Wednesday, August 29, 2018

Philadelphia-based Rubenstein Partners has sold CenterPoint Office Complex for $86M

by John Jordan
Philadelphia-based Rubenstein Partners has sold the 440,000-square-foot CenterPoint office complex in this Boston suburb for $86 million to Hilco Real Estate of Northbrook, IL.

Totaling more than 440,000 square feet, CenterPoint comprises two buildings – 41 Seyon St. and 43 Foundry Ave. The property formerly served as an R&D and manufacturing hub for Raytheon, but has been transformed into a modern multi-tenant campus via substantial capital investment throughout the past 10 years. The property is presently anchored by Repligen, EDC (Education Development Center) and Simpson Gumpertz & Heger.
After acquiring the complex in 2013 as a “uniquely positioned creative class office asset in an emerging urban infill mixed-use neighborhood,” Deke Schultze, principal and regional director of New England at Rubenstein Partners, notes that the firm’s initial investment strategy was to add value via property renovations in the hopes of sparking future office demand.

“That is exactly what has happened at CenterPoint during our ownership and we believe this successful exit supports our initial investment thesis,” he says. “We are also pleased that our valued joint venture partner, Saracen Properties, will be able to continue to be a part of the new ownership group and the asset’s success in the future.”

CenterPoint is situated within the Charles River Mill District, which comprises 2.6 million square feet of synergistic office, technology, manufacturing and industrial space in addition to a wealth of amenities and approximately 1,000 newly-constructed residential units at the convergence of Newton, Watertown and Waltham. The property also benefits from swift connections to Interstates 95 (Route 128) and 90 (Massachusetts Turnpike).

“CenterPoint represents an exceptional creative office retrofit with first-class tenant build outs, state-of-the-art building systems, high ceilings and efficient floor plates.The complex also boasts an attractive infill location within a thriving suburban Boston innovation cluster.”

In other sale/disposition activity, Rubenstein Partners reports it has acquired the 227,000-square-foot Research Plaza office complex here for $38 million, increasing its office portfolio in the Washington, DC market.

PREIT's Coradino Sees Experiential, Entertainment Helping Malls Cope With Consumer Change

by John Jordan,
Traditional retail shopping malls, buffeted by the changing way consumers choose to purchase goods and services, can’t rely on just one response to these changes, according to Joseph F. Coradino, chief executive officer of PREIT, the real estate investment trust that owns the Cherry Hill Mall, Plymouth Meeting Mall, and is a partner in the redevelopment of the Philadelphia Gallery as the “Fashion District.”

“There’s a number of words that we think of when we think about malls these days, words like ‘transformation’ and ‘metamorphosis,’ or ‘evolution,’” Coradino says. “They all really come down to change. We’re in an industry that is changing rapidly, and I think that’s driven by the fact that our customers’ needs, wants, and preferences are also changing rapidly and we’re moving to accommodate that.”

PREIT has been working feverishly to reposition its mall properties, including its flagship assets in the South Jersey and Philadelphia markets, to relieve some of the occupancy pressures malls face as weaker retailers retrench.

The Plymouth Meeting property is a good example of a mall whose shape has changed dramatically. PREIT was ahead of other mall owners, adding an outlet of the Dave and Buster’s food and gaming restaurant in 2009, nearly a decade prior to the entertainment explosion at malls, and Whole Foods in 2010, one of the first grocery stores on a mall property.
PREIT has added a LEGOLAND Discovery Center, just the ninth location in the country for this destination retail concept; Cyclebar, an indoor cycling studio; 5 Wits, a live-action entertainment escape room; Build-a-Bear Kiosk, one of the brand’s first kiosk deployments in the country; and Busy Bees Pottery & Arts Studio, a create-your-own project art studio – among many others.

“Half of the space in that mall is dining and entertainment, and it’s really been driven by the competitive environment,” Coradino says, noting that the property is sandwiched between another PREIT mall in Willow Grove, PA, and Simon Property’s monster shopping complex at King of Prussia, PA. ”You couldn’t replicate what was in King of Prussia or Willow Grove. That would be a silly endeavor and you’d fail at it. It is very much a creative solution driven by market dynamics.”

The next phase of Plymouth Meeting Mall’s transformation is underway, with the redevelopment of the property’s Macy’s store. PREIT will deliver at least five new and distinct uses on the former Macy’s site with executed leases with three new tenants – Burlington, DICK’s Sporting Goods, and Edge Fitness. The company is also negotiating leases with an arts and crafts purveyor and a craft brewery. Phenix Salon Suites is expected to open late this year,  enabling salon professionals to occupy their own suites within the salon, providing personal private space for stylists and their customers.

At the Cherry Hill Mall, which Coradino describes as “an absolute home run of a mall, a trophy asset,” PREIT is jumping on a trend that Jones Lang LaSalle thinks is going to grow significantly over the next five years—the placement of coworking spaces in retail malls.

Coworking provider 1776 will take 11,000 square feet of space in the Cherry Hill Mall, on the second floor near Nordstrom’s, beginning around Black Friday in November, says Jennifer Maher, CEO of 1776. She says the space will fill a need for 1776′s retail startup tenants.

Jennifer Maher, CEO of 1776, coworking space provider Jennifer Maher, CEO of 1776, coworking space provider
“There are companies that work out of our space that are product-based companies, but they were selling through an e-commerce platform,” she says. “The reason why they are members of our community, to be able to have the flexible terms on our membership as their teams grow and scale, is the same reason they won’t be able to go out and get their own retail space, because they’re startup companies, that’s a really heavy lift for them, from the fit-out costs to being a creditworthy tenant. We realized there was more of a need for that from the retail side.”

1776 has created the largest network of incubators that cultivates and empowers companies and startup ecosystems in the Northeast Corridor. The Cherry Hill location, its first in South Jersey, will focus on retail and e-commerce incubation initiatives and will be home to corporate and startup members in the retail and e-commerce industry. There will also be space available to other mall tenants like restaurants who need back office space for bookkeeping and other administrative tasks, Maher says.

As previously reported by, JLL predicts that coworking space in retail will grow at a rate of 25% annually through 2023 and reach approximately 3.4 million square feet, a small fraction of the current 60 million square feet of US coworking space in conventional office buildings.

“We’ve always felt like Cherry Hill had an opportunity to be something more than just a place to shop and dine, and we had been in discussions with 1776′s predecessor Benjamin’s Desk for a number of years, thinking about different properties,” says Coradino. “We hit on the Cherry Hill possibility, and we think that’s really going to be a real sort of R&D for our business or industry, because it’ll provide an opportunity to incubate retail businesses and have them be sort of on the front line, where they can actually engage customers. Usually the incubation occurs somewhere else where customer engagement isn’t possible.”

Live-work-play formats will also come into play in PREIT properties, Coradino says. The firm has an agreement with Hanover Exton Square Mall for 300 multifamily units at the suburban mall property. PREIT is also in discussions for multifamily developments at Moorestown Mall in Burlington County, NJ, and at Plymouth Meeting Mall.

“That’s a little bit different than addressing the retail environment,” he says. “That’s more what I would call ‘smart growth.’”

Cherry Hill Mall is located about eight miles from Center City Philadelphia. The mall offers a variety of retailers, including Nordstrom, Apple, Zara, Hugo Boss, The LEGO Store, The North Face, and dining options that include The Capital Grille, Seasons 52, Grand Lux Café and Maggiano’s, among others.

“It’s not a cookie cutter, it’s not as if we could sit and say what we’ve done at Plymouth Meeting, or what we’ve done at Cherry Hill, or what we’re doing at Fashion District is the answer,” Coradino says. “The answer tends to be market driven.”

Philadelphia Based Rubenstein Partners Buy Research Plaza Office Park

by John Jordan,
Rubenstein Partners, L.P.  has acquired the 227,000-square-foot Research Plaza office complex here for $38 million, increasing its office portfolio in the Washington, DC market.
The Philadelphia-based real estate investment firm plans to undertake a capital improvement program at the complex that is currently 75% leased. The purchase of the Class A office property at 1445-1455 Research Blvd in Rockville, MD follows the company’s sale of a major office complex in the Boston suburb of Waltham, MA—CenterPoint—for $86 million to Hilco Real Estate of Northbrook, IL.

Rubenstein’s business plan calls for the creation of walking connections to a new retail center currently being built adjacent to the Research Plaza property, which will help tenants access the new retail amenities at the complex.
“Rubenstein Partners was drawn to the opportunity of acquiring a best-in-class asset, with walkable retail amenities,” notes Read Mortimer, SVP for Rubenstein. “The addition of walkable restaurants and fitness at the new retail center opening next door, coupled with our planned improvements to the property, will add to the appeal of the tenant experience at Research Plaza.”

He adds that Rubenstein expects tenant interest to grow from tenants that are seeking a well-located and highly amenitized office experience in the Washington DC region. The purchase of Research Plaza also allows Rubenstein to increase its operating presence in the DC market, which he notes has continued to expand over the last few years.”

The Washington Business Journal identified the seller as Realty Associates Fund VIII LP based on public records.
Originally built in 1998, Research Plaza features a two-story marble lobby, on-site parking, fitness center and deli. In addition, the property enjoys convenient access to I-270 and close proximity to the numerous shopping and restaurant options at the nearby Research Row, including the recently announced Cooper’s Hawk Winery, a restaurant and bar with an in-house winery and tasting room.

The Rubenstein Company, LP and affiliates, founded in 1969, was one of the largest private owner operators of Class A office real estate in the Mid-Atlantic, owning and operating a portfolio of assets valued at approximately $1.2 billion at the time of its disposition in 2004. Since 2005, Rubenstein Partners has, on behalf of its investors and clients, invested in more than 10 million square feet of office real estate assets throughout the Eastern United States.

Tuesday, August 28, 2018

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Embassy Suites in Chesterbrook Sells for $29M

Valley Forge Investment Corp. sold the Embassy Suites Philadelphia Valley Forge hotel at 888 Chesterbrook Blvd. in Chesterbrook, Pennsylvania, to a family investment group for $29 million, or about $127,000 per unit.

Valley Forge has decided to end their long-time run in the hotel business as this sale marks the divestiture of the final hospitality property in its portfolio.

The 196,801-square-foot building was constructed in 1981. It offers 229 guest rooms in Chester County.

Monday, August 27, 2018

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Rising Wages Powering Rent Gains Among Philly’s Class B and C Apartments

For U.S. workers without a college degree, the years immediately following the Great Recession were particularly hard times. From 2010 through 2012 their wages grew by about 1.7 percent annually, just barely fast enough to keep pace with rising prices as measured by inflation.

After nine consecutive years of economic growth the situation is gradually changing.

For lower paid workers, navigating obstacles such as rapidly rising healthcare and education costs still remains extremely challenging. But predominately lower paying sectors like retail trade, healthcare and social assistance, and leisure and hospitality have added a combined 10 million jobs nationally since 2009. This, combined with baby boomers, one of America’s largest generations, reaching retirement age means that the pool of unemployed workers is shrinking fast.

The U.S. unemployment rate is currently at a more than 45 year low and given the minimal supply of available workers, companies are being forced to increase wages to meet their staffing needs.

For college educated workers, wages continued to rise ahead of the rate of inflation even during the worst years of the financial crisis in 2008 through 2010. But thanks to tightening labor market conditions, according to the Federal Reserve Wage Tracker data, even wages for high school graduates (without a college degree) began rising at 2.5 to 3.5 percent annually in 2015, a pace which they have maintained since.

It’s no coincidence that just as this acceleration in wage growth for lower skilled workers began, apartment rents among Philadelphia’s 2- and 3-Star apartment properties also began growing at a faster pace.

If the U.S. economy can avoid falling into recession over the next 2 to 3 years, labor market conditions will remain extremely tight. Continued 2.5 to 3.5 percent wage growth among lower paid workers would provide a healthy foundation upon which owners of more affordable rental properties could continue to increase rents.

Tuesday, August 21, 2018

Lebanon Court Apartments Complex Changes Hands

by Steve Lubetkin,
The 87-unit Lebanon Court Apartments community has traded for $5.85 million.
The property at 1102 Jackson Blvd. was sold by High Associates to YMZ, LLC.

Built in 1964, Lebanon Court was acquired in July 2017 by High Associates from Philadelphia-based investment firm Equus Capital Partners as part of a four-complex portfolio in central Pennsylvania.
“Lebanon Court offered a great opportunity for an out-of-state buyer to purchase a value-add property for his portfolio.We are continuing to see an influx of New York and New Jersey buyers purchasing multifamily assets in central Pennsylvania.”

Financing was provided by Investors Bank. The new ownership plans include upgrades to the kitchens and bathrooms.

The property consists of eight three-story brick buildings situated on 3.6 acres with 30 one-bedroom units, 56 two-bedroom units and one three-bedroom unit. Units feature single-pane windows in aluminum frames, large closets, hardwood and carpeted flooring, electric baseboard heating with individual thermostats and hot water heaters along with thru-wall AC units.

Thursday, August 16, 2018

Macquarie Investment Management Relocates #Philadelphia HQ to Independence Mall

by Steve Lubetkin,
Macquarie Investment Management, the Australia-based global asset management firm best-known for its Delaware Funds family of mutual funds, is relocating its Philadelphia headquarters to 100 Independence Mall West in 2020.
Macquarie has entered into a lease agreement with Keystone Property Group to occupy 145,000 square feet of space in the historic building. Australia-based Macquarie plans to redevelop the space, just steps from the Liberty Bell, National Constitution Center, and Independence Hall, where the Declaration of Independence was signed.

“Our US mutual fund business has been in Philadelphia since 1929, and we are proud to say the city is the global headquarters for our investment management business,” says Shawn Lytle, deputy global head of Macquarie Investment Management and president of Delaware Funds by Macquarie. “With this move, we look forward to reimagining this iconic space to combine the best of old and new, maintaining its historical significance while modernizing it to reflect our company culture and our position as a destination employer in the Delaware Valley.”

“We are pleased to welcome Macquarie as our newest tenant at 100 Independence Mall West,” said Keystone president and COO Richard Gottlieb. “When we set out to transform this historic property into a mixed-use commercial destination, we imagined filling it with companies that would appreciate the rich sense of history, creativity, and vibrancy present in this building and the surrounding area. The addition of Macquarie Investment Management’s global headquarters represents a critical step toward the full realization of that vision, as well as a testament to the enduring appeal of not just this building, but all of Center City Philadelphia.”

Independence Mall West, built in 1965 and designed by world renowned architect Pietro Belluschi and formerly known as the Rohm & Haas Building, is listed on the National Register of Historic Places.

Keystone acquired the nine-story, approximately 400,000-square-foot class A office building in 2013. As part of its $25 million reinvestment strategy, it has transformed the building’s formerly empty ground floor and lower level by creating a dynamic indoor-outdoor experience for pedestrians with Independence Beer Garden and the La Colombe coffee café. Keystone also has installed a 110-space public parking facility in the former basement of the building, which was co-developed and is managed by Keystone’s partner in the building, Parkway Corporation.

100 Independence Mall West provides easy access to the city’s premier shopping and dining destinations, as well as a host of arts, cultural, and historic sites. The property is a short walk from local SEPTA train and bus routes and a short drive from area highways including Interstates 95 and 676.

Keystone’s strategy is part of a broader, multi-faceted plan to revitalize Philadelphia’s Center City and Independence Mall area—an emerging hub of culture, entertainment, dining, and business. It also owns and manages The Curtis, the publishing landmark that has been transformed into a mixed-use destination featuring luxury residential, office, and retail space, in addition to popular restaurants such as PJ Clarke’s and The Cooperage.

Keystone is also repositioning One Washington Square, the former home of life insurance company Penn Mutual, adding to Center City’s increasingly dynamic pedestrian experience

Friday, August 10, 2018

Stockton University Takes Another Bet on Atlantic City

There will soon be one less vacant casino on Atlantic City’s fabled Boardwalk.

In yet another expansion into Atlantic City, Stockton University Wednesday agreed to buy the Atlantic Club Casino Hotel, which has been closed since January 2014.

The sale, and Stockton’s continued investment in Atlantic City, is yet one more piece in the comeback of the long-beleaguered gaming destination on the ocean. The Atlantic Club was one of five casinos to shutter its doors in Atlantic City, but now all but one, Trump Plaza, have been revived or found new uses.

The Atlantic Club property, not far from a new campus that Stockton plans to open in Atlantic City at the end of this month, includes roughly nine acres of upland lots, a beach lot with about 11 acres, and a nine-level parking garage that has 550,000 square feet for parking and 50,000 square feet of office space, as well as a 23-story hotel tower. The university's main campus is nearby, in Galloway, N.J.

The board of trustees of Stockton, a public instittution granted university status in 2015, authorized moving forward with a purchase agreement for the former casino site Wednesday afternoon. The price will be disclosed after the closing, which there is no timeline for yet, the university said in a press release.

But the seller, TJM Properties, a real estate and hospitality firm based in Clearwater, FL, will demolish the hotel tower as part of the final agreement, according to the university.

There is very limited growth potential in Galloway due to restrictions regarding development at its location in the South Jersey Pinelands, which is why Stockton is creating campuses in nearby Atlantic City, according to university officials. Stockton is about to open a new campus in Atlantic City, and its planned acquisition is near that facility.

Stockton's new Atlantic City campus, which is to include hospitality-training classes, is located at the intersection of Atlantic, Albany and Pacific Avenues, with apartments for more than 500 students overlooking the beach and Boardwalk. It will also have a parking garage and academic center.

The project is a public/private partnership with Atlantic City Development Corp. (AC DevCo), a non-profit redevelopment company, and South Jersey Gas, which is also building a new headquarters at the site.

There are no immediate plans for construction on the former Atlantic Club land, but the area could provide space for additional academic, residential and retail use by the university, according to the school.

For example, the parking garage and surface lot can accommodate future needs for faculty, staff and students, and the garage has office space Stockton can renovate and use or lease, the school said. Commercial space in the garage may also be renovated and leased, the university added.

"We are buying our future," Stockton University President Harvey Kesselman said in a statement. "And we are trying to make the best investment we can. There is so much excitement around our new campus. We want to be able to provide even more opportunities for New Jersey students to remain in the state to attend college."

Stockton must still complete its review and due diligence on the acquisition, with the trustees approving a $72,500 contract with SOSH Architects to assess the site and submit a report. The final purchase and sale agreement must also still be reviewed by the Office of the State Comptroller.

The university recently sold the Stockton Seaview Hotel and Golf Club in Galloway Township for $21 million to KDG Capital LLC of Tampa, FL, and that money will go toward the purchase of the TJM property. The school acquired the golf club in 2000 for $20 million from LaSalle Hotel Properties of Bethesda, MD, according to CoStar data.

Stockton has used the golf club and hotel facilities for student housing.

Chestnut Hill Village and Blossom Row Apts Trade in #Philadelphia

by Steve Lubetkin,
A two-property, transit-oriented apartment portfolio totaling 821 units traded in the historic Chestnut Hill submarket of Philadelphia, PA.

Goldman Sachs Asset Management Private Real Estate purchased the offering free and clear of existing financing.  The new owner’s behalf to procured a 10-year, fixed-rate acquisition loan through TH Real Estate, an affiliate of Nuveen (the investment management arm of TIAA).

The properties included in the offering are Chestnut Hill Village and Blossom Row.  The properties, which were bifurcated in 2017, are situated on a total of 45 acres surrounding Market Square, an ACME grocery-anchored shopping center, and adjacent to the Wyndmoor SEPTA regional rail station.  Chestnut Hill Village includes 704 units within 23 two- and three-story buildings.  Blossom Row encompasses 117 private-entry, two-story townhomes, which include fenced-in backyards and finished basements.  Residents have access to best-in-class amenities, which are highlighted by a community pool and a recently constructed clubhouse with fitness center.  The portfolio is 96 percent occupied overall.

Thursday, August 9, 2018

Signs the Real Estate Market is Beginning to Overheat

By Joe O’Donnell, President of OMEGA Commercial Real Estate, Inc.

I have been through a few commercial real estate cycles, I have begun to notice signs of the beginning of what an overheated or frothy market look like. Here is my take:

1) Multiple cold calls from New York real estate investors looking to buy buildings in the Philadelphia Market. The conversation goes something like this:

Me: “Why the interest in the Philly market?” the answer is usually the same.
NY Investor: “Well Joe, the New York market is overheated. If I make a 2% mistake in Brooklyn, I am upside down in the deal. I can come to Philly and make an 8% mistake and still be ok.” 
Me:“So you’re coming to Philly to overheat our market?”
NY Investor: “Yes. We need to find any deals.”
Me: (antennas up) "Yikes"

2) Multiple radio advertisements about “gurus” or “experts” coming to your town to show you how to flip houses with “other people money.”  We have all heard them on all the media.  These programs usually offer a free seminar. Then there is pitch for investors program for a few thousand dollars.
 Personally, I have been involved in a few flips. I have friends and colleagues that only flip houses. They don’t want the competition. They also have to have money or “skin in the game” to be taken seriously with banks and investors. Current deal flow for deals that make sense are their biggest issues.

3) Receiving multiple LinkedIn alerts to congratulate people on the newly, minted position at “ABC” real estate company. This is mostly with the residential real estate companies. It seems easy in this market. My residential cohorts are telling me stories about bidding wars and multiple over asking offers that are going to closing. They put a sign up on Friday and under contract by Sunday. Crazy times.

It is always a good time to buy or sell real estate but you have to transact it correctly. Experience is key. If you have a commercial real estate question or issue please give is a call at (610) 616-4604 or (484) 354-2162 or

Joe is the President and owner of OMEGA Commercial Real Estate, Inc. in Wayne, PA. He has been practicing real estate for 15+ years. He has owned OMEGA for the past 9 years.

Tuesday, August 7, 2018

University of Pennsylvania Health System Acquires Eastwick Business Center Bldg

The University of Pennsylvania Health System acquired the Eastwick Business Center building at 3250 S. 76th St. in Philadelphia, PA for $14.34 million, or about $58 per square foot, from Cambridge Hanover.

The 247,447-square-foot industrial building was completed in 1980 with renovations in 2008. The building is located in the southwest Philadelphia County industrial submarket.

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Monday, August 6, 2018

Multifamily Sales On Pace of Reaching Record High for the Year

Annual U.S. multifamily property sales are approaching a record in the face of a flood of new apartment construction and increasing home ownership.

Market doomsayers may be confounded by how the new units are being quickly absorbed by renter,s but demand remains unabated across the sector.

"The multifamily market continues to surprise market watcher. Expectations that supply would overwhelm demand, expectations that price growth would trail off, both appear to be contrary to what we’re seeing today."

While data from the second quarter confirms that rent growth has slowed in many markets and vacancy has inched up in places, apartment vacancy for the U.S. market as a whole actually declined 50 basis points in the second quarter, to just under 6 percent.

In addition, average apartment rents rose 3 percent compared to the second quarter of 2017, an increase in the year-over-year rate compared with the first quarter.

And the average apartment in the U.S. now rents for $1,298 per month. That's another increase from the first quarter, but still well below this cycle’s peak of late 2015, when the average U.S. rent edged toward $1,400 per month.

Taking stock of the second-quarter performance, analysts tied the apartment sector’s success to a favorable overall economic picture nationally: job growth is high and new households are forming quickly, both of which are driving demand for apartments.

But the multifamily market also benefits from some of the bad news in the economy. Increasing mortgage rates are keeping many renters from making the jump to home ownership, while a slowdown in single-family home construction has made it even more difficult for first-time home buyers, even as homeownership rates edged up slightly.

"This cycle, nearly every marginal household has been a renter household, bringing the home ownership rate down from 69 percent to 63 percent. More recently, however, more and more new households have been buyers, and the home ownership rate has begun to rise, albeit slowly. Over the last two quarters, the home ownership rate has risen by just .1 percent, a slower pace than the last two years, and frankly, more slowly than we expected.

"So why aren’t more people buying homes? Rising interest rates and aggressive pricing certainly matter. But are there actually any homes to buy?" he added.

On the capital markets side, investors have shown strong interest in the apartment sector. Many large institutional investors, including those outside the U.S., consider U.S. apartment markets to be a good, long-term investment, and have amassed billions to invest in properties.

Affleck also predicted the year-end total for apartment sales this year will match or exceed last year’s total of just under $180 billion in trades.

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Friday, August 3, 2018

Settlement reached over Seven Tower bankruptcy

by Natalie Kostelni Reporter Philadelphia Business Journal
A settlement has been reached in a Chapter 11 bankruptcy proceeding that involves an entity overseeing the development of Seven Tower Bridge, a proposed office building in Conshohocken, and a company that lent money to help fund the project.

After going through mediation, Seven Tower Bridge Associates, the debtor in the bankruptcy, along with the Redevelopment Authority of Montgomery County, R&J Holding Co., and the borough of Conshohocken have come to terms that will allow the Seven Tower Bridge Associates to proceed with the development.

“We’re back in business like it never happened,” said Don Pulver of Oliver Tyrone Pulver, who controls Seven Tower Bridge Associates. “It’s all resolved and we're back to business as usual.”

Seven Tower Bridge Associates, a limited partnership formed to develop the proposed office tower, has had plans since 2010 to build a 14-story, 250,000-square-foot structure on 2.3 acres at 110 Washington St. The project would have 10 stories of office space atop a four-story parking garage.

It voluntarily filed for Chapter 11 bankruptcy protection on March 22, putting a stay on a mortgage foreclosure proceeding, brought by R&J Holding Co. of Trappe, that was underway in Montgomery County Court of Common Pleas.

R&J Holding initiated the foreclosure, saying in court documents it lent Seven Tower Bridge Associates a total of $8 million in two separate loans — one that totaled $7 million and another $1 million — in 2010 that were secured by the Seven Tower site and scheduled to mature March 1, 2017.
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Thursday, August 2, 2018

Amazon’s PillPack Deal Could Further Drive an Already Tight Industrial Property Demand

Amazon’s pending purchase of online pharmacy PillPack has the potential to create a need for specialized warehouse space to ship prescription drugs and even lead to small retail clinics, adding demand to an already surging industrial property market.

The move by the online retailer could have significant implications for industrial property sales, which outperformed other major commercial sectors across the U.S. in the second quarter as Amazon and other companies pump up their supply chains for e-commerce delivery.

"If you really read between the lines here, and kind of analyze this, Amazon wants to be part of every single transaction that happens in our lives."

Amazon, the world's largest retailer, bought PillPack in late June for an estimated $1 billion. PillPack holds pharmacy licenses in all 50 states and ships medications from its primary drug distribution center in Manchester, NH, to customers who take multiple daily prescriptions. The company is targeting a major market: On its website, PillPack says 40 million adults take more than five prescriptions each day.

If Amazon incorporates PillPack’s approximately 1 million customers into its Prime membership business, which has 100 million subscribers, the company would need drug distribution centers near large cities cleared to handle medicines, said Santo Leo, founder and CEO of in Boca Raton, FL.

Those could be small centers dotted across the country or a handful of larger ones. In either case, they will have to meet far more specialized state and federal requirements because the goods being handled are medicine, Leo said.

Though Amazon already owns or leases about 100 million square feet of distribution space, "you can’t just rip a warehouse out and put a pharmacy there," said Leo, whose mail-order pharmacy is licensed to dispense prescription drugs in more than 40 states. "You need to design these from scratch. You need more power, more data, more security measures. Traditional big, bulky, automated facilities are just not designed for pharmaceuticals."

Pharmaceutical warehouses must have processes in place for temperature control, security, documentation and the ability to address product recalls, said Carmine Catizone, executive director of the National Association of Boards of Pharmacy, which accredits wholesale pharmaceutical warehouses. Each state also has different licensing requirements.

The company may need new buildings for an online pharmacy, the analysts said. Though Amazon is opening fulfillment centers at a dizzying rate -- eight so far in 2018 -- it has a host of controls to ensure each center operates at maximum capacity and has little extra space, the company said in its 2017 annual report.

Amazon declined to comment on its plans for specialized PillPack warehouse space. Amazon hasn’t made any public statements about its PillPack strategy since shortly after the purchase, which is expected to close by the end of the year.

Amazon’s PillPack purchase follows its joint venture with Berkshire Hathaway Inc. and JPMorgan Chase to improve the U.S. health care system and cut costs. PillPack is part of that strategy, said Leo, who predicted Amazon would move quickly to grow PillPack to place pressure on health-care competitors.

"How do you keep people out of the doctor’s office or hospital lab? Make sure people take their prescriptions," he said.

Healy said the purchase could have implications for any brick-and-mortar plans Amazon has as well, noting the trend toward small, walk-in clinics across the country. It's estimated there are now almost 3,000 such clinics, according to Accenture. He also speculated that Amazon could add pharmacy services to its Whole Foods stores.

"It will probably net a greater industrial space for Amazon, but I would think there would be some sort of new retail model," he said. "There could be something else down the pipeline, perhaps a new form of retail."