Thursday, January 31, 2019

Hedge Fund to Buy Ocean Resort Casino in Atlantic City

by Linda Moss
Ocean Resort Casino -- one of two Atlantic City, New Jersey, gaming venues to reopen last June -- is being sold to one of its lenders, which will invest $70 million for improvements to its gambling floor, for additional rooms and suites, and "a world-class buffet" to try to lure more visitors.

Manhattan-based hedge fund Luxor Capital Group, which isn't affiliated with the similarly named Las Vegas casino property, is providing the infusion of strategic capital and gaining a controlling interest in the Ocean Resort, formerly known as the Revel at 500 Boardwalk , the casino announced earlier this week.

One gaming expert lauded the proposed improvements, but said that the resort city really needs to draw more visitors to really help struggling, independent casinos like the Ocean Resort to succeed.

“All of that is great, and I’m happy to hear that they are looking to invest more funds and expand the property, because a great deal of that (Ocean Resort) footprint has been empty space ... There’s a caveat there, though," said Robert Ambrose, a gaming and hospitality consultant and adjunct professor at Fairleigh Dickinson University. "I feel that until Atlantic City can grow its market base properties are going to continue to have seasonal issues, or issues as a whole."

Luxor Capital didn't respond to an email and phone call for comment.

Earlier this month Denver developer Bruce Deifik confirmed that he was going to sell the Ocean Resort just one year after buying it for $200 million and six months after reopening it. But he didn't disclose the buyer, but said it would finance improvements in the site. The 2 million-square-foot property, once known as Revel, had a grand re-opening in June along with the Hard Rock Cafe Hotel & Casino, which took over the former space of the Trump Taj Mahal.

In the aftermath of Atlantic City seeing five of its casinos close from 2014 to 2016, the seaside town has been trying to mount a comeback. The Garden State city is America's second-largest commercial casino market, behind Las Vegas. The shuttering of the $2.4 billion Revel, Ocean Resort's predecessor, was Atlantic City's biggest casino failures, talking place in 2014. In 2015 the 1,400-room property was acquired by Straub Capital Corp. and developer Glenn Straub of West Palm Beach, Florida, for $82 million. But he never reopened it. Then last January Deifik bought the 46-story casino from Straub.

In its announcement this week Ocean Resort said that Luxor Capital, one of its stakeholders, would be acquiring Deifik's share in the property and gaining a controlling interest. Luxor Capital's strategic investment is expected to close in early February, pending regulatory approvals and final documentation.

This year Ocean Resort's budget includes capital investment "in a world-class buffet, additional suite and room product, incremental investments on the casino floor and other exciting projects" as well as "a substantial increase in its entertainment programming and player events throughout the year," the casino said in its statement.

As an independent casino that isn't part of a chain, Ocean Resort faced difficult obstacles, including the fact that it had no database of customers, according to Ambrose.

"If you compare it to the Hard Rock, they opened the same day, the Hard Rock had an international data base, and that means a lot when you’re trying to develop and grow a property,” Ambrose said.

The key to where Ocean Resort goes next whether it and Atlantic City attract new clientele to the gambling mecca, according to Ambrose. That effort is hampered, in part, by the poor transportation options -- including air flights -- to get to the city, he said.

And casinos like Ocean Resort should provide more general shopping and restaurant options for visitors, like the Tropicana Atlantic City's "The Quarter" section, Ambrose said.

Until Luxor Capital receives interim licensing approvals from state gaming officials, expected within 90 to 120 days, a trust will be formed to hold shares of Ocean Resort's parent company, AC Ocean Walk. A trustee, who will be appointed once the $70 million investment closes, will oversee the trust until Luxor Capital receives its interim authorization. Then the trustee will be removed.

Ocean Resort's gambling revenue has lagged behind competing casinos in Atlantic. For example, last year the casino took in $90 million in revenue, compared to $161.6 million for the Hard Rock and $710.8 million for the Borgata Hotel Casino, according to figures the state released earlier this month.

Five Key Trends Seen Shaping Apartments in 2019

Millennials are expected to drive some of the most noticeable shifts in the apartment industry this year as developers focus on high-tech concierges, suites with shared kitchens and ground-floor smoothie shops.

The group of Americans between the ages of 23 and 38, which has some of the biggest spending power in America, is open to space-sharing that’s already taken over offices. It's moving into apartments in the form of "co-living" configurations, according to developers, financiers, investors and researchers at the annual meeting in San Diego of the Washington, D.C.-based National Multifamily Housing Council.

Here are five apartment trends to watch:

1. Space Sharing. Developers are increasingly finding that they can garner more revenue for the same general construction cost by fitting more rental units in a building, clustering them in a "co-living" configuration around shared spaces like kitchens and dining rooms. "It doesn’t necessarily mean lower rent, but it does mean more amenities," said Norm Miller, a real estate finance professor at University of San Diego.

There are limits to how much residents really want to share -- forget common bathrooms, for instance -- and Cliff Nash, senior managing director for national apartment developer Greystar, said operators in countries like the Netherlands that have adopted co-living are still having to set rules against residents coming to breakfast in their boxers. But he said co-living could present a viable way to get more relatively affordable housing units into otherwise too costly markets.

Bob Flannery, president of development and investment firm CA Residential, foresees a time when firms will plan "buildings within buildings" with various tiers of co-living units, luxury units and other types of apartments geared to young professionals, all in the same property.

2. On-Site Technology. Leonard Wood Jr., senior managing director at Trammell Crow Residential, said the apartment developer is making use of software applications like Site Plan, which helps residents schedule maintenance appointments and is in the process of establishing a pilot program with retailer Amazon to set up package delivery lockers in some locations, similar to those now seen in places like college bookstores and Amazon's own Whole Foods stores.

Nash said Greystar at some locations has been experimenting with app-based concierge services where residents can get help with grocery shopping, dry-cleaning trips and package pickups. "It’s almost like an executive assistant on steroids that’s a real person. We’ve got a generation of people who are a lot more comfortable interacting with the world that way."

3. More Uses. Apartments are increasingly being planned as part of walkable mixed-use developments. Cities love the concept, but components like ground-floor retail must be well thought out and cater to the demographics of the on-site residents, said Phillip Martin, senior vice president of market research at investment firm Waterton. Among the concerns, car trips won't be minimized if the retail spaces don't provide the right services to the apartment residents.

Popular uses for these spaces often are coffee shops, yogurt-smoothie places or quick-service eateries. But developers are increasingly focused on lining up tenants that appeal to their apartment dwellers such as a gourmet grocer, a fitness studio, or a useful service business such as a dry cleaner.

The focus on appropriate retailers is even more important in areas such as downtown San Diego that often require ground-floor retail for apartment project approval. Those spaces can sit empty for a while because retail tenants usually want the residents in place first before they'll commit to opening a location in a new building. Debt and equity financiers don’t like paying for commercial space that often sits empty long after apartments have begun to lease up in many cities, he said.

4. Millennial Demand. The latest annual multifamily investment report noted that unemployment among young adults age 20 to 34 fell to a 48-year low of 4.5 percent in 2018. Two-thirds of this millennial group lives in rental housing, and that contingent will continue to be a big driver of apartment demand, as long as the strong job market continues to allow those young consumers to move out of their parents’ homes.

5. Sunbelt, Southeast Focus. New investment and development activity this year and beyond will focus in states that combine good demographics with lots of sunshine, low taxes and relatively low costs for land and other operating costs. Frequently mentioned are cities such as Phoenix, Dallas, Las Vegas and Orlando, Florida. Trammell Crow’s Wood said Orlando, for instance, "has been consistently strong for the past five to six years."

Even so, the relatively less sunny Midwest is also garnering some attention in the early months of 2019, with experts pointing to solid supply-and-demand and job-growth fundamentals in cities such as Columbus, Ohio, and Minnesota’s Minneapolis-St. Paul market. In fact, Minneapolis-St. Paul placed at No. 1 in Marcus & Millichap’s latest ranking of top U.S. multifamily investment cities, moving up two notches from a year ago and besting San Diego, New York City, Los Angeles and Seattle-Tacoma in this year’s Top 5.

Retail Sector Outlook with Azor Advisory Services (Video)

York County Investor Acquires 4251 Crums Mill Road Office Building in Harrisburg

by Steve Lubetkin

York County private investor Crumil is acquiring 4251 Crums Mill Road, Harrisburg, PA, a 21,440-square-foot single-tenant office building occupied by Merakey Corporation, a developmental, behavioral health, and education non-profit provider. The property sold for $3.4 million.
The seller was Jerich II. A private investor based in Dauphin County.

“The property was very well received by local and regional investors,” says Dunkle. “The seller was looking to invest in other commercial real estate opportunities and the buyer wanted to acquire a stabilized investment property with a strong tenant.”
The Merakey office building is minutes away from Interstate 81 and the Interstate 83 interchange; less than a mile away from the Colonial Park Mall and Route 22 (Jonestown Road), a major retail corridor in North East Harrisburg.

Merakey recently signed a new seven-year lease that incorporated a brand new built-to-suit fit-out space. There were numerous capital improvements including HVAC, roof, paved parking lot, new exterior, new floorings, new electrical systems, and security systems.

Wednesday, January 30, 2019

Global Real Estate Trends, #Davos #2019 (Video)

Chinese real estate investors exit US market due to slowdown, trade war (Video)

Penn State University Buys 69-Unit Apartment Complex Near Penn State Harrisburg

The Pennsylvania State University purchased a 69-unit apartment complex in Middletown, Pennsylvania, from Life Development. Nittany Village sold for $21.9 million, or about $317,000 per room.

The low-rise complex at 451 W. Main St. comprises one- and four-bedroom units averaging 1,400 square feet in three, three-story buildings. Built in 2012, the Class B property spans north of five acres between Harrisburg International Airport and Penn State Harrisburg.

The complex will be used as student housing for students starting in fall 2019.

Trane Preleases Industrial Building Under Construction in Burlington, NJ

Trane, a manufacturer of heating, ventilating and air conditioning systems, preleased Whitesell Construction Company’s 310,960-square-foot distribution building under construction at Haines Industrial Center in Burlington, New Jersey.

Plans for the facility at 600 Richards Run call for 66 loading docks, two drive-in bays and a 36-foot clear ceiling height. The property spans 23.1 acres less than 20 miles from downtown Philadelphia, and is slated to deliver within the first quarter of 2019.

Headquartered in Delran, New Jersey, Whitesell Construction Company has 18 million square feet of commercial real estate developed to date and a current portfolio comprising more than 9 million square feet, according to its website.

D&H Distributing in $8M Deal for 250K SF Harrisburg Office Campus

by Steve Lubetkin,
D&H Distributing will relocate its headquarters from 2525 North Seventh Street to 100 and 200 Amp Drive in Harrisburg, PA. D&H acquired the two properties for $8.2 million. D&H Distributing is expected to move into the nearly 50-acre campus during the third quarter of this year.

The seller was TE Connectivity Corporation.

TE Connectivity, which occupied the entire campus before the acquisition, will continue to partially occupy the premises with its employees on site. D&H Distributing is expected to move into the nearly 50-acre campus during the third quarter of this year.
“D&H endeavored to establish a location in Central Pennsylvania where they can continue to foster the growth of their already successful company. This campus allows them to improve the overall condition of their facility, increase efficiencies, and accommodate future growth.”

The two-building office campus is located just off of Interstate 81 near the Route 22 corridor, close to many national and regional retailers.

100 Amp Drive is the larger of the two buildings, 170,000 square feet, while 200 Amp Drive is approximately 80,000 square feet. The campus offers a full-service cafeteria and electric car charging stations, among other amenities.

Tuesday, January 29, 2019

Boston Private Equity Company Pays $22.5M for Elizabethtown, PA Warehouse

High Street Realty Co., a private equity real estate investment management company headquartered in Boston, purchased a 320,000-square-foot warehouse at Conewago Industrial Park in Elizabethtown, Pennsylvania, from Conewago Contractors for $22.5 million, or about $70 per square foot.

The single-story structure at 35 Conewago Road comprises 12 loading docks, one drive-in bay, 60- by 54-foot column spacing and a 32-foot clear ceiling height. Built in 2018, the Class A facility spans 28.2 acres less than 12 miles from Harrisburg International Airport.

Since its inception, High Street has invested more than $700 million of equity and acquired over $1.6 billion of industrial properties in 18 major metropolitan markets, according to its website.

REIT Store Capital a Buy (Video)

Goldenberg and Guidi in Purchase of St. Mary’s Villa in Upper Dublin PA

by Steve Lubetkin
St. Mary’s Villa, which has occupied more than 50 acres in Upper Dublin Township has been sold to the Goldenberg Group and Guidi Homes, who plan to redevelop the site into a luxury residential community.  The development team plans to break ground in upcoming weeks and expects to begin delivering homes in 2020.

Located at 701 S. Bethlehem Pike on the corner of Lindenwold Avenue and Bethlehem Pike, most recently this parcel of land served as a youth home owned by the Sisters of the Holy Family of Nazareth.

Originally, the property was established as the primary residence for Dr. Richard Van Zeelust Mattison, who became one of Ambler’s founders.  Dr. Mattison was a principal at Keasby & Mattison, the town’s primary employer.  He founded a library, built an opera house, offices, shops and Trinity Memorial Episcopal Church.  He also built many of the homes in Ambler including Lindenwold Castle, the focal point of his estate, which was originally a large Victorian home was encased in stone in 1912 to resemble Windsor Castle.
“The ability to preserve many features of this once elegant estate is one of the reasons we were so attracted to this site in addition to its premier location,” says Rob Fluehr, director of residential development at The Goldenberg Group.  The site’s rich history also served as inspiration when the name was designated Mattison Estate.

The Goldenberg Group and Guidi Homes expect to build 104 for-sale villas and carriage homes designed to complement the historic elegance of the estate, while showcasing modern architecture.

Just 30 minutes from the heart of Philadelphia, this location is easily accessible to public transportation via Fort Washington and Ambler train stations and major thoroughfares, like the Pennsylvania Turnpike and Route 309.  Downtown Ambler, the Upper Dublin Public Library and great schools like Upper Dublin High School are all within walking distance.
M&T Bank provided the acquisition and construction financing for the project.

“We have worked with M&T Bank on many projects across our diverse portfolio over the years and are pleased they are involved in our newest endeavor at Mattison Estate,” says Robert W. Freedman Esq., senior vice president of The Goldenberg Group.

AY Trucking Acquires Bucks County Fleet Service Facility

by Steve Lubetkin
AY Trucking has acquired a modern, one-story fleet service facility at 777 Winks Lane, Expressway 95 Industrial Park, Bensalem, Bucks County, PA from 777 Winks Lane LLC for $3.33 million.

The facility is 15,975 square-foot building on 3.7 acres.

This property expands AY Trucking’s existing 9,192 square-foot facility on 4.52 acres next door at 445 Winks Lane, which Roddy also brokered in 2017 for $2.5 million.

AY Trucking  is a nationwide automobile carrier and network logistics service provider.  The firm provides car shipping for both individuals and companies, moving hundreds of vehicles monthly. Its customers include major automobile manufacturers and car dealerships.

Monday, January 28, 2019

Global Net Lease Focuses on “Stable” Countries When Investing Abroad (Video)

Multifamily Development Opportunities (Video)

New York Developer Buys 26-Acre Nicetown Factory Site At Auction

Matthew Rothstein, Bisnow East Coast
A hulking former factory in a run-down neighborhood in North Philadelphia has been given new hope after being sold in an auction.

 New York-based Plymouth Group submitted the winning bid for a 26-acre site along Hunting Park Avenue in Nicetown on which the Budd Co. manufacturing building sits, PlanPhilly reports. The factory, which used to turn out parts for airplanes, cars and trains, ceased operations in 2003 and has been vacant since.

The 1.8M SF building complex was once the prospective site for a casino developed by Donald Trump, for which plans were scuttled in 2005. The parcel eventually sold to a suburban buyer who sat on the deed for years, until the property was seized by the city over unpaid taxes and utility bills in October, according to PlanPhilly.

Plymouth Group principal Joshua Goldman did not disclose the amount of the winning bid, but did tell PlanPhilly that he has a redevelopment plan in mind. Plymouth, which has completed adaptive reuse projects in the Bronx but had never purchased a Philadelphia property before, envisions some combination of housing and creative space.

Knowing that Nicetown has been above average in crime and poverty rates since the collapse of the manufacturing industry that once dominated the neighborhood, Goldman told PlanPhilly that "there are some people who want to pay top dollar, but there are also people who want space and don't want to pay through the nose on rent." Despite its current economic state, Nicetown sits near two growing, well-regarded neighborhoods in East Falls to the west and Germantown to the north. The site is located entirely within an opportunity zone, though Goldman did not indicate to PlanPhilly any plans to utilize the program.

PREIT Leases Former Macy's Space at Moorestown Mall in Philadelphia's NJ Suburbs

by Steve Lubetkin

PREIT has completed key leases at the former Macy’s box at Moorestown Mall, executing a lease with Michaels, which will occupy 25,000 square feet of space, offering arts, crafts, framing, floral, wall d├ęcor and seasonal merchandise for do-it-yourselfers. Michaels joins HomeSense, Five Below and Sierra Trading Post in the former Macy’s location, creating a diverse and compelling retail mix reflective of the new mall platform.  Michaels is expected to open in late 2019, marking another milestone in redefining the property experience.

“The changes we have made at Moorestown Mall are reflective of our efforts to create diverse retail and social experiences at our properties, transforming the mall model,” says Joseph Coradino, CEO of PREIT. “The continued remerchandising and strengthening of our properties lay a foundation that will satisfy the demands of the community and set the stage for continued growth.”

Complementing the recently opened anchor stores are new dining experiences:  Hash House A Go Go and Joe Italiano’s Maplewood. The new-to-market tenants will complement the existing dining options and further support PREIT’s efforts to reimagine the mall experience and provide a variety of experiential options for shoppers.
Hash House A Go Go occupies a 7,800-square-foot space offering locally sourced farm-fresh food. The restaurant will serve breakfast, brunch, lunch and dinner daily and its large bar will host a vibrant happy hour scene featuring local beers and famous signature cocktails. This is the first Hash House A Go Go location to open in the region and in PREIT’s portfolio.

A South Jersey favorite, Joe Italiano’s Maplewood, a family-owned Italian restaurant for nearly 75 years with locations in Hammonton and Mays Landing, NJ, also recently opened. The Moorestown location occupies 8,600 square feet of space and will put a fresh face on its menu with a creative array of brick-oven options including, pasta with meatballs and Maplewood’s unique red sauce, also known as “gravy.”

Moorestown Mall is home to a unique mix of tenants including award-winning Rizzieri salon and spa, Orangetheory Fitness, Yard House, Regal Cinemas, Firebirds Wood Fired Grill and Harvest Seasonal generating over $25 million in dining and entertainment sales and popular retail brands including H&M, Express, Foot Locker, Hollister, Victoria’s Secret and many others.

Carson Wentz's foundation buys Cherry Hill building

Natalie Kostelni  – Reporter, Philadelphia Business Journal
Thy Kingdom Crumb, a food truck service started by Eagles quarterback Carson Wentz’s AO1 foundation to help those in need, bought a building in Cherry Hill for its headquarters.

The sale price wasn’t disclosed. The 4,546-square-foot building at 1800 Route 70 East had once been leased by Big John’s Steaks and Pizza, a restaurant that closed in 2012. At a later point, Rockhill, another eatery, opened in the space and it closed last July.
Full story:

Friday, January 25, 2019

Retail Wrap-up 2018 (Video)

Multifamily Finance Update with Tom Walsh (Video)

Liberty Property Trust Inks Full-Building Lease in NJ

Liberty Property Trust has signed a 302,500-square-foot industrial lease with The Gilbert Co. at 19 Crows Mill Road in Keasbey, N.J. The supply-chain service company will occupy the entire building, which has been vacant following Achim Importing Co.’s relocation.

The single-story property features extensive trailer storage, 180 dock doors, solar panels and 110 parking spaces. Located on 25 acres near Exit 10 of the New Jersey Turnpike, the asset offers easy access to Port Newark/Elizabeth and New York City.

Lincoln Property Trust acquired the building from Alliance Shippers last September. According to Yardi Matrix, it traded for $41 million. In a separate transaction, the company purchased a warehouse in Inland Empire in the same timeframe.

“With this acquisition, Liberty has nearly doubled its footprint in Central and Northern New Jersey in the last 13 months with the acquisition of four properties totaling approximately one million square feet. Liberty entered the market in 2013 with the acquisition of three properties at Exit 8A and has since expanded its holdings up through the Meadowlands for a total of ten properties representing 2.2 million square feet,” said Liberty Property Trust Vice President of Leasing Peter Corcoran in a prepared statement.

Thursday, January 24, 2019

Chemours Reopens Renovated Historic Headquarters in Downtown Wilmington

The Chemours Co., a global chemical company spun off from the DuPont Co., reopened its corporate headquarters in the century-old DuPont Building, a registered historic landmark overlooking Rodney Square in downtown Wilmington, Delaware.

Approximately 850 Chemours employees, contractors and consultants will work out of the company's new headquarters following a 20-month, $80 million renovation by Wilmington-based real estate development and investment firm the Buccini/Pollin Group. Chemours will occupy 280,000 square feet in the top 11 floors of the 13-story building.

Buccini/Pollin acquired the complex at 1007 N. Market St. in April 2017 as part of its acquisition of the historic DuPont Building and Hotel du Pont from Chemours, formerly DuPont Chemical, before being spun off as a separate company in 2015. DuPont had previously owned the building since it was built in 1908. Chemours agreed to lease back office space in the building for a term of 17 years.

Buccini/Pollin is in the process of renovating and converting the historic property, which includes the Hotel du Pont, Playhouse on Rodney Square and the office building at 1007 N. Market St. where Chemours is based, into a mixed-use complex that will include apartments and retail space along with the renovated office, hotel and entertainment space.

In a statement of his remarks at the building's dedication ceremony, Buccini/Pollin Co-President Christopher F. Buccini praised Chemours' decision to keep its headquarters in the city where the company was founded.

"They had other options, and we are grateful for their commitment to our city and our state. Instead of leaving, Chemours made the very difficult decision to stay. They decided to embrace their heritage, to remain in their ancestral home of the 200-year start-up that they are today, and to take a very big chance. And they did it right here in the absolute center of our city… They saw a city surrounding them that was in the midst of an exciting revitalization, and they wanted in."

Chemours cited the Delaware area's educated workforce, proximity to its major customers, and favorable changes to the state's corporate tax structure as the primary reasons for opting to remain after considering other potential locations.

Endurance Announces the Acquisition of 450 Winks Lane in Bensalem, PA

An affiliate of Endurance Real Estate Group, LLC (“Endurance”) is pleased to announce the acquisition of 450 Winks Lane, a 430,373 SF warehouse/distribution building located in Bensalem, Pennsylvania (“Property”). The Property is 97.4% leased to three tenants, National Refrigeration, Inc., Rolled Metal Products, Inc. and Brenner Aerostructures, LLC. Endurance acquired the property from Ivy Realty, LLC for $23.7MM.

The Property’s desired location along I-95 provides convenient north, south, east and west access to the Greater Philadelphia MSA via the PA Turnpike (I-276) and Route 1. The Bensalem market is a mature infill destination with a history of high occupancy.  The greater Southeastern PA industrial market is reporting a vacancy rate of 3.2%, and this rate is even lower in the Lower Bucks County submarket at 1.1%. The Property is strategically located within a day’s drive to over 115 million consumers and should significantly benefit from the recently completed $1.1 billion I-95 and PA Turnpike Interchange Project.

Built in 1973, and renovated in 2018, 450 Winks is a Class B industrial facility with masonry and metal panel construction, ceiling heights up to 40’ clear, LED and T-5 lighting, 38 dock-high loading doors, 6 drive-in doors, and 13,200 amp, 3-phase electric service. National Refrigeration, Rolled Metal Products and Brenner Aerostructures utilize the facility for manufacturing, warehousing and distribution.

“This acquisition combined many aspects of our targeted investment program including its superior location, stable tenancy, and opportunity to improve the functionality in the future,” stated Jared Newman, Vice President of Acquisitions at Endurance.   “We continue to seek well-located investment opportunities in the industrial space for our institutional and private investors all across the Mid-Atlantic.”

Philadelphia area Commercial Real Estate Outlook for 2019 (Video)

Custom Retail Fixtures Provider Signs Industrial Lease in Hamburg, Pennsylvania

Fleetwood, a provider of custom retail fixtures, signed a 128,100-square-foot lease at MRP Realty’s 5-Star distribution building at Hamburg Logistics Park in Hamburg, Pennsylvania.

The 336,000-square-foot, single-story structure at 100 Logistics Drive was developed by the owner in 2019. The Class A facility comprises 50 loading docks with 34 levelators, two drive-in bays, 54- by 46-foot column spacing and a 36-foot clear ceiling height.

Totaling 3 million square feet, Hamburg Logistics Park’s three buildings span more than 150 acres on the former Perry Golf Course.
Aerial of the 3 million-square-foot Hamburg Logistics Park in Hamburg, Pennsylvania. Image: JLL

Retail “Revolution” Benefits American Consumer & Experiential Real Estate Can Disrupt Amazon (Video)

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Black Creek Group Sells Two PA Industrial Buildings, Acquires Three More

Black Creek Group, a real estate investment manager and development firm with a 25-year history, has sold two Pennsylvania industrial buildings totaling 393,000 square feet and acquired three different industrial properties totaling 325,000 square feet.  The transactions bring Black Creek’s Pennsylvania footprint to 4.6 million square feet and 97.4 percent leased as of December 2018.
“Black Creek Group has been active within the region for a number of years and the completion of these transactions demonstrates our ability to perform and create value for investors,” says Dave Fazekas, Black Creek Group’s senior managing director for the Eastern Region. “Pennsylvania, specifically the Lehigh Valley submarket, has been a great area for us as we have experienced success in the region and are looking forward to continuing to be a player within the market.”

Black Creek sold the 188,000 square-foot Iron Run Distribution Center, 1100 Mill Road, Allentown, PA, which it originally purchased vacant in May 2015. Black Creek completed a full-building lease shortly after the acquisition. According to Real Capital Analytics, a proprietary research database that tracks commercial real estate transactions, the property was sold by IPT, a fund managed by Black Creek, to Buckhead 1100 Mill Rd LLC for $21 million.

It also sold the 205,000 square-foot 5 Logistics Drive, Carlisle, PA, to ILPT REIT for $20 million, according to Real Capital Analytics. Black Creek acquired two buildings in Kaiser Business Park, Folcroft, PA, totaling 171,000 square feet, which are 95-percent leased with the current vacancy being actively marketed. It also acquired 7055 Ambassador Drive, Allentown PA, a 154,000 square-foot asset, from High Street Realty, for $15.3 million. 7055 Ambassador Drive is fully leased to a single tenant.

Wednesday, January 23, 2019

Property Sales in Opportunity Zones Grew 12 Percent in 2018

Sales of commercial properties in so-called Opportunity Zones rose 12.4 percent to $52.3 billion in 2018 from the year before. A sign analysts say may mean demand throughout this year.

The numbers are likely to climb higher as details of deals become public and get added to the tally. Whether the total reaches the numbers anticipated by backers of the new tax incentives remains to be seen.

Opportunity Zone activity is being muted by a government shutdown that is entering its second month with little end in sight. The shutdown is delaying the release of final regulations from the Internal Revenue Service, prompting some investors to hold back from property purchases and new development. So far, opportunity zone transactions make up 8 percent of all property sales, a slight increase from the 7.8 percent recorded in 2017.

The data comes amid optimism in the real estate community that opportunity zone spending could jump in 2019.

"I expect that interest to exponentially increase in 2019 and 2020 as the federal government moves to clarify and solidify the rules and regulations surrounding various aspects of the opportunity zone program."

Opportunity zones are communities dubbed economically distressed where new investments can be eligible for preferential tax treatment. Investors can defer or exclude taxes on any prior gains if held for five years or more. In addition, if the investor holds the investment for at least 10 years, investors can exclude 100 percent of new gains.

As enacted, investments would have to be deployed by the end of 2019 to take full advantage of the tax estimates.

Campbell expects that interest to come from larger firms, real estate investment trusts are already getting into the game, she says, but one of the most significant investor types will be so-called family offices that manage assets for wealthy individuals and their families.

"I expect this because they have significant capital gains to defer as well as the flexibility to pivot to a new investment type quickly. They also typically have a more flexible risk profile than other larger dollar investors, while only answering to themselves."

Family offices have the means to purchase these properties and the patience to ride out the decade for a net capital gain of zero at year 10 and beyond, she added.

The big firms and funds will be the major players in 2019. The smaller players, he said probably will not be able to or may not want to absorb the opportunity paperwork and hassle.

"I predict there will be some monster winners with the Goldman Sachs-type funds, but not so sure for the bulk of $500,000 to $3 million in-town rehab/redevelop plays."

The smaller players could be more likely to pull the trigger on deals with adjacency to but not in opportunity zones.

"They want to be adjacent to a larger catalyst redevelopment project. I would guess that a very large percentage of opportunity zone investment will come in the form of rising tide lifts all ships type investments."

There would be much more investment in opportunity zones if the rules were not so convoluted and more developers understood the intricacies of investment in this type of venture.

"The majority of money that has been invested in opportunity zones to date is primarily based on projects that were already targeted to receive these monies. It is a process that is still being vetted out by many of us."

The industry is still reading the tea leaves when it comes to how opportunity zones will play out in 2019 and beyond.

"We are short on data, and what data we have is impacted by an adoption curve dynamic in which the earliest investors bring a different perspective than those who will invest later. The only projection I feel comfortable making is that opportunity zone sales volume will be a larger but still relatively small part of all 2019 U.S. commercial real estate sales volume. I would be very surprised if opportunity zones account for even 12 percent of sale volume in 2019, although I would love to be proven wrong."

Crow Holdings Picks Up 353-Unit Apartment Complex in Suburban Philadelphia

Crow Holdings, a full service investment firm headquartered in Dallas, purchased a 352-unit apartment complex in Chadds Ford, Pennsylvania, from Sentinel Real Estate Corporation. Valleybrook at Chadds Ford sold for $74.5 million, or about $212,000 per unit.

The garden-style complex at 7000 Johnson Farm Lane comprises one-, two- and three-bedroom units ranging from 590 to 1,425 square feet in five, four-story buildings. Built in 2002, the 4-Star property spans 13 acres less than 17 miles from Philadelphia International Airport.

Since 1998, Crow Holdings Capital–Real Estate and CHC-affiliated entities have managed six funds with equity capital totaling approximately $4.1 billion, with which nearly $13 billion in assets have been acquired or developed, according to its website.

Tuesday, January 22, 2019

ShopOne Centers Focused on Market-Leading Grocers (Video)

15-Acre Land Parcel in Bucks County’s New Ford Mill Rd Industrial Park Trades

by Steve Lubetkin,
A 14.63-acre land parcel located at the corner of Progress Drive & Steel Road South, New Ford Mill Rd Industrial Park, Morrisville, Bucks County, PA traded.

The seller was Manhasset Bay Associates, a New York-based private equity property group. They sold the tract for $2.195 million.

The land is presently divided into two parcels—one of 7.53 acres and one of 7.1 acres.  The properties, which  are zoned for heavy industrial use, are located within two miles of the deepwater port facility in the Keystone Industrial Port Complex.
The property provides access to Route 13, Route 1, I-95, I-295, the PA Turnpike (I-276) and the NJ Turnpike (I-95) as well as bridges to New Jersey.

Friday, January 18, 2019

The Rise of Secondary and Tertiary Markets in Commercial Real Estate (Video)

Why buy real estate over other investments offering similar cash on cash returns? (Video)

Kline Plaza Shopping Center Sold in Harrisburg

by Steve Lubetkin,
Nassimi Realty LLC purchased the Kline Plaza Shopping Center, a 214,628-square-foot shopping center in the heart of Harrisburg, PA, from Brixmor Property Group for an estimated $8.7 million. The transaction value was reported by Real Capital Analytics, a proprietary research database that tracks commercial real estate transactions.
The seller was Brixmor.

The shopping plaza, located at South 25th and Market Streets, is anchored by Giant Food Stores, Citi Trends and Family Dollar.
“The demand for grocery-anchored shopping centers remains extremely competitive throughout the region, and that was highlighted throughout this process. Giant’s commitment to the shopping center was highlighted by its recent long-term renewal.

Thursday, January 17, 2019

Ashley HomeStore Signs Lease in Delran, New Jersey

Ashley HomeStore, a furniture store chain with more than 800 locations worldwide, signed a 25,904-square-foot lease at the Greenleaf at Delran shopping center in Delran, New Jersey.

The 171,449-square-foot center at 5011 Route 130 was built in 1972. Spanning nearly 36 acres, the Class B property is less than 14 miles from downtown Philadelphia.

Denver-based Black Creek Group Buys Allentown, Pennsylvania, Warehouse

Black Creek Group, a Denver-based investment, management and development firm, purchased a 153,600-square-foot warehouse at Iron Run Corporate Center in Allentown, Pennsylvania, from High Street Realty Company for $15.3 million, or about $100 per square foot.

The fully leased, single-story structure at 7055 Ambassador Drive comprises 18 loading docks, one drive-in bay, 40- by 40-foot column spacing and a 26-foot clear ceiling height. Built in 1991, the 4-Star property spans 15 acres less than 12 miles from Lehigh Valley International Airport.

During its 25-year history, Black Creek Group has bought or built more than $18.5 billion of investments, including office, industrial, retail and multifamily properties, according to its website.

HomeGoods Inks Deal in East Stroudsburg, Pennsylvania

HomeGoods, a brick and mortar chain of discount home furnishing stores, signed a 15,000-square-foot lease at Kimco Realty Corporation’s Pocono Plaza in East Stroudsburg, Pennsylvania.

The 169,381-square-foot center at 300 Lincoln Ave. was developed in 1977. The Class B property spans 15 acres across from East Stroudsburg University of Pennsylvania.

Multifamily Update 2019 (Video)

GR8 People Relocated to New HQ in Yardley PA

by Steve Lubetkin,
GR8 People, a technology firm offering an HR talent platform for the enterprise, has relocated to a new corporate headquarters within The Tannery, 19 W. College Ave., Yardley, PA.
The company says moving into what’s considered “Bucks County’s most unique office space” is an ideal fit. GR8 People says it is revolutionizing the way organizations attract, engage and hire the world’s best talent with its one-experience talent platform.

“GR8 People is unique in our industry and that’s always been true of the offices we’ve selected for our incredible team to call home base,” says Diane Smith, CEO of GR8 People. “Our new space is a dramatic renovation of a turn-of-the-century former industrial facility. It’s unique, ultra-modern and collaborative and expansive. Our team is thrilled to work together in such an inspirational setting that’s a direct result of our shared success.”

The company entered new global markets as a result of major customer wins driven by growing enterprise adoption of GR8 People’s talent platform. Following strong expansion in its business and another record year, GR8 People increased headcount by 40% and continues to add new key roles to propel growth into 2019 and beyond.
With more than triple the square footage, the new headquarters matches the increased requirements of its expanding business.

According to its website, The Tannery was formerly the Century Leather Enameling Company—established in 1902. It was a processing plant where goat and sheepskins were converted into patent leather. The redeveloped property is owned by ML7, a family of private real estate investment, development, management and construction companies with offices in Princeton, New Jersey and New York City. Class A, finish-to-suit office spaces ranging from 2,000 to 31,000 square feet are available. The property includes onsite power backup, high-efficiency lighting and HVAC. It is two blocks from a SEPTA Regional Rail Station, adjacent to the Yardley Country Club, and offers easy access to US 1 and Interstate 95.

Two Lehigh Valley Commercial Land Sales Trade for Development

by Steve Lubetkin,
Two property sales recently totaling more than 35 acres traded in Bethlehem and Easton, PA.

The first transaction involved 29.5 acres of land in Bethlehem Township, PA. The team represented both the buyer, River Hills Estates, affiliated with Cahill Properties, and seller Joanne Turocy in the sale of the parcel. The land is accessible to Route 33, I-78 and Route 22 and is just minutes to St. Luke’s 500-acre Anderson Campus which features a 108-bed hospital, state-of-the-art cancer center and medical office building. The site allots multiple uses under zoning and future plans for the site have not been finalized.

The second transaction involved the last remaining 6.6 acres of raw industrial-zoned land known as Conroy Place Lot 6 in the Forks Industrial Park IV on Conroy Place and Uhler Road in Easton, PA. The buyer was Triple Net Investments LII and it sold for $625,000 sale. Triple Net will construct a build-to-suit industrial facility for a future occupant on the site.

With construction of the property, the park will be considered fully built-out. Tenants include Martin Guitar, Easton Coach, Daniels Health, Kensington Home Fashions, TorcUP Inc., Kadco Ceramics and Curries. The site is just two miles from the Charles Chrin Interchange and the adjacent Chrin Commerce Centre, an area economic driver that is home to Amazon, Mondelez, Porsche, FedEx and others.

Wednesday, January 16, 2019

1000 Madison Drive Norristown Sells for $17.5M

 The sale of 1000 Madison Avenue  transacted for $17.5 million. It is a 102,894-square-foot, three-story office building located in the Valley Forge Corporate Center in Norristown, PA. The property sold for $17.5 million.
“This is a stabilized office investment property with zero vacancy, occupied by strong credit tenants with long-term leases."

"There were seven offers from a mix of local, national, and international investors, which created a competitive bidding environment."

Located four miles from the King of Prussia Mall, the property is immediately accessible from the Pottstown Expressway, Route 422, the Pennsylvania Turnpike, Interstate 276, and the Schuylkill Expressway, Interstate 76. The Valley Forge Casino Resort is within three miles, and Philadelphia International Airport is 30 miles away.

At the time of the sale, the property was 100 percent occupied by five tenants, including the Commonwealth of Pennsylvania, which occupies 37 percent of the building. Built in 1990, 1000 Madison has 14 corner offices per floor, an atrium lobby and 469 surface parking spaces.

4Q Report: Moderate Growth in South Jersey and Philadelphia Markets

by Steve Lubetkin,
The Southern New Jersey and Southeastern Pennsylvania markets continued to show overall solid fundamentals, buoyed by new investments from outside the region and economic inflows to support local expansions. Leasing, sales, net absorption, and prospecting activity all were up in the fourth quarter 2018.
“Although the financial markets were highly unpredictable, commercial real estate performed the way it has for most of the past several years – with steady growth supported by strong fundamentals."
There were approximately 336,466 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), an increase of 18.3% vs. the previous quarter. The sales market stayed active, too, with about 1.4 million square feet on the market or under agreement, while actual sales were active at $28.5 million, totaling approximately 316,476 square feet.
New leasing activity accounted for approximately 36% of all deals for the three counties surveyed. Overall, gross leasing absorption for the fourth quarter was about 286,215 square feet.
Other office market highlights from the report:
  • Overall vacancy in the market is now approximately 10.95%, an improvement of 35 basis points over the previous quarter.
  • Average rents for class A and B product continue to show strong support in the range of $10.00-$15.00 per square foot, triple-net or $20.00-$25.00 per square foot gross, for the deals completed during the quarter. These averages stayed near this range throughout 2018.
  • Vacancy in Camden County increased to 11.5% for the quarter, an improvement of nearly a point compared to the third quarter.
  • Burlington County vacancy stayed at 10.4%, unchanged.
Highlights from the fourth quarter in Pennsylvania include:
  • The vacancy rate in Philadelphia’s office market was 7.8%, a slight improvement over the previous quarter. Demand for office space continues to be strong.
  • Net office space absorption in Philadelphia was 1,224,697 square feet for the quarter.
  • The industrial sector is as strong as ever in Philadelphia. The fourth quarter saw a small decrease in vacancy rates, to 5.3%, but a jump of about one million square feet in net absorption quarter over quarter, to 7.1 million square feet.
  • Philadelphia retail was the lone true weak spot in Q4. The vacancy rate ticked up two tenths of a point, to 4.5%, while net absorption was negative for the second straight quarter, at -611,261 square feet.
In the Southern New Jersey retail market, the fourth quarter saw the contrast of a spending surge that propelled holiday sales to their best season in six years and at the same time, consumer confidence inching downward as the year ended. The job market has stayed remarkably strong, with low unemployment supporting consumer spending and reverberating through other indicators. Other highlights from the retail section of the report include:
  • Retail vacancy in Camden County stood at 7%, with average rents in the range of $16.19 per square foot, triple-net.
  • Retail vacancy in Burlington County stood at 6.7%, with average rents in the range of $13.11 per square foot, triple-net.
  • Retail vacancy in Gloucester County stood at 8.6%, with average rents in the range of $13.76 per square foot, triple-net.

Tuesday, January 15, 2019

CCIM Institute Chief Economist on the Next Commercial Real Estate Finance Disruption (Video)

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Monthly Economic Outlook — January 2019 (Video)

Cardone sells 1.3M SF distribution center in Philadelphia

Natalie Kostelni Reporter Philadelphia Business Journal
Cardone Industries has completed the sale of a 1.3 million-square-foot building that it has been using as a distribution center and has plans to lease it back.

NorthPoint Development of Kansas City, Mo., bought the building at 5501 Whitaker Ave. in Philadelphia for an undisclosed amount though the property was listed for $34.5 million. Public records of the sale weren’t yet available. 

The building, which sits on 63 acres, has several addresses associated with it: 5501 Whitaker; 5400 Langdon St.; 5401 Whitaker; and 5401 R. Whitaker. The property is most often referred to as 5501 Whitaker though that isn’t what it is associated in Philadelphia property records. Colliers International arranged the transaction.

Cardone is a Philadelphia-based auto parts remanufacturer. The sale of the Whitaker Avenue property was part of an overall evaluation of Cardone’s real estate that involved several different actions. For example, the company signed a long-term lease last year to relocate some corporate operations to 15 Kings Grant Drive, a 53,920-square-foot office building in Bala Cynwyd. About 120 employees will work from that location.
Full story:

2019 Commercial Real Estate Forecast (Video)

PwC's Mitch Roschelle on 2019 Now (Video)

Monday, January 14, 2019

Office properties traded at a strong clip in 2018

Natalie Kostelni Reporter Philadelphia Business Journal
Suburban office sales in 2018 totaled $863.6 million, which was nearly double the $447.4 million laid out to buy office buildings in Philadelphia’s Central Business District.

That’s in contrast to 2017 when office properties totaling $929 million traded in the CBD compared with $864 million in the suburbs. What the 2017 figures show is that suburban office sales were gaining on downtown transactions in terms of dollar volume and that trend was solidified last year.

The commercial real estate investment market was healthy last year across the region. A total of $1.6 billion in 18 office transactions valued at $25 million or more were recorded for the Philadelphia suburbs and Center City combined. Other data, which calculates properties sold that were 25,000 square feet and greater regardless of the transactional amount, showed 92 transactions totaling $1.8 billion were logged last year throughout the region. That outstripped 2017 when 47 deals totaling $1.5 billion were completed.

Sales on a price per square-foot basis also improved.  data show the average office sale price was $180 a square foot compared with $173 a square foot. The occupancy of the properties sold averaged 93 percent, according to Real Capital, and proved money was flowing into lower risk, stable assets. 

While the suburbs experienced the most sales by dollar volume, three suburban submarkets ruled. King of Prussia, Malvern and Conshohocken were the top markets to get investor attention, according to the research. Those three markets accounted for $777 million in sales, according to Real Capital. In Conshohocken, Eight Tower Bridge and 161 Washington St. were among those properties that traded while several properties put up for sale by Liberty Property Trust in Malvern and King of Prussia also sold.
Full story:

Turn5 transforms former supermarket into expanded call center

By Michelle Caffrey  – Reporter, Philadelphia Business Journal
A former supermarket in Montgomery County is now home to a fast-growing e-commerce company. Turn5, which focuses on aftermarket auto products for niche brands, opened a new contact center in Pottstown last week.

Triple the size of its previous facility in the same town, the new 15,000 square-foot center provides more space to the 80 employees based there and offers room to grow, said CEO Steve Voudouris.

“We were busting at the seems,” he said.

To transform the former grocery store on Robinson Street into an office where staff can chat or talk to customers and reflective of its brand took a lot of work.

Turn5’s online brands sell aftermarket parts for American muscle cars, trucks and Jeeps – though a big part of their work involves filming installation tutorials and reviews. Its headquarters in Paoli has ample garage space to do so, and the contact center in Malvern is equipped with its own garage to give customer service employees hand-on experience.

Now the new Pottstown facility also has a garage, a change from the former call center, as well as a video production set, a product lab, an open-office plan and huddle spaces.

Voudouris said when Turn5 took over the building, it had to dial back the intense lighting left over from the building’s grocery store days. Then the company added its own twist, including a handmade light fixture suspended from a tire. To pay homage to both its past and future, the company had a 10-foot-tall, street-legal shopping cart vehicle on hand at its ribbon cutting event last week.
Full story:

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Office Vacancy in Philadelphia Remains Flat, CBD Lease Rates Reach All-Time High

by Steve Lubetkin,
Lease rates for class A office space in Philadelphia’s central business district reached an all-time high of $33 per square foot per year in 2018, fueled largely by investors seeking to recoup the money they invested in fancier amenities.

Office sales volumes in the fourth quarter were nearly double the third quarter, with trophy buildings like Eight Tower Bridge in Conshohocken selling for $313 per square foot, and 1735 Market Street in the CBD going on sale.

Liberty Property Trust continues to unload its office portfolio, with several prominent sales in Malvern, west of the city, as part of a publicly announced rotation out of the office sector in favor of increased investment in industrial properties.
Tenant improvement allowances continued a rising trend since 2010, reaching $4.72 per square foot per year.

Despite the rising rents, vacancy rates remained stable at about 14.5%. Although class A vacancy rates declined from the third quarter. Occupancy gains from a new headquarters opened for food and venue services firm Aramark were offset by some large office relocation and downsizing activities, such as software company Optymyze’s move from Chester, PA into 1700 Market Street in Center City.

The pipeline of new office construction is mostly empty, except for build-to-suit properties that won’t contribute much to availability. Like Brandywine Realty Trust, which is renovating its office property at 500 N. Gulph Road in King of Prussia, landlords are likely to continue renovating existing assets to keep them competitive.

Foreign Investor Buys Old City Mixed-Use Property

by Steve Lubetkin,
The sale of 248 Market Street in the Old City neighborhood of Philadelphia, PA, to a buyer it described as an overseas investment group with local ties. It sold for $3.7 million.

“We are seeing more and more international buyers get aggressive in buying core assets in Center City."

The property, which consists of six residential apartments and two ground floor commercial units, traded for more than $450,000 per unit.

The residential units were recently updated and feature granite countertops and stainless-steel appliances in the kitchens, vaulted ceilings, oversized windows, walk-in closets, in-unit washers and dryers and controlled building access.

The property is located on the bustling corner of 3rd Street and Market Street, convenient to Old City’s historic and tourist destinations, as well as a great variety of popular restaurants, shops, and entertainment options.  The property is also located one block from SEPTA’s Market Frankford train line.

“Recently we have seen a surge in interest in the Old City sub-market, which makes sense given its accessibility and proximity to the CBD. Old City also has great mixed-use building stock.”
The commercial units were leased to Color Inc., a retail/souvenir shop, and Car-Tel Communications, Philadelphia’s largest AT&T retailer.

“The stable retail leases on the ground floor helped to add value in this transaction."

Petrucci Expands Lehigh Valley Real Estate Holdings

by Steve Lubetkin,
“We have a long history of providing turnac-key real estate solutions throughout the Lehigh Valley and New Jersey,” says Jim Petrucci, founder and president of J.G. Petrucci Co. “As the region continues to grow and attract businesses, these strategic acquisitions will enable our company to offer clients an extensive menu of flexible properties available for lease.”

2147 Avenue C, located in Bethlehem, PA, is a 32,000 square-foot industrial flex building with a secure, gated, storage yard and excellent access to all major roadways.

In Forks Township, PA, Petrucci purchased a 6.6-acre site that is ideal for small industrial flex users seeking easy access to New Jersey. The property is located less than 2-miles from the Charles Chrin Interchange and just minutes from New Jersey.

Petrucci has plans to construct a 55,000 square-foot building at the property. The company has a wealth of experience developing properties in Forks Township for food manufacturing users such as Bethlehem Sausage Works and Norac Group, USA; and the design/build construction of a specialized perlite manufacturing facility for Silbrico Corporation.

Jefferson Health Negotiating Purchase of Fox Chase Cancer Center from Temple University

by Steve Lubetkin,
Thomas Jefferson University is continuing an aggressive acquisition strategy with the announcement that it has entered an agreement with Temple University for exclusive talks that could sell Fox Chase Cancer Center to Jefferson.
The move opens the door to bring together significant complementary expertise in cancer treatment and breakthrough research to improve patient outcomes across the greater Philadelphia region and beyond.

Leaders from Jefferson, home of the NCI-designated Sidney Kimmel Cancer Center, and Temple, home of Fox Chase, an NCI-designated Comprehensive Cancer Center, have agreed to exclusively negotiate the potential for a transaction over the next 90 days. The intent is to determine if the acquisition of Fox Chase will better serve the needs of cancer patients, the community and each other’s strategic goals. The due diligence period will also include evaluation of the sale of Temple’s interest in Health Partners Plans, a Philadelphia-based managed care health insurer.

“This negotiation period will allow us to better understand how partnering could improve lives for patients throughout Philadelphia and far beyond,” says Stephen K. Klasko, MD, MBA, president of Thomas Jefferson University and CEO of Jefferson Health. “Just imagine the potential of combining the stellar researchers and clinicians of Fox Chase Cancer Center with the outstanding experts at Sidney Kimmel Cancer Center at Jefferson. This could save – and change – lives forever.”

For Temple, this agreement represents the next step in finding a partner that can enhance Fox Chase’s future growth, while strengthening Temple University Health System’s core mission of providing outstanding clinical care to its North Philadelphia community and beyond and maintaining its unique research and educational mission.

“Temple and Jefferson share a home city, a mission and a commitment to caring for cancer patients throughout the region, and Jefferson is an outstanding potential partner,” said Temple president Richard M. Englert. “We are both dedicated to quality health care, safety, service, medical education, research and discovery, and we support the idea of two great Philadelphia institutions coming together to do what’s right for the patients we proudly serve.”
Jefferson and Temple would also enter into a long-term oncology-related academic affiliation agreement that would expand access for Temple residents, fellows and students to academic and research resources.

If the organizations reach agreement, the deal will require federal and state regulatory approval.

Jefferson Health is the largest provider of healthcare in Philadelphia. Its recent acquisitions have included Einstein Health and Kennedy Health in South Jersey.

Friday, January 11, 2019

Lehigh Valley industrial property growth hits record

By Brian Pedersen
The region’s growth of industrial properties along the Interstate 78-81 corridor hit a record-breaking number of new deliveries.

Lehigh and Northampton counties captured much of that growth, but experts say the market is expanding beyond those borders and further into Berks County and north toward the Wilkes-Barre/Scranton region.

“The market is really pushing the borders. There’s a bunch of development along the Route 33 corridor. You will see additional sites on Route 33.”

Notable deals in 2018 included:

• QVC, which signed a lease for a 1-million-square-foot facility in Bethlehem;

• UPS, which signed a lease for space in a more than one-million-square-foot building in Palmer Township off Route 33;

• Liberty Property Trust, which leased part of a 1.1-million-square-foot-building it owns in Lower Macungie Township.

Throughout the I-78 and I-81 corridor, developers added another 17.6 million square feet of new supply to the inventory, with 16.7 million square feet of occupancy gains during 2018, the report said. That figure represents a record-breaking amount of new product for the corridor.

The previous record of construction completions that were recorded was in 2016, when the market added 16.9 million square feet.

Last year saw more 1-million square-foot warehouses completed compared to any other year, the report said. Right now, there’s enough future demand to continue that trend.

“We see the I-78 corridor as very popular. There, we see the boundaries of what we consider the core Lehigh Valley [begin to] stretch.”

Heading north, there are some viable sites along the Route 33 corridor, he said.

As an example, American Tire Distributors opened a 1-million-square-foot build-to-suit facility in Blakeslee, Monroe County in November, helping boost absorption levels in the Northeast Pennsylvania market.

Depending on the users of these facilities, they still tend to focus on the New Jersey or New York market, including those industrial properties along Route 61 in Berks County..

Average asking rents in the Lehigh Valley are closer to $6 per square foot.

Outside the valley, average asking rents are closer to $5 per square foot.

“Lehigh Valley tends to be a more expensive market."

Though industrial buildings may appear larger, there’s still a lot of deals in this market in the smaller range, he added. These include some of the larger manufacturers who are driving the need for new facilities by adding production lines into their buildings.

“As they need more capacity, they push warehousing out to other buildings.".

Although developers added more than 4-million-square-feet of new product to the corridor’s inventory in the fourth quarter, market vacancy remained stable, quarter over quarter, at 6 percent. Surging demand throughout the year kept pace with the arrival of new supply in the corridor, the report said.

Overall, he expects this strong development to continue, particularly in the Lehigh Valley section of the corridor.

Developers broke ground on more than 9 million square feet of new product in the fourth quarter and of that total, five properties were one million square feet or larger.

“I think the valley will remain strong. In the last downturn, we never really bottomed out. Tenants who want to be here need to be here, so I think there’s great demand.”

Thursday, January 10, 2019

Flexible, shared workspaces are here to stay (Video)

Flexible, shared workspaces are here to stay: JLL from CNBC.

Columbia Property Investors Buys MOB in Lehigh Valley

by Steve Lbuetkin,
Columbia Property Investors acquired a 12,000-square-foot medical office building in the Philadelphia suburb of Hellertown, PA.
Located at 708 Main St., the medical office building was completed as a build-to-suit for Lehigh Valley Health Network, a regional healthcare provider. Lehigh Valley Health Network has leased the entire property for 15 years on a net lease basis.

Lehigh Valley Health Network is a regional healthcare provider that has a network of more than 1,340 primary care and specialty physicians, with hospitals on eight campuses throughout the Lehigh Valley of Philadelphia and New Jersey. The network features the LVHN Cancer Institute, the LVHN Heart Institute and the LVHN Institute for Special Surgery.

“We are pleased to have completed this accretive acquisition and appreciate Bear’s relentless effort to keep the deal on track throughout the entire process,” says Michael Hanson, manager of Columbia Property Investors. “This medical office building is an excellent addition to our investment portfolio, as it features a long-term net lease with a quality tenant in an excellent location.”

The seller was Ashley Development Corporation.
Ashley Development Corporation is a real estate development firm specializing in mixed-use projects in urban areas and the adaptive re-use of existing structures. Founded in 1989, the firm focuses on both residential and commercial projects.

Foxfield Industrial of Atlanta Pays $26.8M for Eddystone Industrial Park by Philadelphia International Airport

Foxfield Industrial, an investment firm headquartered in Atlanta, purchased four warehouses totaling 465,680 square feet in Eddystone, Pennsylvania, from Gateside Corporation. Eddystone Industrial Park sold for $26.75 million, or about $57 per square foot.

The single-story buildings at 1001 Industrial Highway were built in 1974 and renovated in 1998. Spanning nearly 44 acres less than six miles from Philadelphia International Airport, Eddystone Industrial Park comprises clear heights ranging from 18 to 60 feet, 52 loading docks and 16 drive-in bays.

Foxfield Industrial, a joint venture between Novaya Real Estate Ventures (Novaya) and Foxfield Ventures, secured $23.58 million in financing for the acquisition of the center.

Jeff Harper, principal of Foxfield, said in a statement, “We are really excited about the value-add facets of Eddystone Industrial Park. The vacancy and development parcels provide meaningful upside to the otherwise stable returns driven by long term, credit tenancy.”

Foxfield and its affiliates currently manage over $160 million in existing assets and development projects, according to its website.

Wednesday, January 9, 2019

Brixmor Exceeds 2018 Expected Disposition Volume by 30-40% (Video)

Pennsylvania Real Estate Investment Trust Subsidiary Inks Deal in Philadelphia

PREIT Associates, a local firm that operates as a subsidiary of Pennsylvania Real Estate Investment Trust, signed a 44,057-square-foot lease at Brandywine Realty Trust’s One Commerce Square office tower in Philadelphia.

The Class A, 41-story structure at 2005 Market St. was built in 1987 and renovated in 2013. The 4-Star, 1.02 million-square-foot tower is one block from the 22nd Street light rail station.

Toll Brothers Inks Deal in Fort Washington, Pennsylvania

Toll Brothers, a local home construction company, signed a 167,300-square-foot lease at Greenfield Partners’ Class A office building in Fort Washington, Pennsylvania.

The 680,000-square-foot, two-story structure at 1100-1140 Virginia Drive was built in 1964 and renovated in 2017. Spanning north of 67 acres at Fort Washington Technology Center, the 4-Star property is less than 10 miles from Northeast Philadelphia Airport.

Tuesday, January 8, 2019

CCIM's Outlook of 2019 Now (Video)

Apple Automotive Buys Former Dick's Sporting Goods York PA for $6.25M

by Steve Lubetkin,

SP Middletown Land Holdings, an entity closely related to Apple Automotive Group, has acquired a 55,200 square-foot building, formerly occupied by DICK’S Sporting Goods, on 9.35 acres at 1313 Kenneth Road, York, PA, for $6.25 million.

The one-story, masonry and steel building is heated and sprinklered throughout and offers ceiling heights from 12 feet to 14 feet clear, tailgate loading, mostly 30-foot by 36-foot column spacing, and parking for 205 automobiles.

The property is about two  miles from Interstate 83 at the intersection of Kenneth Road and US Route 30 (Loucks Road), and offers convenient access to the Pennsylvania Turnpike (Exit 242/Harrisburg West) and Interstate 81.  The property is just 35 minutes from Harrisburg, two hours from Metropolitan Philadelphia and three hours from New York.
Apple Automotive Group is a leader in the automotive industry in Central PA for sales, service, parts, collision repair and carwash services. Founded in 1976, Apple has nearly 20 locations throughout York, Red Lion and Hanover.

Monday, January 7, 2019

The tech boom in corporate real estate (Video)

Will REITs shine in 2019? (Video)

Top 10 CRE Predictions for 2019

by Joseph Ori
If you are looking for predictions for 2019 for the commercial real estate market, you aren’t alone.

1. Industrial markets will continue to sizzle.
The industrial real estate market will continue to be the favored real estate sector with robust demand, growth and investor capital. This boom has been the result of strong economic growth, record consumer optimism, low-interest rates and the growing demand for products by e-commerce next day delivery. Average rent growth during the last two and a half years through Q-2 2018 was a strong 7.8%. In 2018, industrial cap rates fell by .5% to 1% to a national average of about 6.25% and through the first six months of 2018, 128 million square feet of industrial space was absorbed.

2. Apartment rents will continue to moderate.
Apartment rents that have increased by 50% during the last few years in some hot markets on the West Coast and Northeast, will continue to moderate with national rent increases in the 1%-2.5% range. Per, the Q-3 YoY national rent increase was only 1.2%. Many more markets will begin offering “free rent” as the more than 1.5 million new units built during the last five years begin to further soften markets.
More info:

3. More net asset value REITs will hit the private market.
The moribund non-traded REIT sector was brought back to life in 2017 with the introduction of the Blackstone REIT. This private open-end REIT was one of the first to allow investors to buy shares in the REIT at a monthly net asset value per share rather than the standard $10 per share initial offering price. The net asset value is calculated monthly by using financial metrics including cap rates and discounted cash flow rates. Blackstone has raised over $3 billion through Q-3 2018 and will probably raise at least $10 billion in the REIT. Due to its success in raising capital with real-time NAV pricing, other players are bringing similar REIT funds to the market including; Nuveen, Starwood Capital, and Jones Lang LaSalle.

4. Interest rates will continue to rise.
Although interest rates have dropped the last two months, with the 10-Year Treasury sliding from 3.22% in September to 2.90% in December, we continue to believe the trade skirmish with China will be settled, stock market volatility will subside, and the economic boom will continue. The Federal Reserve may pause on raising rates in 2019, but the long end of the curve will increase with the 10-Year TNote at over 3.5% by the summer of 2019.

5. Opportunity zones will draw billions in capital.
Opportunity zones which were created in December 2017 as part of the Tax Cut and Jobs Act, will continue to flourish with billions of capital invested in individual opportunity zones and opportunity zone funds. This is the first part of the current administration’s infrastructure spending policy that will benefit many blighted urban areas with new low and moderate-income development. Treasury Secretary Steven Mnuchin estimated as much as $100 billion in private capital could be invested in opportunity zones.

6. Public REITs will generate sold returns.
Public REITs which will end 2018 with about a 5%-6% total return (including dividends) will post higher returns in 2019, estimated at 10% with 4% in a dividend and 6% in price appreciation. Even though we here at VOM expect long-term interest rates to increase in 2019, which will hurt REIT net asset values in the short run, the longer-term outlook is positive for public REITs. The average annual return for the FTSE-NAREIT All Equity Index was 11.69% during the last 10 years per NAREIT.

7. Class B malls will generate robust returns.
The class B mall sector has been battered the last four years, especially in the REIT space, with many public REITs like CBL, DDR, Brixmor and Washington Prime Group, selling well below private market net asset values. Many class B malls are trading at 7%-10% cap rates, which are deep value plays in this market. With most retail bankruptcies in the rear-view mirror and less competition among large national retailers for consumer dollars, retail tenants and their landlords should see higher rents, sales per square foot, occupancies and CRE values.

8. Shadow CRE lenders will increase market share.
The shadow or non-bank CRE lending market should see increased activity and deal flow in 2019. This sector includes public and private mortgage REITs, private funds, mortgage bankers and CMBS conduits. These lenders will benefit from slower loan growth by commercial banks as they become more risk averse due to pressure from the various regulatory agencies to temper CRE lending. According to the Mortgage Bankers Association, non-bank CRE loan volumes were $32 billion in 2016, $52 billion in 2017 and $23 billion through Q-2 2018. Some of the largest non-bank lenders include; Blackstone Mortgage Trust, Apollo Commercial, KKR Real Estate Finance, Mesa Capital and Hunt Mortgage.

9. Consolidation of CRE brokers will increase.
There are currently six large publicly traded CRE brokers that control approximately 60% of large (over $10 million) commercial real estate transactions and further consolidation among these and smaller brokers will continue. These firms will need to ramp up their growth and one easy way to do this is to acquire smaller local or larger regional firms. Many brokerage mergers and acquisitions will be strategic with the target providing a unique client base or a specialized service and skill set. The CRE brokerage industry will be structured like an hourglass, with a few large firms at the top, many smaller firms at the bottom and a few midsized firms in the middle.

10. Tech slowdown will lead to lower Northern California housing prices
The median price of a single-family home in San Francisco was $1.45 million at the end of November 2018. This is a reduction in the price of $265,000 or 15.5% from the bubble peak hit in February of $1.7 million. During the last five years housing prices in San Francisco and Silicon Valley have doubled, but they are beginning to come back down to earth. There are two primary reasons for the price declines, higher interest rates and a slowdown in the growth of technology stocks, which are the economic engine for Northern CA. As tech growth slows, the stock prices decline and the firms from Google to Facebook to Square, pull back their hiring quotas. For example, let’s say Facebook is still in a high growth mode and plans to hire 20,000 employees in 2019, with 15,000 in No CA. If their growth is slowing, then they will reduce the new headcount to 12,000, with only 10,000 in No CA. The effect of this is less demand for office space and apartments and less disposable income, which affects housing prices. We don’t think there will be a crash in Bay Area housing prices, but they can certainly decline about 20% during the next few years.

Morgan Properties Buys Creative Office Complex for $52M

Morgan Properties will pay $52 million to acquire Millennium I, II and III, a three-building creative office complex totaling 196,769 square feet in Conshohocken, PA, northwest of Philadelphia.

The seller was Stabilis Capital Management. “Millennium offers significant near-term upside for an experienced owner like Morgan Properties to take advantage of all that Conshohocken has to offer. I’m very excited to see what happens at the property in the coming years.”

Completed between 2000 and 2003, Millennium I, II and III includes three purpose-built, creative office buildings in one of Greater Philadelphia’s most desirable locations. The properties are situated at 20 Ash Street and 225 and 227 Washington Street, on the banks of the Schuylkill River in Conshohocken, a northwestern suburb of Philadelphia. The property has convenient access to Interstates 476 and 76, which provide access to the entire Philadelphia region, as well as being located across the street from Conshohocken Station, which offers SEPTA’s regional rail service for commuters.

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Friday, January 4, 2019

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West Chester, PA Frozen Food Plant Sold to JV

by Steve Lubetkin,
A joint venture of Concord, ON-based Infinity Asset Solutions and New Mill Capital Holdings of New York has acquired the former Hain Celestial frozen food production plant in West Chester, PA. The acquisition includes the real estate as well as all cold storage equipment and infrastructure.

Designed, built and occupied exclusively for frozen food production, the 134,010 square foot facility provides immediate capacity for refrigerated or frozen food manufacturing. The plant offers significant infrastructure including an ammonia refrigeration system with nine compressors, 11,900 square feet of -20 degrees Fahrenheit-capable frozen storage, nearly 58,000 square feet of refrigerated production space and bulk dry ingredient storage with three silos.
“This acquisition is in line with our strategy of identifying underutilized, high quality food processing facilities that can be retrofitted for modern users,” says Leslie Amoils, president of Infinity Asset Solutions. “The West Chester plant represents a compelling opportunity to restart food production and storage in a strategically located area. Potential users will be attracted to the area’s strong labor force and easy access to highways and rail systems in a property that can be acquired significantly below replacement cost.”

The JV partners and its affiliates have acquired and repurposed numerous food and beverage production plants throughout the US and Canada including assets on behalf of General Mills, Kraft Heinz, Unilever, Sunny Delight, Flowers Foods, Aryzta, Bob Evans, Sara Lee, Smithfield Foods, and many others.
“Our venture specializes in identifying excess corporate real estate and equipment assets and providing streamlined solutions to bring those assets back to life,” says Tom Murray, principal of New Mill Capital Holdings. “As we begin making improvements and marketing the property, I am confident that prospective tenants will see the value and functionality of this plant and location.”

Wednesday, January 2, 2019

REITs Performed Better Than S&P 500

Shares in real estate investment trusts, long considered a solid standby for conservative investors, are heading into 2019 after outperforming the overall market in a year marked by drops in big-name companies such as Facebook and General Electric.

After equities trading ended for 2018 on Monday, the Standard & Poor’s United States REIT index had a negative total gross return, or performance before expenses, of 4.06 percent, a smaller decline than the 6.2 percent drop for the entire S&P 500.

While both indices were in negative territory after a fourth quarter in which the S&P 500 zigzagged between positive and negative territory, REITs ended the year ahead largely because of increased confidence in real estate amid overall economic uncertainty.

The overall S&P 500 spent most of 2018 outpacing REIT stocks after eclipsing REITs halfway through 2017 following years of the market trailing REITs since the end of the recession, according to S&P Dow Jones Indices.

When the dust settled late Monday, 2018 was the worst year for stocks since 2008, based on the annual performance of the S&P 500 index. Several factors to a selloff across equities markets, including concern over the dollar and tariffs, the potential for further interest rate increases by the Federal Reserve and economic concerns about countries such as China, Great Britain and Saudi Arabia.

REITs, the publicly traded owners of finance income-producing properties, own real estate rather than run consumer-product or service businesses so they are often better positioned to weather economic fluctuations.

Overall, leverage ratios, or the amount of debt an organization is using to make deals, are at a record low for REITs, according to an analysis by Nareit, the industry association for REIT professionals. These companies have relied on equity more than loans or other forms of debt to make their investments in the past decade, reducing debt exposure and better insulating them from interest rate changes, Nareit said.

Among REITs, those with a residential focus performed best in 2018, according to Nariet. Manufactured home REITs returned 10.45 percent through Dec. 28, with apartment REITs returning 3.08 percent.

Several high-profile multifamily REITs were busy in 2018, including real estate mogul Sam Zell’s Equity Residential, which made several large acquisitions over the year and in high-yield apartment markets. The company’s stock ended the year up almost 4 percent.

Equity Residential re-entered the Denver market with two of the city’s largest apartment deals of the year, totaling almost $275 million. The Chicago company also brought on a new chief executive in 2018 and is heavily invested in Southern California and Washington, D.C., both hot markets with tremendous growth potential for apartments. Technology companies are driving rents up in California while the D.C. area prepares for the arrival of its half of Amazon HQ2.

Industrial REITs, boosted by another year of heavy interest in the industrial market as e-commerce dominates, posted a decline in total returns to a negative 3.2 percent, according to Nareit.

The biggest industrial REIT, San Francisco-based Prologis, bet big on the industrial market in 2018, paying $8.5 billion to acquire DCT Industrial Trust, adding 71 million square feet to its already huge portfolio. The deal is the second-largest on record for mergers and acquisitions involving REITs.

Showing more weakness are office REITs, which fell 15 percent through Dec. 28, while shares of retail REITs slid 13 percent, according to Nareit.

Aside from standouts, such as Boston Properties Inc., which over the summer completed a $616 million deal for Santa Monica Business Park in Los Angeles, office REITs have struggled this year.

Office REIT performance often tracks with job growth, which has been strong across the United States. However, the office development boom that has occurred in many of the country’s growth markets, and in some coastal cities where office REITs are often concentrated, are either having or expecting weaker demand, creating a supply-demand imbalance, according to an analysis by Hoya Capital Real Estate, a Connecticut-based registered investment adviser.