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.

Thursday, October 17, 2019

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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

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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.

Industrious to Open Location at Fashion District Philadelphia in 2020

by John Jordan
Flexible workspace firm Industrious is expanding its presence here. The New York City-based company says it will be opening an approximately 47,000-square-foot location at the recently opened Fashion District Philadelphia.

The new location, which is scheduled to open for business in the second quarter of 2020, will be Industrious’ third in Philadelphia and the fourth location in partnership with Fashion District owner Macerich.

“We’ve seen strong demand for the Industrious product in Philadelphia and are excited to be deepening our presence in the market,” said Joyce Oh, Mid-Atlantic area manager at Industrious. “Our existing relationship with Macerich led us to Fashion District and we’re proud to be a part of this city-wide destination.”

Industrious currently has two other locations in Philadelphia—Avenue of the Arts and Two Liberty Place, both set to open in the first quarter of 2020.
Cory Scott, senior vice president, Macerich, says, “After the hugely successful launch of Industrious at our Scottsdale Fashion Square property in early 2019, it’s clear there is real fit for amenity-rich coworking concepts in our high-performing properties. A well-located property with something for everyone, Fashion District Philadelphia is slated to be another great match for Industrious.”

In addition to Industrious Scottsdale – Fashion Square in Arizona, Industrious has announced plans to open at Macerich’s Broadway Plaza in Walnut Creek, CA, and Country Club Plaza in Kansas City, MO.

Industrious currently has more than 85 locations in more than 45 US cities.

Thursday, October 3, 2019

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Philadelphia Job Growth Slows Heading Into 2020

With construction activity ramped up throughout Philadelphia and with Center City’s restaurants packed, most residents maintain a positive feeling about the current health of Philadelphia’s economy.

But the pace of job growth has also been disappointing in recent months, with total jobs in the Philadelphia metropolitan area growing by 1.1% year-over-year as of August. This is well below the national pace and about half the rate of job growth achieved in Philadelphia just two years ago.

Store closures are hurting workers in the retail trade sector, which has lost 7,000 jobs over the past 12 months. Meanwhile, growth in the education and health services sector has slowed significantly, following the more than 2,500 layoffs tied to the closure of Hahnemann Hospital.

There are a few silver linings to the current labor market picture. The professional and business services sector is growing at some of the fastest rates observed during the current economic expansion. This category is comprised of high paying subsectors such as information technology, legal services, accounting and scientific research and development.
Moreover, much of the current slowdown in aggregate job growth is happening for a good reason. With the local unemployment rate now below 4%, it’s simply becoming difficult for companies to find available candidates.

All and all, Philadelphia’s labor market is awash in mixed signals, as is the overall U.S. economy. With profits among most of the region’s largest publicly traded companies remaining near record highs, a recession over the next several quarters looks unlikely.

But local job growth is slowing while the U.S. economy is also showing weakness in the manufacturing, agricultural and homebuilding industries. Election uncertainty could also be an increased drag on business investment in the quarters ahead.

All of this means that while recession signals are not imminent, Philadelphia’s economic outlook is less bullish heading into 2020 than it was heading into 2019.

Tuesday, October 1, 2019

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More Than 200,000 SF of New Retailers Coming to Plymouth Meeting Mall

by John Jordan
The redevelopment and re-merchandising of the Plymouth Meeting Mall is definitely taking shape. PREIT reports there are more than 200,000 square feet of new retail, dining and experiential concepts that will be opening in the near future at its property here.

Dick’s Sporting Goods and Burlington opened new locations at the shopping center in late September. These new storefronts drove increases in shopper traffic within the mall by more than 40% during the opening weekend, PREIT reports. Miller’s Ale House is scheduled to open at the mall this week and will be followed by Edge Fitness this fall and Michael’s, coming in 2020.
Also, health-wellness-related tenants Red Rose Spa (recently opened), Sola Salon and Restore Hyperwellness & Cryotherapy are being added to the mall’s tenant mix. Complementing other health staples at Plymouth Meeting Mall, the mall has created a hub for health, wellness, nutrition, and recovery.

“Plymouth Meeting Mall sets the standard for the new era of mall experiences that are sweeping the industry. Having integrated entertainment, dining, grocery and fitness segment within our portfolio, we’re driving new customers to the mall regularly,” says PREIT CEO Joseph F. Coradino. “Our proactive and strategic re-merchandising efforts, including the redevelopment of the mall’s anchor space, along with our drive to create a diverse tenant mix, are crucial ingredients to elevating the consumer experience and providing local shoppers with more reasons to visit the mall.”
Among the property’s main tenants include: LEGOLAND Discovery Center, Whole Foods, Dave & Buster’s, a renovated AMC Movie Theatre and Cyclebar, an indoor cycling studio. The property also features five existing sit-down restaurants in addition to quick serve food options, and a Build-a-Bear kiosk, one of the brand’s first kiosk deployments in the country. Currently, nearly half of the property’s space is dedicated to dining and entertainment uses.

PREIT’s redevelopment at the Plymouth Meeting Mall comes as the firm made national headlines with the highly-anticipated opening of Fashion District Philadelphia last month. The firm is also nearing completion of the redevelopment at Woodland Mall in Grand Rapids, MI.

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