Tuesday, July 27, 2021

Real estate investor Rick Caruso on reopening challenges amid Covid (Video)

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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.








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Monday, July 26, 2021

Wharton Industrial Acquires Two NJ Portfolios

By Ingrid Tunberg Globest.com

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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Q3 2021 Commercial real estate outlook (Video)

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Thursday, July 22, 2021

Questions To Ask Contractors When Building Out A Commercial Space (Video)

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3 Ways To Level Up Your Real Estate Investment Analysis (Advanced Tools) - Video

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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.

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Wednesday, July 21, 2021

Uncertain post-pandemic reopening plans threaten real estate market (Video)

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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."

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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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Inflation in Commercial Real Estate: July 2021 Update (Video)

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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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Some Employees Will Not Return... Discussing Americans Returning to the Office (Video)

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Commercial Real Estate Market Update Mid-Year July 2021 (Video)

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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."

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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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Commercial Real Estate Outlook, Return to Work (Video)

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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.

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Wednesday, June 30, 2021

Pennsylvania Shopping Center Trades for $90M

 Ingrid Tunberg Globest.com

Cedar Realty Trust has sold the 430,198-square-foot, Camp Hill Shopping Center in Camp Hill, PA to GSD CampHill Pradsavi Group LLC for $90 million.The 96% occupied grocery-anchored shopping center is anchored by Giant Food Markets and occupied by additional tenants including Boscov’s Department Store, Staples, Five Below, Barnes & Noble and LA Fitness.

Located West of Harrisburg, PA in the hub of Rte. 15 and Rte. 11, the former enclosed mall was redeveloped by Cedar Realty Trust in 2005.

Cedar Realty Trust will maintain property management responsibilities of the asset.

“Camp Hill Shopping Center is one of the many outstanding grocery-anchored shopping centers within the Cedar Realty Trust portfolio."

“There is tremendous demand for dominant grocery-anchored shopping centers nationally, given the rebound in the markets post-COVID and the attractive debt markets,” says Nathanson. “In fact, demand is outpacing the supply of first-class, high-performing assets like Camp Hill Shopping Center.”

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Monday, June 28, 2021

Retail-to-Industrial Conversions (RICS) in the Industry: One Part Logistics, One Part Adaptive Reuse (Video)

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How the Consolidation in Logistics Is Impacting Commercial Real Estate (Video)

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Harbor Group International Pays $59.5 Million for Philadelphia-Area Apartment Complex

By Rachel Whaley CoStar Research

Harbor Group International has purchased Royal Athena, a 275-unit waterfront apartment complex in the greater Philadelphia area.

Harbor Group International acquired the multifamily property for $59.5 million, the privately owned investment and management firm said in a press release. The company didn't disclose the name of the seller.

Royal Athena is located at 600 Righters Ferry Road, about 6 miles from Center City in Bala Cynwyd within the newly rebranded Pencoyd Landing development, a $30 million, 11-acre redevelopment project. The apartment complex comprises a mix of one- and two-bedroom floor plans, according to CoStar data.

"Royal Athena is located in a strong Philadelphia submarket with healthy demographics and increasingly strong job drivers," T. Richard Litton Jr., president of Harbor Group International, said in the press release. "This strategic acquisition directly aligns with HGI's pursuit of luxury apartment communities that are attractive to residents."

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Thursday, June 24, 2021

New Jersey Developer Pays $31.5 Million for Philadelphia Warehouse

 By Clarice King CoStar Research

Greek Development has purchased a fully occupied warehouse facility located about 5 miles from Center City Philadelphia.

The New Jersey-based developer acquired the property from 2121 Wheatsheaf Lane LLC for $31.5 million.

The warehouse facility totals 305,706 square feet and is situated at the base of the Betsy Ross Bridge at 2121 Wheatsheaf Lane along the Interstate 95 corridor. The property features clear heights ranging from 19 to 21 feet, 30 loading doors, one drive-in door and more than 350 parking spaces.

The mission-critical facility is occupied by Dependable Distribution Services, the largest cocoa bean distributor in North America, while a global e-commerce company uses the facility's vast parking spaces for its last-mile delivery strategy.

"This is an irreplaceable last-mile location with highly functional distribution space and ample parking," Alex Motiuk, Greek Development’s associate director of acquisitions, said in a statement. "We are excited to add this property to our presence in Philadelphia and bring it to its full potential."

"There continues to be strong demand for well-located, in-fill industrial assets within the Philadelphia region. The property offers attractive in-place cash flow with potential for future redevelopment into a new generation, Class A warehouse/distribution facility."

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Why Retail Might Be The Best Value in Real Estate Today (Video)

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Tuesday, June 15, 2021

Cabot Properties Buys Two-Building Logistics Complex in Elizabethtown PA

 By Rachel Whaley CoStar Research

Boston-based logistics real estate investor and developer Cabot Properties Inc. has purchased a fully leased, two-building logistics complex in Elizabethtown, Pennsylvania.

Cabot acquired the two buildings from a joint venture between Novaya Foxfield Industrial and Drake Real Estate Partners, which developed the complex in 2019. The buildings sold for roughly $21.9 million.

The two buildings are located within the 3 million-square-foot Conewago Industrial Park at 1405 and 1473 Zeager Road. Combined, the logistics buildings total 198,721 square feet and are 100% leased by Aqua Pool Supply Co. and Packaging Corporation of America.

The Elizabethtown location’s strong leasing fundamentals, labor force and proximity to major logistics infrastructure have attracted both institutional investors and a deep roster of regional and global tenancy.

"Clearly developers and investors are focused on the efficiencies of these labor-rich concentrations that tie directly into critical hubs like the FedEx Ground/Freight Hub in Middletown, Pennsylvania. The Novaya Foxfield Industrial team identified a uniquely infill opportunity and executed seamlessly in bringing the project to life."

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Monday, June 14, 2021

New Jersey Cold-Storage Firm Expands Into Philadelphia

 By Linda Moss CoStar News

A growing New Jersey-based cold-storage company is expanding into Philadelphia and also plans to open another facility in the northern part of the Garden State.

FreezPak Logistics, a third-party food-logistics firm headquartered in Carteret, New Jersey, later this month is slated to debut a location at 1801 N. 5th St. in Philadelphia, its first foray into that market. The facility will be located in a property with more than 103,000 square feet that features all temperature zones — dry, cooler and frozen. The site will also have 15 loading docks, 26 trailer positions and parking for 80-plus cars.

With the rise in online grocery shopping, which got a big boost during the pandemic, the national and global demand for cold-storage warehouses has increased dramatically. FreezPak, a family-owned business that celebrates its 20th anniversary in August, has been expanding its network of distribution facilities, with four now in New Jersey and a fifth one under development.

Last November, Fidelco Realty Group and Elberon Development Group said they were constructing a 140,000-square-foot, build-to-suit facility for FreezPak at a vacant site at 1029 Newark Ave. on the border of Newark and Elizabeth, New Jersey.

In addition to Carteret, FreezPak's other Garden State facilities are in Clifton, Paterson and Wayne.

Company officials said there has been a call for them to debut distribution sites in new areas.

"Every day we are being pushed by our clients to open facilities in every major market," Dave Saoud, FreezPak's co-CEO, said in a statement.

FreezPak is designing an automated operation in Philadelphia, according to co-CEO Michael Saoud.

The company also said it will soon announce a sixth location in North Jersey to help "meet the continually growing demand for cold storage space."

The Philadelphia facility will offer cross-docking, transportation and repacking, all within 6 miles of the Packer Avenue Marine Terminal.

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Cryptocurrency enters real estate industry (Video)

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Thursday, June 10, 2021

Commercial REITS are delivering year to date and are up 25% (Video)

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J.G. Petrucci Breaks Ground On Cigars International Expansion Project

J.G. Petrucci Company Inc. has broke ground on an expansion project for Cigars International's headquarters in Bethlehem, Pennsylvania.

The development and design/build firm is adding 100,000 square feet to the global cigar distributor's 113,500-square-foot facility at 1911 Spillman Drive in Lehigh Valley Industrial Park VII, which J.G. Petrucci developed. The facility is located on land formerly occupied by Bethlehem Steel Corp.

The additional space will serve as additional warehouse and humidor space for Cigars International. The expansion's interior fit-out will also include advanced material handling equipment and smart warehouse features, according to J.G. Petrucci.

The expansion project will be constructed by J.G. Petrucci's in-house construction group, Iron Hill Construction Management. Construction on the expansion project is set to be completed later this year.

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Tuesday, June 8, 2021

TA Realty Picks Up Berks County Distribution Facility for $22.3 Million

 By Tyrone Leake CoStar Research

TA Realty has purchased a recently built distribution facility in Berks County, Pennsylvania, for $22.3 million.

The Boston-based real estate investment manager acquired the 149,632-square-foot building from a joint venture between The Keith Corp. and Kiel Group. The deal works out to about $149 per square foot.

Built in 2020, the distribution facility is located about 2 miles south of Interstate 78 and along Route 61 at 336 Logistics Drive in Shoemakersville. The building is situated on about 14 acres within Hamburg Commerce Park, a master-planned industrial development.

The facility is fully leased by S Walter Packaging and LTL Home Products. The building's features include a 32-foot clear height, LED Lighting, 24 overhead doors that are expandable to 33, two drive-in doors, ESFR sprinklers and ample parking.

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Monday, June 7, 2021

Indus Realty Trust Buys Fully Leased Allentown Industrial Building

 By Rachel Whaley CoStar Research

Indus Realty Trust has purchased a fully leased industrial facility in Allentown, Pennsylvania, for $11.7 million.

The New York-based real estate investment trust acquired the single-tenant building from Jamble Enterprises, according to CoStar data. Indus used cash on hand to pay for the facility, the firm said in a statement announcing the deal.

Built in 1982, the facility is located at 6355 Farm Bureau Road within the Iron Run Corporate Center. The logistics building totals 127,500 square feet and is leased to LyondellBasell Industries.

"We believe this acquisition provides the opportunity to create significant value over time as the current in-place rent is below market and the excess land on the site provides options for potential future improvements.," Michael Gamzon, president and CEO of Indus, said in a statement. "The building complements our existing 1.3 million square foot Lehigh Valley portfolio and is located in the same corporate park as our Ambassador Drive building."

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What is a Good Cash-on-Cash Return? (Video)

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Cooper Health Buys Former Sears in Moorestown Mall for Outpatient Facility

 By Linda Moss CoStar News

A healthcare chain has acquired the former Sears anchor store at a New Jersey mall where it plans to open an outpatient facility.

Cooper University Health Care purchased the 165,000-square-foot vacant department store at the Moorestown Mall in Moorestown, New Jersey, from Pennsylvania Real Estate Investment Trust, according to the broker on the sale, Markeim Chalmers of Cherry Hill, New Jersey.

Terms of the transaction between Cooper and PREIT, which is based in Philadelphia, weren't disclosed.

In March, PREIT Chairman and CEO Joe Coradino announced his company and Cooper had executed a transaction for the outpatient location at the Moorestown Sears during a fourth-quarter earnings report. At the time, Coradino didn’t specify if Cooper was leasing the vacant Sears, which closed roughly a year ago, or buying it.

Cooper will transform the Sears space, which was home to the department store for decades, "into a state-of-the-art specialty care facility with an anticipated opening date in 2023."

"The landmark Moorestown Mall location has frontage on Route 38, ample parking and convenience to all major roadways," the brokerage said. "This project fits within PREIT’s business plans to expand and reposition its mall locations beyond retail. With the addition of the Cooper project alongside hospitality and housing development, this location will flourish and draw even greater regional use."

Back in March, Cooper said is was adding medical office space to meet the demand for its specialists at convenient locations near where consumers live.

Early this year PREIT, which emerged from Chapter 11 proceedings in December, said it was redeveloping Moorestown Mall and planned to add about 1,000 apartment units as well as a hotel to its Garden State retail property.

Like landlords across the country, the real estate investment trust is looking to create foot traffic and fill vacancies at its malls by adding nontraditional tenants, including healthcare and medical offices and facilities.

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What the Labor Shortage Means for Commercial Real Estate (Video)

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Multifamily Is CRE’s Most Liquid Sector

By Lynn Pollack Globest.com

Multifamily transaction volume topped $138 billion last year and hit $32 billion in the first quarter of 2021, making the asset class the most liquid among all commercial real estate property types.

Closed-end fund closings targeting multi-housing assets have totaled $68.4 billion since 2016 and “will provide an ongoing source of liquidity,” especially as pricing discovery in the midst of COVID-19 resulted in more opportunities for private capital to invest in the space. That’s particularly true for high net worth individuals and institutional investors.  

“Amid record levels of dry powder targeting the sector and increased clarity as to rent collections and the stability of the sector, institutional investors have been becoming increasingly competitive in securing transactions so far in 2021,” the report notes. “Investors continue to target secondary markets, primarily located in the Sun Belt, as these markets are home to business-friendly regulatory and tax advantages.”

Dallas-Fort Worth, Atlanta and Phoenix emerged as the top most liquid markets in the US, supplanting the historical mainstays of Los Angeles and New York. Capital momentum is also increasingly targeting garden-style and mid-rise assets in less dense locations.

And both lenders and borrowers have strong appetites for commercial and multifamily mortgages, making debt liquidity “abundant,” the report states. Q1 multifamily mortgage borrowing totaled $51.8 billion in Q1, with agency lenders capturing 62% of loan originations. 

“First-quarter 2021 lending sources diversified as agency lenders started the year off slower following their robust originations last year,” the report states. “While banks, debt funds and insurance companies have more than filled the gap, agency lenders have taken a more competitive approach to winning business since April and we anticipate a strong second half of 2021.”

Supply continues to be a challenge for the sector, particularly among the renter-by-necessity and affordable housing segments, driving pricing. In addition, multifamily produces 4% to 6% dividend yields—better than both sovereign bonds and investment-grade corporate bonds, according to Yardi Matrix data.

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Thursday, June 3, 2021

Black Creek Obtains $39.7 Million Loan To Build New Jersey Industrial Facility

 By Linda Moss CoStar News

Black Creek Group has obtained $39.7 million in construction financing for a 508,000-square-foot industrial facility it's building in Florence, New Jersey.

Black Creek's Class A industrial building at 1100 W. Front St., called Florence West, will be located on 51 acres along the Delaware River. It is near the Pennsylvania and New Jersey turnpikes and offers regional access to the ports of Philadelphia and Newark-Elizabeth as well as multiple international airports, a deep labor pool and a third of the nation's population within one-day's drive.

When it's completed, the property will feature 36-foot-clear ceiling heights, 92 loading docks and two drive-ins, as well as ample trailer, with 101 stalls, and car, with 434 stalls, parking.

"Florence West's blue-chip sponsorship, state-of-the-art design and strategic regional location were extremely appealing to lenders, who continue to increase allocations for industrial," John Alascio, Cushman & Wakefield executive managing director, said in a statement. "This drove a competitive marketing process where BMO Harris ultimately provided highly attractive terms and a seamless execution for our client."

Black Creek is building its Florence project on a speculative basis without having any tenants lined up for it yet.

The developer also has another industrial project in Florence in the works. Roughly a year ago, Black Creek paid $14.75 million for a nearly 31-acre parcel at 837 Railroad Ave. It plans to build a 300,700-square-foot warehouse-distribution facility on the site.

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Where are the Commercial Foreclosures? (Summer 2021) - Video

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Developer Secures $62 Million Loan To Develop Last-Mile Facility Preleased by TJX Companies

 By Charlie Dettbarn CoStar Research

New York developer DH Property Holdings has secured a $62 million senior construction loan from PCCP LLC to develop a last-mile distribution facility 100% preleased to TJX Companies Inc. in northeast Philadelphia.

The 282,737-square-foot facility at 9801 Blue Grass Road will serve as TJX's second distribution center in the city. The off-price retailer's first is its 1 million-square-foot mission-critical facility located 1 1/2 miles north of the Blue Grass road center.

"A key driver of the industrial market today is e-commerce, and there is high user demand for same day service and last-mile connectivity," Aaron Malitzky, vice president with DH Property Holdings, said in a statement. "This facility's pre-lease with TJX is one of many examples of large logistics and last-mile companies occupying space across Pennsylvania to serve the local population inland distribution markets."

Construction on TJX's second distribution facility is set to begin this month and is slated to be completed by the third quarter of 2022.

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Wednesday, June 2, 2021

Joint Venture Pays $19.5 Million for Wayne Industrial Building

 By Ann Warren Harless CoStar Research

A joint venture between Mainstreet Capital Partners and Contrarian Capital Management LLC has purchased an industrial facility in Wayne, Pennsylvania, for $19.5 million.

The building is located on a 10-acre parcel just off the Swedesford Road corridor at 400 Devon Park Drive and totals 132,733 square feet. The joint venture acquired the building from Vimco Inc.

The joint venture plans to convert the building into a life science facility, which it has had success with in other markets such as North Carolina's Research Triangle region.

"This is our first acquisition into the Philadelphia market," Peter Tonon, partner at Mainstreet, said in a statement. "We think very highly of the area and hope to continue to do more transactions in the future."

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Friday, May 28, 2021

Underwriting a Marijuana Production Facility in Commercial Real Estate (Video)

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'All roads lead to King of Prussia': More than $4B in development transforms Upper Merion

 Natalie Kostelni Reporter Philadelphia Business Journal

In April, Purolite Corp. held a virtual groundbreaking on a new $14 million, 74,000-square-foot building in King of Prussia and has plans to invest another $25 million to fit it out and install the equipment it needs to operate the manufacturing facility. 

Not far away from the Purolite plant site at 3700 Horizon Blvd., Steelyard Sports is proposing an expansion off Swedeland Road that would add six new athletic fields and complement its current indoor-outdoor sports complex. 

At the other end of the township, at the Village at Valley Forge, Children’s Hospital of Philadelphia is nearing completion of a $298 million hospital, Toll Brothers Inc. is moving forward with another stacked townhouse community, and Realen Properties plans to build a $20 million, 40,000-square-foot medical office building off Guthrie Road next to Anthology, a new senior housing complex. 

In all, about $1.3 billion of projects are currently underway and contributing to the more than $4 billion in development that has transformed Upper Merion — particularly King of Prussia — over the last decade, solidified it as the center of Philadelphia’s western suburbs, and positioned it to rival the city for employers and residents. 

Full story: https://tinyurl.com/wpahrjjj

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Thursday, May 27, 2021

$500M mixed-use development proposed for NoLibs

Natalie Kostelni Reporter Philadelphia Business Journal 

A venture between National Real Estate Development and KRE Group has plans for an ambitious $500 million, 1-million-square-foot development along North 2nd Street between Spring Garden and Callowhill streets in the Northern Liberties neighborhood of Philadelphia.

The mixed-use development will be built in three phases of which the first is expected to begin early next year and cost $300 million. It will involve constructing two apartment buildings — one at 200 Spring Garden St. and the other at 412 N. 2nd St. — and have a combined 750 units. Each building will have 20,000 square feet of retail space and the structures are expected to serve as bookends to the larger development.

“The vision for the development is to create an authentic and vibrant community that naturally connects Northern Liberties and Old City," said Dan Killinger, president of National Development of Philadelphia. “In order to do that you need scale.”

This will be the third project the National-KRE Group partnership has worked on together. It is developing Grove Pointe in Jersey City, New Jersey, a similarly large mixed-use development.

“When this site was brought to me and we were going to see it, my very first call was to Dan and his team,” said Jon Kushner, president of KRE Group, which is based in Jersey City. “I knew his project [East Market] in Philadelphia and thought we could look at this together.”

Killinger and Kushner met last summer to look at the parcels that were then owned by a partnership involving Arts & Crafts Holdings, a Philadelphia real estate company, and up for sale. The properties included 200-224 Spring Garden St., 412-426 N. 2nd St., 428-458 N. 2nd St., and 460-474 N. 2nd St.

“In as much time as it takes to have coffee together, we made a partnership to go after the deal,” Kushner said.

It seemed like a natural fit. They do have experience working on projects together and the two companies share similar principles when it comes to development, Killinger said. They are long-term holders of their real estate and strive to leave communities better off than when they first go into them. “It was a natural partnership with similar goals,” he said

It was just this past March the partnership closed on buying the properties from Arts & Crafts. It paid $39 million for the parcels.

Full story: https://tinyurl.com/b4h8juvw

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Why Office Values Might Plummet This Year (Video)

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Wednesday, May 26, 2021

Dr Peter Linneman's Spring 2021 Capital Markets Webinar Outlook (Podcast)

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Dalfen to Develop Three-Building Industrial Project in Berks County

 By Rachel Whaley CoStar Research

Dalfen Industrial is planning to develop a three-building industrial project in Berks County, Pennsylvania.

The industrial development is set to total 1.18 million square feet and will be located off Interstate 78. The project is set to be completed by the first quarter of 2023.

Dalfen acquired 153 acres for the project from Vesper Property Group for $24.6 million, according to CoStar data.

"The Lehigh Valley submarket is a critical location for supply chains in the Northeastern United States, yet development opportunities are scarce," John Lettieri, market officer for Dalfen, said in a statement. "Developing three fulfilment centers in this highly demanded location will result in extensive tenant demand for prime real estate with all of the modern characteristics needed for e-commerce clients."

Dalfen's President and Chief Investment Officer Sean Dalfen said the firm is focused on expanding its portfolio in strategic markets in the Northeast.

"Lehigh Valley has one of the strongest industrial markets in the country with a combination of multi-directional interstate connectivity, a more affordable labor base than competing Central New Jersey locations, and strategic logistics connectivity to major United States metropolitan areas," Dalfen said.

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Tuesday, May 25, 2021

Willow Pointe Shopping Center Sells for Nearly $5 Million

 By Linda Moss CoStar News

A shopping strip in Marlboro, New Jersey, has traded for $4.9 million.

The 35,000-square-foot Willow Pointe Plaza retail center at 184 Highway 9 on was sold on behalf of the unidentified seller.

Terms of the deal, including the seller, weren't disclosed.

"This asset's U.S. Highway 9 location offers convenience and accessibility from many local residences, as well as the 75,000 vehicles that drive by per day," Andrew Schwartz, Cushman & Wakefield managing diector, said in a statement. "The center has historically boasted strong occupancy and has a diversified rent role and solid in-place cash flow."

Willow Point, located on a 5.38-acre site, is 85% leased to 17 tenants, including Allstate Insurance, Kumon Learning Center, the Smile of Marlboro dentist group and several dining establishments.

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Monthly Economic Outlook —May 2021 (Video)

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Penn leases 150,000 SF at Discovery Labs in KoP

 By Natalie Kostelni  –  Reporter, Philadelphia Business Journal

The University of Pennsylvania has signed a lease on 150,000 square feet at Discovery Labs in King of Prussia and will use the space for its gene therapy program.

The space is in two buildings off Swedeland Road in what had been previously built and used by GlaxoSmithKline and later sold to MLP Ventures, a Radnor real estate company that is marketing the campus to life sciences and related tenants.

Two floors of the space will be used to expand Penn Vector Core. Vectors are used to deliver gene therapies in patients with conditions resulting from missing or malfunctioning genes.

Led by gene therapy expert Dr. James M. Wilson, Penn’s gene therapy program has been responsible for breakthrough therapies for a variety of disorders. In early 2019, The National Institutes of Health renewed a five-year contract with Penn’s gene therapy program and was awarded $13 million to support the advancement of gene-therapy research at the clinic.

Full story: https://tinyurl.com/tce4tbw

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Thursday, May 20, 2021

How To Analyze Commercial Real Estate Deals (Video)

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Multifamily Outlook - H2 2021 (Video)

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Burle Business Park Lancaster PA Sells for $30 Million

By Clarice King CoStar Research

Burle Business Park, a 1.2 million-square-foot office and industrial campus in Lancaster, Pennsylvania, has sold for $30 million.

Freehold, New Jersey-based Jersey Holdings acquired the 75-acre business campus from Burle Business Park LP, a partnership comprising family members of the individuals who acquired the property in 1987.

Located near U.S. Route 30 at 1004 New Holland Ave., the 16-building Burle Business Park was 90% occupied at the time of the sale to more than 40 tenants, including Intermediate Unit 13, Lancaster General Health, Photonis, Advanced Cooling Technologies and Angelo’s Soccer, among others. The business park is home to over 1,800 employees.

Burle Business Park includes office, flex and warehouse space, loading docks, and heavy floor load capability. Its amenities include 24-hour security, cafeteria, fireside coffee café, conference room, catering service and heavy redundancy electricity.

"BURLE Business Park is one of the premier office and industrial properties in South Central Pennsylvania. With new ownership committed to investing in significant capital improvements, this property will continue to attract high-quality tenants for years to come."

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Real Estate Attorney Breaks Down And Explains ALL Closing Costs (Video)

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Wednesday, May 19, 2021

Walker Dunlop CEO Willie Walker On The Commercial Real Estate Industry (Video)

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MDH Partners Acquires 390,000 SF Industrial Property Near Scranton, Pennsylvania

 Atlanta-based investment firm MDH Partners has acquired a 390,000-square-foot industrial property in Gouldsboro, located outside of Scranton. Built in 2002, the property was fully leased to Broadrange Logistics at the time of sale. Building features include a clear height of 30 feet, 42 dock doors, 130-foot truck court depths and an ESFR sprinkler system. The new ownership plans to expand the property by 160,000 square feet, with construction set to begin in the first quarter of next year. The seller was Exeter Property Group. 

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Tuesday, May 18, 2021

Joint Venture Breaks Ground on West Philadelphia Life Science Hub

 By Javon Roach CoStar Research

Silverstein Properties, Cantor Fitzgerald and University Place Associates have broke ground on 3.0 University Place, a life science hub in West Philadelphia.

The eight-story lab and office building is set to total 250,000 square feet and include ground-floor retail and curated wet/dry lab space. It will also include a dedicated floor for prebuilt "Growth Pods" with three- to five-year leases for graduate/smaller-scale companies, the joint venture said in a statement.

The joint venture, along with Philadelphia State Senator Vincent Hughes, Representative Amen Brown, Councilmember Jamie Gauthier, local community, labor and arts leaders, and two tenants in the building, held a groundbreaking ceremony for 3.0 University Place on May 13.

The West Philadelphia project already secured leases from Ben Franklin Technology Partners, which plans to open an incubator offering shared lab and office space for early-stage tech companies, The Wistar Institute and Fulton Bank. Future tenants at the building are set to benefit from significant tax incentives and proximity to the 40th and Market transit hub, the University of Pennsylvania and Drexel University, according to joint venture.

"We believe there is a real need for quality office and lab space in this area due to its proximity to world-class educational institutions and the life sciences community here in Philadelphia," Howard Lutnick, chairman and CEO of Cantor Fitzgerald, said in a statement. "3.0 University Place will provide the much-needed space and be an economic development engine driving job growth in the local community."

The project is located at 4101 Market St. within University City, which sits at the epicenter of the Philadelphia region's healthcare and education employment sectors and rapidly growing life science and biotech industries. Over 55% of the University City workforce is dedicated to those areas, according to the joint venture.

3.0 University Place is set to open in the fourth quarter of 2022. The building is also slated to be the first phase of a multiphase project, according to the joint venture.

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Big Lots Leases Berks County Distribution Facility

 By Connor Steele CoStar Research

Big Lots has leased a distribution facility that's under construction in Berks County, Pennsylvania.

The 587,100-square-foot industrial building is located at 1 Court St. in Bethel. Big Lots is set to occupy the facility once it has been completed in July.

Big Lots currently has five distribution across the United States, according to its careers website. They are located at Montgomery, Alabama; Apple Valley, California; Columbus, Ohio; Durant, Oklahoma; and Tremont, Pennsylvania.

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Friday, May 14, 2021

Typical Commercial Lease Terms That Everyone Should Know (Video)

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Industrial Sector Leads the Way in PA

 E-commerce is the key in the Keystone State, and a manufacturing resurgence is adding to the industrial momentum

The pandemic year left few bright spots across commercial real estate sectors, but industrial was one of the exceptions. This was especially true in Pennsylvania as the shift to online commerce accelerated last year’s new normal. 

“The bottom line is it was a record year for 2020 as it relates to industrial, with most activity having occurred from Central Pennsylvania down to Philadelphia and up through the Lehigh Valley to Scranton. “There really were a lot of positives: impressive absorption, big deals and companies coming in, and a lot of jobs created. It was really, really good stuff.”

Not surprisingly, e-commerce growth fueled much of that activity. There are reports that the growth rate of that industrial segment more than tripled from 2018-2019 to 2020-2021, to 44 percent. And that’s not just Amazon’s abundant ambition as competitors Walmart and Target have both been active in Pennsylvania, and smaller companies looking to enter or compete in the fulfillment space have also been taking down space.

“E-commerce activity as a part of overall retail sales has been growing on a linear basis for years, but we saw a meaningful acceleration of that trend and its impact on demand for space over the course of 2020."   Statistics released by the U.S. Census Bureau in February, 2021 bear that out, with US e-commerce sales for 2020 increasing by an estimated 32.4% over 2019 levels.  All that demand hit the industrial space market while inventories were already pretty low, leading to significant rent growth and a growing shortage of space.”  There have been other by-products of the surge in e-commerce activity have included challenging increases in employee and delivery vehicle parking requirements, and rising construction costs as competition for steel and other building commodities grows.

 Pennsylvania’s industrial construction wave, with much of the approximately 35 million square feet in the pipeline having been delayed by COVID-19. Once that space comes online over the next six months – and a fair amount of it has been preleased – rolling construction levels “will really drop considerably.  Going into the third quarter, we’re going to be in a different place and it’s going to continue to drive lower vacancies and higher rents.” Some relief may be on the way – tracking more than 200 million square feet of engineered concepts, actively proposed plans, and fully entitled projects queueing for future deliveries.

The sector’s momentum extends beyond distribution and fulfillment. “We’re beginning to see signs of a resurgence. It’s not only more of the same, but it’s more new stuff as well. And it’s presenting itself in the form of record high demand levels.”

Charles Dickens may have identified with Pennsylvania’s current CRE market as the industrial sector gives off a “best of times” glow, especially when compared to office and retail. Many retail and office investors are diversifying into industrial product.

“It’s unbelievable the number of responses you get if you have an industrial site or building to sell. It’s just off the charts."

Thursday, May 13, 2021

Lancaster County Multifamily Complex Trades for $17 Million

 By Rachel Whaley CoStar Research

The Villas at Willow Run, a 72-unit multifamily complex in Lancaster County, Pennsylvania, has sold for $17 million.

Laub Realty acquired the property from a private investor taking title as Willow Run LLC for about $236,000 per unit, according to CoStar data.

The townhouse rental complex was built in 2019 at 26 Utley Place in Willow Street, located minutes from Millersville and downtown Lancaster. The 12-building property comprises two- and three-bedroom units ranging in size from 1,400 to 1,500 square feet. The Villas at Willow Run was 100% occupied at the time of the sale.

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Does inflation pose a risk to the real estate market? (Video)

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Thursday, May 6, 2021

QVC sells West Chester building for $17.5M

By Natalie Kostelni  –  Reporter, Philadelphia Business Journal

Qurate Retail Group, the parent company of QVC Inc. and the Home Shopping Network, has sold one of its buildings in West Chester for $17.5 million, having determined it no longer needed the space as the company embraces a flexible work arrangement going forward.

Parsons 1365 LLC, an entity affiliated with Communications Test Design Inc., bought the five parcels that comprise the property at 1365 Enterprise Drive, according to Chester County real estate records. The property includes a 256,500-square-foot office building and related parking. CTDI is located next door at 1373 Enterprise Drive.

A representative from CTDI couldn’t be reached for comment.

Qurate will continue to own and operate from Studio Park, which is the company’s global headquarters located at 1200 Wilson Drive in West Chester, according to a Qurate spokeswoman. The 720,000-square-foot property is home to its corporate offices, as well as QVC’s U.S.-based broadcast studios.

The decision to sell 1365 Enterprise, which QVC refers to as its Founder’s Park building, came after the company concluded it will continue to integrate virtual work within its operations and all of its West Chester operations would be folded into the Studio Park building, the Qurate spokeswoman said.

Full story: https://tinyurl.com/y35xkn5m

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What Biden's Latest Tax Proposals Might Mean For Real Estate Investors (Video)

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Wednesday, May 5, 2021

Lehigh Valley Distribution Center Sells for $201.5 Million

By Clarice King CoStar Research

A recently built 1.03 million-square-foot distribution center in Pennsylvania's Lehigh Valley has sold for $201.5 million, ranking it as the priciest single-property industrial deal for the market, according to CoStar data.

Oak Brook, Illinois-based CenterPoint Properties acquired the industrial facility from a joint venture between Rockefeller Group and PCCP LLC, according to JLL, which brokered the deal.

The industrial facility is located within the master-planned Rockefeller Group Logistics Park at 951 Willowbrook Road in Northampton, a borough about 6 miles north of Allentown and about 8 miles from Bethlehem. Built in 2020, the facility is fully leased to third-party logistics company Geodis.

"The property presented an exceptional opportunity to acquire a large scale, new generation building in the core of the Lehigh Valley market. The park’s location, adjacent to a massive multinational delivery services company’s hub, makes e-commerce operations a logical use within the surrounding area for years to come."

COVID-19 drastically accelerated the growth of e-commerce, and Lehigh Valley has been ideally situated to take advantage.

"The international ports and sprawling suburbs of New York, Boston, Philadelphia, and Baltimore are all within a two hour drive" Atwood wrote. "Within 500 miles is roughly 40% of the nation's population as are 60% of Canadians. The interstates contained within this market also allow Lehigh to connect directly with inland ports to the south and west, like Columbus and Nashville."

Because of the primacy of location in shipping, some of the biggest names in logistics occupy millions of square feet here, and the market has a relatively low level of at-risk tenants. That has insulated owners of existing supply through 2020, and vacancies barely budged in spite of millions of square feet of speculative space arriving.

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State of the Commercial Real Estate Market! (Video)

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Tuesday, May 4, 2021

Industrial Property in Delaware County Trades for $136/sf

 780 Primos Avenue, a 40,170 SF, manufacturing and distribution facility located in Folcroft, Pennsylvania (“Property”) for $5,475,000.

The building was constructed in 1989, and features 22’ clear ceiling heights, ample loading capacity with full dock packages for the 16 dock positions. The Property is strategically located along US Interstate 95 and was 100% leased to four tenants at closing.

“There was strong interest for this in-fill offering.  The building’s 100% occupancy rate and the existing tenant’s lease terms created an extremely competitive bidding process.  The irreplaceable proximity to I-95, Philadelphia International Airport and Delaware County’s dense population were driving forces for this multi-tenanted building”

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How Biden's plan to tax real estate investors could affect the industry (Video)

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Here Are The Top Five Emerging Industrial Markets For 2021

By Lynn Pollack Globest.com

The US industrial market continues its wild upward swing after a banner 2020, a year in which it fared better than any other CRE segment. Overall, the country has experienced 43 consecutive quarters of positive industrial absorption, with occupancy gains the third highest on record last year. And while core markets have continued to gain popularity, opportunities for both investors and occupiers are increasingly popping up in secondary emerging regions.

Austin leads the way in emerging markets, with overall vacancy coming in at 7.3% at the end of last year, down from 8.6% in 2019, and occupancy gains of 2.3 million square feet, led by big leases by FedEx and Amazon. The average industrial asking rate was $10.70 at year’s end. More than five million square feet of industrial space was also underway in the region at year’s end to meet rising e-commerce and manufacturing demand, with the high-profile NorthPark356 and Plum Creek Industrial Center set to deliver in a few years.  E-commerce continues to pick up traction in Austin and predicts demand will likely outpace supply well into this year. 

Next up is Columbus, the second largest city in the Midwest and the 14th largest in the US. The city is located within a 10-hour drive of 46% of the nation’s population and is a “true multimodal logistics hub.” With record-breaking development, net absorption, and investment sales activity. Vacancy has decreased continuously over the last decade, from 10.2% in 2010 to 4.7% in 2020, and the vacancy rate is expected to decrease further this year as new product is leased up. The city saw the highest net absorption on record last year at 10.7 million square feet, and more than 12 million square feet of new construction was delivered. Asking net rents are $3.89 per square foot, with total sales volume at $1.2 billion last year. 

Indianapolis “is no longer the hidden gem” of industrial, Colliers said, as behemoths like Amazon doubled its local footprint and Walmart broke ground on a 2.2. million square foot build-to-suit distribution center in 2020. Developers in the Circle City delivered a record 14.3 million square feet of new space, thanks in part to business-friendly state tax policies and ample local government incentives. Vacancy hit 6.1% at the end of 2020, a jump from 4.4% in Q1 2019, but last year’s figure is “deceptive,” according to Colliers, because it doesn’t factor into account more than 3 million square feet of signed leases that had yet to commence when data was collected. If those planned occupancies are factored in, the firm says, vacancy drops to 4.8%. The city also experienced two consecutive years of overall net absorption in excess of 10 million square feet, with 2021 predicted to break that record again, and the average rental rate has gone up by 9% over the last two years.

Big box facilities were the highlight for Las Vegas in 2020.  The city has benefited from a new I-10 interstate corridor linking Las Vegas and Phoenix, and its proximity to Los Angeles and Long Beach makes it attractive for western distribution facilities.  Industrial vacancy hit a low of 3.2% in the region in 2019 and rose to 6% by the end of last year, thanks largely to a rapid increase in stock over the past three years. Net absorption totaled 5.7 million square feet and included a new 616,000-square foot Amazon expansion in the Vegas suburb of Henderson. The city posted 18.7 million square feet of industrial construction in 2020, with another 5.3 million square feet underway, and rents have remained stable over the past year. Sales were lower than expected, Colliers said, as the pandemic “pushed investors to the sidelines.” 

Rounding out the top 5 emerging markets is Lehigh Valley, Pennsylvania, home to major manufacturing companies like Nestle Purina, Mack Trucks and Victaulic. The vacancy rate for the region increased to 6.8% in 2020 with 5.6 million square feet of spec construction delivered, and occupancy gains dropped 2.5% from the end of 2019, totaling 4 million square feet. Demand continues to drive development in all size ranges. With activity picking up the most steam in larger big-box speculative spaces larger than 500,000 square feet. Rents increased by 9% last year, though sales activity was constrained by supply constraints. 

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Monday, May 3, 2021

The Rising Dominance of Private Commercial Real Estate Investors (Video)

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New Jersey Tries to Control 'Warehouse Sprawl'

 By Linda Moss CoStar News

A high-profile bill aimed at curbing so-called warehouse sprawl in New Jersey, one of the most desirable areas of the United States for industrial development, is facing criticism from business groups who say it could curb the Garden State's record growth surge that's stemmed in part from its unique location.

Senate President Steve Sweeney, D-Gloucester, introduced the proposed legislation, citing the effect that massive distribution-logistics projects already had, and could continue to have, on New Jersey's more rural regions, its open land, traffic and quality of life in communities. With the head of the state Senate driving the measure, it means the issue will get attention.

Under the bill, a municipality would be required to notify and provide a report to adjoining towns when a developer files an application to build a warehouse, allowing the neighboring communities to adopt a resolution of “inter-municipal concern,” according to Sweeney's office. That resolution would entitle them to have their concerns weighed by a joint board that will include members representing each municipality. The report would include a regional economic impact analysis paid for by the proposed project's developer.

The debate stems from New Jersey’s transformation into a warehouse mecca, a phenomenon created by its proximity to high population areas and the explosion of e-commerce and quick delivery expected by consumers. The state is smack in the middle of a densely populated region, home not just to America's most populous city, New York, but Philadelphia as well. Central New Jersey, for example, has access to 19 major markets and nearly 33% of the U.S. population within 24 hours  and is within 2.5 hours of three major ports, namely Newark-Elizabeth, Philadelphia and Baltimore.

And while it is the fourth-smallest state by area, it is the most densely populated, with 9.3 million people. Yet developers are vying for the little vacant land left in the packed Garden State, a nickname that reflects the farms, built on the region's rich soil, that dominated New Jersey into the middle of the 20th century.

The bill, which is co-sponsored by Sen. Troy Singleton, D-Burlington, has raised concerns in the state's commercial real estate industry, including its major trade group NAIOP NJ. The Garden State has seen the demand for distribution facilities far outpace supply as companies such as online retailer Amazon have become a tenant in a number of massive warehouses. Environmentalists want to put the brakes on that type of development, and the proposed legislation aimed at taking a step in that direction.

The Garden State has more than 500 municipalities with broad control, known as home rule, over development within their borders.

"This bill seems to reflect the fact that New Jersey is both a logistics powerhouse state and also a home rule state," NAIOP NJ CEO Michael McGuinness said in an email, adding that his organization "looks forward to working with Senator Sweeney to address concerns raised in the legislation."

Call for Development Safeguards

NAIOP may face a tough sell convincing Sweeney to ease the mandates proposed in his bill. While the most built-out parts of the state like the highly traveled area outside New York City along Route 95 can make the Garden State moniker seem at times ironic, they don't reflect the many small towns and rural areas, officials said.

“New Jersey is proud to be known as the Garden State, but we are at risk of becoming the warehouse state,” Sweeney said in a statement on his bill. “The rapid increase in the construction and operation of retail warehouses poses a threat to the preservation of farmland and open space. The impact of these large-scale projects extends to neighboring communities that can experience economic and environmental consequences that impact their quality of life.”

The construction and operation of large distribution centers have an impact on land use, traffic, the environment, local economies, "the fiscal well-being of municipal governments and social equity in the region," according to Sweeney.

“We need to have safeguards in place that allow for reasonable controls before the projects are approved,” he said. “The host community and neighboring towns need to have a voice in the process and the ability to reject proposals that will cause them harm. The warehouses should be located where they make sense.”

The bill would update zoning laws and state guidance to empower municipalities to control the placement of warehouses and create a 15-member “Intermunicipal Impact Advisory Board” in the state Department of Community Affairs to promulgate guidelines, hear appeals and render decisions.

That could put the brakes on the industrial real estate market in New Jersey, which has been on a tear for the past few years, with demand for logistics and distribution space heightened amid the coronavirus pandemic as more Americans are forced to stay home and shop online.

The vacancy rate for industrial properties in North Jersey is only 3.8%, according to CoStar's most recent report on the sector. Rents have also risen.

"Absorption [space leased minus space that comes onto the market] in the third quarter reached nearly 1.8 million SF [square feet], the highest quarterly reading since 2005," CoStar said. "Strong demand has continued into 2021, with more than 700,000 SF [square feet] of net absorption recorded, and with no supply additions, the vacancy rate has compressed to the lowest level since CoStar began tracking the market."

Sierra Club Push

Sweeney's bill is a step in the right direction but doesn't go far enough in protecting the environment and communities, according to the New Jersey Sierra Club. The state has a least 50 million square feet of warehouse space proposed in environmentally sensitive areas such as the Delaware Bayshore, Highlands and Pinelands regions, Jeff Tittel, director of the group, said in a statement.

"One of the worst ones is a 5.5-[million]-square-foot warehouse on Route 1 in West Windsor," Tittel said. “This issue is critical considering what is happening across the state, especially when one town tries to build a giant warehouse next to another town. We had hoped that this legislation would be stronger. There’s a lot of process, but we’re not sure that there will be a lot of outcomes. The state needs the ability to stop these developments to protect sensitive farmland from more truck traffic, more flooding and more storm-water runoff.”

For example, although the bill sets up a process and an advisory board, "we’re not sure that the board would have the authority to actually say no to projects," Tittel said.

"Meanwhile, state permits and other things could still go on," he said. "This means that these projects could still bulldoze ahead even with this legislation, paving over some of the last unspoiled areas of the state with warehouses. The governor really needs to put a freeze on warehouse projects until we can make changes to stop projects."

South Jersey and places there such as Burlington County, where there is still swaths of vacant land, have seen a burst of logistics construction

“New Jersey has quickly become a major player in the logistics sector due to our ideal regional location and expansive transportation infrastructure," Singleton said in a statement. "In many cases, our open space has been haphazardly developed without consideration of the impact it will have on neighboring municipalities. As a result, surrounding towns are left grappling with increased traffic, congestion and tractor trailers on their local roadways."

The proposed legislation "will not only protect our natural resources, but will also protect the quality of life for the families living in these towns,” according to Singleton.

At least one municipality has addressed the issue on its own. Branchburg last year passed an ordinance, already being challenged by several lawsuits, that bars warehouses as a permitted use in industrial zones.

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1500 John F. Kennedy Blvd. Philadelphia Secures $68M Refi

 By Kelsi Maree Borland Globst.com

A Pennsylvania limited partnership known as Crown Two Penn Center Associates has closed the $67.9 million refinance of Two Penn Center Plaza, a 502,000-square-foot 20-story class-A office tower located at 1500 John F. Kennedy Blvd. in Center City. 

The property had an existing 10-year loan, according to industry sources, with a $44 million remaining balance. The limited partnership pulled cash out of the transaction. The remaining terms of the capital transaction were not disclosed.

Herzliya, Israel-based real estate investor Optibase announced the refinancing transaction. The firm owns a 22.16% interest in the property, and collected $5 million from the transaction as part of the total proceeds. The limited partnership will distribute $2 million of the total $5 million in the coming weeks. Optibase focused on fixed-income real estate transactions, and currently holds interests in properties in Switzerland, Texas, Philadelphia, Miami and Chicago.

The refi is a standout traditional office deal in a market that has become a stomping ground for medical office activity. Last year, BG Capital sold a medical office campus in Philadelphia’s Port Richmond neighborhood to New Jersey-based the Hampshire Cos. and its international investment partner Arbah Capital for $53.1 million. The three-building property includes a 200,000-square-foot, multi-tenant office building, located at 2301 E. Allegheny Ave., a renovated 30,000-square-foot, single-tenant medical office building, and a new 16,000-square-foot, ground-up recreational facility for a medical office tenant.

Full story: https://tinyurl.com/4jjy6nsu 

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Friday, April 30, 2021

Is it Time to Rethink How Commercial Real Estate is Valued? (Video)

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J.G. Petrucci, Cabot Partner on Lehigh Valley Industrial Project in PA

 By Linda Moss CoStar News

New Jersey-based developer J.G. Petrucci Co. and Boston private equity firm Cabot Properties are partnering on an industrial project planned for the Lehigh Valley in Pennsylvania.

The firms are developing a 318,440-square-foot facility at 600 Male Road in Wind Gap. 

The logistics facility, slated to be completed later this year, will feature 36-foot clear heights, 39 dock-high loading positions, two drive-in doors, 54 trailer positions, LED lighting and employee parking.

In a recent report found that the eastern and central Pennsylvania industrial market has a total vacancy rate of only 5%, which comes after a record year of leasing, positive net absorption and rent growth in 2020. Despite 3.4 million square feet of speculative properties, those without any tenants signed up, being completed in the first quarter, direct-asking rents have increased.

The other two J.G. Petrucci and Cabot projects, both in Pennsylvania, are the development of a 225,000-square-foot distribution facility at 85 Ben Fairless Drive in the Bucks County community of Fairless Hills and a 148,960-square-foot, single-tenant industrial facility at 59 Fretz Road in the suburban Philadelphia community of Souderton.

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Thursday, April 29, 2021

Mast Labs surgical training center coming to Philadelphia Navy Yard

John George Senior Reporter Philadelphia Business Journal

The Philadelphia Navy Yard is getting another health care tenant later this year when Mast Labs opens an independent surgical training center at the site.

The first Mast Labs was established in Bethesda, Maryland, two years ago by Dr. Scott Faucett and Terence Redmond to serve the Washington, D.C., region.

Jeff O'Donnell Jr., who was recently named president of Malvern-based Waypoint Orthopedics, joined the Mast Labs group as a general partner to bring the organization's first expansion site — with its own limited partnership of local surgeon investors — to Philadelphia.

"I've wanted to do something like this forever," said O'Donnell, a health care entrepreneur who has spent the past decade in the medical device industry working for companies such as DePuy Synthes, Intact Vascular and Trice Medical. "There is no independent place companies can use for training. I talked with Scott and Terry and said we need to do this in Philadelphia. … This is a growing med-tech hub. There is a market here for something like this."

O'Donnell said while large medical companies typically have cadaver labs at their headquarters where they can bring surgeons in for device demonstrations and training, smaller companies are left scrambling to rent space after hours at places such as ambulatory surgery centers or hospitals.

Such arrangements are not ideal, he said, because companies need to get in and out of such sites quickly, limiting their contact time for "relationship building" with the surgeons they hope become customers.

O'Donnell said they have raised just under $1 million to create and fund a 5,000-square-foot Mast Lab at One Crescent Drive in the Navy Yard.

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Biden Major Real Estate Tax Hikes (Video)

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Monday, April 26, 2021

Nike Leases 1M SF Bethlehem, PA

 By Ben Atwood CoStar Analytics

One of the largest clothing companies on the planet is coming to the Lehigh Valley.

Nike has leased over 1 million square feet at 3633 Commerce Center Blvd. in the Majestic Bethlehem Center, an industrial park that was developed on top of an old Bethlehem Steel plant in Bethlehem, Pennsylvania.

The campus has become one of Lehigh’s most prominent shipping nodes, and the Fortune 100 company will soon be neighbors with QVC, Crayola and McKesson. Like Beaverton, Oregon-based Nike, these tenants were drawn to the Lehigh Valley market by its exceptional interstate access and direct routes into New York and Philadelphia.

The deal is excellent news for Lehigh, because in spite of the market’s strengths, it saw a curious downtick in industrial demand in 2020. Net absorption was below what was seen in the nearby Scranton and Berks County markets, which each saw multiple million-square-foot deals close in the past four quarters.

This cooling was especially surprising given the market’s prominence before the coronavirus pandemic and how the related shutdowns rapidly accelerated online shopping. One would anticipate this market doing extremely well, as over the past decade, Lehigh has easily been the North Atlantic Trade Corridor’s most in-demand market.

Local industrial professionals remain confident that the market will rebound but point to the cheaper rates and availability of premium space outside the valley as factors that could be siphoning away demand. With millions of square feet of speculative development on the way, Lehigh Valley finds itself in a potentially troubling spot for the first time in years.

While the sheer amount of space set to deliver might make some waves in the coming quarters, Nike’s decision to set up shop within Lehigh is a good indication that 2020 was an anomaly, not a trend. This market remains supremely positioned on the supply chain, and the growth of online shopping caused by the coronavirus will likely keep demand elevated for years.

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