Wednesday, November 13, 2019

Strategic Funding Alternatives Buys Cherry Hill Office Portfolio for $33M

by John Jordan
The three-building Woodland Falls office complex here has changed hands in a $33-million deal.

Moorestown, NJ-based Strategic Funding Alternatives acquired the 217,986-square-foot complex from Crown Properties.  SFA secured a 10-year, $24.75-million fixed-rate acquisition loan for the portfolio that is located near Center City Philadelphia.

The Woodland Falls corporate park currently has an occupancy rate of approximately 97% and is home to tenants that include PNC Bank, Corcentric LLC, Ballard Spahr LLP, 1st Colonial Community Bank and M&T Bank.

SFA managing principal, Jeffery Schneider states, “With its convenient location and parklike setting, Woodland Falls has been a long sought-after corporate park and we look forward to further strengthening its appeal.”

SFA reports it has plans for common area and landscaping improvements to Class A office complex. The deal is largest acquisition to date for the privately-held eal estate investment firm that was founded in 2016.

The Fellowship Business Center NJ Trades for Nearly $10.7M

by John Jordan
The Bloom Organization has sold the five-building Fellowship Business Center here to a private investor for $10.675 million.

The deal for the 96,000-square-foot complex within the East Gate Business Park was reported by Ian Richman and Marc Isdaner of Colliers International’s Mount Laurel office, which represented the seller in the deal. The complex was 96% occupied at the time of the sale.

The multi-tenanted complex of office/flex properties benefits from its location that offers access to the New Jersey Turnpike, I-295, Route 73 and Route 38 and is within a half-hour from Philadelphia.

Stuffed Puffs Manufacturing Firm Expands Operations in PA

by John Jordan
Chocolate marshmallow manufacturer Stuffed Puffs is expanding its operations in Pennsylvania to a 150,000-square-foot building here in the Lehigh Valley.

The food processor will create 134 new full-time jobs in connection with the expansion, according to state officials. The firm secured approximately $1.1 million in incentives in the form of grants and tax credits from the commonwealth.
The confectionary manufacturer will be located at the former Guardian Life property, owned by JG Petrucci, to manufacture chocolate stuffed marshmallows and plans to make significant improvements to the property. Stuffed Puffs will begin manufacturing operations in May 2020 and has committed to investing $31.5 million in capital funding toward the project.

“Food processing is one of Pennsylvania’s most robust and vibrant industries, supporting thousands of jobs and generating more than $5 billion in sales annually,” says Pennsylvania Gov. Tom Wolf. “It is only fitting that a new, innovative food company would make the commonwealth its new home, and we are proud to make the investment that will turn that plan into reality.”
Stuffed Puffs received a funding proposal from the Department of Community and Economic Development for a $670,000 Pennsylvania First grant, $268,000 in Job Creation Tax Credits, and $140,400 in grants for workforce training and development.

“Stuffed Puffs is the easy new way to make a good old-fashioned American favorite S’mores, even better and it’s delicious also to eat right out of the bag,” says Richard Thompson, managing partner at Factory LLC the parent company of Stuffed Puffs. “At Factory LLC we seek innovation and we know Stuffed Puffs is a big winner and the new plant will support our continued growth, because we can’t make it fast enough.”

Stuffed Puffs initially launched its product exclusively at Walmart stores and will be expanding to other retailers in 2020.

Monday, November 11, 2019

REIT Investing 101: Real Estate + High Yields (Video)

Opportunity Zone: Update (Video)

Skanska Completes 465,000SF Inspira Medical Center in Mullica Hill NJ

by John Jordan
A grand opening ceremony was held on Friday celebrating the completion of the new five-story, 465,000 square-foot Inspira Medical Center Mullica Hill here.

The project is the first hospital to open in 45 years in Gloucester County, NJ. Skanska USA constructed the new hospital with partners Array Architects and Leach Wallace Associates using the Integrated Project Delivery approach, which is Skanska’s largest IPD project to date in North America. The approach, which brings together the client, designer and builder to align stakeholders and streamline project execution, created approximately 400 local full-time jobs to the construction site.
The new hospital will provide inpatient hospital care with 210 private rooms, state-of-the-art surgical suites, a modern emergency department with dedicated pediatric and senior ERs, and a maternity center. The project also includes a new central utility plant and solar field, which provides electrical power, heating/hot water and chilled water to the facility.

In addition to the new hospital, Skanska is also building Inspira Health’s new Leading-Edge Cancer Center, which is scheduled to open in early 2020. An attached addition to the main hospital building, the new cancer center spans 120,000 square feet and will provided comprehensive cancer services all under one roof. The addition will also be home to several suites devoted to non-cancer-related clinical and office functions.
This is the third major hospital project for Skanska USA in the Delaware Valley in the last year. Skanska is also building the Women and Children’s Health Building for ChristianaCare in Newark, DE which is slated for completion in 2020, and a new inpatient hospital for Children’s Hospital of Philadelphia in King of Prussia, PA.

Friday, November 8, 2019

PA Approves Funding for Four Expansion Projects

by John Jordan
Pennsylvania Gov. Tom Wolf announced on Wednesday new low-interest loan approvals through the Pennsylvania Industrial Development Authority for four business expansion projects in four counties.

State officials note the loans will enable the purchase, construction and renovation of facilities and will help create and retain hundreds of jobs across the commonwealth.
The state approved a $1.25-million loan to tool manufacturer Channellock, Inc. The 15-year PIDA real estate loan at a 1.75% reset interest rate and a $1 million 10-year PIDA machinery and equipment loan at a 2.75% fixed interest rate through the Economic Progress Alliance of Crawford County will allow Channellock to build a 35,000-square-foot addition to the company’s existing 64,427-square-foot manufacturing facility in Meadville.

The new space will be used for the packaging, warehousing, and shipping of finished goods, a portion of which is currently outsourced to a New York-based firm. The construction of the new addition will allow all outsourced operations to be relocated to the Meadville location and be completed by Pennsylvania employees.
This project, coordinated by the Governor’s Action Team, also involves the purchase and installation of new machinery and equipment, which will allow an increase in manufacturing speed and production capacity. The total project cost is more than $10 million. As a result of this project, 360 full-time jobs will be retained within three years, state officials note.

Equipment Reuse International LLC, a construction equipment manufacturer, was approved for a $399,999, 15-year PIDA loan at a 1.75% reset rate through Northwest Pennsylvania Regional Planning & Development Commission for the acquisition of a 50,085-square-foot building in Lake City Borough. Equipment Reuse International has outgrown its current facility and this relocation will provide the company with the additional space needed for current and future growth. The manufacturing space is divided into three 11,900-square-foot bays with overhead doors, and the company has entered into a lease agreement to lease one bay back to the seller. The total project cost is $900,000. The company is expected to retain three full-time jobs and create eight full-time jobs as a result of this project.

Steel pipe manufacturer Piling Solutions, Inc. was approved for a $1.25-million, five-year PIDA machinery and equipment loan at a 2.75% fixed rate through Northeastern PA Alliance to move operations into a larger 225,000-square-foot manufacturing space in Hanover Township, and acquire both used and new steel pipe manufacturing equipment to keep up with customer demand.
A new pipe mill machine will be custom built to allow the company to roll, weld, ultrasonic test, and clean the steel pipe in one seamless process. The company will retain all 37 existing full-time jobs at the new facility and will create 50 new full-time jobs within three years. This project, totaling more than $3.5 million, is part of a larger project coordinated by the Governor’s Action Team, with a total cost of more than $10 million.

The fourth state financing deal involve es Product Evaluation Systems, Inc., an industrial testing company, which was approved for a $601,352,10-year PIDA loan at a 2.75% fixed rate through Economic Growth Connection of Westmoreland to purchase specialized testing equipment that will increase the company’s capacity to test specifically for the aerospace, additive 3D printing, defense and power generation industries. The new equipment will be used in connection with a recent PIDA real estate loan approval that will fund the construction of a 12,150-square-foot pre-engineered steel building with a connecting corridor to the company’s existing 18,000-square-foot facility in Unity Township. The total project cost is $1,594,331. This project will support the retention of 42 full-time jobs and the creation of 8 full-time jobs within three years.

This year, PIDA has approved approximately $45.6 million in low interest loans that have resulted in ab out $94.2 million in private investment and supported 1,443 created and retained full-time jobs.

Wednesday, November 6, 2019

South Jersey Hospice Organization Inks Deal for New Headquarters

Samaritan Healthcare & Hospice signed a 27,600-square-foot lease for its new headquarters in Mount Laurel, New Jersey.

The hospice organization plans to relocate its corporate offices from Evesham, New Jersey, to the single-tenant building at 3906 Church Road in early 2020 upon completion of a complete interior and exterior renovation of the site.

Built in 1977, the single-story facility spans nearly four acres less than 12 miles from downtown Philadelphia.

Owning & Operating Commercial Real Estate (Video)

Tuesday, November 5, 2019

New Lehigh Valley Apartment Development Slated to Open in 2021

DLP Capital Partners, under its parent company DLP Real Estate Capital, secured $23 million in financing for the development of Dream Lehigh Valley, a proposed apartment complex in Wind Gap, Pennsylvania.

Plans for the 200-unit complex include a mix of one-, two- and three-bedroom units averaging 1,210 square feet in nine garden-style buildings. The property will also include a two-story clubhouse with lounge, game room, fitness center and pool, as well as a nature trail and pond.

The site spans 23 acres along East West Street within one mile of PA Route 33, a roadway that directly connects with Interstates 80, 78 and PA Route 22.

The project is slated to be completed in 2021.

DLP Real Estate Capital has more than $800 million in assets under management and has closed over 12,000 real estate transactions totaling more than $2 billion, according to its website.

Real Estate Refinance Pros and Cons - What You Should Know (Video)

Monday, November 4, 2019

Vanguard Expands Presence in Philadelphia Suburb

New York-based Turner Construction Co. completed a 225,000-square-foot facility that will house 1,350 members of Vanguard’s retail investor group on the firm’s 87-acre Malvern West campus in Frazer, Pennsylvania.

The four-story office building at 1300 Brennan Blvd. features an energy-efficient LED lighting system, enhanced energy commissioning and sections of green roof access.

Amenities include a variety of collaborative working spaces, a spacious outdoor terrace, health and wellness facilities and multiple dining options.

Philadelphia-based Erdy McHenry Architecture served as the project's architect.

Vanguard purchased the Malvern West property in 2012 along with two buildings dubbed Orion and Defence. The site is near the company’s main headquarters, comprised of approximately 115 acres and seven buildings.

Vanguard Head of Corporate Real Estate and Facilities Management Paul Begin said in a statement, “After nearly two years of construction, we're pleased to welcome our crew to the Neptune building. Designed to offer improved access to natural light and exterior views, the new office space provides crew with an exceptional environment that enables collaboration and enhances productivity.”

Vanguard, one of the world’s largest investment management companies, has managed $5.7 in global assets as of September, according to its website. In total, Vanguard comprises 56 offices located across 19 cities worldwide, employing approximately 15,600 people in Pennsylvania and more than 22,400 globally.

Keystone sells Blue Bell office buildings

Natalie Kostelni Reporter Philadelphia Business Journal
Keystone Property Group sold for $34 million Four and Five Sentry Park, a three-building office complex in Blue Bell, that totals 196,273 square feet.

Hudson Equities, a Jersey City, N.J., real estate company, bought the properties that were combined 93% occupied by 23 tenants at the time of sale. Four Sentry involves one building while Five Sentry consists of two buildings noted as Five Sentry East and Five Sentry West.

Keystone bought Four and Five Sentry in 2013 as part of a larger acquisition of Mack-Cali Corp.’s Philadelphia suburban office portfolio. The Conshohocken real estate company invested $5 million on improvements to the complex including adding amenities such as a fitness center, conference rooms, lounge and patio area. Other upgrades included a roof deck, facade work and new landscaping. The buildings were put up for sale in July 2018.

Full story:

REIT Market Minute - November 2019 (Video)

The Fed's View on Commercial Real Estate 2020 Part 1 & Part 2 (Video)

Part 1 Part 2

Friday, November 1, 2019

Multifamily Update with the National Apartment Association (Video)

Victory Brewing Co. Expands Footprint to Downtown Philadelphia

Victory Brewing Co. signed a lease in downtown Philadelphia for a new, 14,000-square-foot state-of-the-art brewery and taproom in Center City's Logan Square.

The taproom at 1776 Benjamin Franklin Parkway will feature a production brewing system, scratch kitchen, three bars, street level outdoor seating and a rooftop patio.

Victory Co-Founder Bill Covaleski said in a statement, "Victory's leadership position in craft beer since 1996 affords us a long perspective on the evolution of this movement and encourages us that now is the time to roll up our sleeves and start brewing in Philadelphia."

Victory rebranded its entire lineup in 2019, and launched new brands like Twisted Monkey and Cloud Walker. (Victory Brewing Co.)
The new two-level facility adds to Victory's other Pennsylvania locations in Parkesburg, Downingtown and Kennett Square. A collaboration between Victory and architecture firm Gerner Kronick + Valcarcel designed the Center City taproom.

The property is owned by local investment and development firm Pearl Properties.

"Victory is one of the iconic brands born out of eastern Pennsylvania. We are so excited to partner with Victory to bring new energy to this building and to the entire Center City area," Reed Slogoff, principal of Pearl Properties, said in statement.

The facility, which will have two indoor bars and one outside bars, is slated to open in the fourth quarter of 2020.

Lancaster Retail Market Remains One of Pennsylvania’s Strongest, Thanks to the Amish

The Amish, an ultra-traditional orthodox community of farmers, eschew nearly all the trappings of modern-day life and materialism. Ironically, they are the reason Lancaster, Pennsylvania, sports one of the state’s healthiest retail markets.

The county estimates that between six and eight million people have visited Lancaster County every year for decades, drawn by the peculiar Amish way of life, and these visitors spend about $2.2 billion annually. They support around 25,000 jobs, providing the firm base of demand needed to create a dynamic retail market.

That stands out in central Pennsylvania, which is largely a slow-growth, rural area where manufacturing still plays a key role in many local economies. Metro areas like Harrisburg, Reading and York certainly support retail markets that are dynamic in their own way, but many remain dominated by value-based chains, catering to a consumer base on operating on a budget.

This isn’t the case in Lancaster, and outsiders can be surprised by the area’s strong retail options. The city itself is vibrant, filled with boutique shops, hotels and restaurants, giving it an eclectic feel that is uncommon anywhere in Pennsylvania outside of trendy districts in Philadelphia and Pittsburgh. Demand is strong outside the city as well. The Tanger Outlets and The Shoppes at Belmont are anchored by chains like Whole Foods, which companion markets across central Pennsylvania cannot yet land.

What makes Lancaster retail all the more peculiar is beyond the horse and buggies, it’s not much different than its neighbors. Year-over-year employment gains slightly outpace nearby markets, but are below the national average. And while there are some large regional employers here, annual income levels of $68,000 are on par with figures in neighboring York, and not much higher than those in Reading or Harrisburg.

Around 550,000 people call the Lancaster metro area home – 35,000 of whom are strictly forbidden from supporting modern retail – and the latest census figures show population growth is below the national average.

But while the Amish are likely not shopping at Whole Foods, they bring in tourists who do.
Lancaster metro area’s occupancies are some of the country’s highest, even though construction here has outpaced all nearby markets over the past three years. The level of construction over the past decade is remarkable for a small Pennsylvania market, especially considering the struggles of the retail industry, which have limited construction and gains across the country.

"Lancaster isn’t immune to fallout of the industry’s revolution. The difference with Lancaster is demand is very high and fills the vacated spaces quickly."

"There’s been enough pent-up demand to quickly backfill vacant boxes, even large ones like former Kmart, with tenants like Aldi, At Home, Hobby Lobby, as well as fitness concepts, like Crunch Fitness and Planet Fitness. The majority of our new construction projects, like Shoppes at Belmont, Lime Springs Square and The Crossings are typically 100% leased, or very close before the projects are completed and ready for delivery."

Lancaster has been somewhat dormant for new retail development for many years, but Rohrbaugh believes the arrival of high-profile tenants like Whole Foods and Wegman’s boosted Lancaster’s profile.

"We have received attention from other national chains that would not have considered our market in the past, like PF Chang’s for example. Projects like these have placed us on the radar screen for all national retailers. We now have more tenants looking, than space available."

Delaware River Waterfront Corp. Issues RFP for 11-Acre Philly Waterfront Parcel

by John Jordan
The Delaware River Waterfront Corp. announced on Thursday the release of a Request for Proposal seeking teams to develop 11 acres on the central Delaware River waterfront.

The development opportunity features two parcels currently used as parking lots: the nearly eight-acre Market Street Site and the nearly four-acre Marina Basin Site. Both are zoned for high-density, mixed-use development and feature views of the river and Philadelphia skyline.

The chosen developer will design, build, and maintain a sustainable, mixed-use development consistent with DRWC guidelines. Teams are invited to respond to the RFP to develop one or both sites by Feb. 7, 2020.
Upon selection of one or more of the respondents, DRWC will execute a sublease with the chosen respondent(s). The sublease will provide for a term ending no earlier than 2075, with the potential for two 50-year options in favor of the developer, the RFP states.

According to the RFP, The Marina Basin Site is bounded by Spruce Street, Lombard Street, Columbus Boulevard, and the Penn’s Landing Marina Basin. It has approximately 875 feet of frontage along Columbus Boulevard, a major city arterial road, and 850 feet of frontage along the Penn’s Landing Marina Basin. The site is used as a surface parking lot and contains a building owned and used by DRWC for operations and maintenance. The sublease will require the developer to demolish the building as part of the redevelopment of the site.

The Market Street Site is bounded by Market Street, Chestnut Street, Columbus Boulevard, and the Delaware River. It has approximately 750 feet of frontage along Columbus Boulevard and 680 feet of frontage along the river. The site is used as a surface parking lot and for DRWC’s seasonal attractions, Blue Cross RiverRink Summerfest and Winterfest. The Blue Cross RiverRink and some of the associated amenities will be incorporated into the new park that is part of the Park at Penn’s Landing project, according to the RFP. The site is bisected by a viaduct road that connects Chestnut Street to Market Street. There is also an existing large concrete tram tower on the site, which DRWC intends to demolish within the next two years.
“The waterfront has become a top destination for residents and visitors of all backgrounds, and an increasingly attractive site for private development. Now with the new Park at Penn’s Landing moving into final design, the time is right to focus on redevelopment opportunities around it in order to maximize the synergy between these significant investments,” says Joe Forkin, president of the Delaware River Waterfront Corporation.

Over the past decade, DRWC has improved the waterfront by building public parks and attractions, streetscapes and trails. A new 12-acre, $225-million public park adjacent to Penn’s Landing will open in 2024.

Primark Signs Lease Deal at Fashion District Philadelphia

by John Jordan
International fashion retailer Primark has signed a major lease at the recently opened Fashion District Philadelphia here.

Multiple published reports state that Primark has signed a lease deal for just over 34,000 square feet at Fashion District Philadelphia, which is owned by a joint venture of PREIT an Macerich.
Primark will anchor the west end of the project with a high-profile location at the corner of 11th and Market streets along with cosmetic and beauty supply retailer Sephora and designer apparel company Kate Spade New York Outlet.

The Fashion District Philadelphia store will be Primark’s only location in Downtown Philadelphia. The retailer also has nearby locations at the King of Prussia Mall and the Willow Grove Park Mall. The Fashion District Philadelphia store will be Sephora’s second Center City location.
Primark joins fellow fast-fashion tenants Forever 21 and H&M to round out an array of apparel options at Fashion District Philadelphia.

The Fashion District Philadelphia launched on Sept. 19, 2019. Most recently, the District welcomed a new Forever 21 and will soon welcome RECPhilly and new-to-market tenants – AMC Theatres in November 2019 and Wonderspaces and Round One in December.

Earlier this month, flexible workspace firm Industrious reported it will be opening an approximately 47,000-square-foot location at the Fashion District Philadelphia.

Thursday, October 31, 2019

Philly Office's Game Of 'Musical Chairs' Is About To Start Up Again

by Matthew Rothstein Bisnow
In both Downtown Philly and the suburbs, more new office space is on the horizon than has been in years. With some deep-pocketed tenants eyeing trophy-class space, some large blocks are due to open up in older Class-A buildings in the next couple of years, and the class of tenants that would replace them is growing, according to multiple Q3 research reports from real estate services firms.

 For years, construction costs similar to those in New York have combined with far cheaper rental rates to make new construction an unrealistic proposition for the vast majority of office occupiers. But that lack of new construction has gradually applied pressure to the top of the market, and the upcoming run of expiring leases may finally be enough to burst it open.

 “The aging office stock and a flight to quality from occupiers, in order to attract the best talent, are kind of coming together. So there’s a limited availability of this type of product in the region, which is driving rents to the point where some are considering new construction.”

 A handful of large tenants have leases due to expire between 2021 and 2024, and at least some of them appear to be willing to pay the rent premium that comes from anchoring new construction. 

Among those reportedly in the market for new construction are law firm Morgan Lewis & Bockius and insurance giant Chubb, each of which has been linked with one of the two new office buildings Parkway Corp. is planning in Market West. 

Brandywine Realty Trust, whose FMC Tower is the most recent ground-up, multi-tenant office development, is also reportedly courting Chubb to anchor a 34-story office tower as the first new construction of its Schuylkill Yards megaproject. Farther west, One uCity Square could accommodate office as well as lab space.

 In suburban submarkets like Conshohocken and King of Prussia, a similar dynamic is at play. Trophy-class office space is so scarce that tenants like AmeriHealth Caritas and AmerisourceBergen opted to lease an entire build-to-suit each.

AmeriHealth will take a five-story, 378K SF building in Equus Capital Partners' Ellis Preserve in Newtown Square, while AmerisourceBergen will have its 11-story, 429K SF corporate headquarters at Keystone Property Group's SORA West in Conshohocken. 

One new construction opportunity remains: Brandywine Realty Trust's 100K SF building at 650 Park Ave. in King of Prussia, for which it has already demolished the older model that stood on the site.

 None of the proposed downtown buildings seem likely to get underway until they secure a commitment for at least 50% of their office space, but in order to be ready for some of the major expiring leases, those commitments would need to solidify by the end of next year. Alternately, those tenants could negotiate short-term extensions with their current digs if a new home isn't ready.

 Whenever those occupiers vacate for new digs, they will be leaving behind large blocks of space in Class-A buildings. But in recent years, those not-quite-trophy buildings have had few problems backfilling behind their major departures and densifying tenants with multiple smaller leases. FMC left behind 1735 Market St. in 2016 to anchor its own tower across the Schuylkill, and while the 1.3M SF tower could be considered trophy-class, it only has one 57K SF block of space still vacant today. 

Across the street, 1700 Market St. has backfilled space Deloitte gave back in short order. “Not being trophy-class does not mean that these buildings are undesirable; they’re still Class-A and you’ll see companies looking to move into high-quality buildings. That really has been the story of Philly since 2000, with lower-quality office buildings being converted to multifamily or hospitality." Developers removing obsolete office stock by converting it has shortened the list of available blocks of space, kept vacancy rates healthy and helped to grow the residential population of vibrant Center City. What office space remains on the market has had good enough bones and location to remain Class-A properties through renovations and updates over the years.

"What has happened in the past 20 years is that the office stock has been improved. So it’s a bit of musical chairs when somebody leaves behind a space, but Philadelphia has proven to have strong demand long-term, and backfill the space left behind.” Among the most frequent occupiers to move into Class-A and not trophy buildings at the moment are the "Eds and Meds," Philly's economic engine. As research and medical space are such a precious commodity in University City, Drexel University and the University of Pennsylvania have moved some back-office functions to Center City.

 Jefferson's voracious expansion included taking over the 1101 Market St. building Aramark left behind for 2400 Market St. Another likely backfill candidate in the next few years is coworking, multiple reports said. Though WeWork may no longer be in expansion mode overall, it recently took an additional floor at its under-construction location in East Market's 1100 Ludlow. Even without any further locations for the embattled industry leader, there are around 270K SF of coworking requirements in Philly. 

Though some macroeconomic factors may be worrying for global markets, Philly looks like it is still playing to its slow-and-steady nature. In the past two years, job growth in the Philly metropolitan area has outpaced the rest of the top 25 cities in the U.S., Center City District reports — a reversal of decade-plus trends. The fact that new construction is even being realistically discussed at all in Philadelphia is a sign that its business community believes in its ability to expand and attract talent. Philly has been patiently setting itself up for new construction, and it seems ready. “Even though we’ve already seen significant densification, the fact that it hasn’t really affected vacancy speaks to the strength of the market,” Dominguez said.

Commercial Real Estate Depreciation Explained (Video)

Wednesday, October 30, 2019

Friedman Signs Office Lease at Four Greentree Centre

Accounting, tax and business consulting firm Friedman LLP signed a 12-year lease for 20,985 square feet at Four Greentre Centre in Marlton, New Jersey.

The 62,069-square-foot, four-story building at 601 Route 73 North was completed in 1985. The Class A facility spans nearly four acres less than 14 miles from downtown Philadelphia.

Friedman’s lease includes the entire fourth floor and about 3,275 square feet on the third floor.

Logistics and Manufacturing Demand Fuels Harrisburg's Hot Industrial Market

Harrisburg's industrial market remained healthy through the third quarter, as sustained demand for logistics and manufacturing space kept vacancies tight, even as heavy levels of new supply arrived in market.

Occupancies are right at historic norms, even though over 2 million square feet of new supply arrived over the past 12 months. Harrisburg's prime location offers distributors easy access to major ports in Philadelphia and New York, and produces exceptionally strong demand for logistics space.

Smucker’s filled the most space in the third quarter, occupying close to 1.2 million square feet of space at 801 Centerville Road, a speculative facility completed earlier this year.
The market’s tight occupancies have enabled owners to see strong rent growth for several years in a row. Historically, the market has supported an annual increase of about 2%, but this figure has been surpassed for four years running, and year-over-year gains were over 4.5% at the end of third quarter.

Logistics properties are the market’s strongest performers. These assets have seen growth of over 5.5% in the past 12 months, and during the past four years, routinely eclipse all other industrial property types.

The strong growth continues to attract investor attention. Year-over-year volume at the end of the third quarter was close to $315 million, nearly double historic expectations. Several major deals finalized during this time, the most notable being the acquisition of 5500 Linglestown Road. The 88,000-square-foot facility sold in August to a private buyer for $4.8 million, or nearly $55 per square foot.

The fourth quarter is off to a strong start as well, thanks to the acquisition of a 55,000-square-foot warehouse on Fisher Street in Halifax, which closed in mid-October.

"Harrisburg is very attractive to industrial users in the logistics/distribution industries largely because of the infrastructure, which offers access to approximately 40% of the U.S population and 45% of the Canadian population in a day’s 11- hour truck drive."

"These factors are advantageous to users in manufacturing and specialized industries as well, who further benefit from the long-standing history of manufacturing in the area, availability of skilled labor and existing heavy-industrial properties that offer economical price points."

"We have a friendly tax structure, and within an hour can be on I-80, I-99, I-81, or the turnpike. A lot of demand is for the million-square-foot logistics centers, but we have more than enough demand for smaller specialized facilities, too. So much so that we are hard pressed to find space for tenants."

 Harrisburg shows very little space available in specialized industrial assets, and with most construction accommodating the logistics sector, this will likely remain an owner’s market for the next few years.

PhilaPort Opens First Terminal in More Than 45 Years

by John Jordan
Officials at PhilaPort officially opened the $110-million 155-acre Southport Auto Terminal and Vehicle Processing Center on Tuesday, the first new terminal at PhilaPort in more than 45 years.

Pennsylvania Gov. Tom Wolf along with the facilities operator Glovis America’s CEO and head of Americas of Hyundai Glovis JinWoo Jeong cut the ribbon marking completion of construction and the opening of the state-of-the-art facility on Tuesday.
Glovis America will process more than 200,000 Hyundai, Kia and other original equipment manufacturer vehicles this year at the processing center. “Pennsylvania needs a top tier Port facility to compete in global markets,” said Jeff Theobald, PhilaPort executive director and CEO. “This new facility the best of its kind on the East Coast.”

The new VPC at Southport is equipped with a state-of-the-art body shop including two car washes with two double prep stations and two joined double paint booths. The VPC at Southport is capable of servicing 200 cars per hour and fully processing more than 1,000 cars daily.
Many of the unique features of this site are not found in other Ports. Southport was built as one continuous facility, located directly adjacent to PhilaPort’s Pier 122—a dedicated auto berth. The layout allows autos to be discharged from the vessel and driven straight to the first point of rest, located on the same terminal, PhilaPort officials state. The facility is also the only one of its kind on the East Coast built above the 100-year floodplain. Southport is located at a unique nexus of deep-water and highways and is serviced by two class I railroads—CSX and NS—with additional service by CN.

Gov. Wolf said the terminal is projected to stimulate an estimated $124 million in economic activity, as well as create as many as 2,500 jobs.

Tuesday, October 29, 2019

Preleasing Kicks Off at The Station at Willow Grove Apartments

J.G. Petrucci Co. has revealed preleasing has begun for The Station at Willow Grove, a 275-unit luxury apartment complex in Willow Grove, Pennsylvania.

Move-ins for the mid-rise property at 91 York Road are slated to begin in December. The four-star complex includes a mix of studio, one- and two-bedroom units ranging from 544 to 1,224 square feet.

Named for the adjacent train station, The Station at Willow Grove aims to bring new life and energy to an urban area that is in need of high-end housing to support the recent influx of new business. The property, which was assembled with 11 properties to create a six-acre parcel, will also feature retail and office space for lease.

J.G. Petrucci Principal Greg Rogerson said in a statement, "At this point the covered parking garage is complete along with the pool, two courtyards and over half of the apartment homes. Our leasing team has seen incredible activity thus far and we look forward to moving residents into the community."

Founded in 1987, J.G. Petrucci has completed more than 600 design/build projects for a diverse group of local, regional and national corporations, according to its website.

Philadelphia's Horsham/Willow Grove Suburb Readies for Wave of New Apartment Units

Philadelphia's Horsham/Willow Grove suburb has hosted very little new apartment construction over the past two decades.

Developers have generally focused their attention in and around Center City, as well as in Philadelphia’s western suburbs, which include the metropolitan area’s largest center of suburban white collar employment.

While corporate expansions are much more common along Philadelphia’s Main Line suburbs to the west of the city than they are in the northern suburbs, Horsham/Willow Grove still has a large base of high-paying employers including Prudential, Toll Brothers and Penn Mutual Life Insurance.

Solid apartment demand drivers combined with minimal new construction has produced rent growth averaging 3.9% annually over the past 36 months, which has given developers the confidence to build.

There were nearly 1,000 apartment units under construction at the start of the fourth quarter. Most new construction is contained in the Promenade at Upper Dublin, a highly amenitized property that will contain 400 units and more than 100,000 square feet of planned retail space. While this is the submarket’s largest supply wave in a generation, there are reasons to believe demand is strong enough to quickly absorb the new units.

In total, the submarket contains about 12 million square feet of occupied office space, which based on a simple usage factor of 200 square feet per worker, holds about 60,000 office workers.

The submarket also supports its own respectable live/work/play scene.

Horsham and Willow Grove also have grocery stores, shopping malls and a strong road network with the turnpike and Route 309 nearby.

The new supply is also well positioned to capitalize on the submarket’s strengths. The Promenade at Upper Dublin is rising just one block from the Horsham Gate Shopping Center, which contains a Fresh Market grocer, and is adjacent to a Walmart, Sam’s Club, Petsmart and a range of restaurants.

The Station at Willow Grove is set to begin move-ins during December, and lists one-bedroom rents ranging from $1,300 per month for studio apartments to $2,150 per month for 969-square-foot units. The 175-unit project is across the street from the Willow Grove station on the SEPTA Warminster Line and less than a mile from the Willow Grove Mall.

Vacancies and free rent discounts are likely to rise temporarily among the area’s existing stock of amenitized apartment properties, as long-time owners compete with these new projects for tenants. The Station at Willow Grove is offering to waive December rent for tenants moving in during the first month of the project’s opening.

Nonetheless Horsham/Willow Grove is long overdue for more high end rental options and if the project’s lease up successfully, institutional investors who previously had not considered this submarket will likely begin eyeing the opportunity to add some of these new properties to their portfolios.

Multifamily Market Forecast with RealPage (Video)

Morgan Properties Buys 18,000 Unit Portfolio from Embattled Firm

by John Jordan
Locally-based Morgan Properties has acquired nearly 80 apartment communities encompassing approximately 15,000 units across eight states.

Morgan Properties acquired the portfolio from Pittsford, NY-based Morgan Communities, which has no relation to the Pennsylvania-based company.
Morgan Communities’ CEO Robert Morgan, his son Todd and two other Morgan Communities’ employees were indicted by a federal grand jury in May on wire fraud and bank fraud charges in connection with an alleged half-billion-dollar mortgage fraud scheme.

No financial details of the purchase transaction by Morgan Properties were announced. The transaction increases Morgan Properties’ total portfolio to more than 75,000 units in 15 states, making it one of the five largest multifamily owners in the US.
Since 2012, the firm has acquired more than $7 billion in total acquisition volume comprised of 50,000 units. Following this transaction, Morgan Properties has also agreed to acquire an additional 3,000 units from Morgan Communities.

The geographic concentration of the acquired portfolio is primarily in upstate New York markets, including Rochester, Buffalo, Syracuse, and Albany, and Pennsylvania submarkets that include Pittsburgh and Harrisburg. The portfolio also consists of assets in Memphis; Chicago, Huntsville, AL and Cleveland, which all represent new markets for Morgan Properties.

The firm notes that the deal solidifies Morgan Properties’ portfolio concentration in the Mid-Atlantic and Northeast regions and its position as the largest multifamily owner/operator in the states of Pennsylvania, Maryland and New York.
Jason Morgan, principal at Morgan Properties, says the firm assumed property management across the acquired portfolio in July and has transitioned more than 750 employees to its team. Morgan Properties now employs approximately 2,000 workers.

Monday, October 28, 2019

Amazon Continues Philadelphia Expansion

Online retail giant Amazon has signed a long-term lease for 165,000 square feet at Gateway Business Center in Philadelphia.

Amazon plans to move in to the single tenant industrial building at 7575 Brewster Ave. in the second quarter of 2020. Built in 1981 on 14.6 acres, the single-story facility includes 20,000 square feet of office space, 20 loading docks, one drive-in bay and a 20-foot clear ceiling height.

The space is currently used as a distribution center by Veritiv Corp., a logistics company headquartered in Atlanta. The building is located two miles from Philadelphia International Airport.

Jim Cramer breaks down the bright spots and low points in real estate (Video)

Jim Cramer breaks down the bright spots and low points in real estate investment trusts from CNBC.

Prologis to Buy Liberty Property Trust for $12.6B

by John Jordan
Prologis announced on Sunday it had struck a deal to acquire locally-based Liberty Property Trust for $12.6 billion.

The deal is reflective of the high demand for industrial warehouses, particularly those that are located in high-demand, last mile delivery locations—indeed, the transaction will deepen San Francisco-based Prologis’ presence in target markets such as Lehigh Valley, Chicago, Houston, Central PA, New Jersey and Southern California. The assets trading include a 107 million square foot logistics operating portfolio, 87% of which overlaps with key markets; 5.1 million square feet of logistics development in progress; 1,684 acres of land for future logistics development with build-out potential of 19.7 million square feet and 4.9 million-square-foot office operating and development portfolio.
As part of the deal, Prologis will sell off $3.5 billion of assets. This includes $2.8 billion in non-strategic logistics properties and $700 million of office properties.

The board of directors of Prologis and the board of trustees of Liberty have each unanimously approved the transaction.
The deal is expected to close in the first quarter of 2020.

The high water mark for these deals was closed by Blackstone in its acquisition of GLP’s US warehouse portfolio for $18.7 billion. Prologis, much like Blackstone, is also in acquisition mode for industrial assets. In July, the REIT agreed to buy Black Creek Group’s investment platform Industrial Property Trust in an all-cash transaction of $3.99 billion. This transaction expanded its position in Southern California, the San Francisco Bay Area, Chicago, Atlanta, Dallas, Seattle and New Jersey.

Prologis and Liberty Property Trust say the deal is expected to create immediate cost synergies of $120 million from corporate general and administrative cost savings, operating leverage, lower interest expense and lease adjustments. Initially, this transaction is expected to increase annual core funds from operations per share by $0.10-$0.12. Upon stabilization of the acquired development assets, completion of the planned non-strategic asset sales and redeployment of the related proceeds, annual stabilized Core FFO per share is forecasted to increase by an additional $0.04 per share for a total of $0.14-$0.16.
Further, there are future synergies with the potential to generate $60 million in annual savings, including $10 million from revenue synergies and $50 million from incremental development value creation, the companies add.

Under the terms of the agreement, Liberty shareholders will receive 0.675x of a Prologis share for each Liberty share they own. BofA Securities and Morgan Stanley are acting as financial advisors and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Prologis. Goldman Sachs and Citigroup are acting as financial advisors and Morgan, Lewis and Bockius LLP is serving as legal advisor to Liberty.

Saturday, October 26, 2019

Phoenix Nexus Enterprises Affiliate Buys One Summit Square for New Headquarters

An affiliate of Phoenix Nexus Enterprises has purchased One Summit Square in Langhorne, Pennsylvania, from Country Life Insurance Co.

The 67,219-square-foot office building at 1717 Newtown Langhorne Road was completed in 1985. Major tenants in the four-story facility include Comcast, Ricoh and US Congressman Brian Fitzpatrick.

The buyer, a locally-based operator of quick-serve restaurants, plans to relocate its headquarters to the building, occupying 13,000 square feet.

Wednesday, October 23, 2019

Multifamily Continues to Flex its Muscles in Philly, NJ

by John Jordan
The multifamily sector throughout the greater Philadelphia region, as well as in North and Central New Jersey, is very strong with significant investment activity.

The firm reports that at the end of the third quarter it had arranged a total of 93 deals (year-to-date) involving 9,232 units sold for $1.38 billion.

“Investors—from private equity funds and institutional entities to private individuals and family offices—are upping their acquisition ‘game’ throughout the New Jersey, Greater Philadelphia and New York State metros as the end of the year draws closer.”

Investors are seeking multi-family properties primed for capital improvements and/or recently delivered new-construction properties that serve as neighborhood redevelopment anchors. He also says the highest velocity of activity is being generated by a seasoned-owner demographic that includes equity funds with “plenty of dry powder who are aligning themselves with local operators. Regardless of vintage or class, multi-family investments across the board are poised for asking-rent and property value acceleration.”

The North and Central New Jersey, to the Greater Philadelphia Metro/Southwest Jersey and New York State, are showing signs of increased investment activity. During the third quarter sales totaled 28 deals valued at more than $560 million, encompassing 3,557 units. Top submarket benchmarks involved 1,298 units/$199.28 million in Essex County; 760 units/$140.38 million in Bergen County; and 198 units/$53.91 million in Hudson County.

Greater Philadelphia market specialists arranged sales involving a total of 519 units sold for $83.25 million.

“Demand has kicked in throughout the Greater Philadelphia Metro, which includes Philadelphia proper as well as South Jersey and the city’s northern and western suburbs. While Philadelphia has been steadily drawing new multi-family investment during the past 10 years or so, vacancies are dropping and annual average rent growth has risen to more than 4.6%—all good indicators of an ever-strengthening metro.”
In the second quarter of this year, the Livingston, NJ-based brokerage firm reported it had closed 65 transactions involving 5,675 multi-family units that old for more than $820 million.

JV Sells King of Prussia Office Building for $37.9 Million

A joint venture between Taconic Capital and Cohen Equities, both of New York, has sold an office building in King of Prussia, Pennsylvania, to local investment firm Pembroke Capital for $37.85 million, or about $230 per square foot.

The 164,360-square-foot building at 200 North Warner Road spans 12.1 acres located a quarter-mile from the King of Prussia Mall. The seller completed a $4.2 million comprehensive modernization program on the building, which was built in 1983.

Upgrades for the four-story building included enlarging and remodeling the lobby, creating all new common areas and restrooms, full replacement and addition of windows, the addition of two common area tenant conference rooms and a lobby grab n’ go.

The capital investment led to rental rates increasing approximately 35% at the property, according to a press release.

Deloitte's 2020 CRE Economic Outlook: Digitization and Tenant Experience (Video)

Office Construction Activity Picking up in Philly

by John Jordan
The office construction pipeline is bouncing back from the last two years when new construction in the city failed to break the 1 million-square-foot threshold.

The third quarter office report states that new office development is now forecast to be just below 2.5 million square feet by the end of 2020.
Occupancy gains in Philadelphia’s CBD during the third quarter pushed year-to-date net absorption into positive territory. University City saw a significant portion of these gains with Drexel University moving into multiple floors at 3675 Market St. Another notable move-in included the Biden for President Campaign at Centre Square.

The region’s vacancy rate stood at 14.7% at the end of the third quarter. The overall average asking rent stood at $27.18-per-square-foot and net absorption totaled 809,683 square feet. At present, there is 834,619 square feet of office space under construction in the area.
Modest rent growth across the metro area was driven primarily by asking rate increases in downtown and the suburbs, with the latter posting a $0.43 uptick, quarter-over-quarter. Additionally, Class A rates grew in the CBD, where the lack of available space in trophy assets continued to put upward pressure on rents.

“Tenants in the Philadelphia region continue to invest in their office space as a tool to recruit and retain the best talent in today’s competitive labor market. This dynamic has fueled a competitive real estate environment, with companies starting the search for office space much sooner as desirable options are limited. This continues to push rental rates to new historical highs and drive the need for new office development to meet the demand for today’s new workplace.”

Recently, the real estate market in Philadelphia has seen the emergence of the e-sports industry in the city. In September, a partnership of Comcast Spectacor and the Cordish Cos. broke ground on a 3,500-seat e-sports arena in South Philadelphia, which will house the Philadelphia Fusion, among other related events.
Multiple e-sports tenants are in the market for office and event space in Downtown Philadelphia. Interest from these unique users for space downtown could increase landlords’ openness for more creative build outs capable of housing the types of events e-sports tenants need, the report states.

On the capital markets front, the most notable investor sale of the third quarter was Rubenstein Partners’ acquisition of Chesterbrook Corporate Center for approximately $134-per-square-foot.

Overall, the Philadelphia office market showed signs of healthy interest from investors as sales volumes persisted near recent historical highs.

Tuesday, October 22, 2019

Anpac Bio Relocate US Headquarters from San Jose to Philadelphia Region

by John Jordan
A growing San Jose, CA-based biotech firm has announced plans to establish its second clinical laboratory site and new U.S. corporate headquarters here at Spring House Innovation Park.

Anpac Bio, which signed a 6,724-square-foot lease at the Montgomery County complex, will be joining a list of life science tenants at the campus, including Jefferson Institute Bioprocessing, among others. Anpac is expected to move into its new headquarters in March of 2020.
Anpac Bio is a biotechnology company focused on early cancer screening and detection. With multiple certified clinical laboratories in China, Anpac Bio markets a suite of cancer screening and detection tests, including CDA, bio-chemistry, immunology and genomics tests.

“We are very excited to be moving forward with our U.S. corporate headquarters and laboratory in Pennsylvania. The state has a mature life sciences ecosystem and a supportive start-up environment that will allow our U.S. business to lay the foundation for future success,” says Shaun Gong, Anpac’s U.S. President.
Anpac Bio CEO Dr. Chris Yu adds that the firm’s second clinical laboratory in Philadelphia will allow the firm to work with its hospital principal investigators and partners on the East Coast much more closely and effectively.

Spring House Innovation Park is a suburban Philadelphia multi-tenant 600,000-square-foot research campus developed and owned by MRA Group. The complex offers move-in ready and build-to-sure laboratories, state-of-the-art research and development facilities, and Class A office and co-working space.
Earlier this year, Philadelphia was ranked a top 10 life sciences market in the nation. With 51,000 people working in the life sciences industry, Philadelphia is home to one of the top talent pools in the country, beating out both New York City and Los Angeles.

MRA Group announced recently that its chief operating officer Phil Butler will serve on the panel at the Molecule to Market Conference presented at the Quorum at the University City Science Center on October 30. Butler will feature Spring House Innovation Park (as an integral real estate project shaping the Philadelphia life sciences sector.

Monday, October 21, 2019

Thursday, October 17, 2019

Real Estate Cash Flow Statement Breakdown (Video)

How Older Apartments Can Competing with New Construction (Video)

Slate Property Sells Dual-Anchored Retail Center in Philly Suburb

by John Jordan
New York City-based Slate Property Group has sold the nearly 75,000-square-foot Country Line Plaza in the Philadelphia suburb of Souderton.

The property that is anchored by Big Lots and a new The Edge Fitness Club. The retail center was acquired by an unnamed private investor. No financial details of the transaction were disclosed.
The 90.3% leased center is also home to Integrated Medical Care, Pho Palace, Akira Sushi and DT Nails & Spa. Situated on 7.67 acres at 15501 Bustleton Ave., the property is visible to approximately 40,000 vehicles a day from frontage along Bustleton Avenue and County Line Road.

The deal for the property shows that demand remains high for infill, high barrier-to-entry retail real estate within the Philadelphia Metro.

County Line Plaza is 20 miles from Center City Philadelphia within an infill area that is being revitalized by the Far Northeast District plan. More than 94,700 residents earning an average annual household income of $88,839 live within a three-mile radius of the property.

Wilkes-Barre Industrial Building Acquired by Growing Distribution Firm

by John Jordan
PSI, a pipe distribution company, has acquired a 225,000-square-foot industrial building here and will expand and relocate operations from Mountain Top, PA.

PSI purchased 827 Sans Souci Parkway from Medley Investments for $4.2 million. The company has pledged to invest more than $9 million to renovate the facility, including the addition of a pipe mill, which will allow it to develop its manufacturing operations. The capital improvement project is expected to create 50 new, full-time jobs and retain 37 existing jobs for Pennsylvanians over the next three years.

“The Wilkes-Barre industrial real estate market is thriving for both property owners and investors alike.”

The property’s proximity to to I-81 and Routes 11 and 309 is an advantage for PSI. In addition, 827 Sans Souci Parkway is a crane and rail-served heavy industrial building that will be beneficial to the growth of PSI as it further develops its manufacturing operations.

$60M Industrial Park in Suburban Philly Hits Key Milestone

by John Jordan
Pennridge Development Partners reports it has completed the first building in its $60-million master-planned Pennridge Airport Business Park here.

The business park, located at 1100 Ridge Road in Perkasie, Bucks County, PA is currently one of the only master-planned, multi-phase developments in suburban Philadelphia. Building 1, a 100,000-square-foot tilt-up construction industrial facility is now complete and awaiting tenant specific improvements. while adjacent to it the site for Building 2 is fully entitled, pad-ready, and able to accommodate more than 100,000 square feet.
At full build-out, the campus will contain six buildings of approximately 700,000 square feet. Proposed plans call for a walking trail, hotel and brew pub.

Situated on the grounds of the Pennridge Corporate Airport, Pennridge Airport Business Park provides access to the one of the region’s largest corporate airports and a 4,215’ paved runway. The site is located less than three miles from Route 309, which provides access to I-476 via both the Lansdale Interchange and the Quakertown Interchange. Route 309 also provides access to the Lehigh Valley and both I-78 and I-276, Pennridge Development states.
“Building 1 of the Pennridge Airport Business Park is the culmination of many years of hard work and could not have been achieved without the support of individuals from Perkasie Borough and the State of Pennsylvania. This is an exciting project which we are confident will bring jobs and industry to Perkasie Borough.” an official from property developer Pennridge Development Enterprises states.

On hand at the groundbreaking ceremony held earlier this month were: Robert Brink, president of Pennridge Development Enterprises; Pennsylvania Senator Steve Santarsiero, Pennsylvania State Representative Craig Staats, Aliyah Stanger of the PA Department of Community and Economic Development and Perkasie Borough Manager Andrea Coaxum.

Tuesday, October 15, 2019

New Jersey's Warehouse Space Surges With US Logistics Demand

Northern New Jersey is undergoing unabated demand for U.S. industrial real estate as tenants snap up space at large new distribution properties.

A five-building development anchored by electronics retailer Best Buy is one of the latest massive complexes to open, while companies such as home improvement chain The Home Depot, Japanese fashion retailer Uniqlo and e-commerce giant Amazon are among those signing big logistics leases in the Garden State.

Industrial real estate is a surging sector in markets across the nation, with demand driven by the rise of e-commerce and consumer expectations of quick, sometimes same-day, delivery. This movement is exacerbated in New Jersey, where the scarcity of modern, top-of-the-line warehouse space and a lack of vacant land to build it, has meant that need has far exceeded supply. The state is a popular choice for distribution hubs because of its central location in the densely populated region around the most-populous U.S. city, New York, and proximity to ports and highways.

So far this year, 6.3 million square feet of new industrial space has been completed in New Jersey, including 1.5 million square feet during the third quarter. That's caused industrial vacancy rates to drop below historical averages.

"Demand for new product remains strong, evidenced by 69.1% preleasing on 2019 deliveries. This velocity shows no sign of slowing down, and the development community is responding. In fact, we are anticipating more than 18 million square feet in the industrial pipeline through mid-2021."

There is now 8.1 million square feet of warehouse space under development, possibly lifting construction volume to a century-high mark in 2020, according to Price.

Developers are trying to help replenish limited top-flight warehouse supply while there's strong tenant interest, he said, as the U.S. economic expansion reached its longest stretch in history this summer.

And 12 of the 17 facilities under construction are larger than 300,000 square feet, with four more than 800,000 square feet, according to Price.

‘Demand for Everything’

Last week, Rockefeller Group held a ribbon-cutting at its Rockefeller Group Logistics Center, a 2.1 million-square-foot industrial park in Piscataway, New Jersey, that's fully leased to Best Buy, heating and cooling solutions provider Fujitsu General, office furniture maker Humanscale, cosmetics company Kiss Products and tech equipment seller SHI. The developer is also constructing a 900,022-square-foot industrial facility, called 10Edison, at 2195 State Route 27 in Edison.

"What you’re finding is folks are out looking for space, and there’s really not a lot of options for them,” said Mark Shearer, senior vice president and regional development officer for Rockefeller's New Jersey-Pennsylvania region. "There’s user demand for everything that we started. The way it’s working is as soon as we get permitted and start really putting concrete down, we really start getting interest.”

There's also been interest in tenants buying their buildings, as well as third parties looking to invest in industrial developments.

Kiss acquired its Piscataway building from Rockefeller this year for $66 million. And DWS Group bought the two buildings leased by Best Buy, Fujitsu and Humanscale for $184.1 million.

Some of the larger New Jersey industrial projects in the works now include:

  • A joint venture of Advance Realty Investors, Greek Development and PGIM Real Estate is building the Linden Logistics Center, a 4.1 million-square-foot complex in Linden.
  • Bridge Development Partners is constructing Bridge Point 78, a 4 million-square-foot logistics hub on the site of a former Ingersoll Rand plant in Phillipsburg in Warren County.
  • Russo Development and Forsgate Industrial Partners are developing Kingsland Meadowlands, a 3 million-square-foot logistics center on a 718-acre site that spans Lyndhurst, Rutherford and North Arlington in the North Jersey meadowlands.
  • Lincoln Equities Group is redeveloping a site at the former Military Ocean Terminal in Bayonne into 1.4 million square feet of industrial warehouse space called Lincoln Logistics Bayonne.
  • Crow Holdings Industrial is developing a 925,000-square-foot warehouse at 50 Veronica Ave. in Franklin Township, its first foray into New Jersey.

Big-Box Leases

Two retailers have accounted for the biggest industrial leases so far this year in New Jersey, in the second and third quarters, showing the appetite for big-box space. Home Depot has committed to 1.3 million square feet at 225 Elm St. in Perth Amboy. And Uniqlo has leased 975,761 square feet at 942 Memorial Parkway, which is part of the Bridge Development industrial park in Phillipsburg, according to third-quarter reports.

Amazon is also increasing its industrial footprint in the state. Bridge Development is building a new 625,000-square-foot warehouse for the Seattle-based company at 495 Weston Canal Road in Somerset. New Jersey. In addition, Amazon has leased 243,751 square feet of industrial space at 118 Moonachie Ave. in Carlstadt, according to Russo's third-quarter report. Amazon will soon have 11.7 million square feet of industrial space in New Jersey, the report said.

Industrial vacancy rates in New Jersey have hit lows not seen in the past five years. In northern New Jersey, the vacancy rate is averaging 4.4%. In its third-quarter report, the industrial vacancy rate for northern and central New Jersey combined at 4.8%.

Many were bullish because of some fundamentals they cited.

"E-commerce sales have edged higher by 13.3% compared to one year ago and continue to push warehouse markets both locally and nationally to new heights as the need for distribution centers and last mile facilities persist at a brisk rate."

"As the supply of land shrinks, developers will take on a growing number of redevelopment projects to keep up with demand. The restocked construction pipeline is expected to drive more big-box leasing in future quarters as large tenants create new requirements."

Safety Firm Inks 39,000 SF Deal in Upper Macungie; Denholtz Sells Tampa Parcel

by John Jordan
UL Verification Services has signed a lease renewal for 38,510 square feet of flex industrial space at Denholtz Properties’ 7036 Snowdrift Road building here in the Lehigh Valley.

The global independent safety science company was represented.
7036 Snowdrift Road is a 96,235-square-foot flex industrial building located on 8.47 acres in the Iron Run Business Campus in Upper Macungie, just west of downtown Allentown.

The property offers access to Interstate 78 and the Northern Extension of the Pennsylvania Turnpike interchange as well as PA Routes 33 and 309. The building features ample tailboard loading facilities, optimally designed bay spacing and a well-landscaped park-like setting.
“Record-high prices and limited availability in Lehigh Valley’s industrial markets have continued to drive strong demand for industrial space,” says Kristine B. Hurlbut, SVP of leasing at Denholtz Properties. “Through offering well-located and adaptable multi-tenant flex spaces like 7036 Snowdrift Road and 969 Postal Road in Allentown, we provide companies with spaces tailored to their needs and help them run their businesses more efficiently in this competitive market.”

Denholtz Properties, which has a portfolio of office, industrial and retail space in New Jersey, Pennsylvania and Florida, also announced the sale of a parcel of land adjacent to its 1000 N. Ashley Avenue office building in Downtown Tampa to Mill Creek of Boca Raton, FL. The sale will pave the way for Mill Creek to construct Modera Tampa, a luxury mixed-use apartment community in the heart of Tampa’s emerging River Arts District.

No financial terms of the transaction were disclosed.
Situated at the intersection of North Ashley Drive and West Tyler Street, Modera Tampa will be steps away from the Straz Center for the Performing Arts, the Tampa Riverwalk, Curtis Hixon Waterfront Park, museums and several vibrant dining, shopping and entertainment options within Downtown Tampa.

Targeted for completion in the fall of 2021, the eight-story Modera Tampa will feature 353 apartment homes and approximately 13,000 square feet of ground-floor retail space. Modera Tampa will offer studio, one-, two- and three-bedroom apartment homes with a rooftop deck with outdoor dining areas, a 24-hour fitness center with a full suite of fitness programming, a pet spa lounge, barbecue grills and fire pits, workspace and a resident clubroom with entertainment and lounge areas.

“Situated near the top of every list of the nation’s hottest real estate markets, Tampa has become the place to be for real estate developers, investors, businesses, and residents alike,” says Steven Denholtz, CEO of Denholtz Properties. “As the owners of one of the city’s premier office buildings, we welcome Mill Creek to Downtown Tampa. We look forward to watching their team leverage their decades of residential development experience to create a unique and amenity-filled space that will help further reinforce downtown Tampa’s position as one of nation’s most desirable locations.”

Modera Tampa will be located next door to The Times Building, Denholtz Properties’ 10-story, 180,000-square-foot office building. Denholtz Properties recently completed a year-long $1.5 million renovation project at the building that included a complete lobby renovation, new restrooms, the addition of a new fitness center and a café operated by Inside the Box Catering.

Monday, October 14, 2019

Commercial Markets in Southern New Jersey and Philly Post Modest Gains

by John Jordan
The Southern New Jersey and Southeastern Pennsylvania commercial real estate markets continued to show modest gains, continued investments, and overall solid fundamentals in the third quarter.

Sales volume and prospecting activity held steady in the third quarter. Third quarter leasing activity was higher in Camden County, and particularly in Cherry Hill, but fell for the region overall. Gross leasing absorption was positive, but trended lower quarter-over-quarter.
“We are in a continuing period of a strong economy with low unemployment. This has supported a long streak of slow, steady growth supported by strong fundamentals. Although a given indicator might fluctuate one quarter to the next, commercial real estate in this region remains strong, and there is reason to stay optimistic.”

In the third quarter, the region posted approximately 266,867 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was a decrease of 7% compared to the second quarter. The sales market increased, with approximately 1.67 million square feet on the market or under agreement. However, completed sales slowed to approximately 329,769 square feet changing hands, less than half the previous quarter, which had been notably active.
New leasing activity accounted for approximately 36% of all transactions for the three counties surveyed. Overall, gross leasing absorption for the third quarter was in the range 70,000 square feet, down from 150,000 in the second quarter.

Among the other key data points include:

Overall vacancy in the market was approximately 11.50%, which was a slight uptick from the previous quarter, but was still near a 20-year low.
Average rents for Class A and B product continue to show strong support in the range of $10.00-$15.00-per-square-foot NNN or $20.00-$25.00-per-square-foot gross for the deals completed during the quarter. These averages have hovered near this range for more than a year.

Vacancy in Camden County dropped slightly to 11.1% for the third quarter, back to where it stood in the first quarter.

Burlington County’s vacancy stood at 11.9%, increasing 40 basis points. Burlington’s vacancy rate jumped earlier in the year due to several large blocks of space returning to the market.

The vacancy rate in Philadelphia’s office market dropped slightly to 8.6%, the second consecutive quarter to post a decrease of two tenths of a percent. The office vacancy rate is still near a 20-year low, and below that of comparable major cities.

The industrial sector in Philadelphia remains very strong. The third quarter saw vacancy rates virtually unchanged, at 5.0% while net absorption was constrained by a shrinking volume of available space. Rent growth of 6.0% far exceeded the long-term average of 1.7%.

Philadelphia retail is so far avoiding a major spike in vacancy due to the shift toward e-commerce. Rising wages and low unemployment are fueling retail spending, buoying the CRE market. The vacancy rate inched up to 4.7%, while net absorption was negative 562,000 square feet over the last 12 months.

In terms of the Southern New Jersey retail market, the retail vacancy rate in Camden County jumped to 6.9% from 5.7% in the second quarter, while average rents increased in the range of $17.05-per-square-foot NNN. Retail vacancy in Burlington County ticked up very slightly, to 7.6%, with average rents in the range of $12.68-per-square-foot NNN. Retail vacancy in Gloucester County dropped to 7.4%, with average rents in the range of $13.41-per-square-foot NNN.

Friday, October 11, 2019

REITs Market (Video)

Local Investor Buys Market Street Flats for $29.8 Million

Local investment firm Hankin Group has purchased the 88-unit Market Street Flats in West Chester, Pennsylvania, from McCool Properties for $29.75 million, or about $342,000 per unit.

The five-story building at 124 E. Market St. includes a mix of one- and two-bedroom units ranging from 710 to 1,115 square feet. Completed by the seller in 2015, the mid-rise property spans nearly an acre less than a mile from West Chester University.

The four-star building was 96% occupied at the time of sale.

Thursday, October 10, 2019

Commercial Real Estate Product Types (+ Which One's Right For You) - Video

Brookfield Mall Bounces Back in Heart of Pennsylvania Amish Country

Brookfield Property REIT completed a $135 million refinancing of its Park City Center, a 1.2 million-square-foot regional shopping mall that's had some success remaking itself because it's in the heart of one of Pennsylvania's main Amish tourist areas: Lancaster.

The deal is a bright spot for a center that has lost two of its five anchor tenants in the past year: Bon-Ton and Sears. Those retailers, like other big-box and department stores, filed for bankruptcy amid competition from growing e-commerce businesses and a shift in consumer spending habits.

JPMorgan Chase Bank provided the loan and is preparing to roll it into a new single-asset commercial mortgage-backed security. Brookfield Property used the money late last week to repay a $134.76 million balance on a loan held in a multiborrower commercial mortgage-backed security deal.

The previous loan had come due this past June with the noteholder allowing for a forbearance extension while the refinancing details were worked out, according to DBRS bond rating agency commentary from August. The loss of two anchor spots may have presented challenges in obtaining a replacement loan despite the center producing generally strong cash flows, according to DBRS.

“Despite the heightened concerns in the closure of two mall anchors in the last year within close proximity to the June 2019 maturity ... the loan benefits from strong sponsorship in Brookfield and a low leverage point ($112 per square foot),” DBRS analysts wrote.

Brookfield's success with revitalizing the mall stems partly from its location, according to DBRS.

The property sits in a major tourist area between Harrisburg and Philadelphia, near chocolate giant Hershey's headquarters and its large amusement park. Lancaster is also noted as the center of Pennsylvania Dutch Country and its Amish attractions.

Park City Center reported an unaudited net operating income of $10.25 million, according to a recent CMBS bondholder filing.

Brookfield Property did not respond to a request for additional information.

DBRS has been monitoring the previous loan following the departure this past March of Sears, which occupied 13% of the mall's net rentable area. In August 2018, Bon-Ton closed, leaving almost 15% of the mall empty.

Neither property looks to stand vacant much longer.

The 179,000-square-foot Bon-Ton building, in fact, may not be standing soon at all. The mall owner has filed to have the building demolished, LancasterOnline reported in August. That would open the site up to full redevelopment.

The 79,000-square-foot vacated Sears store is expected to be occupied by a Round1 multientertainment center, offering bowling, arcade games, billiards, karaoke, pingpong and darts, according to the Japan-based company, which is opening three facilities in the state next year as part of a U.S. expansion.

Brookfield Property acquired the property in August 2018 as part of its $15 billion acquisition of General Growth Properties.

These days, the mall’s tenant mix has higher-end tenants in Apple, Michael Kors, White House Black Market, Williams-Sonoma and Sephora, as well as popular retailers in H&M, Build-a-Bear and Journeys.

Sales for nonanchor tenants less than 10,000 square feet [excluding Apple] were reported at a healthy $389 per square foot in 2018, according to DBRS.

Latest Census Data Shows Lehigh Valley Leading Pennsylvania in Working-Age Population Growth

The latest data from the Census Bureau shows Pennsylvania continues struggling to lure in new industries and working age residents. The U.S. population aged 20-64 increased by 0.25% last year, but of Pennsylvania’s 67 counties, only seven surpassed this growth rate and 55 experienced net declines.

The highest levels of working-age population growth (ages 20-64) occurred in the counties surrounding Philadelphia.

Lehigh Valley is the state’s fastest growing region for working-aged adults. The county grew by 0.5% in 2018, adding over 1,000 residents. The region has benefited tremendously from the logistics boom, adding around 16,000 transportation jobs this decade, doubling the number of transportation workers.

The latest population figures don’t surprise Lehigh Valley Economic Development Council President and CEO Don Cunningham.

"A lot of our growth has been from young people," Cunningham said. "Thirty percent of the population in our cities is between 18 and 34, and we have a lot of young people moving into the area for the jobs."

Cunningham believes that trucking is playing a role, but that other factors are at play in Lehigh Valley as well.

He said, "Distribution is definitely our fastest growing employment sector, but our biggest employers are in finance, insurance and real estate as well as advanced manufacturing. It doesn’t hurt that we’re also an hour and a half from New York City and Philadelphia."

This logistics growth is likely fueling central and northeast Pennsylvania’s population gains. In counties like Monroe, York and Lebanon, the trucking and distribution industries are generating new blue collar jobs sorely lacking in other parts of the state. This growth helps to attract residents from nearby counties, and helps local families remain in their hometowns rather than move to other parts of the country in search of viable employment.

Southeastern Pennsylvania counties including Berks, Chester, Philadelphia and Montgomery County also posted some of the highest levels of growth in 2018. While distribution employment is also on the rise in many of these locations, the Philadelphia area’s powerhouse healthcare and education industries continue to grow overall employment and support growing numbers of working age residents.

In contrast, the western portions of the state are too far from the New York and Philadelphia ports to support strong levels of trade and transportation employment. Lower income levels in counties around Pittsburgh have also made it more challenging for the city’s healthcare industries to grow as rapidly as those in Philadelphia.

Of the 10 counties showing the largest losses in working-age populations, eight are west of Harrisburg, and western Pennsylvania continues to struggle with population decline. Allegheny County lost about 4,000 prime workers in 2018, and the suburban counties orbiting the city did not fare much better. Even areas like Washington County, where there has been significant economic development as a result of drilling on the Marcellus Shale, are still losing working-age residents.

Wednesday, October 9, 2019

Boxzooka Comes to New Pennsylvania Industrial Property

A Secaucus, New Jersey-based fulfillment company has signed a lease and taken occupancy of roughly 133,500 square feet at a large logistics center in Pennsylvania owned by Colony Industrial.

Boxzooka Fulfillment & Global Ecommerce, a business that stores and ships goods for online retailers, is now on the tenant roster at 300 Capital Lane in Middletown, Pennsylvania. The new Class A warehouse is part of a 1.5 million-square-foot logistics hub owned and operated by Dallas-based Colony Industrial, part of Colony Capital. Blackstone Group's desire for warehouse properties led to a deal reached this week to acquire Colony Industrial for $5.9 million.

“Pennsylvania is the perfect geographic location for our expansion plans," Boxzooka Founder Brendan Heegan said in a statement. "Its close proximity to major FedEx and UPS truck hubs and to a large part of the U.S. and Canadian populations, where 30% and 50% of the respective countries’ residents can be reached within just a one-day truck drive, made the property ideal for our requirements.”

In addition to Boxzooka’s long-term commitment to its 133,500 square feet, it will have access to additional warehousing space within Colony Industrial’s complex in Middletown and around the country for the company’s further expansions.

“The space at 300 Capital Lane will not only increase Boxzooka’s distribution network capacity, but also bring more jobs to the region," Colony Industrial Vice President Aaron Reynolds said in a statement. "Boxzooka is another example of the strong demand by our customers for high quality, well-positioned distribution properties located close to major transportation hubs, to satisfy their delivery requirements.”

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Philly based Alliance Partners HSP Sells GrubHub Chicago Buys One Financial Plaza Florida

by John Jordan

GrubHub Chicago
A joint venture of Golub & Co. and The Family Office Company B.S.C. of New York City has acquired the Burnham Center office tower here—the home of GrubHub’s Chicago headquarters.

The 22-story office tower at 111 West Washington totals 585,000 square feet. Chicago-based Golub will assume management and leasing of the building that was constructed in 1913. The property was the last building designed by famed architect and urban planner Daniel Burnham.
No financial terms of the transaction were disclosed. Financing was provided by CIT.

Golub’s acquisition team was led by Adam Short, vice president of acquisitions, and Ania Najder, director of acquisitions. The seller is an affiliate of Bryn Mawr, PA-based Alliance Partners HSP, LLC, an affiliate of the Shidler Group.
Peter Derrico, managing director of acquisitions and disposition for Alliance, negotiated the transaction on behalf of the seller who was represented by Cushman & Wakefield. Financing was provided by CIT.

Golub & Co. says it plans to refresh the tenant amenities, which include a fitness center, private tenant lounge and conferencing facilities. Ground-floor retail includes a mix of national and regional tenants.

With the acquisition, Golub & Company’s Chicago-area office portfolio that includes 300 South Wacker Drive and 444 North Michigan Ave., now totals 3.5 million square feet.

One Financial Plaza Florida

The One Financial Plaza office tower has been sold for $117 million to Alliance Partners HSP of Bryn Mawr, PA.

The deal comes after Alliance Partners HSP sold the GrubHub’s headquarters in Chicago to joint venture of Golub & Co. and The Family Office Company B.S.C. of New York City for an undisclosed price.

Crocker Partners has been retained as the property management team for the 28-story Class A office building under the new ownership. In addition, Crocker Partners retained a 1.9-acre site for a new multi-family project adjacent to the office building.

The firm purchased the 283,000 square-foot building in 2017 for approximately $86 million. Over the two-year period, modernized and repositioning One Financial Plaza to compete in Fort Lauderdale’s fast-growing CBD market.
Recent capital improvements includer a new ground floor façade, common area upgrades, the addition of 2,500 square feet of new retail space, as well as roadway and sidewalk improvements.

“One Financial Plaza has been among the most desirable office buildings in the CBD. With the recent capital improvements that position is enhanced for the long-term,” says John Osborne, SVP at Crocker Partners. During Crocker’s ownership, One Financial Plaza drew premier, new tenants such as Convey Healthcare, which leased three floors totaling 34,000 square feet and the renewal of the property’s anchor tenant Regions Bank.

Since 1993, Crocker Partners has acquired and managed more than 149 properties, totaling 44.3 million square feet representing $5.2 billion invested. The company is currently Florida’s largest office landlord and has offices in Miami, Jacksonville and Atlanta.

Cedar Realty Begins Construction on Fishtown Crossing Shopping Center

by John Jordan
Cedar Realty Trust, Inc. commenced construction last week on the redevelopment of the former Port Richmond Village shopping center here.

The redevelopment of the shopping center, now known as “Fishtown Crossing,” will create approximately 18,000 square feet of new retail space. The property in Northeast Philadelphia is anchored by IGA Supermarket and when construction is complete will also feature a number of new amenity upgrades that will create public spaces that Port Washington, NY-based Cedar Realty Trust  says it hopes will foster an inviting atmosphere for shoppers and visitors.
The shopping center will soon welcome Starbucks and Nifty Fifty’s. Fishtown Crossing is currently home to approximately 20 shops, including IGA, GNC, Kicks USA, Slack’s Hoagie Shack and Rita’s Water Ice, in addition to a tenant mix that includes beauty and health, clothing, professional services and discount retailers.

The redevelopment is expected to add a mix of fast casual and sit-down restaurants,  along with the creation of outdoor seating areas and landscaped common areas, Cedar Realty Trust officials say.
A groundbreaking for the project was held on Oct. 3. A host of dignitaries including State Senator Lawrence M. Farnese, Council Member Mark Squilla, State Representative Mary Isaacson and State Representative Joseph Hohanstein were on hand. Cedar Realty Trust president and CEO Bruce Schanzer, EVP and COO Robin Zeigler and SVP of development and construction Michael Sommer also attended the event.

“As Fishtown and Port Richmond continue to thrive, we’re creating a destination for a diverse mix of shopping and dining that harnesses the energy of these neighborhoods,” Schanzer said. “Along with the addition of new retailers, this property is getting a full facelift, while adding new public gathering spaces that reflect the growing preference for a unique, walkable retail experience.”

The property is the first of several redevelopment initiatives being undertaken by Cedar Realty Trust in Philadelphia. In South Philadelphia, the company is leading the South Quarter Crossing redevelopment, which will initiate substantial improvements to the Quartermaster Plaza and South Philadelphia Shopping Center. In addition to the enhancement of the retail structures onsite, South Quarter Crossing will include the addition of 270 apartments, along with a wide range of improvements to the surrounding pedestrian walkways.
Cedar Realty Trust is the owner and operator of grocery-anchored shopping centers from Washington, DC to Boston. The company’s portfolio comprises 57 properties totaling approximately 8.6 million square feet of gross leasable area.