Wednesday, November 29, 2017

CEO of Self-Storage REIT CubeSmart Sees Little Risk of Overbuilding (Video)

Henderson Group Purchases Newtown Square Portfolio

Natalie Kostelni Reporter Philadelphia Business Journal
Henderson Group has paid $42 million for a portfolio of five office buildings in Newtown Square, Pa., that had been owned by Brandywine Realty Trust.

The properties total 250,000 square feet at 11, 14, 15, 17 and 18 Campus Blvd. One building, 17 Campus Blvd., totals 48,565 square feet and is vacant. The other four properties are occupied. The buildings were developed between 1990 and 2002.

Henderson has historically banked land and developed ground up projects and this transaction, which involved buying existing buildings, marks a shift for the company.

“This breaks our mold with acquiring large tracts of vacant land and going vertical,” said Brian Coyle, president and CEO of Henderson, which is based in Media, Pa. “This is our first foray into acquiring existing product and I think it will be the model we will deploy in the future.”

Full story:

Tuesday, November 28, 2017

Siemens Renews 185,000-SF Office Lease in Malvern

Siemens Medical Solutions Health Services Corp. has renewed its lease for 184,872 square feet in the Great Valley Corporate Center office building at 51 Valley Stream Pky in Malvern, PA.

The four-story building totals 235,000 square feet. It was developed in 1982 by Rouse & Associates, and is currently owned by Cerner Corporation. Siemens' lease spans all four floors of the building.

Data Center REIT CoreSite Seeing Organic Demand Growth (Video)

Thursday, November 16, 2017

Cold Storage Becoming a Hot Property Investment

The Blackstone Group (NYSE:BX), which reportedly attempted to buy one cold storage warehouse operator earlier this year, has found a willing partner in another.

Sioux City, IA-based Cloverleaf Cold Storage has agreed to a recapitalization that will see private equity funds affiliated with Blackstone make a majority investment in Cloverleaf alongside the firm's existing Feiges and Kaplan family shareholders, who will continue to operate the business post-closing. Terms of the transaction were not disclosed.

Meanwhile, Atlanta-based Americold Corp., the worlds largest owner and operator of temperature-controlled warehouses, filed an initial public offering this week to form a new REIT called Americold Realty Trust. It was previously reported that Americold turned down a $3 billion buyout bid from Blackstone this past September, according to Frozen & Refrigerated Buyer magazine and other news reports.

Goldman Sachs is funding Blackstone's Cloverleaf investment. The Wall St. financial firm is well versed in the cold-storage real estate sector having partnered with JPMorgan earlier this yeat to sell a $1.3 billion CMBS offering backed by loans on 54 cold storage facilities operated by Lineage Logistics Holdings LLC.

The Global Cold Chain Alliance, an industry trade group, recently forecast that, beginning next year, owners and operators of U.S. temperature-controlled warehouses as a whole will see a five-year compounded annual growth rate in revenues of 4% based on the group's view that U.S. demand from food producers, distributors, retailers and e-tailers exceeds currently available temperature-controlled capacity in the U.S.

The alliance further posits that an owner with a large-scale network of high-quality temperature-controlled warehouses will be well-positioned to take advantage of these trends.

Market capitalization rates in the temperature-controlled warehouse sector for triple net leased temperature-controlled facilities have ranged from 6.25% to 7.25% and for owner operated temperature-controlled facilities ranged from 7.5% to 8.25%, according to a recent report on temperature-controlled warehouses by Cushman & Wakefield.

The higher capitalization are attributed rates of owner-operated facilities to the net operating income derived from the handling and other services provided by the owner to customers at the facility. The report further said that temperature-controlled facilities have benefited from the same capitalization rate compression that has helped drive values in the warehouse sector since the global financial crisis.

Cloverleaf Cold Storage
Cloverleaf is the eighth-largest public refrigerated warehouse company in North America, as reported by the International Association of Refrigerated Warehouses. It operates a network of 19 warehouses across eight states in several Midwest and Mid-Atlantic markets, providing a variety of food grade storage, handling, and freezing services to food producers.

"Our partnership with a world-class firm such as Blackstone provides us with significant capital and operating resources to invest for growth and continue to expand our platform," said Daniel Kaplan, co-president of Cloverleaf, in a statement announcing the recapitalization with Blackstone.

Wells Fargo Securities served as financial advisor and Katten Muchin Rosenman LLP served as legal advisor to Cloverleaf during the transaction. Barclays and Goldman Sachs served as financial advisors to Blackstone and Kirkland & Ellis LLP and Simpson Thacher & Bartlett LLP served as legal advisors. Committed debt financing for the recapitalization was provided by Goldman Sachs.

Americold Files IPO for REIT
Meanwhile, Americold Realty Trust filed for an IPO of an undisclosed number of common shares. The company has a global portfolio of 160 warehouses spanning about 945.3 million cubic feet. Of this number, it owns or leases 134 warehouses in the U.S. and manages another eight. Its other warehouses are located in Australia, New Zealand, Canada and Argentina.

It listed the value of its assets at $2.39 billion as of Sept. 30 and reported $1.14 billion in revenue first nine months of 2017.

"We consider our temperature-controlled warehouses to be 'mission critical' real estate in the markets we serve from 'farm to fork' and an integral component of the temperature-controlled food infrastructure supply chain, which we refer to as the 'cold chain,' " Americold said in its filing.

The company plans to use capital from the common stock offering to take advantage of the market opportunity from the combination of tight warehouse capacity and increased demand for a range of handling and other warehouse services.

Wednesday, November 15, 2017

Fall 2017 Real Estate Economic Forecast (Video)

New coworking operator enters Philadelphia market

Natalie Kostelni Reporter Philadelphia Business Journal

Another coworking operation is entering Philadelphia and offering its own twist on the growing shared-office concept.

Bond Collective, which is based in New York, has signed a 10-year lease on 22,000 square feet on the top floor of One Penn Center where it plans to open next spring a coworking space called Bond Station House. Bond Collective attempts to differentiate itself in the increasingly crowded coworking market with its “high design,” said Shlomo Silber, CEO and co-founder of Bond Collective.

“Our model is boutique, hospitality driven space with high design,” he said. “We don’t see enough high-design space in the market.”

That may be a product of the cost it takes to build out such fancy space and the narrow margins produced by the memberships and other services provided by a coworking operation. Bond Collective has based it business model on it and believes it fills an unmet niche in the realm of coworking.
Full story:

Deloitte 2018 CRE Outlook (Video)

Monthly Economic Outlook – November 2017 (Video)

Monday, November 13, 2017

Philadelphia's office market slides while the suburbs take off

Natalie Kostelni Reporter Philadelphia Business Journal
The office markets in Philadelphia’s Central Business District (CBD) and the suburbs are a tale of contrasts, according to various third-quarter research reports.

The suburban market had its strongest quarter in terms of demand for office space than it has had in the last 12 years and the vacancy rate nearly dropped to its lowest point last seen in the first quarter of 2008, according to CBRE Inc. data. That’s when the vacancy rate stood at 14.9 percent. It is now at 15.1 percent.

Activity was so robust in the suburban office sphere that there was 935,538 square feet of absorption, or space occupied by tenants and taken off the market. The submarkets that saw the most leasing activity were Fort Washington, King of Prussia, Conshohocken, and the Malvern-Exton area, according to JLL.

That was not the case in Philadelphia where there were signs that the CBD is on the wane. The CBD logged its highest vacancy since the third quarter of 2014, climbing to 13.7 percent as tenants such as PNC Bank, Wells Fargo and Verizon gave back space and tenants haven’t backfilled the spaces that have been thrown back on the market, according to Newmark Knight Frank research. Savills Studley’s research showed the vacancy rate nudging up for the third consecutive quarter and now is 15.0 percent compared with 13.8 percent.

Full story:

Life Time Athletic ventures into co-working space

Natalie Kostelni Reporter Philadelphia Business Journal
Life Time Athletic, which has expanded during the last two years into the Philadelphia area with locations in Wayne, Pa. and Mount Laurel, N.J., has decided to venture into co-working.

As part of its 80,000-square-foot fitness facility in the former Macy’s in Ardmore, Pa., Life Time will dedicate 12,000 square feet to a co-working space called Life Time Works. This is the first time the Minnesota company has decided to add a work area for small business owners, freelancers and others can use. In addition to its membership to its fitness facility, it will be offering memberships and different pricing to this space as well. 

In addition to typical cardio and weight lifting rooms, Life Time provides professional fitness, family recreation and spa treatments. It often provides indoor and outdoor swimming pools, basketball and racquet courts, personal training and group fitness, yoga, child care, hair cuts and boot camp fitness. An area that is assigned to co-working is a natural extension to its business, company officials say.

Full story:

Friday, November 10, 2017

The Westover Companies purchased Gilbertsville Shopping Center for Cash

The sale of Gilbertsville Shopping Center, an 85,576-square-foot, grocery-anchored shopping center located in Gilbertsville was traded. It is an affluent Philadelphia suburban community within Montgomery County, Pennsylvania.

The seller was Brixmor Property Group.  The Westover Companies purchased the asset on an all cash basis.

Gilbertsville Shopping Center is anchored by Weis Markets, which has been a tenant since the center was constructed in 1976.  The 95.6-percent-leased center is also home to Anytime Fitness, T-Mobile, Pet Valu, Dairy Queen, National Auto Stores, Great Clips, Quest Diagnosis, Key Bank and Fine Wine & Good Spirits.  The center is at 1050 East Philadelphia Avenue (Route 73).

“The Gilbertsville Shopping Center has been a successful asset since its development due to its market positioning and Weis grocery anchor. Grocery-anchored retail in the Philadelphia suburban markets continues to price aggressively, and Gilbertsville was no exception with multiple competitive offers throughout the marketing process.”

“Gilbertsville is a strong suburban market with access to multiple employment hubs. Weis is ideally positioned within the local marketplace, which has enabled it to be a successful store and enhance the property’s ability to attract and retain tenants.”

United Way Puts Philly Headquarters Up For Sale

The United Way of Greater Philadelphia and Southern New Jersey has put its headquarters building on the market. The international charity built the eight-story office building at 1709 Benjamin Franklin Parkway overlooking Logan Square in 1970 and has occupied it ever since.

 "Together with our Board, we ultimately determined that owning the building is not central to our mission of ending intergenerational poverty, and that, if sale of the building could generate significant revenue, the opportunity cost of investing in a building versus investing in the community and in our initiatives is too great," United Way interim President and CEO Mike DiCandilo said in a statement.

 There is expected heavy interest in the 60K SF office building, and expects to complete a sale early next year. Situated across Logan Square from the Franklin Institute and a few blocks from the nearly complete Comcast Innovation Center, the property is zoned for a variety of uses, including multifamily. DiCandilo said the United Way will remain in the City of Philadelphia, though he did not disclose plans to move out or find a new location when the building is sold.United Way also declined to disclose an asking price for the property.

Thursday, November 9, 2017

Brandywine Starting $3.5B Schuylkill Yards Project In Philadelphia

by Steve Lubetkin,
Brandywine Realty Trust, in partnership with Drexel University, is beginning Phase I construction of the mixed-use, master-planned Schuylkill Yards development in the University City submarket of Philadelphia, PA.

The first phase of the $3.5 billion, multi-year project will create a 1.3-acre community park at the corner of 30th and Market Streets to be known as Drexel Square, followed by a redesign of the former Philadelphia Bulletin Building, and the development of two towers at 3003 JFK Boulevard and 3025 JFK Boulevard. This first phase of development will produce 4.6 acres of entrepreneurial space, educational facilities, research laboratories, corporate offices, residential and retail spaces, hospitality venues and open public spaces.

Schuylkill Yards is the next chapter in Brandywine’s commitment to West Philadelphia, which began more than 15 years ago.

Brandywine built West Philadelphia’s first office tower—Cira Centre—in partnership with Amtrak, followed by the historic renovation of the new IRS Philadelphia Campus. Brandywine then began construction of Cira Centre South in partnership with the University of Pennsylvania—a two-tower development comprised of FMC Tower—Philadelphia’s first “vertical neighborhood”—and evo—the nation’s tallest, luxury student apartment tower at the time of completion. Cira Green, Philadelphia’s first “park in the sky” creates a bridge between the two towers. The park serves not only as an amenity for tenants, residents and guests of Cira Centre South, but as an open-to-the-public destination for community gathering and relaxation.

“Today we take the first steps in making this large-scale innovation community a reality,” says Jerry Sweeney, president & CEO of Brandywine Realty Trust. “As Brandywine continues to expand the West Philadelphia skyline, we do so with a forward-thinking, inclusive approach to the future. We embrace the changing habits of how people are living, creating, working and spending their time. We are proud that our first project in Schuylkill Yards will deliver a green public gathering space where the community can connect, interact and share experiences.”

As a priority of Brandywine’s curated neighborhood experience, Drexel Square will include 1.3 acres of public space directly across from Amtrak’s 30th Street Station. The space was designed in partnership with planning and design firms SHoP Architects and West 8 Landscape Architects, and will serve as a four-season destination with community programming throughout the year. Drexel Square is just one portion of the 6.5 acres of greenspace and improved streetscape planned for Schuylkill Yards, and is expected to be completed in Q4 2018.

“All great cities have great public spaces. Drexel Square will be Philadelphia’s next signature square – a sixth square adding to the five originally created by William Penn. Drexel Square is the keystone to the larger transformative development project at Schuylkill Yards, conceived by Drexel University and brought to life through a partnership with Brandywine Realty Trust,” says Drexel University president John Fry. “Drexel is proud to have chosen Jerry Sweeney and his team at Brandywine for this project that will benefit all of University City and Philadelphia.”

In conjunction with Schuylkill Yards’ groundbreaking, Brandywine will implement a $5.6 million neighborhood engagement program focused on small business development, job creation, and affordable housing. This initiative emphasizes Brandywine’s commitment to improving Philadelphia’s neighborhoods, and ensuring Schuylkill Yards serves as a bridge to West Philadelphia communities.

“Thanks to Brandywine’s thoughtful community building, this project will help us expand opportunities to many Philadelphians in need of jobs that pay family-sustaining wages and provide them with the security of affordable, permanent housing,” says Philadelphia Mayor Jim Kenney. “Brandywine was a great partner in helping the city develop our PipelinePHL, which will also help us diversify the building jobs and provide people with barriers to employment a life-long career in the trades. What Philadelphia truly needs is long-term inclusive growth and this project serves as a model for how we can make that happen going forward.”

Schuylkill Yards will, over the next 15-20 years, bring to Philadelphia a next-generation innovation community defined by thoughtful place-making, civic engagement, and quality execution, Brandywine says. The project will be strategically designed to emphasize thoughtful collaboration, inspiring spaces and dynamic movement. When completed, the site will host a combination of repurposed buildings, new high-rises with world-class design, and a diverse network of public spaces regularly programmed for community engagement and enjoyment.

As master developer of Schuylkill Yards, Brandywine leads an experienced development team that includes residential developer, Gotham Organization and life-sciences developer, Longfellow Real Estate Partners. SHoP Architects is responsible for the district planning and development of architectural standards, and West 8 Landscape Architects has designed the public realm plan and overseen development of landscape standards.

Commercial Real Estate Development at NAR 2017 (Video)

Wednesday, November 8, 2017

Tax Reform Bill Draws Cautious Support from CRE Industry Leaders

CRE industry leaders who worried that the largest rewrite of the U.S. tax code in more than three decades would eliminate like-kind 1031 exchange transactions or curtail the ability of businesses to write off interest and debt expenses breathed a collective sigh of relief last week after House Republican leaders outlined the major components of their long-awaited bill.

The Tax Cuts and Jobs Act (H.R. 1), released last week by the U.S. House of Representatives Ways and Means Committee, also retains existing rules for writing off depreciation of commercial property, while reducing the tax burden on all businesses.

Real Estate Roundtable President and CEO Jeffrey DeBoer, who led efforts to keep those provisions, said the proposed bill, by reducing barriers to private-sector capital formation and business investment, "will boost economic demand and job growth."

"If the final bill is similar to the one introduced today, our industry will put more people to work modernizing and improving existing properties - office buildings, shopping centers, apartments, industrial properties - to meet the changing and growing needs of American businesses and consumers," DeBoer said in a statement.

The proposal reduces the corporate tax rate from 35% to 20% for tax years beginning after 2017 and repeals the corporate alternative minimum tax.

The legislation provides for a special maximum 25% tax rate on ordinary income that would apply to the "qualified business income" of individuals engaged in business activities through sole proprietorships, tax partnerships and S corporations. Business income not qualifying as such would remain subject to the normal ordinary income tax rate.

Current law generally treats those entities as "pass-through" entities subject to tax at the owner or shareholder level. Net income earned by an individual owner or shareholder of one of these entities is reported on the individuals income tax return and is subject to ordinary income tax rates up to the top individual marginal rate of 39.6%.

In a bulletin, the CRE Finance Council (CREFC) described the retention of interest deduction, 1031 exchanges and existing cost recovery and depreciation rules as "major steps in the advocacy effort to allow for continued CRE market liquidity and supply/demand balance."

While CREFC remains skeptical that House leadership can meet its aggressive goal of getting the bill to the Senate before the Thanksgiving holiday due to its size and complexity, the group expects a flurry of Congressional activity up until the holiday.

"We caution that uncertainty will be the order of the day until the bill either advances to the Senate (which is working on its own legislation) or gets stymied by member opposition," the group said.

The U.S. apartment industry's main lobbying groups, the National Multifamily Housing Council (NMHC) and National Apartment Association (NAA), said that while they are still reviewing the legislation, the proposal as written "looks to encourage economic growth and job creation."

"Critically, the Tax Cuts and Jobs Act would preserve interest deductibility, like-kind exchanges and other provisions important to the apartment industry," the groups said in a joint statement.

NMHC/NAA said it would work with lawmakers to safeguard those provisions and others, including the capital gains treatment of carried interest and the Low-Income Housing Tax Credit (LIHTC), during the "long process ahead before tax reform becomes law."

While capital markets, CRE and small-business interests generally lauded the proposal, the residential real estate and mortgage industry cited serious concerns about how the provisions will impact U.S. housing markets, including the production of affordable housing.

"We believe that the proposed changes to the mortgage interest deduction, deductibility of state and local real estate taxes and the exemption for capital gains treatment when families sell their principal residence would have a negative impact on the housing market and potentially the national economy as a whole," said David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA). "We are also concerned about the potential impact of certain provisions on the production of affordable housing, which is vital."

Millennials ready to buy homes? Changes in Multi Family? (Video)

Millennials ready to buy homes? from CNBC.

The Harman Group has opened Vue32 in University City

by Steve Lubetkin,

The Harman Group has opened Vue32 in University City. The 176,000-square foot, 16-story residential tower and mixed-use development caters to Drexel University faculty, staff, and graduate students, as well as non-Drexel professionals living in the area. The development meets one of the tenets of Drexel’s master plan to reduce the pressure on off-campus housing in Powelton Village. The residential tower at 32nd and Race Street offers 164 junior one-and two-bedroom apartments, as well as a three-bedroom apartment on the top floor. The units all feature nine-foot ceilings and full-height windows that provide sweeping views of the Philadelphia skyline. The development has many community amenities, including a roof-top deck with outdoor cooking facilities, a community room with a full kitchen, a billiards and game room, a conference room, a fitness center, and a secure parking garage under the building.

Monday, November 6, 2017

Aulder Capital Pays $44.5M for Foxwood Apartments

Aulder Capital acquired the 414-unit Foxwood Apartments in Newark, DE from Fairfield Residential for $44.5 million, or about $107,000 per unit.

The apartment complex , located at 15 Fox Hall in Newark, DE, sits on 27 acres and was delivered in 1989. It totals 357,635 square feet across 31 three- and four-story buildings. It is currently 96 percent leased.

The buyer secured a new $34.3 million mortgage on the acquisition. HFF arranged the financing on behalf of the borrower.

One & Two Pitcairn Place Sells for $12.1M

by Steve Lubetkin,
The sale of One & Two Pitcairn Place, a two building, Class A office complex was completed in Jenkintown, PA. Joss Realty Partners purchased the 98,057 square-foot complex from Pitcairn Properties for $12.1 million. There was $9.225 million in acquisition financing from Beneficial Bank.

Thursday, November 2, 2017

F&S Produce Acquires Vineland Manufacturing-Warehouse Facility From General Mills

by Steve Lubetkin,
F&S Produce Co. acquired 500 W. Elmer Rd., a 580,000-square-foot manufacturing-warehouse facility on 65 acres in Vineland, NJ.

Terms of the sale and the seller were not disclosed, but according to, a website that aggregates publicly available property data, the site was transferred for $10 in September from General Mills Corporation to a related company, GM Cereals Properties.

The property was previously listed as being owned by Progresso Foods, which is also a division of General Mills. says the property is assessed at $13.993 million for tax purposes.

The new location satisfies F&S Produce’s manufacturing needs and cuts six months from the company’s original expansion plan of building another facility in Cumberland County, NJ, to increase its production capacity. The manufacturing and warehouse facility at 500 W. Elmer Rd. offers four times the space of the current facilities to accommodate F&S Produce’s future expansion.

F&S Produce has a longstanding manufacturing presence in Southern New Jersey including two production facilities in Rosenhayn, NJ, as well as a trucking operation and freezer warehouse.

“This significant facility sale to F&S Produce represents a successful outcome of job retention and economic growth in the City of Vineland and for the state of New Jersey.”  The New Jersey Economic Development Authority recognized the importance of F&S Produce’s move to job creation and retention in the region with $21.7 million in state tax credits. According to the economic development organization Choose New Jersey, the Garden State is home to a $105 billion food industry and agriculture sector that continues to grow, with 1,900 food manufacturing companies employing nearly 44,000 people in total and, earning New Jersey Saveur magazine’s moniker of “most edible” state in America.

Wednesday, November 1, 2017

Investor Appetite for Center City Apartments Reaffirmed in Q3

As Philadelphia gradually shook off the damage of the 2008 - 2009 financial crisis, affluent millennials and empty nesters began to converge on Center City's rental market. A boom in apartment acquisitions by major investors such as JPMorgan Chase and BlackRock quickly followed.

By 2015, Center City's annual apartment acquisitions had surged to an all-time high of more than $470 million, more than double the sales volume that was recorded during even the best years of the economic high of 2005 - 2007.

The boom in Center City apartment sales has lost some steam, and investments have slowed noticeably in recent quarters. While more than 1,600 apartment units changed hands in 2015, sales dropped by more than 70% in 2016, and less than 400 units have traded during the first three quarters of 2017.

There are a few reasons why investors hit the pause button on Center City apartment transactions. With booming development activity increasing Center City's stock of multifamily units by more than 5% per year, newly-completed apartment towers are increasingly offering one - or in some cases even two - free months of rent in order to lease up on schedule. Furthermore, at the end of 2016, Philadelphia's City Council voted to close loopholes that had previously allowed many large real estate investors to circumvent the city's hefty 3.1% realty transfer tax.

After the drop off in Center City apartment sales activity and the elimination of tax loopholes, some market participants are wondering, do prices need to decline significantly for apartment sales to pick back up again?

The September 2017 sale of the Pepper Building at 1830 Lombard deserves a close look from Philadelphia apartment investors. It was the first Center City apartment deal with a price over $50 million that has closed in more than 18 months. The Pepper Building, built in 1927 but renovated in 2009, sold for $53.3 million. The 4.75% cap rate on the deal reflects robust investor demand for the asset. Furthermore, the per-unit price tag, at $288,000, came closely in line with the price of $294,000 per unit that 1930 Chestnut and 400 Walnut traded for during 2015. Like the Pepper Building, both of these properties were originally built in the 1920's but offer a modern amenity set.

The Pepper Building's sale did reveal some signs that investor demand for Center City apartment has moderated in recent years. This same building sold in 2011, and when the Pepper Building changed hands in that transaction, it spent only two months on the market before selling.

This time around, the building spent about three months on market, and another two months in escrow while the buyer arranged financing. Nonetheless the sale was a largely positive sign for the market. As the first large Center City apartment sale to close in several quarters, the deal reaffirmed investors' willingness to acquire large center city apartment assets at sub-5% cap rates.

Braeburn Pharma Leases 24,000 SF in Plymouth Meeting

Braeburn Pharma, a pharmaceutical company, has leased 23,805 square feet in the Interchange Corp Cntr Plymouth Mtg office building at 450 Plymouth Rd. in Plymouth Meeting, PA.

The four-story building totals 91,305 square feet and was developed by Leggat McCall Properties LLC in 2000. Braeburn Pharmas lease includes the entire fourth floor. Other tenants in the building include Granite Telecommunications and ESSA Bank & Trust.

Workhorse Leases Space in King of Prussia

Workhorse, a work vehicle manufacturing company, has signed a lease for 62,000 square feet at the industrial building located at 250 King Manor Dr. in King of Prussia, PA.

The warehouse totals approximately 127,000 square feet and delivered in 1970. It is currently owned by Ingerman-Ginsburg Partnership and managed by Equivest Management, Inc.

I-81 Industrial Portfolio Trades For $30M

by Steve Lubetkin,
NorthPoint Development has acquired a three-building industrial portfolio in the dynamic Northeastern PA submarket from Endurance Real Estate Group for $30.1 million.

The buildings, 7 Alberigi Drive and 15 Alberigi Drive in Jessup, PA, and 32 Earth Conservancy Drive (also known as South Preston Avenue) in Wilkes-Barre, total 544,974 square feet.

According to Real Capital Analytics, a proprietary research database, 15 Alberigi Drive, a 130,000 square foot property, sold for $7.2 million; 7 Alberigi Drive, a 167,000 square-foot industrial, represented $9.2 million; and 32 Earth Conservancy Drive, a 249,000 square-foot warehouse, represented $13.7 million of the portfolio price.

The transaction represents the largest portfolio of industrial real estate that has traded in Northeastern Pennsylvania in several years.

“This was a great opportunity for both the buyer and seller.” The portfolio was 78 percent occupied at the time of the sale. “Endurance Real Estate Group added tremendous value through thoughtful renovations and tenancy, while the remaining vacancy provides further value add opportunity for the purchaser.”

All three buildings are class-A facilities that were initially developed as part of a joint venture partnership between MetLife and Chicago-based Versus Development. They feature market-leading functionality including 30-foot clear height ceilings, T-5 lights and the potential to expand car and trailer parking as well as loading positions.

The properties are strategically located within one of the most densely populated areas in the region, which boasts a strong local labor pool. The surrounding highway network of I-81, I-84, I-80, I-380 and the Pennsylvania Turnpike provides easy access to major Northeast Corridor cities including New York, Philadelphia, Pittsburgh, Washington, DC, and Baltimore.

So far this year, the Northeastern PA submarket of the I-81/I-78 distribution corridor has been one of the most dynamic leasing markets in the entire Northeastern U.S. “There has been approximately 3 million square feet of net absorption year to date with over 3 million square feet of new construction underway, much of it pre-leased. The current vacancy rate of 3.8 percent is the lowest throughout the eastern part of the state, and we expect demand will continue to outpace supply.”