Monday, September 21, 2020

PREIT Welcomes New Tenants Throughout its Portfolio

PREIT today highlighted new stores opening throughout its portfolio highlighted by an expanded, new prototype Apple store at Cherry Hill Mall. The store features Apple's latest store design elements, an outdoor seating area and exterior and interior accessibility. Cherry Hill Mall will also welcome new tenants, Jamba and Tempur-Pedic, in the fourth quarter.

Elsewhere, PREIT continues to welcome new brands across its portfolio and is looking forward to the upcoming additions of:

  • Sola Salon Studios, offering individual suites for full service salon offerings, opened at Plymouth Meeting Mall last week, joining Restore Cryotherapy and Red Rose Spa as part of its wellness cluster.
  • White House | Black Market and Windsor at Woodland Mall in the fourth quarter of 2020
  • Ardene opened its doors at Willow Grove Park this week, as its expansion across the region continues.
  • Blaze Pizza, a first-to-portfolio tenant, will open at Capital City Mall in the coming weeks.
  • Planet Fitness is set to open its 23,000 square foot facility at Moorestown Mall in the fourth quarter.
"As operations continue to re-build steam, PREIT is continuing to make strides in rent collections and building an even more diverse leasing pipeline," said Joseph F. Coradino, Chairman and CEO of PREIT. "We are thrilled to be welcoming new stores, that offer new experiences and create jobs, across our portfolio in time for the 2020 holiday season."

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Real estate is seeing signs of a W-shaped recovery: National REIT Association Mid-Year Outlook (Video)

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Friday, September 18, 2020

Velocity Venture Partners Adds Former Ford Motor Facility to Its 'Last-Mile' Portfolio

 By Charlie Dettbarn and Rachel Whaley CoStar Research

Velocity Venture Partners, a value-add industrial investment firm formed in 2016, has bolstered its Philadelphia-area portfolio with its latest purchase, a 677,000-square-foot distribution facility fronting I-476 in Eastern Montgomery County, Pennsylvania.

The real estate investment firm acquired 2750 Morris Road in Lansdale from a joint venture between Advance Realty Investors and The Davis Cos. The building sold for $33 million, or about $44 per square foot, according to CoStar data.

The Flynn Co. represented the buyer in the acquisition of the property and has been retained by Velocity to handle leasing and property management. Cushman & Wakefield represented the seller.

The distribution facility, which Velocity plans to renovate and rebrand as Velocity Park, was originally built in 1989 by Ford Motor Co. and housed the auto maker's electronics division until 2010. The building was about 60% leased at the time of the sale, providing a partially occupied property with leasing upside, according to Velocity. About 230,000 square feet of warehouse space and 50,000 square feet of office space is available.

Velocity's latest purchase continues its rapid growth throughout Pennsylvania and New Jersey, specifically Eastern Montgomery County. With its latest acquisition, Velocity's portfolio now totals about 3 million square feet.

Industrial remains as the Philadelphia region's healthiest commercial property type six months into the coronavirus pandemic, CoStar director of market analytics Adrian Ponsen notes in a recent market report. The industrial market still faces challenges but retailers' ongoing shift to e-commerce sales and faster delivery times has continued to drive industrial leasing as tenants store more of their inventory in local logistics centers as close to their customers as they can, Ponsen wrote.

Velocity said it has experienced "overwhelming success" with its last-mile industrial properties in Pennsylvania and New Jersey, and the company is confident that the property will "absorb tenants benefiting from the surge in e-commerce growth," Zach Moore, a founding partner at Velocity, said in a statement.


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Calculating Commercial Real Estate Investment Returns (Video)

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Thursday, September 17, 2020

SL Green CEO on the Future of Office Space

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Real Estate Developer Bill Rudin on Returning to Work Amid the Pandemic (Video)

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Fed chair Jerome Powell: Support for commercial real estate might need further action from Congress (Video)

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Nerd Street Gamers to Open World's First Esports Industry Campus in Philadelphia

 by Clarice King Costar

Nerd Street Gamers, a national esports infrastructure company, is planning to open what it's calling the world's first esports industry campus at the historic Terminal Commerce Building in Center City Philadelphia.

Called The Block, the campus will serve as Nerd Street Gamers' new corporate headquarters and is expected to include global broadcast studios, dedicated training centers for professional teams and schools, educational space for community partners and, subject to zoning approval, a Localhost facility capable of hosting community, scholastic, amateur and pro-level events and programming.

Nerd Street Gamers operates esports training facilities called Localhosts where guests can pay hourly rates and compete in amateur esports tournaments. Other Localhost locations include Denver and Austin, Texas, with Los Angeles and other locations across the country opening in the near future.

The Block will be located in a roughly 40,000-square-foot space within the 11-story, 1.3 million-square-foot building at 401 N. Broad St. that's owned by Netrality, the operator of strategic, fiber dense data centers that facilitate the interconnection between major fiber networks enabling regional connectivity. After acquiring the Terminal Commerce Building in 2014, Netrality invested over $50 million in renovations for the building, making it one of the most fiber-dense, network-neutral facilities along the East Coast. The building's internet capabilities support a near-zero lag time for competitive gamers.

"Not only are we creating one of the industry’s largest gaming landmarks with The Block, but we’re also building a home for every member of Philadelphia’s gaming community and contributing a vital element to the redevelopment of North Broad Street," John Fazio, founder and CEO of Nerd Street Gamers, said in a statement. "With this esports campus, we're supporting the growth of the industry as a whole by increasing access to opportunities for gamers, public organizations, educational institutions, and the community at large."

Nerd Street Gamers plans to open The Block this winter unless circumstances change given the COVID-19 pandemic.

The Block is the latest example of Philadelphia rapidly becoming an esports hub in the United States. Fusion Arena, the Comcast Spectacor and The Cordish Cos.' $50 million next-generation esports and entertainment venue, is slated to open in the heart of the Philadelphia Sports Complex. The Block will help solidify Philadelphia's role as a destination for industry professionals and fans by offering practice facilities, broadcast studios and exhibition opportunities for professional teams visiting the arena.

Nerd Street Gamers is also planing to provide low-cost access to high quality equipment and education to the Philadelhipa community. The company will also be partnering with local organizations and educational institutions for their respective esports programs, including Temple University, Comcast NBCUniversal LIFT Labs, Team Altemus, Aim Lab and TechGirlz.

The Block comes on the heels of Nerd Street Gamers' commitment to open an additional 100 venues across the United States in Five Below stores, stadiums and college campuses over the next five years.

Tuesday, September 15, 2020

Ensemble Expands Life Sciences Footprint in Philadelphia

 By Ingrid Tunberg Globest.com

Ensemble Real Estate Investments has purchased three life sciences facilities, comprising 366,803 square feet of space in Philadelphia’s Navy Yard.

The properties, located at 4701 and 4751 League Island Blvd. and 400 Rouse Blvd., are each occupied by WuXi Advanced Therapies Inc.

“Ensemble is proud to partner with WuXi to support their important work in developing advanced and life-sustaining therapies in the years to come,” states Mark Seltzer, SVP of development for Ensemble. “The Navy Yard’s proximity to the highway network and airport, along with its unique ability to accommodate large-format, low-rise buildings in an urban environment has made it incredibly attractive to WuXi and many other Life Sciences companies, positioning it as a critical component of our regional economy.”

With the recent acquisitions, Ensemble Real Estate Investments now owns a total of five life sciences properties within Navy Yard, totaling 550,000 square feet and $155 million in investments. The company’s additional Navy Yard properties include Adaptive Therapeutics’ US headquarters and the Iovance Biotherapeutics facility, which is currently under construction.

Each of the company’s Navy Yard life sciences buildings offer manufacturing, laboratory, research and development and office space to support the clinical development and initial commercialization of novel engineered immunotherapies, including gene and cell therapy.

Along with the facility assets, the California-based company has additionally invested in office and hospitality properties within the area; bringing the firm’s Navy Yard portfolio to total more than 1.1 million square feet, including four pad-ready development sites.

The real estate company has appointed two former Liberty Property Trust professionals to its team. Within their new roles, Brian Cohen and Mark Seltzer will lead Ensemble’s East Coast operations.

“Ensemble’s decades-long track record of successfully executing development projects across all asset classes and their ability to effectively raise capital, creates a platform well positioned to achieve an aggressive growth strategy in Philadelphia and the region.” says  Cohen. “These attributes, coupled with the team’s vast experience envisioning and creating exceptional projects will serve to further attract leading-edge companies throughout our portfolio.”

WuXi’s most recent advanced therapies testing facility, 400 Rouse Boulevard, offers 140,000 square feet of state-of-the-art space. As one of the largest LEED Gold life sciences buildings in Philadelphia, the property more than doubles the company’s testing capacity for gene and cell therapies and increases the company’s Navy Yard footprint to more than 400,000 square feet of lab and GMP space.

As one of the first companies to move to the Navy Yard in 2004, AppTec opened a 75,000-square-foot contract testing and manufacturing facility, prior to being acquired by WuXi PharmaTech in 2008. Since then, WuXi has expanded its presence within the Navy Yard in order to serve the growing demand for cell therapies.

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Wednesday, September 9, 2020

South Jersey Leads Philadelphia Region in Multifamily Market Resilience to COVID-19

It’s not often the Garden State’s commercial property market flexes its muscles on the national stage. Enter 2020, the year when the only thing to expect is the unexpected.

The once-in-a-lifetime effects of the coronavirus are not only upending long-held investor assumptions on which markets are safest, they’re also unveiling resiliency in markets and properties that arguably deserved more investor attention in the first place.

In July, we highlighted how Philadelphia’s apartment sector is proving to be one of America’s healthiest markets in the face of the coronavirus with the lowest concessions rates nationally and asking rents now well above their pre-pandemic peak.

Diving deeper into the data reveals that South Jersey is leading the Philadelphia region’s charge in asking rent growth. Apartment rents here are up more than 3.5% year over year.

"We have done really well," said Caroline Adillon, president of Viking Residential, which owns more than 1,900 units worth of workforce housing properties, which is housing geared toward middle-income households, throughout the Philadelphia metropolitan area, most in either South Jersey or Lower Bucks County.

"Our occupancies have stayed above 95% at all three of our South Jersey properties since the pandemic started," Adillon said. "People don’t want to move today if they can avoid it, so our turnover is way down. This has drastically reduced our expenses and helped us tighten qualifying guidelines on the few units that are opening up."

The region’s resilience partly ties back to its lower levels of new apartment development heading into the pandemic.

Most recent apartment construction in the Philadelphia suburbs has been focused in western suburbs such as King of Prussia and Exton, leaving South Jersey apartment owners with fewer new properties to compete with.

There’s also been a groundswell in development of distribution centers along Interstate 295, by e-commerce retailers seeking to speed up their home deliveries.

South Jersey is a natural fit for these operations given its location squarely in the middle of the western hemisphere’s largest center of purchasing power, minutes from Philadelphia, but also right between New York City and the Greater Baltimore/Washington Area.

Since 2015, more than 27 million square feet worth of distribution centers have started construction in the four South Jersey counties of the Philadelphia metropolitan area. Even after coronavirus-related cuts, transportation and warehousing employment in these counties is still up by more than 33%, or 9,000 new jobs over the past five years.

The federal government’s enhanced $600 per week unemployment benefits have also played a key role in supporting South Jersey’s economy and apartment market, signaling risks if stimulus is further scaled back. But these benefits were cut to $400 per week at the end of July, and South Jersey apartment rents only continued to increase.

Meanwhile, there’s no end in site to the boom in distribution employment that has underpinned South Jersey’s job market. Target, Amazon, Premier Technology and Burlington Coat Factory are all set to open new distribution centers larger than 200,000 square feet in late 2020 and early 2021.

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Industrial Vacancy Rates Stable in Northeast Through Q2 2020

By Pearl Wu Globest.com

Vacancy rates in the northeast remained steady in the second quarter at 6.6 percent despite the ongoing coronavirus pandemic.

Leasing in the industrial sector decreased at the start of 2020 in comparison to last year, though leasing regained momentum in the second quarter as a result of demand from retailers, logistics providers and e-commerce firms.

Average rents for Class A facilities remain at peak levels in the northeast, particularly in The Meadlowlands in New Jersey and Lehigh Valley in Pennsylvania. The Class A vacancy rate remains highest in Pennsylvania, which increased to 12 percent in the fourth quarter in 2019, dipped to just over 10 percent in the first quarter of 2020 and increased slightly in the second quarter of 2020. New Jersey has seen its vacancy rate in Class A facilities drop steadily since 2018.

New construction and development has regained momentum in the second quarter with almost 38 million square feet of new development under construction in the second quarter. Numbers for pre-leasing of new development remain strong. Retail properties have also been converted to industrial use in New Jersey and Pennsylvania. The conversion of retail space into industrial properties is an ongoing trend propelled by the coronavirus pandemic, as shoppers reject traditional retail properties by avoiding in-store shopping, instead opting for online shopping. This opens the need for logistics centers and warehouses. Industrial properties had returned about five percent at the end of June, despite still trending down, and total office vacancy increased to 13 percent in the second quarter and businesses and office workers shifted their focus online.

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Tuesday, September 8, 2020

Lehigh Valley's Apartment Market Is Strengthening

The apartment market in Pennsylvania's Lehigh Valley is strengthening during the pandemic.

Multifamily vacancies are at record lows, and close to 97% of the Lehigh’s inventory is leased. This is good news for a small market with modest population growth that saw over 1,000 apartment units deliver since 2018. The recent supply is over 90% occupied, and few of these projects are advertising concessions.

The market’s workforce housing, or housing geared toward middle-income households, is also faring well. Lehigh's mid-tier two- and three-star properties are faring even better. They post average vacancies of just 2%, and occupancies have climbed over the past 12 months.

Even more interesting is the rent growth.

At a time of great uncertainty for the apartment market, Lehigh's apartment landlords are doing quite well. Year-over-year gains are over 3%, which makes the area one of the nation’s top performers. Gains here are surpassing those seen in nearby cities such as Philadelphia and New York, which are struggling with some outmigration issues caused by the coronavirus.

It is possible that Lehigh is benefiting from this. The market offers relatively quick access into both cities, particularly Philadelphia. The restructuring of office and the likelihood of companies adapting hybrid remote/office employment in the coming years could be a great benefit to a market like Lehigh Valley.

The region’s location could also make it a prime destination for workforce housing. Lehigh is ideally situated at the crossroads of Interstates 78 and 476 and has become a shipping node. Developers have been extraordinarily busy in the past 10 years, adding millions of square feet of logistics space. These warehouses are creating thousands of jobs, which could pull in even more blue-collar workers now that retail has been so thoroughly disrupted.

While sales have slowed because of the pandemic, third quarter figures have already surpassed what the market saw in the second quarter. Though only a handful of properties have traded in the past three months, there were a pair of notable deals that did close in July. Laub Realty had one of the larger deals: The New York firm spent $6.25 million on the three-star, 30-unit Taylor Apartments.

Out-of-state money, tightening vacancies and stronger than average rent growth all are good signs for the local apartment market and Lehigh at large.

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Friday, September 4, 2020

PREIT Calls Off Plan to Sell Five Shopping Malls

Pennsylvania Real Estate Investment Trust has terminated an agreement to sell five of its malls — a deal it mentioned earlier this year as one of its efforts to raise needed cash.

PREIT owns and operates a portfolio of enclosed malls and shopping centers that has been hit hard by recent retailer bankruptcies and shutdown orders to curb the COVID-19 pandemic. It was one of the first real estate investment trusts to acknowledge its survival may be in doubt.

In its first-quarter securities filing, the Philadelphia-based company said there is “substantial doubt about our ability to continue as a going concern,” citing its current financial condition, liquidity sources and financial obligations coming due over the next 12 months.

Also in that filing, PREIT disclosed in February it entered into an agreement for the sale-leaseback of five mall properties. The transaction was subject to completion of due diligence.

The outbreak of COVID-19 the following month pushed back due diligence efforts and reduced the availability of financing to complete the deal, PREIT said in a Securities and Exchange Commission filing this week. As a result, PREIT elected not to extend the due diligence period any longer and terminated the agreement.

The sale was expected to gross proceeds of $153.6 million in cash. It was structured as a 99-year lease with an option to repurchase. The agreement also provided for release of outlying land parcels for multifamily development.

The deal was a key component of asset sales PREIT arranged this year expecting to raise $313 million.

Geyser Holdings, based in the Detroit area, was identified in a PREIT federal filing this month as the buyer under the sale-leaseback agreement. Geyser did not respond to a request for comment.

The malls identified as having been under contract for sale were: Moorestown Mall in Moorestown, New Jersey; Jacksonville Mall in Jacksonville, North Carolina; Magnolia Mall in Florence, South Carolina; Valley Mall in Hagerstown, Maryland; and Capital City Mall in Camp Hill, Pennsylvania.

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Can commercial real estate rebound after the coronavirus pandemic (Video)

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