Friday, May 28, 2021

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

'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:

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:

Why Office Values Might Plummet This Year (Video)

Wednesday, May 26, 2021

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

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.

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.

Monthly Economic Outlook —May 2021 (Video)

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:

Thursday, May 20, 2021

How To Analyze Commercial Real Estate Deals (Video)

Multifamily Outlook - H2 2021 (Video)

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."

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

Wednesday, May 19, 2021

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

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.

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.

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.

Friday, May 14, 2021

Typical Commercial Lease Terms That Everyone Should Know (Video)

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.

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

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:

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

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. 

State of the Commercial Real Estate Market! (Video)

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”

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

Here Are The Top Five Emerging Industrial Markets For 2021

By Lynn Pollack

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.

Monday, May 3, 2021

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

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.

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

 By Kelsi Maree Borland

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: