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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