Thursday, June 29, 2017

Lower Makefield Shopping Center Sells for $20M

Inland Institutional Capital Partners Corporation, a subsidiary of The Inland Real Estate Group of Companies, acquired the Lower Makefield Shopping Center at 668 - 706 Stony Hill Rd. in Yardley, PA for $20.4 million, or about $272 per square foot, from TriGate Capital LLC.

Built in 1986, the 74,953-square-foot retail strip is 97 percent occupied by multiple tenants including Rite Aid, Giant Food and GNC.

Hyland Levin Renews Lease in Marlton

Hyland Levin LLP, a multi-practice law firm, has renewed its lease for 16,440 square feet in the Sagemore Professional Center office building at 6000 Sagemore Dr. in Marlton, NJ.

The three-story, 50,000-square-foot property was built in the South Burlington County submarket in 2000 by Davis Enterprises, which still owns the property. The law firm's lease is on the third floor of the building, which is also home to the Delaware Valley Institute of Fertility and Genetics and Janney Montgomery Scott LLC.

Gladstone Acquires Three Tower Bridge Office Bldg Conshohocken

Gladstone Commercial Corporation acquired Three Tower Bridge office building at 2 Ash St. in Conshohocken, PA for $15.45 million, or about $257 per square foot, from Oliver Tyrone Pulver.

The 60,000-square-foot property is currently leased for the next 8.5 years to Jacobs Engineering Group, a design and construction contractor that has occupied the building since it delivered in 1996.

UPS Purchases 595,000-SF Distribution Center in Carlisle

United Parcel Service (UPS) purchased its industrial building at 1 Ames Dr. in Carlisle, PA for $55 million, or about $92 per square foot, from Dermody Properties, Inc.

UPS had previously leased more than half of the building from Dermody.

The 595,000-square-foot facility was built in 2015 on 53.9 acres in the Harrisburg Area West Industrial submarket of Cumberland County, within the LogistiCenter at Carlisle business park. It features 59 loading docks and two drive-ins, 36-foot clear heights, a 135-foot truck court, industrial and surface parking, fluorescent lighting, 7-inch floors with a 4,000-lbs/sf load rating, 1,500-amp heavy power and 50x52-foot column spacing.

Wednesday, June 28, 2017

CRE Middle Market Digest–The Northeast

by John Jordan,
PFM Asset Management has signed a 63,133-square-foot long-term lease at 213 Market St. in Harrisburg, PA. The company will be relocating from its current location at 100 Market St., where it has been operating for the past 20 years.

Built in 1989, the property is currently undergoing renovations and once completed, will be one of the most modern office spaces in the city of Harrisburg. PFM Asset Management’s more than 150 employees will occupy floors three through six and floor 14 in the new building. The company is expected to move into its new location by the end of this year.

The sale of three Pennsylvania shopping centers recently traded. The company reports that it successfully arranged for the sale of the Lower Makefield Shopping Center, a 74,953-square-foot property at 700 Stony Hill Road in Yardley, PA.

The seller, TriGate Capital, LLC was and the buyer was Inland Institutional during the transaction.

The sale comes roughly two and a half years after TriGate Capital purchased the Bucks County property from PDSI, an affiliate of Public Service Electric and Gas Co. of Newark, NJ, in a national portfolio of seven properties.

The sale of Town Square Plaza, a 215,610-square-foot power center located at 1100 Town Square Road in Pottstown, PA was also arranged.

The seller was Retail Properties of America. The buyer was Bluejay Management during the transaction. Town Square Plaza was 98% occupied during the time of sale.

Built in 2004, Town Square Plaza is anchored by a 134,574 square-foot Lowe’s Home Improvement warehouse, on a long-term ground lease. Additional national and credit retailers include: PetSmart, Michaels, Rite Aid, BB&T Bank, Mattress Firm, Hair Cuttery, LongHorn Steakhouse, AT&T and H&R Block.

The third shopping center deal was the sale of the 226,894-square-foot Midway Shopping Center at 1026 Wyoming Avenue in Wyoming, PA.

The seller was SIN Ventures, and the buyer was Endeavor Equities. The sale marks the fifth property  SIN Ventures has sold over the past two years to close out its retail fund.

Built in 1970 and renovated in 2000, the community retail center is currently 93% occupied and anchored by a 53,277-square-foot Price Chopper grocery store, a 64,000 square-foot Bon-Ton Department Store, Harbor Freight Tools, CVS Pharmacy and Dollar Tree.

Tuesday, June 27, 2017

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Lidl Grocery Leases Space in Proposed Turnersville Development

Lidl Grocery has leased 34,780 square feet in a proposed retail development at 3950 Black Horse Pike in Turnersville, NJ.

Ground breaking of this development is currently set for December 2017, with estimated completion in Summer 2018. There are still availabilities in the center for a second anchor, inline retail and pad sites.

Friday, June 23, 2017

Burlington Coat Factory Leases 43,091 SF in Red Rose Commons

Burlington Coat Factory signed a lease for 43,091 square feet in the office building at the Red Rose Commons Shopping Center at 1700 Fruitville Pike.

The shopping center in Lancaster, PA, totals 463,042 square feet. Goldenberg Development developed the property in 1998 and now provides leasing and property management for current owner Vereit, Inc. Other notable tenants include Barnes and Noble and Petsmart.

Wednesday, June 21, 2017

5 Cap Realty Planning $1 Billion in Multifamily Acquisitions

A new national investment venture of 5 Cap Realty LLC has acquired two multifamily complexes for $60 million as part of its strategy to launch a multi-year national investment venture that could top $1 billion in assets under management.

Plymouth Meeting, PA-based 5 Cap Realty LLC and its affiliate RREIC Advisors has teamed with a private equity fund vehicle managed by JMP Asset Management LLC, an affiliate of publicly traded JMP Group LLC (NYSE:JMP), to focus on acquiring and operating value-add multifamily assets.

This new partnership has closed on its first two acquisitions: an apartment community in the Philadelphia metro area and another in greater Atlanta, with a total of 446 units, for a total cost of just under $60 million.

“This is a great opportunity at a pivotal time,” said David Reiner, RREIC Advisors’ managing director. “There are a lot of undermanaged assets in the marketplace. Our team has demonstrated throughout its history that we can identify these assets and reposition them with better management, marketing, and capital improvements.”

“Our plan is to build a billion-dollar multifamily investment platform. Over the next five years, we are targeting the acquisition of 10 properties per year, each with 200-300 units, focusing on the nation’s top 50-60 markets,” Reiner said.

The Philadelphia area acquisition, Summer Chase, is about 28 miles from Center City in Limerick, PA. The property has 198 units. The property was acquired for $36.3 million ($183,333 per unit) from Capri Capital Partners, an institutional seller. The new ownership plans to invest $2.5 million in renovations including kitchens, bathroom fixtures, and HVAC systems. Freddie Mac provided the debt financing.

The Georgia acquisition, Grove Mountain Park, is about 18 miles from downtown Atlanta, and was acquired for $21.6 million ($81,000 per unit). The venture plans to invest $3.15 million in renovations to common areas and individual residences. Debt financing was provided by Fannie Mae.

5 Cap affiliate Forty Two LLC (Forty2), a multifamily property management, development, and consulting firm, will manage all of the JV’s acquisitions. Forty2 managed Grove Mountain Park prior to the acquisition and is taking over management of Summer Chase.

RREIC is the founder and sponsor of the Delaware Valley Real Estate Investment Fund and co-sponsor of Develop-DC LP. DVREIF is an open-end commingled fund whose investors include eight of the largest Philadelphia building trades union pension funds. Through DVREIF, RREIC targets major value-added, development and redevelopment and projects with top-tier sponsors located throughout the Philadelphia area.

Develop-DC is a closed-end fund that is jointly sponsored by RREIC and Real Estate Capital Partners of New York City. Develop-DC is focused on new development projects in the greater Washington, DC area.

Capri Capital Partners Sells Summer Chase Apts for $36.3 Million

A partnership between a Pennsylvania-based real estate investment firm and a private-equity fund managed by JMP Group, Inc. announced the purchase of the Summer Chase Apartments in Limerick, PA, for $36.3 million, or about $183,333 per unit.

The partnership of Plymouth Meeting, PA-based RREIC Advisors, LLC and JMP acquired the 198-unit property at 100 Hunsberger Dr. from Capri Capital Partners, LLC.

The community was built in 1999 on about 15 acres and includes 26 buildings totaling 216,254 square feet. The new owners plan to spend $2.5 million on renovations of the kitchens, bathroom fixtures and HVAC systems. Occupancy was 95% at the time of sale.

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Lehigh Valley Capitalizes On Drive Time Between Eastern Population Centers

by Steve Lubetkin,
The Lehigh Valley market wasn’t always a big focus for industrial developers. In the 1970s and 1980s, when target sizes of warehouse projects were 100-200,000 square-foot properties, developers and logistics companies focused mainly on northern and central New Jersey.

“The metrics have changed with e-commerce. It really is about the eight hour drive time, getting to Boston, getting down to Richmond. When you draw the big circle with the current freight driver rules, the big circle gets you to roughly one third of the US population in a one-day drive.  Now logistics companies are really putting circles on the map as to where they can hit the population within that drive time.”

The logistics companies that began selecting Pennsylvania sites in the late 1990s are finding a better tax and employment environment. “They’re getting a better-priced, better quality employee on the Pennsylvania side of the market."

One advantage the Lehigh Valley maintains over northern New Jersey is a mix of both greenfield and brownfield sites, where most of the development in submarkets like the Meadowlands is being done on brownfield properties that may need expensive environmental remediation before redevelopment.

However, the intense interest in Lehigh Valley locations is driving up costs and making land more difficult to find, he says.

“There was an abundance of land 20 years ago, that is becoming more pinched, so people are coming up with pieces of ground that are a little further afield, and the price of the land has definitely escalated significantly,” he says. “In 1988 we were doing land deals around $35,000 an acre for improved ground, and today we’re between $175,000 and $255,000 an acre. But we are still below the per-acre costs of New Jersey.”

Although much of the development activity in the Valley is focused on industrial “big box” warehouses because of proximity to highways like I-78 (serving North Jersey and New York), Route 33 (running north from the Lehigh Valley to the Poconos region) and Route 100, which provides access to I-78. Class A retail development is also faring well in the region.

“Well-located retail sites are still doing well,” he says, although large retailers are also going through some dislocation and retrenchment as in the rest of the country.  Class A retail sites are running at 95 percent occupancy, while class B assets “have had a little more challenge,” and are being converted to different uses like medical office product.

The office market has had a slight uptick in downtown Allentown, mainly because of some tax incentives encouraging office relocation there.

“We’re not seeing employers laying off people, but we’re not seeing them take a lot of office space, especially in the suburban office market. Our net absorption is flat for office.”

Lehigh Valley investors need to plan for the eventual slowing of the big-box industrial market, which has been robust for more than a decade in the region.

“The number of square feet being absorbed are going to slow precipitously, because you can only fit so much product with so much consumerism in the whole country,” he says. “The Valley had historically absorbed a million and a half square feet of warehouse, but the last five to seven years, we’ve been absorbing four to eight million feet a year. That growth is unprecedented, and you have to be a little cautious and realistic that that growth is going to slow.”

One sector that hasn’t grown for some time in the Lehigh Valley is flex. This is mainly because rental rates are not high enough to justify construction costs,  but that seems to be changing.

“We’re slowly beginning to see the rental rates escalate enough that it will become more cost-effective to go back to building some of the flex buildings,” he says. “Now we’re seeing the rental rates for flex space exceed $6, up to even $7 and $8 triple-net, for warehouse flex space, that will allow the developers to go back to putting up 50,000 or 100,000 foot flex buildings.”

Thursday, June 15, 2017

PetSmart Leases 18,000 SF at Plaza 352 Mall Shopping Center

PetSmart has signed a lease for 18,000 square feet in the Plaza 352 Mall Shopping Center at 5005 Edgmont Ave. in Brookhaven, PA.

The shopping center totals 207,212 square feet and was built in 1956. Other tenants include Lowe’s and ShopRite.

Plymouth Packaging Leases 133,000 SF in Mechanicsburg

Plymouth Packaging signed a lease for 133,371 square feet of warehouse space at 53 Commerce Dr. in Mechanicsburg, PA.

Building Two was recently completed during the second quarter of 2017 and sits on 40 acres. The tenant is expected to take occupancy during the fourth quarter of this year.

Rubenstein, CS Capital Sell 263,000-SF Valley Creek Corp Ctr in Exton

Pembroke Hobson LLC and Ten Capital Management have acquired the three-building Valley Creek Corporate Center - Phase I office park at 220 - 224 Valley Creek Blvd. in Exton, PA for $45.3 million, or about $172 per square foot, from Rubenstein Partners LP and equity partner CS Capital Management, Inc.

Rubenstein developed the properties in 2002 with Philadelphia-based Wallace Roberts & Todd, architects.

Totaling 263,037 square feet, the buildings sits on 18.4 acres in the Exton / Whiteland submarket of Chester County, near the confluence of Routes 202 and 30 and the PA Turnpike, an hour northwest of downtown Philadelphia, and amid numerous hotels, restaurants, shopping centers, banks, daycares, health clubs and Exton Park, an adjacent 725-acre park with walking and biking trails, recreational fields, fishing ponds and plans for future equestrian space, golf and sports fields.

"This ‘best-in-class’ asset boasts an impressive mix of global corporate headquarters and credit worthy tenants and is situated in the Route 202 corridor, one of suburban Philadelphia’s most desirable locations."

Today the property is 95 percent leased to multiple tenants, with an average weighted lease term of 5.5 years.

The buyer financed the acquisition in-part with a new $34 million mortgage. Debt placement arranged the 10-year, fixed-rate loan at 4.3 percent on behalf of the borrower, placing the loan package with Barclays Capital.

Monday, June 12, 2017

Select Top Philadelphia Office Leases Signed in Q1 2017

The select top office lease signed during the first quarter of 2017 in the Philadelphia market was at 785 Arbor Way in the Plymouth Meeting / Blue Bell submarket. Cotiviti leased 86,621 square feet there.

The landlord at 1100 Virginia Dr. in the Ft. Washington submarket signed 76,475-square-foot lease .

Centene leased 68,846 square feet at 300 Corporate Center Dr. in the Harrisburg Area West submarket.

The GSA signed a 38,644-square-foot lease at 1601 Market Street in the Market Street West submarket.

Phillips & Cohen Associates renewed its lease for 34,000 square feet at 1000 Justison St. in the South New Castle County submarket.

This trend is compared to the U.S. National Office select largest lease signings occurring in Q1 2017, which include the 550,750-square-foot lease signed by Oracle at 2300 Cloud Way in the Austin, TX market, the 473,000-square-foot deal signed by the Federal Communications Commission at Sentinel Square III in the Washington DC market and the 395,279-square-foot lease signed by RBC Capital Markets at 200 Vesey St in the New York City market.

Thursday, June 8, 2017

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Philadelphia Trophy Apts. are Up For Sale, but is Anyone Buying?

Within the last six months, two of Philadelphia’s latest-and-greatest multifamily assets have been put up for sale, with reported price tags that are noteworthy (and potentially record-setting in one case.) But with a clear slowdown in multifamily sales activity playing out over the last several quarters, it remains to be seen if these trophy assets will fetch the dollars-per-door their sellers are looking to secure.

Southern Land Co. listed its 3601 Market at the outset of the second quarter and broker HFF is hoping to draw as much as $450,000/unit for the 363-unit, 5 Star asset located in the University City submarket. Asking rents at the time the property was listed ranged between $1,800 and $4,700 per month for apartments averaging between 427 and 1,543 square feet each.

Meanwhile Dalian Development, a family investment and development company based in Washington, D.C., put the 5 Star, 293-unit Dalian on the Park up for sale just months after it delivered in 2016. Reported price estimates of $180 million to $190 million would net an unprecedented $650,000/unit. The Dalian, 35% occupied entering June 2017, has some of the highest rents in the metro. Studios start at about $1,900/month while two-bedroom units of nearly 2,000 square feet ask as much as $7,250/month, although the building is offering one rent-free month in addition to reduced amenity and parking charges.

The Dalian sits atop a 90,000-square-foot Whole Foods Market (one of only two in the city), but the retail portion is owned separately and is not for sale.

Through the first five months of 2017, multifamily sales volume across the Philadelphia metro area has gotten a slow jump out of the gate, particularly after three consecutive years with more than $1 billion in total apartment sales. In 2015, the region set a new record when apartment sales volume topped $2.8 billion, nearly double the previous record high for the Philadelphia market of $1.5 billion set in 2007. 

In a year that may see the peak for new supply in this cycle, apartment sales volume through May 2017 is just over $165 million. Pricing is at cyclical, and likely record, highs through first quarter 2017 with an average price per unit of more than $100,000, well above the high point set in the previous cycle at just above $70,000 per unit. 

Transfer Tax Avoidance Law Weighing on Sales?

Most of the multifamily sales activity in Philadelphia occurs within Philadelphia County, and it is possible that recently passed transfer tax avoidance legislation is weighing on sales. The City Council voted in December 2016 to close certain legal loopholes that, according to analysis and reporting by The Philadelphia Inquirer, have cost the city tens of millions of dollars during this boom cycle. 

According to the Inquirer, few big-ticket property sales have included the full transfer tax of 4%. This includes 1% going to the State of Pennsylvania, and payment is commonly split evenly between buyer and seller. 

Several investors instead paid a levy based on the assessed value (as opposed to the sales price), or no tax at all or by having sellers retain a small ownership slice in what amounts to an entity sale versus a real estate transaction. The so-called 89-11 transaction method does not mandate that a deed be recorded. 

The new legislation changes the mandatory retention for a seller from 11% to 26% and the hold period from three years to six. Potentially even more impactful is the change of tax basis from the computed value to the actual consideration paid for the transferred interest. Despite Philadelphia recently reassessing its commercial properties (and implementing annual reviews), many properties are still likely to trade for well over their assessed values due to intensifying investor interest in core and core-plus investments in the city. Cap rates for the most highly sought after apartment properties are below 5%. 

Wednesday, June 7, 2017

Commonwealth Leases 18,000 SF in Harrisburg

The Commonwealth of Pennsylvania leased 17,500 square feet at One Penn Center at 2601 N. 3rd St. in Harrisburg, PA. Occupancy is scheduled for November.

One Penn Center is a five-story, 300,316-square-foot office building was constructed in 1925 in the Harrisburg Area East submarket.

Metropolitan Properties of America Secures $91M Financing for 100 York Apts

Metropolitan Properties of America secured a $91 million loan for its 100 York apartment complex at 100 Old York Rd. in Jenkintown, PA.

Brad Johnson, senior vice president with CBRE's debt and structured finance department in Philadelphia, PA arranged the financing on behalf of the borrower.

The 12-story, 500,000-square-foot multifamily complex features 588 units and was built in 1955 with a recent renovation completed in 2016. The financing was established to reposition the property and upgrade it to a class A asset. Located within Abington Twp approximately 10 miles north of Center City, the asset features tennis courts, outdoor swimming pool, amenity center with fitness center and yoga studio, cardio room, billiards and game rooms, business center, theater and resident lounge.

"This transaction provides us with the opportunity to expand our lending portfolio in the Philadelphia area and establish a lending relationship with Metropolitan Properties of America, a sponsor with significant multifamily experience throughout the nation," said Michael Lavipour, principal with Square Mile. "After the recent renovations, 100 York is very well-positioned to take advantage of positive market fundamentals as the most newly-renovated and highly-amenitized product within the immediate area."

West Hills Business Center Bldg E Nears Completion

Hillwood Development Company will deliver this month on Building E in the West Hills Business Center located on West Hills Ct. in Fogelsville, PA.

Hillwood broke ground on the property in August of 2016. The building totals 413,750 square feet and comes equipped with 94 loading docks and two drive-in doors, 124 trailer parking spots and 211 additional surface parking spots. The West Hills Business Center is made up of five other industrial buildings with several available for lease, while Bldg E is fully leased.

Tuesday, June 6, 2017

Full Circle Training Leases Space at South Mall

Full Circle Training, a fitness center, has signed a lease for 20,000 square feet in the South Mall at 3300 Lehigh St. in Allentown, PA.

The single-story enclosed retail mall totals 405,205 square feet. It was built in 1975 and renovated again in 1992. Other notable tenants there include Bon-Ton, Staples, Petco and Ross.

The landlord is Nicholas Parks Mall LLC.

Ace Hardware Leasing A Million Square Feet In Fredericksburg, PA

by Steve Lubetkin,
Ace Hardware is leasing nearly 1.1 million square feet at the Lebanon Valley Distribution Center, 139 Fredericksburg Road, Fredericksburg, Lebanon County, PA.

This involves a new 1,080,421 square-foot cross-dock, 36’ clear distribution facility. The existing 874,126 square-foot facility is to be expanded by 225,875 square feet and delivered to Ace Hardware for occupancy by year end 2017.

The property is owned by USAA Real Estate Co. and is being developed by the Trammell Crow Company.

Ace Hardware executives were looking to locate a suitable class-A consolidation facility to serve Ace Hardware stores located throughout the Northeast and Mid-Atlantic US. The Lebanon Valley Distribution Center property was chosen over several other options because of its site and building design, expansion capability, and access to I-78 and I-81.

Ace Hardware was given LERTA tax benefits.

Friday, June 2, 2017

Keystone Property Group Gets Approval For Massive Conshohocken Project

Matthew Rothstein, Bisnow

Keystone Property Group has received zoning approval for an ambitious project in Conshohocken.

Situated next to the Conshohocken SEPTA train station, SORA West would be a multifaceted development, including a 250K SF office building and a 171-room hotel surrounding a public plaza and gathering space. Both the office and hotel buildings have retail and dining components planned, and the historic Conshohocken Firehouse, which also would abut the plaza, would be renovated into a brewpub. Keystone also plans for a 950-space parking structure to support the hotel and office buildings, with an additional 150 free public spaces somewhere in the project to support the surrounding downtown and the plaza. Keystone Property Group, which is headquartered at SORA East across the street, is looking for an anchor tenant for the office component, as well as a partner in the hotel project. It also still requires additional development permits, and is mulling an additional residential component to the project.

Thursday, June 1, 2017

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Conshohocken Brewing Company to Expand into Delaware and Chester Counties

The Havertown location will take over the space on the corner of Darby Road and Benedict Avenue which used to be home to Nais Cuisine. This will make it neighbors with the popular Brick & Brew Gastropub which is located just a block down the street.
The company will face similar competition at its planned location in Phoenixville. Here it will take over the space previously occupied by the Heidi Sue Variety store on the Bridge Street business corridor which is already home to the popular Crowded Castle Brewing Company.
No opening date for either new location has yet been set. However, the company stated on its Facebook page that the two new locations will open sometime later this year and that each will feature a unique concept.
“Pretty excited to confirm that we are opening two new spots later this year- in Havertown and Phoenixville. Each location will have a different concept and feel and we couldn’t be more excited to join both neighborhoods!“

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