Thursday, April 27, 2017

Capital One Leases 330,000 SF in Wilmington Consolidation

Financial services corporation Capital One has signed a new 10-year lease for 174,000 square feet in the office building at 800 Delaware Ave. in Wilmington, DE and renewed its current space at the adjacent 802 Delaware Ave. through 2027.

The company, which recently acquired Wilmington, DE-based financial services companies HSBC and INGDirect, will consolidate offices from several area buildings as its new space is renovated and built out.

800 Delaware is a 10-story, 277,899-square-foot, 4-Star office building in the Wilmington CBD submarket while the adjacent 802 Delaware building totals 240,780 square feet of 4-Star office space over 14 floors. DelleDonne & Associates developed the 800 building in 1994 and renovated it in 2007. Other tenants there include Blue Cross Blue Shield of Delaware and Heckler & Frabizzio.

Tuesday, April 25, 2017

O'Neill Property Group has GSK campus in Upper Merion under agreement

by Natalie Kostelnie, Staff writer Philadelphia Business Journal

O’Neill Properties Group has put GlaxoSmithKline’s “West Campus” in Upper Merion, Pa., under agreement, according to sources. And, if a deal is completed, it will for the first time in three decades free up the property to be marketed to multiple tenants.

The property at 709 Swedeland Road consists of 43 buildings totaling about 2.2 million square feet of office, lab and warehouse space. In 2014, GSK announced it planned to sell its West Campus and lease back a portion of the site that consisted of its sterile clinical manufacturing pilot plant.

Frances DeFranco, a GSK spokeswoman, declined to comment on whether the sprawling campus was under agreement. A representative from O’Neill Properties also declined comment.

Undertaking the repositioning of 2 million square feet of space would be a daunting task for any developer. There is demand for lab space in the region, which has an abundance of pharmaceutical and biopharmaceutical companies. Such specialized space is expensive to build and fit out. In light of that, its ready-made, move-in condition might be appealing to prospective tenants.

There is also demand for office space. Large blocks of well-located office space in the suburbs is becoming scarcer and may present O’Neill Properties or any buyer with an opportunity to renovate the space and create an amenity-rich environment that would appeal to tenants.

O’Neill has completed office and multifamily projects throughout the region but is familiar with the area where the GSK property is located. The real estate company developed projects in Conshohocken, Pa., and maintains its headquarters off Renaissance Boulevard, just a stones throw away from the GSK campus.
Full story:

Is this a good time to sell my CRE property? (Video)

Monday, April 24, 2017

Amazon Adding Three More NJ Fulfillment Centers

by Steve Lubetkin,
CRANBURY, EDISON, AND LOGAN TOWNSHIP, NJ— will open three additional fulfillment centers in New Jersey, at sites in Cranbury Township, Edison and Logan Township that the online retailer says will create more than 2,500 new, full-time jobs.

Since Amazon launched operations in New Jersey in 2012, the company has grown its fulfillment workforce in the state to 13,000-plus full-time employees across seven existing facilities in Avenel, Carteret, Florence, Logan Township and Robbinsville.

“Our ability to expand in New Jersey is the result of two things: incredible customers and an outstanding workforce,” says Akash Chauhan, Amazon’s vice president of North American Operations. “We are excited to continue growing by creating an additional 2,500 full-time roles at new fulfillment centers across the state.”

Amazon employees at the more than 900,000-square-foot fulfillment center in Cranbury Township and the one-million-square-foot fulfillment center in Logan Township will pick, pack and ship larger customer items such as music equipment, sports gear, and patio furniture. The 900,000-square-foot fulfillment center in Edison will handle smaller customer items such as books, toys and kitchenware.

“We applaud Amazon for investing in several expansions throughout New Jersey and for creating greater opportunities for our high-quality workforce,” says New Jersey Governor Chris Christie.

Friedman Group Acquires, Renovating Phoenixville Apartment Complex

by Steve Lubetkin,
Breckenridge Plaza, a 92-unit garden apartment community with 48 two-bedroom apartments, 40 one-bedroom apartments and 4 studio apartments located on Nutt Road in Phoenixville, PA, has been acquired by an affiliate of Friedman Realty Group for $8.7 million.

Friedman specializes in revitalizing apartment communities, shopping centers and office buildings.

Major renovations underway on the property will help reposition the property with a new name—Phoenix View Apartments—and Friedman also plans to capitalize on the economic revitalization initiative that has attracted large developers for multifamily, class-A properties in and around Phoenixville.

“The property had all the hallmarks of the type of property we like,” Brian K. Friedman, president of FRG. The property had been overlooked for years by the previous owner.  Rents fell well below the market and vacancies rose to 42 percent. Yet it had terrific bones with a garden setting and brick exterior, providing us with an opportunity to significantly enhance the property’s curb appeal. With 40 years of expertise restoring class-B apartment communities, we will turn Phoenix View Apartments into one of the most sought after multifamily addresses in Phoenixville.”

Exterior improvements include new building entryways and common area designs, gable roof siding replacement, apartment deck and balcony replacements, decorative window shutters plus updated lighting, landscaping and signage.

“The repositioning of the exterior amenities, including the former in-ground pool, is just another fresh start for Phoenix View Apartments,” says Friedman.  The apartments will also benefit from new energy efficient windows and sliding glass doors.

Apartment interiors will receive new plank hardwood flooring throughout the living and dining areas with new carpeting in bedrooms, new kitchens with updated cabinetry, stainless steel appliances (including built-in dishwashers and microwaves), quartz countertops and subway tile backsplashes.  Additionally, the kitchen layouts will be re-designed from their current footprint to provide for a more open and modern look.  Bathrooms will be gutted and everything will be replaced, such as new floor and wall tile with upgraded vanities, light fixtures and plumbing fixtures.  All apartments will also include individual stackable washers and dryers within the unit.

The property’s prior ownership had not invested any capital for major or minor renovations and upgrades, except for adding newer roofs and parking lots, all of which were required by the Borough of Phoenixville to address previous multiple code violations.  Inside the units, everything from the HVAC systems to kitchen cabinets and appliances to the bathrooms were original and in poor condition.  With a deteriorated look, inside and out, the property’s marketability stagnated and suffered, with vacancies rising to 42 percent at the time FRG purchased the property.

“This is a complete gut job,” says David B. Friedman, CPM, owner and vice president of FRG.  “It’s going to be an enormous effort to renovate and restore this property, but this is what we do.  We convert under-managed garden style apartments into modern, contemporary communities with state-of-the-art amenities that can compete with new construction.”

Built around 1970, the property consists of five two-and-a-half-story brick on block buildings with pitched roofs constructed on a three-acre parcel.  The property sits atop of a hill at the busy intersection of Nutt Road and Bridge Street and is within one-half mile from downtown Phoenixville and the township’s Borough Hall.

“The growth of Phoenixville has been tremendous,” says David B. Friedman. “A number of high-profile multifamily projects are coming out of the ground led by developers who have been attracted to Phoenixville’s economic revitalization. The growth shows no signs of waning; renters are exhibiting strong interest in suburban settings with access to downtown shopping and dining destinations.  We believe Phoenix View Apartments fills an important niche in the sub-market by providing beautifully renovated apartments at competitive, affordable rents.”

Phoenix View Apartments is close to major highways such as Route 422, I-76 and provides convenient commuter access to Pennsylvania routes.  Within 10 miles is the King of Prussia Mall, one of the largest retail shopping centers in the country, as well as major regional employers such as The Vanguard Group, GlaxoSmithKline, Pfizer, Dow Chemical Company, and Lockheed Martin.

Friday, April 21, 2017

Retail ice age: Why 5K stores expected to close this year (Video)

Blackstone REIT Rapidly Adding to Initial Portfolio with 6 Million-SF Industrial Buy

Blackstone’s non-traded REIT, Blackstone Real Estate Income Trust, this week added another portfolio to its growing property stockpile.

The REIT's latest acquisition is a six million-square-foot portfolio of predominantly infill industrial assets it purchased from affiliates of High Street Realty Co. $402 million.

The portfolio is 97% leased to over 90 tenants and consists of 38 industrial properties totaling 5.97 million square feet. The properties are located in six submarkets with the following concentration based on square footage: Atlanta (38%), Chicago (23%), Houston (17%), Harrisburg (10%), Dallas (10%) and Orlando (2%), according to Blackstone. The purchase price breaks down to about $67.30/square foot.

Blackstone did not provide a specific list of properties.

The REIT said that, over the last two years, market rents in those submarkets have increased by 5% annually while vacancy has declined by approximately 100 basis points to 5.2%. The REIT also said that infill industrial supply in these markets is expected to be constrained at 0.6% of stock throughout 2017 given limited land availability near these population centers.

The REIT added the properties have posted weighted average releasing spreads of 12% over the last two years, which Blackstone described as a measurement of the change in rent per square foot between new and expiring leases at a property. The portfolio posted average effective annual base rent of $4.31/square foot as of March 31.

The acquisition was funded through a combination of cash on hand, a $5 million draw on the REIT’s line of credit, and a short-term $292 million loan from various lenders lead by Bank of America. The REIT expects to convert the loan shortly after closing long-term financing.

Wednesday, April 19, 2017

FASB Leases Standard to Offer Clearer View of Corporate Liability (Video)

Health Network Labs Leases 15,000 SF in Bethlehem

Health Network Laboratories has signed a 15,400-square-foot office lease in the Fuller Co office building located at 2040 Avenue C in Bethlehem, PA.

The tenant will relocate to the first floor of the updated annex building in the Lehigh Valley Industrial Park I. The 164,451-square-foot office building has been recently updated with a main entrance, natural light, flexible layouts and additional parking.

Health Network intends on using the space as additional administrative office space. The company has locations across Pennsylvania and New Jersey.

HT Lyons Renews 122,000-SF Lease in Allentown

H T Lyons, a contracting, engineering and maintenance company, has renewed its industrial lease for the 122,400-square-foot building at 7165 Ambassador Dr. in Allentown, PA.

The single-story warehouse was built in 2002 on 10 acres in the Lehigh Valley Industrial submarket.

Monday, April 17, 2017

MRA Group Acquires 133 Acre Rohm & Haas (Dow) Campus in PA

MRA Group announced that it acquired the former Rohm & Haas Research & Development campus located at 727 Norristown Road, in Spring House, Lower Gwynedd Township, Montgomery County, PA.  Rebranded as the Spring House Technology Park, there currently exists 591,000 square feet in eleven buildings. The bucolic campus, which totals 133 acres situated at a full interchange with the Rt. 309 expressway, is less than three minutes north of the Ft. Washington exit of the Pennsylvania Turnpike.  Mike Wojewodka, Senior Vice President of MRA Group, states "we are transforming Spring House Technology Park into the premier, multi-use technology enhanced campus in the region. Plans include, in addition to first class office and laboratory facilities, a campus environment with a university-affiliated regional center of excellence for innovation and advanced production, a laboratory incubation and commercialization center, a boutique hotel with full amenities, co-working space with on-demand offices and shared office/conference facilities, on-site child daycare, a health/fitness center, and a retail village containing approximately 40,000 square feet of restaurants and other amenities. Our focus is in attracting companies that can best utilize the robust existing laboratory infrastructure at one of the best locations in the Philadelphia region."

According to Hank Merrill, Vice President of Facility Engineering at MRA Group, "the in-place laboratory infrastructure is invaluable for laboratory users and technology companies. The cost to replicate what we already have in place would be immense, and certainly will be a significant benefit to any forward-thinking company that prefers to direct capital to other needs besides building improvements.  Our utility infrastructure alone will translate to measurable operating savings over what space users will typically find available on the market today."

Heather DeFreytas, MRA Group Vice President for Project Design and Management, plans to embrace and enhance unique architectural features of the campus, along with including an outdoor amphitheater and meeting spaces, nature trails for use by tenants and the community, and the conversion of an existing barn into a coffee shop and restaurant.  Heather observed, "the opportunities presented on this campus are complex. Design and construction for each building will reflect a balance between technology, innovation, sustainability and the neighboring environment.  Though some of the buildings appear tired now, they in fact possess features that are very much desired by space users today.  It will not take much to bring them up to MRA standards."

Larry Stuardi, CEO of MRA Group, states that "the development of Spring House Technology Park is a collaborative endeavor with Lower Gwynedd Township.  There is a shared vision for the redevelopment of the campus, and though there are details to be worked out, we generally are on the same page when it comes to the overall development of the site.  We are all aware that we have the opportunity to do something special and unique, and we are collaborating so as to get it right."

Monthly Economic Outlook – April 2017 (Video)

Two Logistics Firms Lease 450K SF At Middlesex Center

by Steve Lubetkin,
CDS Logistics and Best Logistics have leased 450,000 square feet of space at 301 Middlesex Center Boulevard, a class-A industrial building located within the three-building Middlesex Center in South Brunswick, NJ.

This brings the newly constructed, speculative facility to full occupancy. CDS leased 250,000 square feet and Best Logistics leased 200,000 square feet.

“Exit 8A is one of New Jersey’s hottest submarkets for industrial property, and this class-A facility provides an ideal location for premier third-party logistics providers like CDS and Best Logistics. To facilitate lease-up in a more timely manner, we utilized the latest technologies, including virtual reality tours, to draw greater interest from local and national prospective tenants.  We ultimately decided to divide the building into a multi-tenant facility, and IDI Gazeley was able to pursue the subdivisions without a hitch. These leases also mean that all three buildings at Middlesex Center are now fully occupied, providing further evidence of the continued strength of New Jersey’s industrial market.”

Situated just off of the New Jersey Turnpike in South Brunswick, 301 Middlesex is less than 30 miles away from the ports of New York / New Jersey and Newark International Airport. The property includes 36-foot ceiling heights, ESFR sprinkler systems and cross-docked loading. Among tenants at Middlesex Center is Williams-Sonoma.

“CDS and Best Logistics are among the most prestigious logistics providers in the region, and we’re very excited to welcome them to our property.”

Big plans for an 11-acre parcel on the Schuylkill River in Bala Cynwyd

Natalie Kostelni Reporter Philadelphia Business Journal
For the last 17 years, Sean McCloskey has been patiently plotting a more than $50 million mixed-use development on an 11-acre site along the banks of the Schuylkill River where the former Pencoyd Iron Works Inc. plant operated. Finally, he is now the closest he has ever been to getting his project out of the ground.

McCloskey’s Penn Real Estate Group anticipates breaking ground later this year on the first phase of Pencoyd Landing, which will include a public square, two hotels, a restaurant as well as an already renovated building that once served as Pencoyd’s headquarters but is now occupied by the real estate company McCloskey runs with business partner Donna Glavin. The first part of the project to be constructed is a 123-room Marriott Residence Inn. The other hotel will follow at some point and be about the same size but more upscale. McCloskey said he has lined up an operator for it but declined to disclose who it is.

Between 1999 and now, Penn Real Estate has been assembling parcels, conducting environmental remediation, installing infrastructure such as stormwater management systems and retaining walls as part of its effort to bring Pencoyd Landing to fruition. “Our objective is to encourage people to visit the river not only from Philadelphia but from around the world,” McCloskey said. “We are re-imagining and repurposing this part of the waterfront for the first time since 1852.”

That’s when Pencoyd Iron Works began production along the Schuylkill River and one of its last remaining operations, the fabrication of rebar, fully ceased operations last month. That meant Penn Real Estate could finally move forward with its plans.

Two hotels next to each other on the Lower Merion side of the Schuylkill River may seem a little preposterous until McCloskey makes his case. For one, he believes there’s demand for additional rooms in that area and at that particular spot, where Righters Ferry Road dead ends into the river, will provide an experience visitors can’t get elsewhere.
Full story:

Redevelopment Authority makes pick for Chinatown's 8th and Vine development site

by Natalie Kostelni Reporter Philadelphia Business Journal

The Philadelphia Redevelopment Authority has selected a team that involves Pennrose Properties and EZ Park to buy and develop a highly visible site at 8th and Vine streets into a mixed-use project that pitted developers and their respective visions for the property against each other.

“We’re definitely deeply honored to be selected,” said Richard K. Barnhart, chairman and CEO of Pennrose Properties, which will lead the development that includes the construction of the Philadelphia Bar Association's Equal Justice Center.

The site sits in an area of Philadelphia referred to as Chintatown North, which has expanded the boundaries of Chinatown beyond Vine Street. It’s an area that was once overlooked by developers, even those from Chinatown, but has gained more attention from investors in recent years and will continue Chinatown's expansion northward.

The redevelopment authority put out a request for proposals for the site last fall and both bids were backed by experienced developers. Despite that, it was a contentious process.

The process ended up putting a proposal that involved the Philadelphia Chinatown Development Corp. and its partner, Parkway Corp., against a plan that involved the Philadelphia Bar Foundation and the long-time operator of what is now a surface lot. Some observers predicted Parkway was a shoo-in because it has done a handful of PRA-controlled sites in Chinatown already and was experienced with the government agency.

The Philadelphia Bar Foundation, the philanthropic arm of the Philadelphia Bar Association, was hoping its plan would prevail and it did. With Pennrose and EZ Park as partners, the Bar Association proposal laid out the building of a $40 million mixed-use project that would house more than 20 legal nonprofits.

The proposed 160,000-square-foot building — which the bar association is calling the Equal Justice Center — is envisioned to be eight to 14 stories when completed. The plan also calls for 55 affordable housing units for senior citizens, another building containing market rate rentals, a small hotel (rumored to be a Comfort Inn), retail space and 181-space parking lot.
Full story:

Wednesday, April 12, 2017

Crown Properties Pays $19M For Cherry Hill Office Park

Crown Properties, Inc., a New York-based property investment firm, has acquired the 215,465-square-foot Woodland Falls Corporate Center in Cherry Hill, NJ from Brandywine Realty Trust for $19 million, or about $88 per square foot.

The center includes three Class A office buildings located at 200, 210 and 220 Lake Drive East constructed between 1986 and 1989. Brandywine reported an average occupancy at 93%.

Metro Development Sells Bakers Centre for $52.4 Million

Bakers Centre, a grocery anchored shopping center on 27.4 acres in the East Falls/Hunting Park area of Philadelphia traded for $52.4M.

The 236,719-square-foot center is anchored by ShopRite, Ross Dress for Less and Planet Fitness.
The property developed in 2013 is located in the Northwest Philadelphia submarket at 2800 Fox St. An undisclosed buyer group purchased the property

Tuesday, April 11, 2017

REIT Fundamentals Keeping Market on “Solid Keel” (Video)

Retail real estate strength defies headlines of store closures (Video)

Middle Market CRE Digest – The Northeast

by Steve Lubetkin

The Haub School of Business’s real estate finance program at St. Joseph’s University has conducted its first Real Estate and Construction Survey of Philadelphia and the Delaware Valley. The report, which is based on a survey of local professionals in various real estate fields, contains 2016 year-end results as well as expectations for the upcoming year. The survey’s 117 respondents included real estate agents to construction specialists, property owners, bankers, project managers and more, representing 134 professions in 10 areas of commercial real estate in Philadelphia and the Delaware Valley. Significant findings from the Real Estate and Construction Survey Report include: 80 % of respondents indicated that their business increased in 2016. Only three percent said business had decreased. 100% reported an increase in hiring in 2016. 59% said that they expect business to increase again in 2017. Respondents agreed that the top strategic opportunities in the Philadelphia real estate market are infrastructure, tax abatement and the millennial market.

PREIT held a grand opening of LEGOLAND® Discovery Center Philadelphia, an indoor family-friendly LEGO® play experience, at Plymouth Meeting Mall. The first-to-market attraction is also a first-to-portfolio tenant for PREIT, illustrating its strategy of revolutionizing the shopping experience for consumers. With a focus on family-friendly entertainment, LEGOLAND Discovery Center Philadelphia reinforces Plymouth Meeting Mall’s transformation into a lifestyle destination in the Greater Philadelphia region. Currently 17 percent of PREIT’s retail space is committed to dining and entertainment tenants, such as LEGOLAND Discovery Center.

The sale of a multi-building, 5.5 acre retail parcel located at 5202 Baltimore Pike, Delaware County, Springfield PA, traded in the aka “The Golden Mile” for $7.425 million. The property, situated on a signalized corner at Baltimore Pike and Oak Avenue, was sold to BET Investments by Burlington Stores, Inc. The site will be redeveloped for retail uses.

Metropolitan Capital Advisors and AMA Financial arranged both the debt and equity for the acquisition of Northbrook Corporate Center in Trevose, PA. MCA and AMA (based in Pennsylvania), both members of the Real Estate Capital Alliance, teamed up to facilitate the financing on behalf of a partnership sponsored by Red River Asset Management. Northbrook is a 107,700 square foot class A office building. The business plan is to renew and extend the major tenants, renovate common areas, and lease up the few remaining vacant suites. The acquisition loan was funded by a bridge lender that included a future funding component to execute the business plan. The equity partner is a NYC based private investment firm focused on “middle market assets”. Scott Lynn, Founding Principal of MCA, and Gregg Wallace, President of AMA, were responsible for arranging the financing.

Monday, April 10, 2017

Acme replacing Fresh Grocer in West Philly

Natalie Kostelni Reporter Philadelphia Business Journal

Acme Markets has signed a lease on 34,500 square feet at 4001 Walnut St. in the University City neighborhood of Philadelphia and will open a grocery store in the space.

The lease was signed with the University of Pennsylvania. In addition to a sushi and noodle bar as well as a guacamole station, the new store will have a Starbucks and sell beer and wine. Acme plans to spend millions of dollars to renovate the space.

The new Acme will backfill space vacated by Fresh Grocer. It had been reported in December by the Daily Pennsylvian that the Fresh Grocer was trying to remain in the space and that Acme was at the ready to move forward with a store at that location. Fresh Grocer had operated from that site for 15 years.
Full story:

Custom doughnut shop & burger joint coming to KOP Town Center

Kenneth Hilario Reporter Philadelphia Business Journal

Upper Merion residents and visitors can add customizable doughnuts and chargrilled burgers to the King of Prussia Town Center's growing list of food-and-beverage operators.

The King of Prussia Town Center, developed by Maryland-based JBG Cos., has continued to add more eateries to its roster over the past few months since the first restaurant opened in summer 2016.

Most recently, JBG Cos. signed on three food-and-beverage tenants like California-based MidiCi The Neapolitan Pizza Company.

Two more tenants have signed on to open up Philadelphia-area outposts: Duck Donuts and The Habit Burger Grill.

Duck Donuts is slated to open in July, and Habit Burger is slated to open in October. The Town Center is now 86 percent leased with these additions.

Duck Donuts, which originated in the Outer Banks and is named after Duck, N.C., is known for its made-to-order doughnuts that include 11 coating choices, seven topping choices and four drizzle choices.

Duck Donuts will open three more Pennsylvania locations this year alongside the 1,500-square-foot Town Center outpost, including one in Hershey that's slated to open in May.

The Town Center location is expected to create 25-40 new jobs in Montgomery County.

“King of Prussia is located only 1.5 hours from our corporate headquarters in Mechanicsburg and is home to many of our doughnut fans that vacation in the Shore points near our Avalon store,” said Russ DiGilio, founder and owner of Duck Donuts Franchising Company.
Full story:

Retail real estate bargain hunting (Video)

Blackstone real estate head on future of retail (Video)

Southern NJ and Pennsylvania CRE Markets Remain Strong

by Steve Lubetkin,
Despite political uncertainty at home and around the world, the Southern New Jersey market has started off 2017 on a cautiously optimistic footing.

“Even with an expected winter slowdown affecting office leasing activity, and added anxiety with the transfer of political power in Washington, the overall mood of the market seems to be positive. As we’ve seen the past couple of years, several business sectors increased their occupancy needs during the first quarter, and we continue to see increased capital spending, construction hiring, and expansions.”

In its latest quarterly analysis, there were approximately 317,886 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which represents a decrease of approximately 18 percent compared with the previous quarter, but is essentially unchanged from the first quarter last year. While leasing slowed a bit, the sales market doubled in volume during the first quarter, with some 767,988 square feet worth more than $133.5 million trading hands. New leasing activity accounted for approximately half of all deals – a significant increase over the fourth quarter. Overall, net absorption for the quarter was in the range of approximately 122,572 square feet.

Other office market highlights:

  • Overall vacancy in the market is now approximately 11.05 percent, which is a nominal increase from the previous quarter.
  • Average rents for class A and B product continue to show strong support in the range of $10.00-$14.50 per square foot (triple net) or $20.00-$24.50 per square foot gross for the deals completed during the quarter. This is essentially unchanged from the previous two quarters.
  • New Jersey’s unemployment rate moved down to 4.4 percent, putting it below the national rate of 4.7 percent.

 Highlights from the first quarter in Pennsylvania include:

  • Office demand in Center City is still exceptionally strong, as rental rates continue on an upswing and vacancy levels are compressing to all-time lows.
  • There is a significant amount of inventory of multi-family, including recently developed, under construction, and proposed, in both the City of Philadelphia and Philadelphia suburbs. Rental rates have either remained relatively stable or decreased slightly. Concessions are becoming commonplace at many apartment communities.
  • While much of the pricing for commercial real estate accounts for increasing interest rates, many purchasers are showing signs of hesitation and fears of potential decreases in market fundamentals.
  • The industrial market in the City of Philadelphia and its suburbs is fetching price points never experienced in the marketplace. The lack of available product coupled with significant demand is putting further upward pressure on overall pricing.

There was also a report on the Southern New Jersey retail market, noting an incongruous mix of consumers earning more and showing a willingness to spend, and a high number of retailers declaring bankruptcy. The report attributes this to a growing shift to online shopping and other changes in spending habits. Highlights from the retail section of the report include:

  • The Conference Board reports that consumer confidence is at its highest level since 2000.
  • Nine retailers filed bankruptcy in the first quarter, which is the same as the total for all of 2016.
  • Retail vacancy in Camden County stood at 6.4 percent, with average rents in the range of $12.92 per square foot (triple net).
  • Retail vacancy in Burlington County stood at 11.1 percent, with average rents in the range of $12.31 per square foot (triple net).
  • Retail vacancy in Gloucester County stood at 5 percent, with average rents in the range of $12.01 per square foot (triple net).

Thursday, April 6, 2017

Philadelphia's Growth Can And Should Go Beyond Its Priciest Buildings

by Matthew Rothstein, Bisnow
Philadelphia’s growth as a commercial real estate market over the last decade has been invigorating for business and government leaders, but its concentration in Center City and University City has increased the gap between the haves and have-nots, highlighting for many the progress that still needs to be made.

One of the most frequent questions for developers regarding any major city has been the possibility of preventing Millennials from moving back to the suburbs when they start families. With the amount of multifamily being planned and built in Philadelphia, keeping demand high is essential to prevent a major downturn, but the single biggest factor in retaining that demographic is the quality of schools.

 Philadelphia’s public schools lag far behind its suburbs in terms of performance, but its negative reputation can be a self-fulfilling prophecy.

 “It’s important to talk about public schools in Philadelphia not as bad, but as trending upward,” PIDC’s Prema Gupta said. “There is so much energy and innovation, I feel incredibly bullish about the direction of school districts in Philadelphia.”

“If we want to improve our schools, Millennials who are moving out need to stay and be part of the solution,” Philadelphia Planning and Development director Anne Fadullon said.

 For businesses, one of the programs that they have supported most strenuously — the 10-year tax abatement on new construction — may be one they need to think differently about to keep those young families around.

“The appropriate balance between abatements and losses is necessary," City Councilwoman Maria Quiñones-Sanchez said. "As good as abatements have been for business, they’ve taken money from our schools."

But the focus on Millennials may itself be slightly misplaced, thanks to their visibility and influence on cultural and retail trends. There are other groups, especially in Philadelphia, that may have just as much of a demographic impact.

“We need to talk about immigrants,” Fadullon said. “The reason we’ve had a population growth in the last few years is because of immigrants, and we’re doing them a disservice by ignoring them.”

According to Fadullon, Hispanics are the only ethnic group that has seen an increase in homeownership in the last decade in Philadelphia, a trend indicative of their solidifying place in the community and one that needs to be supported and fostered.

Quiñones-Sanchez stressed the importance of programs allowing lower-income homeowners to keep and maintain their homes, both as a way to support nearby businesses and to stave off homelessness. Remaining in one’s homes is a major priority for the senior population as well — a demographic growing as quickly as any in the area.

“So many things seniors want — access to transit, walkable grocery stores and healthcare — are the same things that Millennials want,” Fadullon said.

With discussion largely focused on what Philadelphia can do to both attract investment and support its residents, Fadullon gave a crucial exhortation to business professionals to offset some of the damaging federal cuts on the horizon from the Trump administration.

“We’re going to have to be really creative, because if some policies from the federal government come down, it’s going to be on the people in this room to keep this city from taking a nosedive,” Fadullon said. “We cannot let the federal government just walk away, especially in regards to infrastructure. It’s great that they’re talking about infrastructure, but they’re also talking about gutting public transit, which makes no sense for our current climate.”

 One of the ways in which Philadelphia could use the private sector to overcome a lack of support from the federal government is the way in which it negotiates zoning, land-use and tax agreements. “Now that Philadelphia has something that people want, we’re going to start asking for things in return,” Fadullon said.

Full story:

Middle Market CRE Digest - Northeast

by Steve Lubetkin,

Natixis provided a $102.795 million floating-rate, first-mortgage financing to Post Brothers for the redevelopment of a vacant, 21-story historic office building located at 260 South Broad Street in Philadelphia into a 268-unit luxury multi-family rental property, to be branded as The Atlantic. The property also includes an adjacent three-story parking garage building with 205 parking spaces as part of the proposed amenities. The property was designed by Rafael Viñoly, a world-renowned architect. The Atlantic is positioned to be Center City Philadelphia’s premier residential building. It will have an unrivaled amenity package with a business lounge with conference rooms for resident usage, a clubhouse, a fitness center including a yoga studio, a rooftop swimming pool, and a roof deck with dog park and grilling areas.

Two mixed-use properties in Center City, Philadelphia have sold: 120 N. 3rd Street in the Old City neighborhood and 1701 South Street in the Graduate Hospital neighborhood. 120 N. 3rd Street contains four high-end renovated loft-style apartment units and one unit in “shell” condition, along with a ground floor commercial unit.  It is well located among the boutiques and cafes of 3rd Street and is just a few blocks from historical tourist attractions like the Liberty Bell and the Betsy Ross House. 1701 South Street is a newly constructed building with 9 apartment units and a ground floor commercial unit leased to 7-Eleven, located on the southern edge of the Rittenhouse Square neighborhood.  The seller selected a buyer in less than 30 days after going to market.

Wednesday, April 5, 2017

Turn5 plans expansion, will add 200 jobs

By Brian McCullough
A company that sells parts online for Jeep Wranglers, Ford Mustangs and F-150 pickup trucks plans to expand and add almost 200 jobs in eastern Chester County.

The news of Turn5’s expansion was announced by Gov. Tom Wolf last week as the state put in incentives to keep the company, now based in East Whiteland, in the area. The new headquarters at 600 Cedar Hollow Road will be about four miles from its current location on Lee Boulevard, brothers and company founders Steve and Andrew Voudouris said.

The company was last in the headlines in July when it refurbished the 2012 Jeep Wrangler of wounded Folcroft Police Officer Christopher Dorman. A Jeep enthusiast, Dorman was shot seven times while responding to a drug activity call and was recovering in the hospital when Turn5 detailed his Jeep.

Now, Turn5 says business is going so well it plans to create 183 new full-time jobs during the next three years, taking its total to more than 500.
The company also will double the size of its headquarters with the move to 90,000 square feet.

“To see a successful Pennsylvania-born company grow is a true testament to Pennsylvania’s business climate,” Wolf said in a statement. “This will provide jobs to Pennsylvania’s residents and further the company’s contribution to the economic well-being of the commonwealth.”

Turn5 plans to invest $7.9 million in the expansion project.

“Andrew and I started our business in southeastern Pennsylvania, in our parents’ garage in fact, and we’ve been proud to grow here over the last 15 years,” said CEO Steve Voudouris. “We look forward to bringing more jobs and more economic development to the region as we continue to serve the auto enthusiast market with our phenomenal team.”

“This has been our headquarters here for nine years, and we’ve had aggressive growth for all of those years, particularly in the last couple of years,” added Andrew Voudouris, executive marketing director.

Turn5’s new building is now an empty warehouse that the company plans to turn into “high-class office space,” Steve Voudouris said. “We plan to be here a long time. We’re excited to need all of this space”

Turn5 received a funding proposal from the Department of Community and Economic Development that includes a $200,000 Pennsylvania First Program grant, $45,000 in WednetPA funding for employee training, and $366,000 in Job Creation Tax Credits to be distributed upon the creation of the new jobs.

The project was coordinated by the Governor’s Action Team, a group of economic development professionals who report directly to the governor and work with businesses that are considering locating or expanding in Pennsylvania, in collaboration with the Chester County Economic Development Council.

“As an e-commerce-based company, Turn5 has embraced technology and innovation to expand its business and provide significant job creation in Malvern,” said MaryFrances McGarrity, senior vice president of business development at the development council. “The IT sector is expected to remain one of the largest employers in the county, which bodes well for Turn5. We are delighted that the company has made the decision to continue its growth trajectory in Chester County.”

Founded in 2003, Turn5, Inc. is an award-winning e-commerce business that provides aftermarket auto parts, content, and customer service through the two e-retail stores, and

The Voudourises credit the company’s success to its workforce.

“We know the products inside and out,” Steve Voudouris said. “(Customers) can feel that – that we have the same passion that they do. We really connect with our community.”

New employee hiring has commenced. The company is looking for people in the areas of software development, IT, marketing and Jeep/Mustang experts.

It will maintain space at 1 Lee Blvd, where it has contact and distribution centers, as well as a distribution center in Linefield. The company opened a West Coast distribution center last week in Las Vegas.

Zamir Equities Acquires 184,000-SF Triad Bldg in KOP

Zamir Equities, a New York-based property investment firm, acquired the Triad Bldg at 2200 Renaissance Blvd. in King of Prussia, PA for $30.2 million, or about $164 per square foot, from Artemis Real Estate Partners and Kairos Real Estate Partners.

The four-story, 184,118-square-foot office building delivered in 1985 on 10.1 acres in Montgomery County, and was renovated in 2014. It features covered and surface parking, steel construction, 12-foot slab heights, atrium, on-site day care and fitness center, food service, building signage and a water feature.

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TCC Breaks Ground on 455,000-SF Distribution Center in Scranton

Trammell Crow Company began construction in March on its Humboldt East Trade Center, a 455,000-square-foot distribution center being built on spec at a 31-acre site at 105 Commerce Dr. in Hazleton, PA. 

Expected to deliver by year-end, the 5-Star industrial building will feature 60 loading docks and two drive-ins, rail spurs on Norfolk Southern, 36-foot clear heights, 50-foot column spacing, seven-inch floors, 2,400-amp heavy power, metal halide lighting, ESFR sprinklers and reinforced concrete construction. 

Located within the Humboldt Industrial Park, one of the area's largest parks with rail service, the property also falls within a Keystone Opportunity Zone (KOZ) which offers certain tax abatement incentives to qualified occupants. 

Originally marketed as a build-to-suit opportunity, the project is moving forward in a submarket teeming with demand. According to CoStar data, vacancies in the I-81 Corridor submarket of Luzerne County are hovering around all-time lows with next to no vacancy in distribution centers built in 2000 or later. Whether that demand can stand up to all the speculative building in the submarket remains to be seen; as of the end of the first quarter 2017, nearly 2 million square feet of warehouse and distribution space was under construction in the submarket. 

The rampant building in the area is the result of how important the I-81 Corridor has become in terms of a North American distribution hub. A future tenant would join the likes of OfficeMax, Auto Zone, Penske Logistics and Hershey Foods within the park and scores of multi-national corporations that have zeroed in on Scranton, Lehigh Valley and Harrisburg over the last several years. Quick access to interstate highways, rail yards and ports are some of the benefits to locating within the area, which allows for overnight shipping access to more than one-third of the U.S. population and parts of Canada. 

"Construction has not been as strong in Scranton as it has been in neighboring Lehigh Valley, but demand remains strong because of the ideal location and is unlikely to taper off in the near future," said Ben Atwood, an analyst with CoStar Market Analytics covering both Scranton and the Lehigh Valley. "Developers have over 90 pad sites built-out and are optimistic they'll be filled over the next few years." 

While an asking rate for the new building is being withheld at this time, institutional-grade distribution centers in the submarket are at or above $4 per square foot. The building is also available for sale, and while an asking price is also undetermined, recent comps in the area would suggest that $65-$70 per square foot is possible. Of note, the Northeast Distribution Center on Green Mountain Road, a 400,000-square-foot asset built in 2006, sold for $28.5 million ($71 pSF) in 2015 to the Abu Dhabi Investment Authority.

Phillips & Cohen Subleases 34,000 SF at The Shipyard

Phillips & Cohen Associates, a law firm founded in 1997, has subleased 34,000 square feet of office space at The Shipyard office building at 1000-1072 Justison St. in Wilmington, DE.

The 94,691-square-foot office building was developed, owned and managed by Pettinaro.

Target expands central Philly footprint with new store planned for NoLibs

by Jacob Adelman Staff Writer, Philadelphia Inquirer

Target Corp. is opening its biggest central Philadelphia store yet at the former Destination Maternity warehouse headquarters at Fifth and Spring Garden Streets, a heavily trafficked area for commuters to Center City and the growing neighborhoods that surround it.

The Minneapolis-based retailer said in a release Monday that it had signed a lease for an approximately 47,000-square-foot space at the building, with plans to open in July 2018.

The store will feature a grocery section, with fresh produce and grab-and-go items, as well as clothing, sporting goods, and beauty products, a pharmacy operated by CVS Health, and other offerings, Target said.

“We think guests in the Northern Liberties and Fishtown communities will enjoy the quick-trip shopping experience that only Target can provide,” senior vice president Mark Schindele said in the release.
The retailer will occupy the southern part of the structure, facing a parking lot with 100 designated spots, Matt Handel, leasing director for the building’s owner, Alliance HSP, said in an interview.

The building also will be home to Yards Brewing Co., which aims to complete its move into a 70,000-square-foot space by the end of this year, as well as the Philadelphia Department of Records and Archives, which is to occupy a 68,000-square-foot section of the property.

Alliance acquired the building, in a mostly industrial and commercial corner of Northern Liberties, in 2014 from Destination Maternity Corp., which has relocated to Moorestown. The Target deal leaves the property 100 percent leased, Bryn Mawr-based Alliance said in its own release.

“We pieced together a blend of tenants with different needs, allowing us to allocate the existing building’s strongest physical attributes accordingly,” Max Ryan, Alliance’s director of development, said in the release. “Target will have visibility from Spring Garden Street and [I-]676, as well as prominent surface parking directly in front of their premises.”

The Target store will be the retailer’s fifth in Philadelphia to deploy its "flexible format" approach involving smaller, urban-oriented alternatives to its big-box stores. Two such stores are currently operating in Center City, with an additional two under development in Fairmount and  Roxborough.

Target also has been looking to open a store at the planned Lincoln Square mixed-use complex in South Philadelphia at Broad Street and Washington Avenue, according to a legal filing concerning a nearby property.

The space at Fifth and Spring Garden will be Target’s largest in what is sometimes called Greater Center City, bounded by Tasker and Girard Avenues between the Schuylkill and the Delaware River.

The site is different from Target’s other central Philadelphia locations in that it lacks their population density and easy walkability.

Though some recent real estate activity points to more residential uses around the newly announced site, its selection seems based on its ability to draw from the heavy vehicular traffic along Spring Garden and Callowhill Street and other busy arteries nearby, said Steinberg, who was not involved in the deal.

"They like the existing fundamentals," he said. "The fact that density could improve here is just a bonus for them."
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