Monday, October 25, 2021

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Multibillion-Dollar Philadelphia Redevelopment Project Gets Dubbed ‘Bellwether District’

 By Linda Moss CoStar News

The multibillion-dollar redevelopment of a former oil refinery site in Philadelphia, a project touted as what will be one of the largest and most strategically located U.S. logistics hubs, now has a moniker that reflects the times.

Developer HRP, formerly known as Hilco Redevelopment Partners, on Monday announced the 1,300-acre South Philadelphia property it acquired for $225.5 million in June 2020 will now be called the Bellwether District. The company, based in Chicago, purchased the site of the former Philadelphia Energy Solutions refinery at 3144 W. Passyunk Ave. in a bankruptcy auction.

"This is a poster child of environmental and social justice, let's call it that," Justin Dunn, HRP senior vice president of development, told CoStar News. "The amount of remediation, the amount of development that is going to go into this site — that was 150 years a refinery — and now turning that into an economic and environmental sustainable engine for this region I think is really, really powerful. And we're future-proofing this as much as possible, everything from the energy to the environmental, to the types of buildings, the types of life-science products. ... And those jobs are sustainable for generations to come."

HRP described the refinery as a symbol of the Industrial Revolution for more than a century in Philadelphia — and a factory that polluted its site. Now it has become the latest U.S. brownfield set to be transformed into a new kind of industrial use, mainly distribution, in an environmentally friendly fashion. HRP, the real estate development unit of Hilco Global, is spending hundreds of millions of dollars to decommission, demolish and clean up the property for actual construction, which is expected to start the end of 2022 or early 2023, according to Dunn.

HRP is removing 35,000 tons of asbestos, 850,000 barrels of hydrocarbons, 100 buildings, and 950 miles of pipe from the refinery.

The redevelopment of the Bellwether District is expected to take up to 15 years, "resulting in one of the largest and most strategically significant multi-modal logistics hubs in the country that leverages the site's unparalleled infrastructure and location," according to HRP. The parcel is within an eight-hour drive of one-third of the nation's population, the developer said.

The property encompasses 2% of the land mass of Philadelphia, will create an estimated 19,000 permanent jobs and aspires to be home to global leaders in e-commerce, logistics and life sciences. Roughly 10 million square feet of the project will be devoted to Class A industrial uses, according to Dunn, and 4 million to 5 million square feet is slated for life sciences firms.

Its full tenant roster will include e-commerce, warehouse and distribution companies, as well as light manufacturing, rail and marine operations at the site, in addition to life science, which will take up over 250 acres of the site.

Innovator Role

The Bellwether District name, with its tag line of “Next Starts Here,” was the end result of extensive research, according to HRP, "and reflects Philadelphia’s role as an innovator and achiever of many firsts for the country from the first library, hospital, and medical school to the birthplace of a new nation."

"A bellwether is really a meter or an indicator of trends," Melissa Schrock, HRP senior vice president of mixed-use development, said. "And we see the redevelopment of a very large piece of property as an indicator of what's to come in the future for Philadelphia, so that's why we selected this name."

There's already been inquiries from potentials tenants, according to Dunn.

"There's been a lot of interest in this site based on its location itself and its proximity to New York, the city, Philadelphia, New Jersey and that region," he said.

As part of the project four new city streets are being created, with two of them paying homage to historic Black Philadelphians: James Forten, a Philadelphia businessman and abolitionist, and Frances Harper, one of the first Black women to be published in the United States.

The new Bellwether District name will be featured on buses and various billboards on Interstate 95, Penrose Avenue, the Schuylkill Expressway and other major commuting routes.

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Wednesday, October 20, 2021

Investor Buys Amazon Facility Near Scranton

 By Rachel Whaley CoStar Research

Preylock Holdings has purchased a recently built distribution center fully leased by Amazon in Jessup, Pennsylvania, a borough located about 7 miles from Scranton.

The Los Angeles-based investor acquired the 1.03 million-square-foot facility from a joint venture between Trammell Crow Co. and Diamond Realty Investments Inc., which developed the distribution center. Preylock paid $127.7 million for the facility, according to a Pennsylvania Department of Revenue realty transfer tax statement of value.

Located at 45 Valley View Drive, the joint venture broke ground on the speculative distribution center in November 2018 and wrapped-up construction on it in August 2020. The facility features a 40-foot clear height, 190-foot-deep truck courts with opposing trailer storage, ESFR fire protection, 311 trailer parking spots, 277 car parking spots and 159 dock positions.

The joint venture announced in March 2021 that it leased the entire facility to "a major ecommerce tenant," which was later reported to be Seattle-based retail giant Amazon. The distribution center serves as one of Amazon's XL facilities, where the company packs and ships large items such as mattresses, grills and exercise equipment, according to local media reports.

Monday, October 18, 2021

ASB and Endurance Joint Venture Acquire 1.5-Million-Square-Foot Industrial Complex in Central Pennsylvania for $90.96 Million

 ASB Real Estate Investments (ASB) today announced the acquisition of a 1,525,000-square-foot industrial facility, York Business Center, located in York, PA for $90.96 million in a joint venture with Endurance Real Estate Group. ASB made the investment on behalf of its Allegiance Real Estate Fund, a $7.4 billion core vehicle.

The three-building warehouse facility is situated on 119 acres near the intersection of I-83 and Route 30 and located in the core of the Central Pennsylvania industrial market. This prime location provides easy access to exceptional highway infrastructure that places approximately 40% of the US population, six of the top 10 U.S. MSAs and 51% of the Canadian population within a one-day truck drive. In addition, companies are attracted to the Central Pennsylvania region for its ample blue-collar labor pool—236,000 working-aged people are within a 30-minute drive of York.

The property is 94.2% leased primarily to Harley-Davidson for just-in-time manufacturing and pre-assembly which supports the nearby Harley-Davidson York manufacturing plant,  LSC Communications, a multinational commercial printing company, and WellSpan, a non-profit healthcare delivery company.

The two primary buildings in the complex—787,600 square feet and 686,000 square feet—feature up to 32-foot clear ceiling heights, ample column spacing and a combined dock ratio of one per 7,000 square feet. The overall site provides parking for 1,600 cars and 400 trailer spaces. The asset also includes 53,670 square feet of office space, that WellSpan utilizes as a mission critical operations center.

Brodie Ruland, ASB Managing Director and Co-Head of Acquisitions, said: “The York Business Center investment expands ASB’s industrial portfolio into a strategically important regional distribution and manufacturing corridor. We are continuing to grow and diversify our industrial portfolio across the country meeting the significantly increasing tenant demand for well-located assets that facilitate rapid delivery of parts, products, and consumer goods in and around the nation’s major population centers.”

ASB’s industrial nationwide portfolio, comprising nearly 10 million square feet of space, is 99% leased. The company has invested $1 billion in 17 industrial assets since 2018.

The investment is ASB’s fourth with Endurance Real Estate Group, a diversified real estate developer and management company in the Mid-Atlantic States. The joint venture bought the asset from Equity Industrial Partners.

UDR Acquires Apartment Complex in King of Prussia Suburbs Outside Philly

 By Cara Smith-Tenta CoStar News

UDR Inc., one of the nation’s largest real estate investment trusts, has acquired an apartment complex in King of Prussia, Pennsylvania, outside Philadelphia.

The Denver-based REIT spent $115 million, or $370,968 per unit, on The Smith at Valley Forge, a 310-unit apartment complex at 580 S. Goddard Blvd. next door to the King of Prussia Town Center, according to CoStar research and UDR’s public filings.

Woodfield Development, a South Carolina-based development firm, sold the property and the property was 92.8% occupied at the time of sale, according to UDR’s filings.

 In UDR's second-quarter earnings release, the company said it was under contract to close on an apartment complex in King of Prussia for $115 million.

UDR paid nearly twice the average price per unit that most buyers pay for Philadelphia apartments. The average multifamily property in the city trades for $192,000 per unit.

UDR is also developing The George Apartments, a 200-unit project at 140 Valley Green Lane on the other side of Goddard Boulevard, which should be complete in the third quarter of 2022, according to the company.

The outlook for Philadelphia’s suburban landlords is positive at the moment. Thanks to record completions of new apartment projects in 2020 and the pandemic’s shock to construction lending, the number of properties under construction in the city’s suburbs has been cut almost in half since late 2019.

That could translate to less demand — and therefore the ability to charge higher rents — for landlords in the suburbs in the coming years.

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Wednesday, October 13, 2021

Tilted 10 To Take Over Former J.C. Penney Space in Willow Grove Park

By Mannie Rivera CoStar Research

Paying homage to Willow Grove Park's roots as an amusement park, indoor family entertainment center Tilted 10 and Tilt Studio will be opening a new location in the former J.C. Penney space at the Montgomery County, Pennsylvania, mall in 2022.

The entertainment center, operated by Texas-based Nickels and Dimes Inc., will span two floors and occupy the entire 104,000-square-foot J.C. Penney space. Tilted 10's first location in the Philadelphia region is set to feature over 200 games and attractions, including a bowling alley, multi-level laser tag arena, black light mini golf course, bumper cars, virtual reality games, a pinball arcade, a prize redemption center and a restaurant.

The addition of Tilted 10 is part of a strategy by the mall's landlord, Pennsylvania Real Estate Investment Trust, to expand offerings at Willow Grove Park to meet the changing needs of today's consumer.

"PREIT continues to lead the charge in proactively transforming our properties to create sought-after community centerpieces that serve a multitude of purposes," Joseph F. Coradino, CEO of PREIT, said in a statement. "Tilt is a trusted partner across our portfolio, and we’re excited to bring this unique entertainment experience to the Philadelphia region."

Willow Grove Park was originally an amusement park that opened in the late 1890s. The park operated until the mid 1970s and was later converted into the Willow Grove Park Mall in 1982.

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Tuesday, October 5, 2021

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Northeast Philadelphia industrial building trades for $33.5M

 Natalie Kostelni Reporter Philadelphia Business Journal

A 454,456-square-foot industrial building in Northeast Philadelphia has sold for $33.54 million after attracting a dozen offers.

A joint venture between two New York firms, Ajax Advisors and Brickman Associates, bought the property from Ivy Realty. The building at 11200 Roosevelt Blvd. sits on 25 acres and was fully occupied at the time of the sale to such tenants as Philadelphia Delivery Systems, IK Marketplace, Philadelphia Academy Charter School and Dependable Distribution Services.

Ivy Realty of Greenwich, Connecticut, bought the building in the fall of 2018 for $17.75 million.

Though some of its characteristics can be unattractive to investors — it was built in 1960, is adjacent to a shopping center, and a charter school is a tenant as is a cocoa bean distributor — it still garnered 12 offers.

Full story:

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Monday, October 4, 2021

GSK moving out of Philadelphia Navy Yard to smaller space at FMC Tower

 Natalie Kostelni Reporter Philadelphia Business Journal

GlaxoSmithKline is relocating corporate operations now based at the Philadelphia Navy Yard into FMC Tower at Cira Centre South in University City, joining the University of Pennsylvania, Spark Therapeutics in the building and bringing it closer to one of the city's burgeoning life sciences hubs.

The global pharmaceutical company will be leasing 46,000 square feet at the skyscraper and shrink from 207,779 square feet it occupies at a four-story building at Five Crescent Drive at the Navy Yard. Prior to the pandemic, GSK had 660 employees working each day from the Navy Yard and it expects up to 330 employees to work from FMC Tower.

GSK (NYSE: GSK) will occupy floors 16 and 17 at FMC Tower that Brandywine Realty Trust has occupied for the last four years as its headquarters. Brandywine will relocate into space that had been occupied by Dechert, a law firm, in Cira Centre. Brandywine, which built and owns FMC Tower and Cira Centre, declined comment.

In 2011, GSK signed a 15-year lease on the Navy Yard building, which was designed for it, and completed its move there in early 2013. It was a big deal for the company when it decided to move to the South Philadelphia site and considered pioneering to relocate from offices it had been in for decades in Center City.

Along with its move to the Navy Yard, GSK redefined how office space was used and eschewed many of the traditional ways companies had used space. Gone were dedicated desks and cubicles and a hierarchy that designated expansive offices for executives that were located around the perimeter and often with the best views. Spaces at its Navy Yard building were designed to be open with some break out rooms for meetings and private conversations, and furniture was mobile and benching commonplace.

Many companies, viewing GSK as on the vanguard, mimicked the style of open office and space for employees on a per-square-foot basis shrunk and kept getting smaller. While there was growing backlash against open offices and smaller work spaces, the pandemic threw many of those design elements into question.

GSK expects to complete its move to FMC Tower early next year and, once it vacates the Navy Yard, will seek to sublease the space. Its lease runs until September 2028.

Five Crescent Drive was sold in 2018 for $130.5 million, or $628 a square foot, to an affiliate of Korea Investment Management Co. Ltd.

Full story:

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Friday, October 1, 2021

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Dermody Properties Breaks Ground on 154-Acre Logistics Park in South Jersey

 By Amber Valentine CoStar Research

Dermody Properties has broke ground on a 154-acre logistics park in South Jersey, a region where industrial space remains in high demand.

The three-building, 1.2 million square-foot logistics park, called LogistiCenter at Woolwich, is located at the intersection of Route 322 and Locke Avenue in Woolwich Township in Gloucester County. Dermody plans to make significant improvements to the intersection in conjunction with the development of the park.

LogistiCenter at Woolwich includes a 262,200-square-foot facility at 2062 U.S. Route 322, a 552,585-square-foot facility at 2120 U.S. Route 322 and a 336,700-square-foot building at 2057 U.S. Route 322. Each building is set to feature a 36- to 40-foot clear height, build-to-suit office space, ESFR fire protection systems, 50 to 110 dock-high doors, drive-in doors and ample trailer and car parking.

The logistics park is less than 2 miles from Interstate 295 and less than 3 miles from Interstate 95. Because of its proximity to Philadelphia and Wilmington, the park's direct highway will give tenants the ability to reach 33% of the U.S. population in a single day's drive and 3 million people within a 40-minute drive, Dermody said in a press release announcing the start of construction.

Demand for industrial space had been skyrocketing, driven by e-commerce, in New Jersey even before the pandemic last year. Stay-at-home orders and store closures at the onset of the coronavirus pandemic gave online buying another boost, and the need for logistics space exploded. But there is scant vacant space available to build such projects in North Jersey, so distribution and warehouses are being constructed farther south in the Garden State.

Gloucester County's industrial vacancy rate is 2.1%. Annual net absorption, which measures the difference between the sum of space tenants physically occupied and the sum of space tenants vacated over the past 12 months, sits at 2.5 million square feet.

"The region continues to attract top-tier companies looking for Class A warehouse space that has become too rare to find or too expensive in Central and Northern New Jersey," Rob Borny, partner at Dermody Properties, said in the press release. "We believe that Southern New Jersey will continue to flourish and we’re extremely grateful that our past success in the region has afforded us the opportunity to grow along with it."

Friday, September 24, 2021

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JV Plans 611-Unit Multifamily Project in Philadelphia's Navy Yard

 By Chris Sangiuliano CoStar Research

A joint venture between Ensemble Real Estate Investments and Mosaic Development Partners is planning to build a residential complex in the Philadelphia Navy Yard as part of its $2.5 billion development plan for the high-profile redevelopment project.

The complex, called Chapel Block, is located at 1200 Normandy Place and will comprise a seven-story building and two connected six-story buildings. Chapel Block will include a mix of luxury and mixed-income apartments, 75,000 square feet of indoor and outdoor resident amenity space and 26,000 square feet of space for restaurants and retail.

The seven-story building will be developed on the north end of the Chapel Block site in partnership with Korman Communities under its residential real estate brand, AVE. Called AVE Navy Yard, the building will include 265 luxury units, a portion of which will be reserved as flexible-stay, fully furnished apartments offered on a monthly basis for people who need a temporary living option. The building's amenities will include a pool, media theater, fire pit lounge, grilling stations, meeting spaces, golf simulator, music studio and pet spa.

On the south end of Chapel Block, the two six-story buildings will contain 346 market-rate and affordable units. The two buildings will be connected on the ground floor by shared amenities, including a fitness center, business center, lounge areas, game area, party room with gourmet kitchen, pet spa and bike storage.

Chapel Block was designed by a partnership between Philadelphia-based DIGSAU, the design architect, and Columbus, Ohio-based Moody Nolan, the architect of record.

"Ensemble/Mosaic is on the cusp of reaching a longstanding, identity-shifting objective — to evolve the Navy Yard into a fully functioning Philadelphia neighborhood," Brian Cohen, senior vice president at Ensemble, said in a statement. "We are incredibly excited at the prospect of creating a vibrant and diverse residential community so people may further enjoy this unique location and all it has to offer.

Earlier this year, PIDC, the public-private economic development corporation and master developer of the Philadelphia Navy Yard, executed an an agreement that provides Ensemble and Mosaic with the exclusive development rights for 109 acres in the Navy Yard. That agreement launched a $2.5 billion development plan by Ensemble and Mosaic that's set to create thousands of construction and permanent jobs. Ensemble and Mosaic were selected as the co-development team for this project in July 2020 after PIDC put out a call for prospective partners through a request for qualifications in September 2019.

Ensemble and Mosaic is working with PIDC and the Navy to complete the technical steps necessary to lift the residential deed restrictions on the parcel where Chapel Block will be developed.

The joint venture plans to break ground on the project in 2022 and open the complex in 2024.

Thursday, September 23, 2021

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Amazon's New 3.8M SF Mega Warehouse in Wilmington, DE

 By Linda Moss CoStar News

It’s named for an airport. Its mascot is a dragon. Its motto is “Courage to start, heart to finish.” And it’s a logistics behemoth. Welcome to Amazon’s newest next-generation robotic fulfillment center.

The e-commerce juggernaut opened the 3.8 million-square-foot facility this month in Wilmington, Delaware, at the site of a former General Motors assembly plant at 1025 Boxwood Road. Dermody Properties of Reno, Nevada, is the developer and landlord of the project that Amazon is leasing, one of the company’s biggest facilities in operation.

Seattle-based Amazon has at least 16 mega distribution facilities that span at least 2 million square feet under construction or proposed across the United States and Canada, according to Ben Atwood, a senior market analyst at CoStar Group who has been tracking the data. The e-tailer, which is increasingly using robotic technology at its facilities, has been pressed to accommodate the increasing demand from online shopping, which was exacerbated by the COVID-19 pandemic. That's one reason Amazon has been the nation's most active industrial tenant.

The company is usually fairly tight-lipped when it comes to its warehouses and distribution centers, but this week it invited local officials and the media to tour the state-of-the-art Wilmington site. Photographers were barred from taking photos of certain parts of the plant, for proprietary reasons, Amazon said. The brand new building is five stories tall, with a 640,000-square-foot ground floor and gigantic floor plates.

“Just picture 17 football fields five times going up … pretty big, overall, for a facility,” Will Carney, the center’s general manager and a U.S. Marine Corps veteran, told reporters on Tuesday.

The facility has hired 500 workers so far and is looking to add another 500 to the site, according to Amazon officials. Carney, whose work at Amazon includes a stint at its 1.7 million-square-foot site in West Deptford, New Jersey, said there have been about four other super-robotics launches that Jeff Bezos’s giant business has debuted recently.

Airport Inspiration

The Wilmington facility is called MTN1. Amazon fulfillment’s centers are named after local airports, and MTN1 got its moniker from Martin State Airport in Maryland, according to Jairaj Vora, the site’s assistant general manager.

Because MTN1 is just getting up and running and isn’t fully staffed yet, there weren’t that many employees to be seen during the media tour. The center is a seemingly endless sea of conveyors and ramps and stacks of yellow bins used to transport, sort and stow products. The noise was loud enough that reporters were given headsets with speakers so they were able to hear Vora over the din during the tour.

The loud noise gives one indication of what some Amazon workers across the country have complained can be tough working conditions with high productivity goals at some of the company's facilities.

The next stop “upstream,” as Amazon officials would say, is for these orders to be sent to Amazon sorting stations and delivery stations, so they can travel the so-called last mile to shoppers. Amazon has a delivery station next to the new Wilmington fulfillment site, according to Carney.

Robots save Amazon employees lots of steps, according Vora, who said in some facilities workers had been walking the equivalent of 20 miles during a shift. And having fewer humans on the floor puts them less at risk physically, Amazon officials said, for example, from being hurt in an accident.

The corporate position on robots is that they aren’t eliminating jobs, they are creating them at Amazon fulfillment centers.

“Transporting thousands of pods per floor with millions of products stowed inside, the robots enable more inventory to pass through a fulfillment center, which means more associates are needed for handling that inventory,” according to Amazon’s website. “Since 2012, Amazon has added tens of thousands of robots to its fulfillment centers, while also adding more than 300,000 full-time jobs globally.”

General manager Carney declined to say how much Amazon has invested in the Wilmington fulfillment center. But that facility and the delivery station next door will be adding to the over 5,000 jobs Amazon already has in Delaware, according to Carney.

The money that Amazon has put into its two Wilmington buildings contributes to the more than $4 billion in investment the company has made to date during the past 10 years in Delaware, contributing $3 billion to the gross domestic product of in state, he said.

Carney described the new Wilmington fulfillment center as "probably one of the most special in the Northeast ... so close to one of our first-generation buildings."

That's because Amazon debuted the first fulfillment center in its network in New Castle, Delaware, in 1997 about 7 miles away from Wilmington.

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Friday, September 17, 2021

Rite Aid Corp. to move HQ to Philadelphia Navy Yard

 Natalie Kostelni Reporter Philadelphia Business Journal

Rite Aid Corp. will relocate its headquarters to the Philadelphia Navy Yard, after having spent decades based in Camp Hill.

The company leased 23,500 square feet at 1200 Intrepid Ave. and will open what it is calling an “enterprise headquarters” as part of an effort to redefine how it envisions its employees working as a result of the pandemic.

Rite Aid is moving to a “remote-first work approach for corporate associates, supported by a network of collaboration centers throughout the company’s geographic footprint,” the company said in a statement. “The reimagined workplace model focuses on flexibility for associates, while also creating an official headquarters space in Philadelphia designed specifically for in-person collaboration and company gatherings, rather than office spaces.”

The company has 2,800 corporate employees and a representative from Rite Aid said the number of people working out of the Philadelphia Navy Yard will fluctuate. The move will take place in the first half of 2022.

"It's a vibrant area and it's an exciting place to be," said Brad Ducey, a company spokesman. "It's central and easy for employees, partners, clients."

Rite Aid is No. 132 on the most recent Fortune 500 list. The company reported revenue last year of $24 billion.

Full story:

Tuesday, September 14, 2021

New $55 Million Multifamily Complex Set To Be Completed by End of 2023

 By Scott Morrill CoStar Research

A joint venture between Method Co. and Cimbra Partners has started construction on a new 142-unit multifamily complex in the East Falls neighborhood of Philadelphia.

The $55 million project is set to include a mix of one- and two-bedroom floor plans with select bi-level duplex units, short-term furnished rental units and 10,450 square feet of ground-level retail space.

Method Co. and Cimbra Partners secured a $30 construction loan for the project from Pacific Western Bank.

The project's amenities are set to include an outdoor pool and lounge, residents’ lounge, game room, private workspaces, fitness center, yoga room and bike room. It will also feature a public art installation in accordance with the city's Percent for Art program.

The project is located along the Schuylkill River at 4300 Ridge Ave. in East Falls, a neighborhood that has a scenic riverfront, burgeoning restaurant scene, regional rail access and walkability.

"The challenge for residential developers in East Falls has never been leasing up projects once they are complete, but rather finding large enough parcels in which to build at scale," said Adrian Ponsen, CoStar's director of market analytics for Philadelphia. "This project has already cleared that hurdle having secured the most visible development site in the neighborhood and will likely further enliven the already up-and-coming retail corridors along Ridge and Midvale Avenues in its backyard."

Method Co. and Cimbra Partners' project is set to be completed by the end of 2023.

Friday, September 3, 2021

The Remarkable Strength of Lehigh Valley's Multifamily Market

By Ben Atwood CoStar Analytics

It is a good time to be an apartment owner in Pennsylvania's Lehigh Valley.

The market’s year-over-year rent growth sits at a lofty 10.5%, the strongest levels its ever recorded.

Every region within Lehigh is posting above-average gains in the third quarter, with the strongest seen in Central Lehigh County, where year-over-year growth is over 15%.

There are some properties in this area that have been posting jaw-dropping levels of growth. The Allen Gardens, the Bridgeview, the Spring View Apartments and the Woodmont Ridge are all showing year-over-year gains over 20%. In the Tremont Apartments, rents have climbed by more than 40% in the past 12 months.

Suburbs such as Central Lehigh County show the strongest levels of gains, but Lehigh's more-urban areas are also performing well. This is particularly true in downtown Allentown, where year-over-year growth is close to 10%.

That’s impressive for any urban core, but doubly so in Lehigh because these rents aren't being compared to a 2020 rent downturn. That’s something many other cities experienced in 2020, as renters fled to the suburbs.

But downtown Allentown never saw this drop. Its rents kept growing through the coronavirus pandemic and its new arrivals filled within days of opening their doors.

Rapid success in leasing up isn’t limited to just Downtown. Though most recent construction has been in the city, new suburban projects, such as the Dream Lehigh Valley Apartments, also filled within months of opening.

The data shows a near total absence of vacant units across the Lehigh Valley. The market's overall vacancy rate sits at 1.3%, which is also a record, and some of its suburbs are even tighter.

There's very little that's available to immediately rent in institutional assets inside of Northwestern, Southeastern and East Lehigh County. Scour listings on and you will find few units available and even fewer owners offering renters any form of concessions. 

There's also almost nothing underway to disrupt Lehigh's rent-growth, either.

The regions to watch in the coming quarters will be Northwestern Lehigh County and Southeastern Northhampton County. These areas have over 300 units underway, and the rapidity of their lease-up could provide further insight into apartment demand.

Looking at the data now, its hard to believe these projects will struggle at all. Their success could prompt more growth and indeed, Lehigh looks primed for it.

Thursday, September 2, 2021

JV Partners Sell 430K-SF Industrial Asset in Philadelphia Area

 By Ingrid Tunberg

Joint-venture partners, ASB Real Estate Investments and Endurance Real Estate Group LLC have sold a 430,373-square-foot industrial building to global real estate operator, EQT Exeter for $41.9 million.

Located at 450 Winks Ln. in Bucks County, PA, the multi-tenant industrial asset is situated within the Expressway 95 Business Park, directly north of Philadelphia, PA.

The sale was made on behalf of ASB Real Estate Investments’ Meridian Real Estate Fund II.

The joint-venture partners purchased the property in December 2018. The asset was originally constructed in 1973.

“The sale represents an excellent execution of our value creation strategy and benefits from the current high demand from institutional investors for industrial properties, driving down cap rates, increasing valuations, and escalating sale prices,” says Brodie Ruland, managing director and co-head of acquisitions at ASB Real Estate Investments.

“Demand of infill industrial assets continues to be a strong market driver in the surrounding counties of suburban Philly. Our diverse tenant roster made this a very desirable industrial opportunity, which was highly competitive and sought after by many buyers.”

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Monday, August 30, 2021

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EQT Exeter picks up 8 buildings in Delaware County for $48.45M

EQT Exeter has purchased a portfolio of buildings at Naaman's Creek Business Center in Delaware County, Pennsylvania, from SSH Real Estate for $48.45 million.

The portfolio, which was 100% leased at the time of the sale, comprises eight industrial and office buildings totaling 265,757 square feet in Boothwyn on Route 322 near Interstate 95.

All eight buildings are situated on about 45 acres and feature a diverse tenant roster of 16 companies that use the properties for warehouse, logistics, office, lab, pharmaceutical and showroom space. The largest tenant is Pentec Health, a pharmaceutical manufacturer. Other tenants included in the portfolio are Nielsen-Kellerman Co., UnitedHealth Group, Federated Healthcare Supply Inc. and Patterson Dental.

SSH, along with its family office joint-venture partner, assembled the portfolio through three separate transactions between August 2017 and April 2021. The firm paid a total of $28 million for the eight buildings.

"While we had underwritten a longer hold, the combination of value creation, and incredible investor demand for warehouse and life science product made the timing ideal for a sale," Greg Muller, partner of SSH Real Estate, said in a statement. "We and our investors are extremely pleased with the outcome and look forward to continuing to seek additional value-add investments.".

Full story:

Thursday, August 26, 2021

CoreOne Sells South Jersey Industrial Facility for $26 Million

By Teresa Blackmon CoStar Research

CoreOne Industrial LLC has sold an industrial facility in Logan Township, New Jersey, for $26 million, or about $102 per square foot.

The Connecticut-based industrial investor sold the facility to Black Creek Industrial REIT IV, CoreOne said in a statement announcing the deal. CoreOne paid $12.4 million for the property in November 2017.

The industrial facility is located at 405 Heron Drive and totals 245,220 square feet. It was built in 1980, according to CoStar data.

"The Pureland Industrial Complex is Southern New Jersey’s premier industrial park," Joe Burton, president of CoreOne, said in the statement. "We have continued to invest in the park since our first acquisition in Pureland in January, 2017 and it has been consistently rewarding. The sale of our 405 Heron Drive asset will afford us the ability to immediately reinvest back into the market as we continue to uncover value and drive return for our investors."

SK Realty Management Pays $73 Million for York Logistics Hub

By Rachel Whaley CoStar Research

SK Realty Management has purchased York Logistics Hub, a three-building complex comprising 1.4 million square feet of industrial and manufacturing space in York, Pennsylvania, for $73 million.

The real estate investment group acquired York Logistics Hub from Patriot Equities. SK Realty Management also secured a $48.2 million loan for the acquisition through a regional bank.

Located at 601, 621 and 631 S. Richland Ave., York Logistics Hub comprises three buildings called South Campus, North Campus and West Office Tower, which together were 72.5% occupied by 13 tenants at the time of the sale.

South Campus totals 743,413 square feet and is anchored by Johnson Controls, which occupies 71% of the building for its mission-critical manufacturing operation. North Campus total 548,632 square feet and has redevelopment potential. And the West Office Tower totals 116,255 square feet and can potentially be redeveloped into industrial space

York Logistics Hub is located along Route 30 and 2 miles from Interstate 83, providing access to the region's critical highway infrastructure. Its location allows tenants to reach about 412,000 residents within a 30-minute drive, along with access to over 40% of the U.S. population, six of the top 10 metropolitan areas and more than 50% of the Canadian population.

"York is a fantastic industrial location, as it has a strong labor base and good connectivity to Harrisburg and Baltimore. The sales process saw very strong interest from a wide array of investors and developers, given the great in-place cash flow with the potential in the future for re-development of new Class A warehouse."

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Wednesday, August 25, 2021

S. Jersey Industrial Buildings Built on Speculation set record with $108M Price Tag

 Natalie Kostelni Reporter Philadelphia Business Journal

A California real estate company has paid $107.74 million, or $201 a square foot, for a pair of industrial buildings in South Jersey.

Watson Land Co. bought a 283,040-square-foot building at 100 Huff Lane, and a 252,750-square-foot building at 191 Harmony Road, enters South Jersey with the purchase and expands its East Coast presence. The company, which focuses on buying and developing industrial real estate, owns properties in the Lehigh Valley.

The sale of the Cubes at Huff Lane and the Cubes at Harmony Road in East Greenwich sets a new high water mark on a per-square-foot basis for traditional a warehouse in South Jersey, according to JLL.

The seller was CRG, the real estate development and investment arm of Chicago-based Clayco.

The transaction embodies all of the aspects of the industrial market these days, particularly in South Jersey.

Banking on continued robust demand, CRG developed the two buildings in 2020 on speculation, or without any tenants lined up to fill the space. The location of the two buildings had all of the elements for success since it was adjacent to Interstate 295, a half mile from the New Jersey Turnpike and about 20 miles from Interstate 95.

The gamble CRG took paid off as have most of the speculative developments undertaken throughout the region. The real estate company landed long-term tenants for the buildings. Jaguar Land Rover North America, which is headquartered in Mahwah, New Jersey, leased the Huff Road building. Elogistics, a rapidly expanding Chinese-based third-party logistics provider, leased the Harmony Road property.

“When I first developed in Central New Jersey in 1999 at Exit 8A, I remember I was accused by my own company as being a renegade,” said Frank Petkunas, who is Northeast industrial leader for CRG and was then with a different company.

Full story:

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Monday, August 23, 2021

DHL Supply Chain Begins Work on Life Science Warehouse Facility in Lebanon

 By Mannie Rivera CoStar Research

DHL Supply Chain has started construction on a new warehouse facility in Lebanon, Pennsylvania.

This warehouse is part of DHL Supply Chain's $88 million investment that includes the construction of two facilities at 3100 State Drive. The first building is a 970,000-square-foot manufacturing, warehousing and distribution facility that is set to help optimize logistics in the Northeast for a leading life science and pharmaceutical company, DHL Supply Chain said in a statement announcing the project.

"Life sciences and healthcare logistics is complex with no margin for error given the life-sustaining and life-saving nature of the equipment and supplies moving through our supply chains," Scott Cubbler, president of life sciences and healthcare at DHL Supply Chain, North America, said in a statement. "At DHL Supply Chain, we understand this complexity and have developed the industry leading team of logistics experts to implement cutting-edge solutions. Our investment in Lebanon Valley will enable our life science partner to fulfill their commitment to excellence in patient care."

The 970,000-square-foot facility is expected to be operational by the end of the first quarter of 2022 and is set to create at least 200 jobs, according to DHL Supply Chain.

Investors Spending Big on Lancaster County Industrial Properties

 By Ben Atwood CoStar Analytics 

Data shows investors have taken quite an interest in the industrial assets in Lancaster County, Pennsylvania, this year.

They've spent over $315 million buying them over the course of 2021, which is already the highest figure ever recorded in this small central Pennsylvania market. Their interest speaks to the strengths of both the logistics sector and Lancaster itself.

The coronavirus pandemic fueled an absolute surge in demand for shipping, leading to preposterous levels of industrial leasing activity across the country's major shipping nodes. This effect is particularly pronounced across central and northeast Pennsylvania, where markets such as Scranton and Lehigh Valley continue posting some of the nation’s strongest levels of demand and rent growth.

Lancaster's position on the supply chain is nowhere near as strong as either of those markets. While this county does offer direct access into Philadelphia's wealthier suburbs, it lacks the north/south highway routes that many of its neighbors offer.

But that doesn't mean there isn't demand for Lancaster space. The market's vacancies are nearly nonexistent, and there'd probably be quite a bit more leasing activity if it were easier to build here. Unfortunately for warehouse builders, Lancaster County’s residents are big on preserving their agrarian heritage and have it made it rather difficult to bring large-scale projects on line.

Barring some drastic change to local politics, there likely won't be a supply surge in Lancaster like what's being experienced in Lehigh Valley, Scranton or Reading. So, with limited supply and nearly endless demand, it's no surprise at all that prices are going up.

Take a look at this transaction involving 601 Stony Battery Road. It was completed in February 2021, and the 250,000-square-foot asset was completely vacant when it sold shortly after coming online. TA Realty out of Boston bought the property for $23.7 million, or nearly $95 per square foot.

Those prices are significantly higher than the market’s three-, five- and 10-year averages, and what’s even more interesting is TA Realty sold this same property in July. It was still completely vacant, and they weren’t marketing it for sale. But industrial investor and developer Dalfen Industrial made an off-market bid too good to pass up.

Equally curious is the fact that other markets along the North Atlantic Trade Corridor are not experiencing this same surge in investment. Sales volume for 2021 has notably dropped in Scranton, Lehigh, Harrisburg, York and Reading.

There are still four months left in the year, so obviously all of that could change. But right now, Lancaster appears to be the hottest industrial investment market in Pennsylvania.

Dalfen Industrial Picks Up Pair of Lancaster County Distribution Facilities

 By Rachel Whaley CoStar Research

Dalfen Industrial has purchased two distribution facilities in Lancaster County, expanding its portfolio in Pennsylvania.

The industrial investor and developer acquired the pair of properties from TA Realty for $70 million. TA Realty acquired the two buildings in separate transactions between December 2020 and February 2021.

The two properties involved in the deal include a brand new, 252,800-square-foot facility at 601 Stony Battery Road in Landisville and a 320,000-square-foot facility at 35 Conewago Road in Elizabethtown that was built in 2018. The Elizabethtown facility is fully leased by Grove Collaborative, according to CoStar data. Both buildings feature characteristics highly demanded by e-commerce tenants, including high clear heights, a large number of loading docks, ample parking and modern office space, according to Dalfen.

"The fundamentals of this market and location near multiple major cities such as New York City, Philadelphia, Baltimore, and Washington D.C make these assets a great fit for our portfolio," said Sean Dalfen, President and Chief Investment Officer. "In addition to the proximity to major cities, the great workforce demographics, accessibility to major highways, and robust demand in the area further substantiate the strategic fit of these properties."

With this purchase and its development in Lehigh Valley, Dalfen now owns and operates close to 2 million square feet in Pennsylvania.

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Mainfreight Inks Lease for LogistiCenter at Lehigh Valley East Facility

 By Chris Sangiuliano CoStar Research

Global supply logistics provider Mainfreight has leased an entire facility within Dermody Properties' LogistiCenter at Lehigh Valley East in Wind Gap, Pennsylvania.

Mainfreight is taking the 207,900-square-foot facility at 460 E. Moorestown Road, which was built in 2020, according to CoStar data.

"We are excited to grow our footprint to eastern Pennsylvania, further extending the capabilities and network reach we offer to our customers," René van Houtum, president of warehousing for Mainfreight, said in a statement. "With this site, our North American footprint now covers 1.8 million square feet across ten North American regional sites."

The Lehigh Valley is a desirable location for a company like Mainfreight, which was looking to expand its retail and direct-to-consumer fulfillment operations in the Eastern United States, according to Gene Preston, east region partner at Dermody Properties.

The other building at LogistiCenter at Lehigh Valley East, a 349,920-square-foot facility at 450 E. Moorestown Road, is currently available for lease.

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Developer Picks Up Proposed 2.4 Million-Square-Foot Rausch Creek Logistics Center in Valley View, PA

By Mannie Rivera CoStar Research

Panattoni Development Co. has purchased a development site in Valley View, Pennsylvania, that's set to host a 2.39 million-square-foot logistics park.

Tremont FT LLC, an affiliate of brownfields redeveloper Viridian Partners, sold the site for the proposed Rausch Creek Logistics Center to the Irvine, California-based developer for $25.75 million.

Building 1, totaling 1.35 million square feet, is set to be completed by the third quarter of 2022. Building 2, totaling 1.04 million square feet, is set to be pad ready for construction in early 2022. Both Rausch Creek Logistics Center buildings are being developed on a speculative basis. The development is located at 978 Gap St., sitting immediate off Exit 107 of Interstate 81 and 18 miles from Interstate 78.

"Located in the heart of Pennsylvania’s I-78/I-81 Industrial Corridor, Rausch Creek Logistics Center will offer tenants superb access to major industrial markets in the Northeast," Hess said in a statement. “Panattoni Development specializes in build-to-suit and speculative industrial development. With limited inventory in Central Pennsylvania and the Lehigh Valley, and with a 75% LERTA tax abatement available, this state-of-the-art industrial park will attract an array of prominent industrial users.”

Friday, July 30, 2021

Joe Flacco & Nexii Building Solutions Green Construction in Hazelton, PA

 By Ben Atwood CoStar Analytics

NFL quarterback Joe Flacco is partnering with Nexii Building Solutions just as the Canadian manufacturer of synthetic concrete wraps up construction on its first American production plant in Hazleton, Pennsylvania.

Within the Hazleton plant, Nexii will create Nexiite, a carbon-free form of concrete. Concrete production is one of the world’s leading causes of carbon dioxide emissions, and the eco-conscious firm hopes that Nexiite can take its place in commercial real estate construction.

What’s in it for Flacco, Super Bowl XLVII's most valuable player and current backup quarterback for the Philadelphia Eagles? The chance to make a few bucks, sure. But to do it while contributing to the fight against global warming for a construction firm with an environmental mission he believed in played a major role in him partnering with the team.

But Flacco told CoStar in an interview via Zoom that he was also excited about bringing jobs to challenged areas, such as Hazelton.

"Getting involved with a company that has a mission like this was certainly a big part of the draw," said Flacco. "But it’s also incredibly rewarding to help bring jobs to struggling areas like Hazleton."

Greater Hazleton absolutely could use the jobs. Located deep in the Pocono Mountains and about 30 miles south of Scranton, this small city and its surrounding townships are deep in the heart of coal country.

This region was built around coal and manufacturing, and the decline in those industries brought about decades of hard times. The lack of blue-collar jobs is fueling outmigration from Northeast Pennsylvania, and census data shows that this part of the Commonwealth has lost quite a few residents over the past decade.

While Nexii’s arrival won’t turn the tide on that trend, it likely can’t hurt, and the plant will be the latest in a string of good news for Northeast Pennsylvania real estate.

Scranton's industrial market is positively booming right now, as hardly a week goes by without a mega-lease being signed in one of Hazleton’s warehouses. Even the normally slow Schuylkill County is getting some action, as this week over a million square feet signed in a distribution center built on top of a demolished mall. And this week, President Biden visited Lehigh Valley to talk about his administration’s initiatives to bring back manufacturing jobs to Pennsylvania.

Nexii’s Executive Vice President Gregor Robertson previously indicated that bringing jobs to regions like Hazleton is also part of its core mission, and his firm is doubling down on the Keystone State. The Nexiite manufactured in Hazleton will be used to build the company's next plant in Pittsburgh, a city that Joe Flacco knows quite well from.

The Baltimore Ravens and Pittsburgh Steelers’ longstanding rivalry was quite heated during Flacco's tenure with the team. It will be a little ironic if the quarterback so despised by the overwhelming majority of its residents ends up creating hundreds of jobs within it.

This is Flacco's foray into the world of commercial real estate and it might not be his last. Though he declined to comment on when he might be stepping away from the NFL, he hinted that the industry could be something he becomes more involved with after he hangs up his cleats.

Several other former athletes, including Super Bowl quarterbacks, have taken a similar path. Dallas Cowboys hall-of-famer Roger Staubach has been heavily involved in it for decades.

"The construction side of it was really cool," said Flacco. "You're creating something that you can see, something that has tangible benefits for the community around it that will be here after you are gone."

Logistics Property Co. Plans 1.5 Million-Square-Foot Industrial Center Outside Philadelphia

 By Linda Moss CoStar News

A Chicago developer has acquired a site outside Philadelphia where it plans to build a more than 1 million-square-foot industrial campus.

Logistics Property Co. purchased a 72-acre parcel in Cinnaminson, New Jersey, for its planned Box Park Logistics Center, which will have 1.2 million to 1.5 million square feet of industrial space and up to 6 acres of parking.

“This is a trophy project in one of the strongest markets in the country,” Mark Glagola, senior vice president and market leader, Northeast region, for Logistics Property, said in a statement.

New Jersey does in fact have one of the hottest industrial markets in the nation, with record-low vacancy rates and demand outpacing supply. The Garden State benefits because it is located in the center of a densely populated region, nestled between New York City and Philadelphia, a key for quick delivery in the age of e-commerce.

“Strong fundamentals have attracted developers and more than 5 million [square feet] of new inventory has opened since the start of 2017,” CoStar said in a recent report on the Northern New Jersey logistics market. “Industrial tenants favor new, efficient facilities and projects generally see rapid lease-up.”

The Philadelphia industrial market is also performing well, according to CoStar.

“Thanks to surging demand for space from which to distribute the growing number of retail goods sold online, Philly’s industrial market has never been tighter,” CoStar said in a recent report. “The metro area’s vacancy rate is holding near all-time lows of 4.4%, while leasing has leapt to new records during the past 12 months and is accelerating heading into the second half of 2021. Developers have certainly taken notice. The recent spike in groundbreakings on new distribution centers has been nothing short of astounding.”

Logistics Property’s site in Burlington County is located immediately off U.S. Route 130 and offers quick access to Interstates 95 and 295 as well as the New Jersey Turnpike, Logistics Property said. It has direct access to New York City, Baltimore, Washington, D.C., Boston and Pittsburgh within a one-day drive, and the entire Philadelphia metro area in less than one hour, according to Logistics Property.

“With flexibility of design, an abundance of both trailer and car parking, and the ability to build up to 1.5 million square feet, Box Park Logistics Center promises to be a [premier] logistics location."

FCL Builders is the general contractor on the project and will start site clearing and grading in roughly three weeks.

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Tuesday, July 27, 2021

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Bed Bath & Beyond Plans Massive Distribution Hubs - 1M SF In PA

 By Linda Moss CoStar News

Bed Bath & Beyond, among the national retailers trying to modernize supply chains to meet the demands of e-commerce, is partnering with a third-party logistics firm to open large distribution centers in Pennsylvania and Southern California.

The Union, New Jersey-based home goods company said Monday it struck a deal with Ryder System of Miami, which will be developing and operating regional facilities "that will reduce product replenishment times to Bed Bath & Beyond and Buy Buy Baby stores to less than 10 days from the current 35 days."

The first distribution facility will be 1 million square feet, with the potential for expansion, in Frackville, Pennsylvania, near Scranton. It will supply merchandise to stores throughout the Northeast for both in-store shopping and online shopping services such as buying online, picking up in the store or curbside, same-day delivery, and shipping from store, according to Bed Bath & Beyond.

The move marks something of a battle of the warehouses between e-commerce giant Amazon and other retailers trying to keep up with online shopping demand.

Bed Bath & Beyond, under the new leadership of CEO Mark Tritton, has been trying to overhaul and streamline its online fulfillment service, which the company has conceded lagged far behind the industry. Like other traditional brick-and-mortar retailers, Bed Bath & Beyond is competing to offer seamless online ordering and quick delivery like that of Amazon and fellow retailers Walmart and Target, where Tritton once worked.

A former mall in Frackville, the Schuylkill Mall, has been demolished and replaced by a 1 million-square-foot industrial property that NorthPoint Development of Riverside, Missouri, developed on speculation, without having a tenant immediately signed. That logistics complex, called Tradeport 124, will ultimately have two buildings with 1.3 million square feet.

A vast number of retailers have distribution centers in Schuylkill County, the mostly rural area where Frackville is located. The tenant list includes Walmart, Lowe's, Hudson's Bay and Big Lots. And Amazon plans to open a 1 million-square-foot fulfillment center nearby in a new facility in the Valley View Business Park in Jessup, Pennsylvania.

Frackville itself is near the intersection of Interstate 81 and Pennsylvania State Route 61, about 102 miles northwest of Philadelphia and 45 miles southwest of Wilkes-Barre. Bed Bath & Beyond's distribution center there will open this fall, and Ryder will then open a similar facility next year in Southern California. The distribution hubs will each create 300 new jobs in their local communities.

In October, Bed Bath & Beyond announced plans to allocate $250 million of capital investments to overhaul its distribution system.

"The modernization of our supply chain is one of our core operational transformation initiatives to create greater efficiencies and reduce 'out of stock' occurrences for our customers," John Hartmann, chief operating officer for Bed Bath & Beyond, and president of Buy Buy Baby, said in a statement.

"As we provide our customers with an omni-always shopping environment, it is imperative for our growth to invest in our supply chain to ensure that we are meeting the needs of the business and our valued customers," he said. "Ryder is a clear leader in logistics, and we look forward to leaning on their expertise and capabilities to help modernize our supply chain and distribution network operations."

Bed Bath & Beyond has taken a number of actions to to update its supply chain as its digital orders have soared, including selecting Oracle earlier this year as the company's enterprise resource planning technology provider and the announcement of Relex Solutions, a retail-focused omnichannel tool that will provide real-time visibility into the supply chain.

"These added technology solutions will enable the company to track the merchandise and products stored and distributed by these new regional distribution centers, enabling greater efficiencies and capabilities to plan and forecast product replenishment to improve in-stock positions and speed to market," Bed Bath & Beyond said.

The retailer last week reopened its newly redesigned flagship store in Manhattan, a showcase of its plan to remodel 450 stores.

Monday, July 26, 2021

Wharton Industrial Acquires Two NJ Portfolios

By Ingrid Tunberg

Wharton Equity Partners’ platform, Wharton Industrial has acquired six industrial properties, totaling 280,000 square feet in Southern New Jersey.

The industrial developer and investor’s purchases encompass two industrial portfolios; a three-building, 153,400-square-foot portfolio in Pennsauken, NJ and a three-building, 130,000-square-foot portfolio in Cherry Hill, NJ.

The firm acquired the Pennsauken portfolio in a joint-venture transaction with Walton Street Capital. The acquisition adds onto the joint-venture partnership’s 32-building, 1.1-million-square-foot Twinbridge Industrial Park, located off of Rte. 73.

Wharton Industrial acquired the Cherry Hill, NJ portfolio in an off-market transaction from a long-term owner.

Wharton Industrial will implement a comprehensive capital improvement program within both portfolios. The improvements will include roof replacements, landscaping upgrades, exterior painting and repairs, and improvements to truck loading stations.

“Southern New Jersey and the rest of Greater Philadelphia is home to one of the hottest and most promising industrial markets in the country, and these new acquisitions are a testament to our confidence in its continued growth potential,” states Peter C. Lewis, founder and chairman of Wharton Equity Partners.

Lewis adds, “As the largest industrial landlord in Pennsauken, we’ve witnessed the enduring appeal of this market first-hand, and the assets we have acquired in the Cherry Hill area represent a perfect fit with our strategy of acquiring first-class buildings in densely populated markets.”

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FellowShip Leases 185,000SF in Bucks County Warehouse

By Scott Morrill CoStar Research

FellowShip, a third-party logistics provider, has leased a warehouse facility within the Keystone Industrial Park in Bucks County, Pennsylvania.

The California-based company will be leasing the 184,611-square-foot facility at 3001 Frost Road. The facility is located in the Keystone Industrial Park, a business park in Bristol Township at the Route 413 interchange of Interstate 95.

The 3001 Frost Road facility, which is owned by EQT Exeter, features 20- to 30-foot clear heights, 28 tailgate loading docks and a drive-in door, 15,000 square feet of office space and an ESFR sprinkler system.

Wednesday, July 21, 2021

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Student Housing Complex Near Kutztown University Sells for $20.1 Million

 By Javon Roach CoStar Research

A student housing complex near Kutztown University in Kutztown, Pennsylvania, has sold for $20.1 million.

DLP Real Estate Capital acquired the student housing complex, called Edge at Kutztown, from a private investor.

Edge at Kutztown is located half a mile from Kutztown University and a mile from downtown Kutztown at 2200 Lifestyle Lane. Built in 2008, Edge at Kutztown includes 522 beds across 184 units. Its amenities include a clubhouse, patio with grilling area, package receiving area, pool table, bike racks and vending machines.

"The Philadelphia region has had limited true value-add opportunities like the Edge at Kutztown. As a result, we had robust interest in the opportunity across the spectrum of investors. We conducted more than 20 tours and had a significant number of bidders."

Tuesday, July 20, 2021

GI Partners Buys Port of Technology Building in Philadelphia

 By Mark Heschmeyer CoStar News

GI Partners’ recently launched technology and science real estate fund has stepped up acquisitions in the past few weeks, picking up about $235 million in properties.

The firm’s most recent buy, in Philadelphia, is the San Francisco-based private investment firm’s first outside of the U.S. tech capital of Silicon Valley and the Bay Area in California. The deal shows the nationwide lure of investing in lab office space for tenants in the growing life science industry.

GI Partners acquired 3701 Market St., a 140,913-square-foot lab and research-and-development facility. The company paid $79 million for what’s been dubbed the Port of Technology Building.

The fund said it seeks to acquire data center properties, life sciences assets, and “always on” R&D facilities within the office and industrial sectors.

These types of properties “support essential functions of the 24/7 modern economy,” John Sheputis, managing director of GI Partners and head of the fund, said in a statement. “Our goal is to maximize risk-adjusted returns for our investors by identifying untapped segments of the market where our experience provides a critical competitive advantage.”

“The life sciences sector, especially since the start of the pandemic, has come to be regarded by investors around the world as low risk and low volatility. Philadelphia’s life sciences market continues to mature and is generally regarded as the fourth-largest research cluster in the U.S. The market’s growth and increased profile is attracting ever more investment from both global and domestic capital investors.”

The fund’s other purchases this year include the following:

  • Mount Eden Research Park, 369,986 square feet in Hayward, California: A six-building life science campus in the Bay Area for $155 million in June.
  • The Point, 89,145 square feet in Redwood City, California: Two life sciences buildings near the Bay Area life science submarket for $30.1 million in May.
  • The Walsh-Bowers assemblage, 207,534 square feet in Santa Clara, California: A portfolio of three buildings for $79 million in March.

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Wednesday, July 14, 2021

Italian Logistics Company Joins Tenant Roster at Bridge Point 78

By Linda Moss CoStar News

In one of the largest New Jersey industrial leases in the second quarter, an Italian logistics firm will be occupying 607,279 square feet at a large newly developed complex in Phillipsburg.

OMLog, which provides national and international distribution for luxury fashion products, has signed a lease for Building 3 at Bridge Point 78, a 3.9 million-square-foot industrial complex at 1000 Rand Blvd.

The industrial market in the Garden State remains strong, driven by its central location in a densely populated region and the continued rise in e-commerce, which accelerated during the pandemic. In a report earlier this month. Northern and central New Jersey recorded 8.2 million square feet of industrial leasing activity during the second quarter, the fourth-highest figure on record. That put the area’s vacancy rate at 5%, a historic low, according to the brokerage.

“Demand was mixed between new construction, as pre-leasing accounted for 1.75 million square feet of the overall leasing total, and the dwindling supply of large blocks on the market."

In its latest report on the North Jersey industrial market, the vacancy rate for that region at just 3.5%.

“New Jersey’s industrial market continues to break records as demand shows no signs of slowing. The market posted the fourth-highest leasing activity on record, strong net absorption and climbing rents — all signs of an extremely robust and healthy market.”

The OMLog deal ranked as the top industrial lease transaction in the second quarter, followed by: Dream on Me, which leased 539,000 square feet at 47 Veronica Ave. in Somerset; World Distribution Services, which took 480,740 square feet at 500 Linden Logistics Way in Linden; and Amazon at 65 Baekeland Ave. in Middlesex.

“Bridge Point 78 offered OMLog the ideal opportunity to expand its international operations in the heart of one of the Northeast’s main industrial distribution hubs. In addition to OMLog, the Class A complex is home to several big box tenants including Uniqlo and White Claw. With Phase 1 of the development fully leased, we look forward to marketing Phase 2, which includes two additional buildings totaling over 1.6 million square feet set to deliver next year.”

Bridge Point 78 is a master-planned development in the Interstate 78/81 corridor. The complex is located just 15 miles from the FedEx hub in the Lehigh Valley and 55 miles from New Jersey’s Port of Elizabeth.

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Monday, July 12, 2021

Brandolini Cos. Sells Five Philadelphia Suburban Shopping Centers

By Clarice King CoStar Research

 A joint venture between Paramount Realty and Medipower Group has purchased has purchased five grocery-anchored shopping centers in the greater Philadelphia region for $114.25 million.

The partnership acquired the portfolio from Brandolini Cos. The buyers also secured $80.5 in acquisition financing for the five retail centers through five separate fixed-rate loans with three banks.

The portfolio garnered significant interest from the investment world, especially since each shopping center was anchored by high-performing grocers Giant, George's Market and Aldi and home improvement retailer Lowe's with increasing or stable historical sales. Other major highlights of the portfolio were long remaining lease terms of the anchor tenants and long-tenured small shop tenants with proven history of operations.

All five shopping centers in the portfolio are located within highly populated residential neighborhoods. The portfolio included:

  • Giant-anchored Lionville Shopping Center in Lionville.
  • Marketplace at Westtown in West Chester, which is also anchored by Giant.
  • Spring Towne Center in Sinking Spring, which is anchored by Giant and Lowe's.
  • George's Marketplace-anchored Dreshertown Plaza in Dresher.
  • Aldi-anchored Limerick Crossing in Limerick.

"We are excited to increase our footprint within the Philadelphia MSA and we look forward to adding value through capital improvements and procuring a new diverse tenant mix for existing vacancies to cater to the evolving new retail landscape," Maurice Zekaria, president of Paramount Realty, said in a statement.

Investor demand in the mid-Atlantic region has grown both in quantity and diversity, with much of that interest being generated from both alternative product-type owners as first-time retail buyers looking for yield or out-of-market capital.

"With over 20 offers received on the portfolio, many from those segments of the investment community, it is clear to us that we will continue to see exceptional demand and yield compression in the grocery-anchored space."

"The Philadelphia MSA continues to remain hyperactive in the retail sector," Behr said. "It was a very strong first half of the year, with our team closing 16 retail assets, and we anticipate the second half of the year to be just as active, as we see fresh capital entering the market."

Wednesday, July 7, 2021

Investors Making Plays Across North Atlantic Trade Corridor, Particularly in Pennsylvania's Lehigh Valley

 By Ben Atwood CoStar Analytics

The second quarter of 2021 saw some of the highest levels of industrial investment ever recorded in the North Atlantic trade corridor, according to CoStar data.

Investors spent over half a billion dollars acquiring warehouses and distribution centers across the seven markets that orbit Philadelphia. This figure compares favorably to what these same markets saw in the first quarter, when roughly $250 million was spent. It also compares well to the 10-year quarterly average, which is closer to $400 million.

Unsurprisingly, much of the second quarter transaction volume came from the Lehigh Valley industrial market. Lehigh remains Pennsylvania’s premiere shipping node and investors have been buying assets here for some time. What is interesting is just how much these assets are selling for now.

The sale at 951 Willowbrook Road in Northampton appears to be the most expensive acquisition in Lehigh history. This 1 million-square-foot distribution center sold for an eye-popping $195 per square foot in late April, closing at just over $200 million.

There are no recent non-portfolio transactions that come close to that sales price locally. It also compares favorably to a similarly sized property which sold in mid-2020, when a 975,000-square-foot warehouse in Lopatcong, New Jersey, sold for $135 per square foot.

While some of this price discrepancy can be explained by a difference in occupancy and location, what is also interesting about Lehigh is how much its Class B assets sold for last quarter. For instance, 6355 Farm Bureau Road sold in May for over $90 per square foot. This 40-year-old, 100,000-square-foot property was acquired by Indus Realty Trust of New York, which stated it was attracted to the property's location and the ability to develop the land it sits on in the future.

That property is about one mile from the Interstate 78/I-476 interchange that makes Lehigh so popular. While prices can spike in this area, assets similar to 6355 Farm Bureau Road were typically trading for closer to $60 per square foot prior to the pandemic.

Given that demand for industrial space continues to climb and Lehigh has a prominent position on the Northeast supply chain, it seems likely that this will remain a hot investment market in the coming quarters.

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Tuesday, July 6, 2021

People First Federal Credit Union’s Planned HQ Relocation Marks Latest Win For Downtown Allentown

By Ben Atwood CoStar Analytics

People First Federal Credit Union announced late last week that it would relocate its Lehigh Valley, Pennsylvania, headquarters into downtown Allentown, a neighborhood in the midst of a renaissance thanks to a unique tax-incentive plan.

The not-for-profit credit union is set to occupy about 25,000 square feet on the third floor of Five City Center, one of the many Class A offices built in the past decade by the City Center Corp., a local developer that is almost single-handedly breathing life back into Pennsylvania’s third-largest city.

"It's so exciting seeing people come back downtown for work," said Jill Wheeler, vice president of sales and marketing at City Center. "The coronavirus didn’t disrupt our momentum at all."

In fact, it is looking as though the shutdown might have strengthened Allentown’s commercial real estate scene.

This is a city that’s one hour from Philadelphia and two from New York, and this is a year when the pandemic is redefining what office tenants are looking for and where they are looking at. Remote working has also opened the door for white-collar relocations, and life in Lehigh County is significantly cheaper than it is in the Philly and Jersey suburbs.

Downtown Allentown appears to be capitalizing on this, and much of the credit belongs to City Center. It has been utilizing a tax incentive program to build close to a dozen Class A multifamily and office properties in the heart of Pennsylvania's third-largest city. The tax plan was created specifically for Allentown and was designed to bring people and businesses back into an urban core that was pummeled by automation and outsourcing.

Loosely speaking, it allows for a large chunk of state taxes paid by tenants renting in new office or retail projects within a 126-acre Neighborhood Improvement Zone to be redirected back to the developer to pay off debt.

That mitigation of risk enabled City Center to rapidly build out several Class A offices, something that is typically tricky in Pennsylvania’s secondary markets. Its projects are almost totally occupied, and Wheeler believes it will only become more appealing in light of the coronavirus.

"Now more than ever, Class-A assets are important for employers," Wheeler said. "Employees are very concerned about workplace safety and employers need to retain their talent."

This sentiment is echoed by real estate professionals throughout the commonwealth and by office experts across the country. The People First lease totally fills Five City Center, and the 95 employees it will bring will also strengthen Allentown’s white-hot multifamily market.

CoStar data shows this submarket’s apartments are 98% occupied, a figure that would have seemed absurd in the early 2000s when residents were fleeing in droves. Even more incredible is that these rates have remained strong even with a frenzy of multifamily development.

City Center has completed seven apartment complexes containing close to 1,000 units in Downtown’s Neighborhood Improvement Zones. You must get on a waiting to list to rent from it now, and Wheeler said the developer cannot build new apartments quickly enough.

The firm has four additional properties planned for the next 18 to 24 months, which will increase the multifamily inventory within the zones by around 500 units. These residents enabled the city’s retail scene to hang on through the pandemic, and two new restaurants recently leased space within the improvement zone.

Allentown's success is also attracting outside developers. Last week, the Neighborhood Improvement Zone's oversight board approved the financing of a new multifamily complex on which The Manhattan Company, out of New Jersey, will soon begin work. It plans on rehabbing an old furniture factory along the city’s riverfront into a 25-unit modern apartment complex.

That type of development and demand wouldn’t make waves in many markets, but in a city that looked to be on the verge of defeat 20 years ago, it’s flat-out incredible. Downtown Allentown has become one of the state’s most intriguing areas to monitor for real estate development and opportunities.

People First Federal Credit Union plans to move into Five City Center in November. The credit union will retain its branch location on Downyflake Lane in Allentown and open a new branch across from Miller Symphony Hall.