket of Philadelphia. The ceiling heights in the buildings range from 14 to 44 feet, and the asset features 80,000 square feet of office space throughout the property.

Baystate Pool Supplies Extends 40,000-SF Lease

Family-owned pool and spa supply distributor Baystate Pool Supplies, Inc. has signed a five-year lease extension for 40,019 square feet of industrial space at 411 Feheley Dr. in King of Prussia, PA. 

The single-story industrial building was constructed in 1979 on 2.4 acres in Montgomery County. Building amenities include 20-foot ceilings, seven loading docks, and 2,000 square feet of built-out office

Wednesday, April 16, 2014

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AmerisourceBergen looks for office space outside of Chesterbrook

by Natalie Kostelni, Staff Reporter- Philadelphia Business Journal

AmerisourceBergen Drug Corp. is looking for an outpost beyond Chesterbrook Corporate Center where it has long been based.
The company is out in the market looking for between 50,000 and 100,000 square feet of additional office space. It has reportedly looked at Conshohocken, Pa., Radnor, Pa., and Newtown Square, Pa.
“As a result of growth we have experienced, we are securing some additional office space to supplement our Chesterbrook facilities,” said Barbara Brungess, company spokeswoman. Brungess declined to comment on specific sites or locations it is considering, how much space it is seeking and what time frame it is working under.
The international drug wholesaler occupies roughly 175,000 square feet at 1300 Morris Drive in Chesterbrook for its corporate offices and headquarters.
Of the office submarkets it is considering, Conshohocken and Newtown Square offer the most flexibility. In Conshohocken, where the company has reportedly narrowed its focus, O’Neill Properties Group has available space and room to construct new office buildings as well as do other developers such as Oliver Tyrone Pulver and Keystone Property Group. 

St.-Gobain Will Build New HQ in Malvern

By Antoinette Martin, New Jersey and Philadelphia editor for

Saint-Gobain has chosen a 65-acre site here to redevelop as a 320,000-square-foot LEED-certified facility to serve as its new North American headquarters.
Binswanger conducted the site search and negotiated for the long-term lease at the property at 20 Moores Rd., with Clive G. Mendelow directing the effort.
The site also will house Saint-Gobain’s construction materials subsidiary, CertainTeed Corp. In fact, the project will use a wide range of products manufactured by CertainTeed and related companies, including SAGE Glass, Saint-Gobain ADFORS, Saint-Gobain Performance Plastics and others.
The sale of the two corporations’ current headquarters in Valley Forge was brokered by Binswanger.
“There were a number of factors involved in our selection of this site, including our ability to attract new talent, expand the headquarters over time and the desire to select a marquee location for our North American headquarters,” said John Crowe, president and CEO of Saint-Gobain and CertainTeed.
With the relocation, the companies will bring 120 additional employees to Chester County and raise the company’s total employee count at the new headquarters to more than 800.
The redevelopment of the campus, the former home of Aegon Group, will be executed by E. Kahn Development Corp, which will also acquire the headquarters site in Valley Forge. Construction will begin this month, with completion expected by fall 2015.

Tuesday, April 15, 2014

Monthly Economic Outlook -- April 2014 (Video) - Wells Fargo

Philadelphia Office Vacancy Rises to 11.2%

The Philadelphia Office market ended the first quarter 2014 with a vacancy rate of 11.2%. 

The vacancy rate was up over the previous quarter, with net absorption totaling negative 324,914 square feet in the first quarter. That compares to positive 1,217,600 square feet in the fourth quarter 2013. Vacant sublease space increased in the quarter, ending the quarter at 1,368,152 square feet. 

Tenants moving into large blocks of space in 2014 include: The Harrisburg University of Science & Technology moving into 149,820 square feet at 326 Market St; Beneficial Mutual Bancorp, Inc. moving into 95,764 square feet at 1818 Beneficial Bank Place; and BioTelemetry, Inc. moving into 46,972 square feet at 1000 N Cedar Hollow Rd. 

Rental rates ended the first quarter at $21.26, an increase over the previous quarter. 

A total of five buildings delivered to the market in the quarter totaling 131,624 square feet, with 1,194,598 square feet still under construction at the end of the quarter. 

This trend is compared to the U.S. National Office vacancy rate, which decreased to 11.5% from the previous quarter, with net absorption positive 21.68 million square feet in the first quarter. Average rental rates increased to $22.17, and 321 buildings delivered to the market totaling more than 16.1 million square feet.

RREEF Acquires Commerce Corner for $19.8M

RREEF Property Trust, Inc. has acquired the Commerce Corner industrial building at 1109 Commerce Blvd. in Logan Township, NJ from Dermody Properties, Inc. and Great Point Investors LLC for $19.75 million. Included in the sale was an adjacent 9.5-acre development land parcel. 

The 259,910-square-foot distribution center was built in 1998 on 14.4 acres in the Gloucester County Industrial submarket. It features 60 loading docks and a drive-in, 33-foot clear heights, and a 146-foot truck court. 

At the time of sale the asset was fully leased to Vistar Corp and Mission Produce. 

The building is part of the 3.1 million-square-foot LogistiCenter at Logan industrial park, which offers proximity to four major shipping ports with direct access to I-295 and Philadelphia's central business district and airport, as well as the Port of Philadelphia. 

"Commerce Corner is a state of the art, multi-tenant distribution facility with excellent prospects for income generation and total return. We are pleased to add this investment to the RREEF Property Trust portfolio," said Todd Henderson, chairman of the board at RREEF Property Trust and head of real estate, Americas at Deutsche Asset & Wealth Management

Friday, April 11, 2014

L.F. Driscoll Signs Lease in Bala Cynwyd

Natalie Kostelni, Staff writer Philadelphia Business Journal

L.F. Driscoll has signed a lease to relocate its offices in Bala Cynwyd, Pa., and that has triggered a decision to sell the building from which it’s moving.
The construction company signed a long-term lease on 20,000 square feet at 401 City Ave. and will leave from 9 Presidential Blvd., also in Bala Cynwyd.
An affiliate of the Driscoll family owns the two-story, 27,000-square-foot building on Presidential Boulevard that the company vacated. No asking price has been put on the property,
Full story:

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Thursday, April 10, 2014

Denver Industrial Sells for $3.5M

Integrity Plastics acquired the industrial building at 10 Industrial Way in Denver, PA for $3.5 million, or about $55 per square foot, from Mirada Associates. 

The 63,604-square-foot property was built in 1994 on 6.7 acres in the Lancaster County Industrial submarket.

Tuesday, April 8, 2014

Construction Execs Bullish on Philly

by John Jordan staff writer

Despite unemployment rates in some trades that approach 30%, construction executives see heady times ahead thanks to a significant amount of investment earmarked for commercial and infrastructure projects in the city.
Construction executives, convened for the Greater Philadelphia Chamber of Commerce's “Region on the Rise: Construction Investment in Greater Philadelphia" event held at the Radisson Plaza-Warwick Hotel on Thursday, shared their bullish forecasts for the city’s building industry.
Among some of the major projects discussed at the event included the $500 million to repair and replace area roads and bridges by the state of Pennsylvania. Roundtable panelist John Gattuso, senior vice president and regional director of Liberty Property Trust, detailed the $1.6-billion skyscraper Liberty is building with in partnership with Comcast Corp. in Center City. The project will yield 6,300 jobs during construction, according to The Inquirer.
"That's an enormous vote of capital in the city of Philadelphia," Gattuso said. Other projects mentioned at the event were the $341-million project to build a 47-story skyscraper at 30th and Walnut Streets for FMC Corp. and the $280-million W Hotel on Chestnut Street, as well as other projects in the pipeline on East Market Street.

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GSA Signs Lease Deal in Cherry Hill

by John Jordan Staff writer
The US General Services Administration has signed a 20,000-square-foot lease at 51 Haddonfield Road here.
The deal was announced by the building ownership of Bergman Real Estate Group and Time Equities, Inc. The transaction comes on the heels of an approximately 21,000-square-foot lease with Benefits Consultants Group, Inc., which recently took occupancy of its new space at the 100,000-square-foot office building.
Since taking ownership of the property recently, Bergman and Time Equities have undertaken an extensive capital improvement program and as part of TEI’s Art in Buildings program has implemented a rotating art gallery of work by local and national artists.
“GSA’s decision to come to 51 Haddonfield Road further validates our belief that demand is strong in South Jersey for a Class A office building that is able to offer aggressive rental rates that are competitive with those offered by a large number of lesser quality properties in the market,” saysJohn G. Osborne, Bergman’s executive director of leasing and marketing. “Since completing the repositioning of the building about a year ago, we’ve seen a significant increase in the pace of leasing.”

Sam Zell on 'carried interest' tax rates (Video)

Monday, April 7, 2014

First-Look: U.S. Office, Warehouse Markets Begin Year On Strong Note

As preliminary first-quarter data and new forecasts for the rest of 2014 and beyond begin to roll in, it's clear that demand for office and industrial space continue to improve steadily in most major metros, despite fairly plodding employment growth, geopolitical tensions with Russia and some of the most severe weather in two decades blanketing many parts of the U.S. 

Eight out of 13 major metro markets saw office vacancy rates decrease and average asking rents increase in the first three months of 2014. 

Preliminary CoStar data for multitenant office buildings 50,000 square feet and larger shows the highest first-quarter absorption since at least 2007, the end of the last boom cycle, and the highest occupancy since mid-2009 following the throes of the Great Recession. 

"The U.S. economic recovery is continuing to fuel demand for office space nationally, with relatively little new space coming on the market," said Art Jones, senior managing economist. "Landlords are seeing the pendulum of pricing power shift in their direction and are able to raise rents modestly in most major markets." 

From here, analysts expect two more years of strong performance for real estate and the broader economy is in the offing. The latest multi-year outlook covering 2014 through 2016 from the Urban Land Institute (ULI) and EY predicts steady economic growth in the U.S., along with sustained investment demand from real estate capital markets and continued improvement in both CRE fundamentals and the housing sector. 

The semi-annual ULI/E&Y Real Estate Consensus Forecast is based on a survey of 39 of the industry’s leading economists and analysts, including Hans Nordby, managing director, and Shaw Lupton, senior real estate economist, with CoStar's Property and Portfolio Research (PPR) analysis and forecasting unit. The consensus prediction from the survey conducted between Feb. 19 and March 14 is that CRE transaction volume will reach a decade-high $430 billion by 2016, exceeding the record-setting volume of 2006. 

The report shows a marked increase in optimism over the last survey conducted in October. However, recovery across the globe is still uneven and a good size list of risks remain, cautioned Howard Roth, global real estate leader for EY, during a presentation Tuesday. 

Among those risks: High global unemployment, high government debt, pressure from deflation in advanced economies, weak domestic demand, capital flow volatility in emerging markets and the potential impact from tapering of economic stimulus by the U.S. Federal Reserve. 

"Still, all signs point to a continued gradual improvement in both the economy and real estate market fundamentals," Roth noted. 

Rising Office Rents Expected to Continue

Survey respondents foresee healthy growth in office rental rates through 2016, increase by 3% in 2014, 3.9% next year and 3.6% in 2016. 

For now, office market performance is steady but not spectacular. In the first quarter of 2014, U.S. office markets absorbed 12 million square feet, up 63% from the same quarter a year ago. However, the U.S. vacancy rate remained unchanged at 15.4% as 10.5 million square feet of new space was delivered in the quarter, according to a first-quarter analysis by Cassidy Turley. Average asking rents rose 2.1% compared to a year ago to $22.30 per square foot. 

After three years in which modest increases in office demand coupled with a smattering of new supply have repeated again and again, something like a broken record, absorption is catching up with supply. More than 50% of the country is now experiencing consistent upward movement in rents, Chief Economist Kevin Thorpe said. 

In addition to the abnormally harsh winter which kept consumers' hands in their coats and stymied business expansion, temporary factors that slowed growth in the first part of the year included a flight of reserve capital out of emerging market currencies (which rattled the equity markets), and Cold War style geopolitical tensions with Russia, Thorpe added. 

"As we enter spring, the economic data in the U.S. should resume the stronger trajectory that we observed in the second half of last year," Thorpe said. "Likely, we will see much stronger demand numbers in the office sector for the remainder of the year." 

According to CBRE, Atlanta and Seattle led the U.S. in vacancy declines, each with a vacancy rate drop of 60 basis points during the quarter. Technology firms once again led demand improvements in Seattle, and the story was more broad-based in Atlanta, with tech, health care and service firms leading demand. 

A bit surprisingly for a market that suffered along with other housing bust markets a few years ago, Phoenix led the nation with a 3.9% increase in average asking rents, followed by San Francisco at 3.3%, as large blocks of space in both markets are in short supply. 

Warehouse Building Boom on Horizon

U.S. warehouse markets also experienced healthy activity in the first quarter, with fundamentals continuing to recover on the back of strong economic drivers, and demand notably strong in big-box space driven by e-commerce, logistics and food facility users. 

"With trade, industrial production and private inventories all expanding, early numbers suggest the industrial sector is continuing to recover strongly," said Jared Sullivan, senior economist. 

Atlanta had the largest drop in its industrial availability rate (space that is actively being marketed and available for tenant build-out within 12 months), falling 100 bps to 14.9%, amid demand in the home building, logistics and consumer products sectors. 

Average asking rents grew in nine of the top 12 warehouse markets with only one market showing a decline. 

After years in the freezer, new commercial construction is slowly thawing. Growing demand for bank construction and development financing, combined with an easing of underwriting standards, should provide developers with capital for good projects. 

Lending standards for CRE construction and land development loosened by -8.1% in the first quarter, followed by multifamily (-6.7%) and non-farm nonresidential construction (-6.6%), according to Federal Reserve Senior Loan Officer Opinion Survey data analyzed by Morgan Stanley. 

Borrower demand for CRE development loans, meanwhile, jumped more than 28% in the first quarter, while edging down to still-solid 23% growth for multifamily projects. 

Nationally, 65.4 million square feet of new office buildings were under construction at the end of the first quarter, up 31% from the same quarter a year ago, Cassidy Turley said. 

Though office development nationally remains constrained, increased activity was evident in markets like Houston and San Francisco, which each reported deliveries of about 1.2 million square feet, CBRE reported. 

With U.S. industrial market experiencing a tightening supply, especially in the highly competitive big-box market, both build-to-suit and speculative warehouse construction activity is increasing, in most cases to pre-recession levels, the report said.

Friday, April 4, 2014

Drug, Biotech Boom Fuels Real Estate Demand (Video)

Center City building sells for $23 million

Natalie Kostelni, Staff writer for the Philadelphia Business Journal

A Denver investor has paid $23 million to buy the so-called Kling building in Center City.
Michael Plante bought the two-building complex that includes 2301 Chestnut St. and 2300 Ionic St. The properties total 141,763 square feet and take up an entire block. Both buildings were constructed in 1925 but were renovated in the early 1980s.
It is referred to as the “Kling” building for the architectural firm that has occupied the structure for decades.
Eight years ago, what is now KlingStubbins sold the building to Capital Solutions, an entity affiliated with Blue Bell, Pa., developer Frank Seidman. At the time, KlingStubbins entered into a long-term lease and the firm still occupies the entire complex as its headquarters. It has nearly nine years left on the lease.
Once the lease expires, the building could be ripe for redevelopment into another use.
“You’re at the center of everything there,” he said.
The building was put up for sale last June. 
Full story:

Thursday, April 3, 2014

Apartment REITs returned to 12.75% in Q1 (Video)

Doubletree Wilmington Sold for $23.5M

ASAP International Holdings acquired the Doubletree Wilmington at 700 N. King St. in Wilmington, DE from Driftwood Hospitality Management LLC and AGRE US Real Estate Fund LP for $23.5 million, or about $108,000 per key. 

The nine-story, 133,000-square-foot hospitality building was originally built in 1978 and had undergone renovations as recently as 2011. The property is comprised of 217 guest rooms under Hilton's Doubletree flag, and features a concierge and ground-floor restaurant, which the new owner will upgrade.

Coachman Manor Apts Sell for $15.9M

T Real Estate Capital purchased the Coachman Manor Apartments at 401 E. Gibbsboro Rd. in Lindenwold, NJ from Goldstone Management for $15.9 million, or about $29,000 per unit. 

Built in 1969, the 690,000-square-foot, garden-style multifamily complex sits on 28.4 acres. The property contains 400 one-bedroom, 135 two-bedroom, and 11 three-bedroom units. At the time of sale, the property was 79 percent occupied.

Association Headquarters to Relocate, Expand in Mt. Laurel

by John Jordan staff writer for
Association Headquarters, Inc. is relocating operations from its current home at 15000 Commerce Parkway to the 1120 Rt. 73 office building here. The move will expand the association management company’s presence in Mt. Laurel by 9,000 square feet.
Association Headquarters signed the 40,000-square-foot lease deal at 1120 Rt. 73 (1120 Executive Plaza). Officials say the new office will improve the company’s workspace, boost its image and allow for future growth. The company expects to take occupancy of its new space in August.
“With our lease set to expire, the time was right for us to evaluate how we work and implement changes to improve our productivity and our space,” says Robert Waller, president and CEO of Association Headquarters. “We’ve experienced double digit growth over the past few years and believe we can continue expanding at this rate over the next several years…Our new space will incorporate all the best thinking from workplace experts. We will vacate a single-story flex building and relocate to a larger, more prominent building with recently renovated atrium lobby. It will be convenient for our employees and it will give us the flexibility and collaborative environment that we’ve been looking for.”
 “We looked at multiple locations but determined this building met the needs of Association Headquarters’ in a way that the others did not. The company will be in a highly visible location with lighted building exterior signage and monument signage on two major roadways. Brandywine (the building owner) has also committed to installing a new left turn lane on northbound Route 73, which will improve access to the nearby highways.”

StoneMor Partners Acquires Nine Funeral Homes

by John Jordan staff writer at
Locally-based StoneMor Partners L.P. reports it has signed definitive agreements to purchase nine funeral homes, 12 cemeteries and two crematories from Houston-based Service Corporation International for an aggregate cash purchase price of approximately $53.8 million.
The properties are located in Central Florida, North Carolina, Southeastern Pennsylvania and Virginia, and include approximately 1,140 acres of land, 236 of which are undeveloped. This transaction is subject to closing conditions, including the FTC approval of StoneMor's acquisition of certain of these properties, StoneMor states in its announcement.
"We're delighted to move to the next step of the process we previously announced when StoneMor was named the successful bidder for these properties," says Larry Miller, president & CEO of StoneMor. "The addition of these cemeteries, funeral homes and crematories will facilitate our ongoing national expansion. These are very well run properties which should not require a great deal of up-front investment, but we believe that once we are up and running, in addition to being immediately accretive, we can further enhance the financial performance of these properties."
The cemeteries included in the transaction perform approximately 3,500 interments per year and the funeral homes perform approximately 1,900 annual calls. The cemetery inventories include more than 76,000 developed, unsold spaces, more than 2,400 unsold lawn crypts, 4,200 constructed unsold mausoleum crypts and 4,400 constructed unsold niches.
Upon completion of the acquisition, StoneMor will receive control of cemetery merchandise trust funds with a current value of approximately $18.9 million and perpetual care trusts of approximately $15.3 million. StoneMor will assume merchandise liabilities of approximately $10.5 million and accounts receivable in the amount of $5.7 million.
StoneMor is an owner and operator of 278 cemeteries and 90 funeral homes in 28 states and Puerto Rico.

Wednesday, April 2, 2014

Coachman Manor Apts Sell for $15.9M

PT Real Estate Capital purchased the Coachman Manor Apartments at 401 E. Gibbsboro Rd. in Lindenwold, NJ from Goldstone Management for $15.9 million, or about $29,000 per unit. 

Built in 1969, the 690,000-square-foot, garden-style multifamily complex sits on 28.4 acres. The property contains 400 one-bedroom, 135 two-bedroom, and 11 three-bedroom units. At the time of sale, the property was 79 percent occupied.

$300M Villanova dorm plan gets nod from Radnor Board

Villanova University has cleared a major hurdle in its expansion plans, which include building dormitories on an existing parking lot along Lancaster Avenue.

The Radnor Township Board of Commissioners voted late Monday night to approve zoning changes for the estimated $300 million project, a step that took two years and drew strong opposition from some residents.
Villanova wants to build new dormitories, a performing arts center, parking garage, and campus bookstore. A vocal group of residents has spent thousands of dollars and has packed meetings to fight the plans, which some said would increase traffic and noise while bringing an unwanted urban feel to their Main Line community in Delaware County.

After an initial plan was rejected last year, the university returned with the smaller proposal that gained approval Monday.

Villanova officials said the project would decrease traffic because it would include a pedestrian bridge over busy Lancaster Avenue, where thousands of students now use crosswalks every day. The new dormitories would house nearly 1,200 students who now live off campus and drive to school.

After hearing from residents opposed to the plan Monday night, the commissioners voted 4-2 to approve the zoning change.
"I honestly feel people oppose this because they don't like change," Commissioner Jim Higgins said at the meeting.

"And ultimately, I do believe honestly that this will have minimal adverse impact on people that live near it."
The project could still be years away. Villanova must submit final designs to the township before work can begin. The new dormitories could be open by the fall of 2019, said Chris Kovolski, assistant to the president at Villanova.

Also Monday, the commissioners voted against a proposal to hire an outside planner to review Villanova's plans and a proposal for commercial development at the former Wyeth property on King of Prussia Road.
Some residents concerned about the potential impacts of both projects wanted a consultant, rather than just the township's own planning board, to examine plans.