Thursday, January 21, 2021

Capitalization Rate Commercial Real Estate. What You Must Know (Video)

South Jersey Shopping Center Outside Philadelphia Trades Hands

 A retail center anchored by a ShopRite grocery store in the suburbs of Philadelphia has traded hands.

Mill Pond Village, a 94,550-square-foot shopping center at 380 Egg Harbor Road in Sewell, New Jersey, was sold to Sterling Organization of West Palm Beach, Florida, by Edens of Washington, D.C. The sale price wasn't disclosed.

ShopRite, a dominant grocer in South Jersey, has been an anchor at the Gloucester County shopping center for nearly 13 years. The tenant roster at the 98% leased property also includes Inspira Health, Orangetheory Fitness, Hair Cuttery and AAA.

Mill Pond Village spans two buildings and is about 14 miles from Philadelphia's Center City District. The property's neighbors include Rowan University and Jefferson Health, and the retail site serves a trade area that includes 161,499 residents within a 5-mile radius.

"With ShopRite performing extremely well at this location and attributing to such a large portion of the income, Mill Pond Village is a stable investment," Colin Behr, a JLL senior director, said in a statement. "We saw a great amount of competition for this asset and we are pleased to have the opportunity to work with both buyer and seller as they worked diligently to complete the transaction."

Wednesday, January 20, 2021

The Rising Cost of Building Materials for Real Estate


As building material prices and demand for houses increased throughout the year, total construction spending on residential housing rose to almost $667 billion.

These building material prices rose 5.4% in 2020, led by a jump in lumber costs due to an interruption in production at the start of the pandemic, which limited supply. High housing demand and weakening of the U.S. dollar also contributed to the increase.

The charts below show the trend in building material prices since 2015.


Lumber prices reached historic peaks this year, but those prices have been volatile. This year’s price index has been roughly four times as volatile as it was during the recessionary years of 2008 and 2009.

Softwood lumber prices rose by 12.5% in December following a 23.9% decline over the prior two months.

Ready-Mix Concrete

Ready-mix concrete prices rose by 0.7% in December, after a drop of 1.1% in November.

Gypsum Products

Prices for gypsum products, such as drywall and ceiling tiles, bounced around during the year until surging by 4.8% in November. They ended the year about 0.9% higher than December 2019.

Friday, January 15, 2021

Lehigh Valley Industrial Market Well Positioned for 2021

By Ben Atwood CoStar Analytics

The Lehigh Valley, Pennsylvania, industrial market took everything COVID-19 dished out without missing a beat. And it appears ready for whatever 2021 may throw its way.

Lehigh Valley's unique location and proximity to every major city along the northeastern shore meant at the start of the shutdown, it had a deep base of strong tenants relatively unexposed to risk. This helped keep the market stable through a few turbulent months in the second quarter when leasing activity dried up across the county.

Because COVID-19 has accelerated the growth of e-commerce, demand quickly resumed. Last year ended with nearly 2.5 million square feet of net absorption — the difference between move-ins and move-outs — which kept vacancies stable even as millions of square feet of industrial space came online in the midst of a global pandemic. The market posted year-over-year rent growth of nearly 5.5%, which is incredible considering the chaos surrounding the initial shutdown.

Demand was heaviest in the Fogelsville corridor, where Interstates 78 and 476 intersect. This is one of the state's best locations for distributors, and 14 of the year's 52 leases over 10,000 square feet were signed here. There was also an interesting flurry of activity near Easton and close to the airport, where Geodis and Natural Foods each signed for over 1 million square feet in 2020.

This level of activity likely helped give developers the confidence to resume building, breaking ground on more than 7 million square feet last year. Many of these projects are northeast of Fogelsville and hug I-22. There's several major projects underway around Easton, which offers the most direct access into New York City but also substantial work being done near the Airport.

Given the market’s location and the growth of e-commerce, it is not too surprising that investment exploded in the Valley. Total industrial sales volume was over $730 million, one of the highest levels in market history and the third consecutive year of sales growth. Big buyers on the year included Prudential, Uline, Prologis, and the BlackStone Group.

How to Maximize 2021 Investing in Commercial Real Estate (Video)

Thursday, January 14, 2021

Real Estate vs. Stocks - Which Investment Makes You Rich? (Video)

BakerHostetler signs deal to move Philadelphia office

Natalie Kostelni Reporter Philadelphia Business Journal

BakerHostetler has signed a 16-year lease to relocate its Philadelphia offices from Cira Centre in University City to BNY Mellon Center at 1735 Market St. in the Central Business District.

The Cleveland-based law firm leased 45,121 square feet, a reduction from the 80,000 square feet it had occupied at Cira Centre. BakerHostetler's lease was scheduled to expire this year at the Brandywine Realty Trust-owned building. In 2014, the law firm merged with Woodcock Washburn, which was one of Cira Centre’s original tenants, and inherited its office space.

BakerHostetler, which has 65 attorneys in Philadelphia, is the second law firm in recent weeks to sign a long-term lease. Blank Rome, one of Philadelphia’s largest law firms, committed to a new 16-year lease on space in the Center City building where it currently resides — One Logan Square, which is also owned by Brandywine Realty.

BakerHostetler was one of two prominent Philadelphia law firm tenants at Cira Centre in the market and exploring what to do once their leases expired at the office building. Dechert is the other firm.

Dechert, which occupies around 240,000 square feet at Cira Centre, has been looking for new office space for nearly two years. A proposed office building at Brandywine Realty’s Schuylkilll Yards in University City had been one option it was considering. The firm did sign last year a lease on 34,987 square feet at 1735 Market, though that was just one part of its overall space strategy.

BakerHostetler will occupy floors 31 and 32 at 1735 Market and its lease brings the 51-story, 1.3-million-square-foot office tower up to 90% occupied. “It’s the second large national law firm that has moved to the building since we acquired it,” said Jeremy Moss, executive vice president of leasing at Silverstein Properties. “That’s a real validation for the building.”

Full story:

Investor and Occupier Opportunities in 2021 (Video) 

Monday, January 11, 2021

Amazon takes more warehouse space in Philadelphia for last-mile distribution

 by Natalie Kostelni Reporter Philadelphia Business Journal Inc. has leased 94,000 square feet in Philadelphia for last-mile distribution as part of its continued expansion throughout the region.

The online retailer signed a long-term lease on a portion of a building at 700 Ramona Ave. in North Philadelphia, according to those familiar with the deal. The building had been vacant.

Amazon (NASDAQ: AMZN) has been one of the most active companies leasing industrial space throughout the region as it continues to build not only its network of last-mile distribution centers but larger warehouse buildings as well. In 2020, the online retailer signed onto more than 3 million square feet of space in the Philadelphia area, South Jersey and Wilmington in a mix of large and small warehouse facilities.

Among the more recent last-mile spaces it signed onto are 3750 State Road, a 235,000-square-foot building in Bensalem; 3025 Meeting House Road, a 207,500-square-foot building in Philadelphia; 2400 Weccacoe Ave., a 283,000-square-foot building in Philadelphia; and 2891 Benigno Blvd. in Bellmawr, New Jersey.

Those leases add to the other last-mile facilities Amazon already has in West Deptford, King of Prussia, Lansdale, Langhorne, Philadelphia and throughout South Jersey.

On a larger scale, Amazon signed leases last year on a 1.25-million-square-foot building under development in Carney’s Point, New Jersey, and an 820,000-square-foot facility at a former General Motors plant in Wilmington. It also opened in November a new 1-million-square-foot fulfillment center in Berks County. The facility is the online retail giant's 15th large fulfillment center in Pennsylvania.

Full story:

Link Logistics Real Estate & Bridge Development Partners Team Up for 480,000sf Facility in Lehigh Valley

 Link Logistics Real Estate is teaming up with Bridge Development Partners to create a 480,000-square-foot industrial campus on a 60-acre site in the Lehigh Valley in Pennsylvania, a hot spot for such projects.

Bridge, headquartered in Chicago, assigned the contract for the vacant site at 428 E. Moorestown Road in Wind Gap to Link after securing all of the necessary development approvals. Link Logistics, the Piscataway, New Jersey-based industrial real estate arm of investment giant Blackstone, has retained Bridge to provide development management services and to construct the industrial facility on its behalf.

Construction on the project is slated to begin this month, with completion expected in December. It is Bridge's first development in Pennsylvania and will be overseen by northeast region partner Jeff Milanaik and his team, according to a statement from the real estate firm.

With space for industrial development scant and state-of-the-art logistics properties scarce in North Jersey, real estate firms have gone south and west to build warehouse and distribution hubs. That's sparked a flood of development in the Lehigh Valley, a region that borders and includes part of the Garden State but mainly encompasses Allentown, Bethlehem and Easton in Pennsylvania.

Although Bridge hasn't had any projects in the Keystone State previously, it has developed in the New Jersey portion of the Lehigh Valley. The developer built Bridge Point 78, a 3.85 million-square-foot industrial campus with six buildings in Phillipsburg, New Jersey, on a former Ingersoll Rand site.

The project's first phase was recently purchased by PGIM Real Estate for $275 million, according to CoStar data. The complex has a tenant roster that includes Japanese clothing retailer Uniqlo, Mark Anthony Brands, which distributes White Claw alcoholic seltzer, and lawn-care manufacturer ScottsMiracle-Gro.

"The Lehigh Valley continues to distinguish itself as one of the country’s most vital distribution and logistics hubs, which was critical to our success at nearby Bridge Point 78," Milanaik said in a statement.

The proposed Lehigh North project would feature 36-foot clear heights, a cross-docked configuration for its 73 exterior docks, four drive-in doors, 100 trailer positions and parking for 187 cars. The facility is equidistant between Route 78 and Allentown near Route 33 through the Northampton Valley.

The new development would be an addition to Link's Lehigh Valley portfolio, which totals more than 16 million square feet of industrial space, according to Britton Winterer, the company's executive vice president and head of development.

It is the second industrial project that Bridge and Link have partnered on, with the two companies developing a 95,000-square-foot industrial facility in Lyndhurst, New Jersey, in 2019.

Live! Casino & Hotel Philadelphia Sets Opening Date

An opening date has been set for Live! Casino & Hotel Philadelphia, a $700 million gaming and entertainment development in South Philadelphia's Stadium District.

Live! Casino & Hotel Philadelphia, located at 900 Packer Ave., is set to have a series of reservation-only preview days starting Jan. 19. The official grand opening for the general public is currently scheduled for Feb. 11 at 8:00 p.m., pending approval from the Pennsylvania Gaming Control Board.

Live! Casino & Hotel Philadelphia's planned opening comes amid the ongoing coronavirus pandemic. The city of Philadelphia allowed casinos, along with gyms and museums, to reopen on Jan. 4 after being closed for six weeks due to the "Safer at Home" restrictions. The restrictions were put into place amid rising COVID-19 cases across the city and Pennsylvania. The city, however, will continue its restrictions on indoor dining, indoor gatherings and events, theaters, colleges and indoor organized sports through at least Jan. 15. Masks will continue to be required indoors at all times.

To prepare for opening, Live! Casino & Hotel Philadelphia developed an enhanced health and sanitation program called the Play It Safe plan. The program will include increased cleaning frequency, physical distancing, reduced occupancies, new technology and vigorous hygiene and health measures.

Construction on the 510,000-square-foot gaming and entertainment development began in 2019. The development features a luxury 12-story, 208-room Live! Hotel; six-room even center comprising 15,000 square feet of customizable meeting space to accommodate groups of 12 to 1,000; more than 2,100 slots and electronic table games; 150 live-action table games; dedicated 29-table poker room and a state-of-the-art FanDuel Sportsbook. Its dining line-up is set to include The Prime Rib, Sports & Social Philly, Luk Fu, Center Bar, R Bar and 10th Street Market, a dining hall that's set to include two venues from Emmy-award winning chef and TV personality Guy Fieri.

The Live! Casino & Hotel is set to generate over $2 billion in economic stimulus to Philadelphia, along with $100 million in tax revenues for the city in its first five years of operation.

Thursday, January 7, 2021

Developers pay $110.5M for 117-acre South Jersey site, plan two new warehouses

 Michelle Caffrey  Reporter Philadelphia Business Journal

A 117-acre industrial site in South Jersey has sold for $110.5 million, paving the way for the construction of two speculative Class A distribution buildings. 

A joint venture between Clarion Partners and Baltimore-based MRP Industrial bought the expansive property at 1900 River Road in Burlington Township from Boston-based Stag Industrial, which paid $61.5 million for the site in 2015. 

A vacant 1-million-square-foot warehouse building formerly occupied by the U.S. General Services Administration currently sits on the property and will be decommissioned and demolished.

Full story:

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Monday, January 4, 2021

Stag Sells Distribution Warehouse in New Jersey’s Priciest Industrial Trade of Year

 Stag Industrial, a real estate investment trust, said it sold a vacant distribution warehouse in Burlington, New Jersey, in the state’s biggest industrial sale by total price this year.

The company, based in Boston, said it sold 1900 River Road, a roughly 1 million-square-foot facility that was built in 1992, for $172 million to an undisclosed buyer.

The sale price amounts to about $164 per square foot, significantly above the market sale price for an industrial property in Burlington of $99 per square foot, according to CoStar.

The sale is the top total sum paid for a single industrial property in New Jersey in 2020. It surpasses the $164 million sale of 50 Veronica Ave., a 926,392-square-foot industrial facility in Somerset that is 100% leased to LG Electronics.

The River Road property had been fully leased to the General Services Administration until this month, according to public records. The property is now vacant.

Burlington sits in the broader Philadelphia metropolitan area, where the industrial market is its healthiest commercial real estate sector. The city benefits from its proximity to major population hubs including New York City and Washington, D.C., and is an attractive spot for retailers and e-commerce companies to maintain a significant presence.