Wednesday, January 27, 2021

Three-Building Newtown Office Campus Sells for Over $12 Million

 Metropolitan Commercial Development has purchased Cricklewood Green, a three-building office campus in Newtown, Pennsylvania, for $12.2 million.

The Wyomissing, Pennsylvania-based firm acquired the property from Cricklewood Realty Investments LP.

Cricklewood Green totals 81,640 square feet and is located at 1-5 Caufield Place. The office campus was 84% leased by five tenants at the time of the sale.

"The portfolio’s prime location off of I-295 combined with its strong in-place tenancy attracted an array of investors to this opportunity. Furthermore, with just over 15% of the existing buildings currently unoccupied, and with the ability to construct additional buildings on site, the transaction represents a major value-add opportunity for the buyer."

Green Construction Tech Company to Open First US Production Facility in Pennsylvania

 Nexii, a Canadian green construction technology company with lofty ambitions of revolutionizing commercial real estate in an eco-friendly way, is set to open its newest manufacturing center in Hazleton, Pennsylvania, this spring, its first in the United States.

Its plant will produce a synthetic construction material called Nexiite, which Nexii hopes will replace concrete as the go-to product in commercial real estate development. Once fully operational, the plant is slated to create more than 180 new jobs and produce more than 8 million square feet of building panels every year, serving projects across the northeastern United States. The plant will be operated by Pennsylvania's John Wolfington and NEXUS-1 through Nexii’s Certified Manufacturing program.

Concrete might be ubiquitous with construction, but it’s not great for the environment. Creating it requires heating limestone to extraordinarily high temperatures, and coal is often used as the fuel. Since coal is essentially the solid form of carbon, the industry releases quite a bit of carbon dioxide into the atmosphere every year.

"Our carbon footprint compares very favorably to steel and concrete," said Gregor Robertson, Nexii’s executive vice president of strategy and partnership and former Mayor of Vancouver, British Columbia. "Using Nexiite results in a 43% drop in a property's carbon footprint and Nexiite can be used in all types of construction projects."

Nexii has already invested $56 million into its plants and said that production orders at its existing facilities in Canada are booked for years. The firm is also building another Nexiite plant in British Columbia. Robertson is also optimistic that more growth is in the future.

"We're very bullish on green technologies and President Biden is clearly signaling that fighting climate change will take on an increased importance in the coming years," he said.

Nexii’s arrival is certainly positive news for Hazleton and for the greater Scranton market. Northeast Pennsylvania was built around coal, manufacturing and trucking. The decline of the first two kneecapped the local economy for generations, but the presence of the third still creates some interesting commercial real estate opportunities for the struggling region.

If Nexiite is going across the country, there are few locations in the United States better suited to get it there. The Scranton market is within a few hours drive of every major port on the northeastern shore. It also has a deep base of blue-collar workers, as well as several tax incentives designed to lure in manufacturers.

This has made Scranton a keystone of Pennsylvania logistics, and Robertson specifically mentioned the region’s labor pool and logistics reach as primary reasons behind the company's decision to locate within the market. There is no shortage of major shipping tenants here, and Scranton posted some of the state’s strongest levels of industrial absorption, the difference between move-ins and move-outs, through 2020.

Robertson believes that the region’s logistics capacities could entice more manufacturers to the area; Nexii is not the only international firm looking at the region. Last October, Kanji Yamanouchi, the ambassador consulate of Japan, reached out to Wilkes-Barre Mayor George Brown to request a tour of the area.

Yamanouchi spent a day sight-seeing and told local reporters that he was impressed with the region’s potential and hoped that Luzerne County could be a spot for Japanese manufacturers.

Brown is optimistic, too.

"We’re turning it around up here," Brown said. "Mark my words, one day, Wilkes-Barre will be the country’s capital of innovation."

While that claim may be so audacious that trying to fact-check is a moot point, and the height of his ambition seems unlikely at the moment, fighting climate change is starting to become more important. And right now, northeast Pennsylvania is at the front of the charge.

University City Science Center puts building up for sale amid 'insatiable' demand

Natalie Kostelni Reporter Philadelphia Business Journal 

The University City Science Center has put up for sale 3701 Market St., an 8-story, 141,000-square-foot office building that is mostly leased to Penn Medicine.

The building, developed in 2000, is fully leased and expected to sell for upwards of $80 million.

The Science Center has from time to time sold buildings to users such as Monell Chemical Senses Center and Children’s Hospital of Philadelphia, but it considers now is a particularly good time to try to sell 3701 Market.

“It’s a very much sought-out asset class,” said Curt Hess, senior vice president of real estate at the Science Center. “It’s an opportune time to sell.”

Investor interest in real estate leased to life sciences and medical tenants has increased during the pandemic. While that has contributed to investor attention so has the uncertain future of traditional office space.

“The current appetite for science-focused real estate globally is really insatiable,” said Robert Fahey, an investment broker with CBRE Inc. who is marketing 3701 Market for sale. “Capital from around the world is pursuing these assets for a couple of reasons. They are considered low risk and low volatility and the aging population is driving the health of that sector and the need for science to create cures for all sorts of ailments.”

The plan is to pour any proceeds gained from the sale of 3701 Market back into the Science Center’s programs, Hess said.

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Exeter Property Group to be acquired by EQT AB in $1.9B deal

Natalie Kostelni Reporter Philadelphia Business Journal

 Exeter Property Group, a global industrial property behemoth started by Ward Fitzgerald in 2006, has entered into a deal to be acquired for $1.9 billion.

EQT AB, a Stockholm private equity firm, will buy Conshohocken-based Exeter in a transaction that involves $1.07 billion in cash including $300 million to refinance existing debt and $800 million in EQT shares.

Exeter has $10 billion in assets under management and, for 2020, it is expected to generate $135 million in revenue and $80 million in earnings. While the bulk of Exeter’s portfolio consists of industrial properties, the company has expanded into life science, suburban office and other real estate throughout the United States and Europe.

Under terms of the agreement:

EQT will acquire 100% of Exeter’s management company;

Fitzgerald and other Exeter management shareholders will receive 65% of their consideration in newly issued EQT shares and 35 percent in cash;

Fitzgerald and other Exeter management shareholders to join EQT and enter into lock-up agreements; and

Funds managed by TA Associates, which own roughly 40% of Exeter, will receive 25% in newly issued EQT shares and 75% cash.

Fitzgerald had been with Liberty Property Trust prior to forming Exeter 15 years ago with Tim Weber. The focus for Exeter was industrial real estate. The two figured a confluence of variables including technology, e-commerce, bar codes that allowed a faster and more efficient movement of goods and a rise in disposable income would eventually lead to an evolution in modern big box warehouses. Industrial properties constructed three decades ago were functionally obsolete, providing an opening for companies such as Exeter to swoop in, build new ones, lease them up and make their mark by accumulating a portfolio of modern warehouse-distribution centers.

The gamble paid off as e-commerce began to dominate retail, logistics continued to expand and demand for industrial real estate grew globally. Exeter continued to evolve as a company.

In 2010, Exeter went out to raise its second fund and closed in 2011 on $615 million. That money was spent building up its core investment properties. A third fund totaling $400 million was raised in 2014 and deployed to help secure long-term leases and modernize the portfolio.

By 2015, Exeter had built up its portfolio to 209 properties totaling 58 million square feet in 25 markets. In its first big transaction, Exeter sold the properties for $3.1 billion to a joint venture of Henley Holding Co., a subsidiary of the Abu Dhabi Investment Authority, and the Public Sector Pension Investment Board, a Canadian pension investment manager.

The deal didn't stop Exeter from continuing execute on its original strategy. The company deployed a value-add fund totaling $832 million that was focused on big box warehouses and multi-tenant logistics facilities throughout the U.S. Exeter used another $600 million fund to acquire core assets as well as a fund totaling 300 million euros to buy warehouses throughout Europe.

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Thursday, January 21, 2021

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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.

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Thursday, January 14, 2021

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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:

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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.

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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.

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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.