Tuesday, December 27, 2022

Gattuso Development Secures Financing for Largest Life Sciences Research and Lab Project in Philadelphia

 By Javon Roach CoStar Research

Looking to capitalize on Philadelphia’s emergence as a national hub for cell and gene therapy, Gattuso Development and project partner Vigilant Holdings of New York have secured a $290 million construction loan to build an 11-story life science research and lab facility at 3201 Cuthbert Street in the center of Philadelphia’s University City submarket.

SmartLabs, a Boston-based Laboratory-as-a-Service (LaaS) firm, had previously committed to occupy a portion of the new facility for its first location outside of San Francisco or Boston, demonstrating the strength of the Philadelphia life sciences market, which JLL ranked fifth in the nation in its 2022 Life Sciences Lab Real Estate Outlook.

Corebridge Financial is financing the deal, with an additional equity commitment through The Baupost Group. SmartLabs and Drexel University have pre-leased a combined 45% of the lab space in the new building set for completion in 2025.

3201 Cuthbert Street is located at the center of Drexel University’s campus. Drexel leased the site to the developers under a long-term agreement. The new facility will include R&D, vivarium, and manufacturing suites with SmartLabs occupying two floors in the building.

Designed by Robert A.M. Stern Architects to achieve LEED® Gold-certification, the building will encompass nearly 520,000 square feet of wet lab and dry space, 11,908 square feet of street-level retail space, and 137 underground parking stalls, making it the largest life sciences research and lab facility in the city.

Additional lab-friendly design elements include expanded floor-to-floor heights, an HVAC system designed specifically for lab research, dedicated chemical storage space and ph-neutralization capability, six enclosed loading docks, and additional storage for tenant equipment and vertical shaft infrastructure.

University City has emerged as a center of Philadelphia’s life sciences market, becoming a global hub for specialized gene and cell therapy, the 2.4 square-mile University City neighborhood is home to one of the largest concentrations of health systems, teaching institutions, life sciences, biotech and pharmaceutical companies in the world.

 “We appreciate the chance to work with the great team at JLL to complete the capital stack for this important project,” said John Gattuso, Gattuso’s president, and co-founder said in a statement. “We believe the project validates Philadelphia’s emergence as a global hub for life sciences research, and we are excited to begin construction.”

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Wednesday, December 21, 2022

Chubb Plans New Philadelphia Office Headquarters

By Mark Heschmeyer CoStar News

Chubb, the world’s largest publicly traded property and casualty insurance company, is planning a new Philadelphia headquarters.

The 18-floor, 438,000-square-foot building would be the third-largest office property built or under construction in the past five years in the city, according to CoStar data.

Parkway is developing the property in partnership with Chubb. Construction will commence in February. Chubb will occupy the planned building at 2000 Arch St., reaffirming a commitment to the city of Philadelphia.

“Chubb is a dynamic and growing company that is proud to put a new stake in the ground in Philadelphia, a city that has been part of our history and success since 1792,” John Keogh, Chubb president and chief operating officer, said in a statement. “Our expanded presence will bring economic benefits to the city and commonwealth, including new jobs and stimulating broader economic activity.”

Chubb, already a major employer in Philadelphia and elsewhere in Pennsylvania with about 1,950 jobs, plans to create at least 1,250 new positions in Philadelphia after the building’s expected opening in early 2026, making it the company’s largest office in North America.

Chubb has committed to creating and retaining a total of 3,200 jobs in Pennsylvania within five years following the opening. The firm’s expanded workforce in Philadelphia will include new roles in digital technology, finance, underwriting and claims.

The Redevelopment Assistance Capital Program provided by the state of Pennsylvania and facilitated by the Philadelphia Industrial Development Corp. is providing $10 million to fund development and construction costs of the project.

Chubb currently occupies two locations in Philadelphia at 436 Walnut St. and 510 Walnut, steps from Independence Hall where its predecessor company was founded.

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Friday, December 16, 2022

Regulators highlight top risks: Commercial real estate, credit losses and crypto (Video)

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Alterra Property Group nears deal to acquire 1701 Market St., soon to be vacated by Morgan Lewis

 Paul Schwedelson Reporter Philadelphia Business Journal

Alterra Property Group is nearing a deal to acquire 1701 Market St. with plans to convert the longtime Morgan Lewis & Bockius headquarters building into apartments, according to industry sources.

The 305,170-square-foot property in the heart of the Central Business District has been up for sale as Morgan Lewis plans to vacate the entire space and move five blocks west into a new 19-story building at 2222 Market St. in 2023.

The 18-story 1701 Market building is owned by an entity affiliated with LXP Industrial Trust (NYSE: LXP), previously known as Lexington Realty Trust. The New York company rebranded last year as it sheds its office portfolio to focus solely on industrial properties.

Alterra declined to comment on 1701 Market.

Morgan Lewis’ lease at 1701 Market expires Jan. 31, 2024. The property, also known as Six Penn Center, was built in 1955 and Morgan Lewis moved there in 1998. The building was most recently assessed by the city at $69.8 million.

Located between Comcast Corp.'s headquarters and City Hall, the building has been viewed as a ripe candidate for an apartment conversion given the likely challenge of filling the entire space after the law firm departs.

In marketing materials for 1701 Market St., brokerage JLL said the building “offers a rare opportunity to acquire a value-add mixed-use tower that can accommodate a variety of future uses while benefiting from the asset’s trophy location in the heart of Philadelphia’s CBD.”

Philadelphia-based Alterra owns dozens of residential buildings throughout the city, several of which it has repositioned from office to residential. The company bought the One City building at 1401 Arch St. in 2017 when it had 220,000 square feet of office space. Alterra converted it to 323 apartments that opened for occupancy in 2020.

Alterra recently developed LVL North, a 410-unit apartment building with a Giant grocery store and underground parking on the northwest corner of Broad and Spring Garden streets.

The deal for 1701 Market would mark the latest office-to-residential transformation in Philadelphia, which ranked second nationally in apartment conversions in 2020 and 2021 with 1,552 new apartments that were converted from other types of buildings, according to a RentCafe analysis of Yardi Matrix data. Center City District CEO Paul Levy said 180 buildings, or 9 million square feet of office or industrial space, were converted to residential from 1998 to 2021 in Philadelphia.

Full story: https://tinyurl.com/bdbvnrp3

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Velocity Venture Partners buys Delco industrial building for $41.8 million

 Paul Schwedelson Reporter Philadelphia Business Journal

Fast-growing Velocity Venture Partners has purchased the 468,000-square-foot Yeadon Industrial Center in Delaware County for $41.75 million.

Velocity plans to spend an additional $8 million on capital improvements to upgrade the complex and raise rents to market rates, co-founder Zach Moore said.

“It’s not very often we get the opportunity to buy a building of that size,” Moore said. “When we do, we get excited by it.”

The Bala Cynwyd company already owns more than 8 million square feet of industrial and flex space across 80 buildings in New Jersey and Pennsylvania. The company specializes in buying industrial properties, renovating them and elevating their value. The Delaware County building is the fifth acquisition for the company since late August, in a buying spree that also includes properties in Montgomery and Bucks counties. The deals total $93.5 million.

The complex at 6250 Baltimore Ave. in Yeadon offers a prime location near I-95, 100 yards from the Philadelphia line and six miles from Center City.

“Delaware County as a whole is one of the highest-performing institutionalized industrial markets in our geography over the past several years,” Moore said.

The complex was built in 1955 and a family owned it for the past 20 years, Moore said. Property records list the seller as Commonwealth Real Estate Investment Co.

Yeadon Industrial Center is 82% occupied by 17 tenants, a mix of distribution companies, manufacturers and service companies. Moore said Velocity intends to offer renewals to all the tenants there on a long-term basis with higher rents. Though he hopes all tenants stay, Moore anticipates somewhere between 50% and 100% will choose to renew.


Currently, there’s about 100,000 square feet of available space and that could change based on new tenants moving in or existing tenants leaving. Velocity plans to offer a variety of space size, whether it’s 5,000 square feet or 100,000 square feet.

“It doesn’t matter what your requirement is from a size perspective,” Moore said. “Come take a tour and we’ll be able to find something for you whether you’re big or small.”

Since there was “significant deferred maintenance,” Moore said Velocity is planning a new roof, parking lot and exterior facade as well as upgrading building utilities and painting existing units. The building has more than 120 dock doors and ceilings up to 26 feet.

New industrial buildings in Delaware County are rare because the area has been built out, Moore said. Once the renovations are complete, he believes they’ll be able to increase income by raising rent to market rate. Moore said it’ll be among the top Class B industrial buildings in Delaware County.

With nearly half a million square feet, Moore said it’s the largest industrial building in Delaware County, which he called “extremely valuable long term.” 

Full story: https://tinyurl.com/2p9p4yuz

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Commercial Real Estate Outlook: Opportunities Amid Distress - Disarray? (Video)

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Tuesday, November 22, 2022

Two Philadelphia Developers Propose $3 Billion Mixed-Use Project in Atlantic City, NJ

 By Linda Moss CoStar News

Philadelphia developer Bart Blatstein isn't finished putting his mark on Atlantic City, now proposing to build a $3 billion mixed-use complex, featuring canals inspired by Venice and Amsterdam, on the site of a former airport.

Bartstein, the CEO of Tower Investments and owner of the Showboat Resort & Convention Hotel in the New Jersey gambling destination, unveiled his plan for "Casa Mar" at a news conference with his joint-venture partner, fellow Philadelphia developer Post Brothers, on Monday. The waterfront project would be constructed on the former Bader Field airport, the last large parcel of undeveloped land in Atlantic City. But it is vying with another development proposed for that long-vacant historic site, a plan supported by the city's mayor.

Blatstein's project, aiming to create a walkable neighborhood, "is designed to embrace the water, inspired and modeled after the canals of Venice and Amsterdam," according to a statement from Tower. Planned for 140 acres, the project will include 10,000 residential units, 400,000 square feet of office and retail space and 20 acres of trails, parks and amenities, which will all be open to the public.

Atlantic City, a seaside resort, has had more than its share of ups and downs, and many of the areas off its storied Boardwalk, with its flashy casino hotels, have dilapidated buildings and little quality housing stock. Residents are also much poorer than those in other parts of the state. The Casa Mar project would be a boost to the city, according to Blatstein.


Because Atlantic City is devoid of any significant swaths of new housing, Bartstein said in an interview, Casa Mar would help fill that void. To build the development, the site will have to be raised 6 feet to be above the 100-year flood mark, according to the developer. The dredging necessary for the canals will supply fill to raise the site, Blatstein said.

The developer, who said he's been coming to Atlantic City since he was a child and knows it "inside out," already has investments in the municipality. He owns the Showboat, which doesn't have a casino. He's been making improvements to the hospitality property to make it a family-friendly destination, including adding a large gaming arcade and indoor go-kart track.

"This is a once in a lifetime transformational opportunity for Atlantic City and together Tower and Post will make this happen,” Blatstein said in a statement.

He added that he and Matthew and Michael Pestronk, who lead Post Brothers, have created billions of dollars of development over the years and have over a billion dollars in joint-venture residential development in Philadelphia.

Monday's news conference was held at the construction site of Island Waterpark, a $100 million indoor facility scheduled to open next year that Blatstein is building next to the Showboat.

Blatstein's proposal for the former airport has competition: one from DEEM Enterprises. Its $2.7 billion proposal would be a recreational, residential and retail development targeted to car lovers. It would include a 2.44-mile auto course. Atlantic City Mayor Marty Small supports that auto-centric project, and its developer has been before the city council and other officials on its proposal.

In a statement, Small said the city is near reaching an agreement with DEEM.

"I'm a huge supporter of Bart Blatstein," the mayor said. "I'm just excited Bart and others have their eye on Atlantic City. I let him know [a memorandum of understanding] between the city and the other project is imminent."

Blatstein touted his proposal for the former airport as "inclusive." He said he will request that the city issue a formal request for proposals for the site, to ensure that its developer is chosen through an "open and transparent process." Atlantic City owns the former airport property. But in 2016 the state of New Jersey took on oversight of Atlantic City, and now has control over most of city's major decisions.

The Casa Mar project would be developed in five phases over 12 years, and create more than 44,000 construction jobs and 8,000 permanent jobs, which will include the training and employment of a local workforce.

Tower, based in Philadelphia and founded in 1978, is a privately held development company. Post Brothers, started in 2006, has acquired or developed more than 30 properties, with over 8,000 apartment units and totaling over $4 billion in total project cost.

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Wednesday, November 9, 2022

PA Based PREIT Works Out Extensions on $300 Million NJ Mall Loan

 By Mark Heschmeyer CoStar News

For the second time in three months, Pennsylvania Real Estate Investment Trust has bought itself more time to sort out its options for $300 million in debt due on its Philadelphia-area Cherry Hill Mall.

Life insurers New York Life Insurance Co. and the Teachers Insurance and Annuity Association of America have extended the repayment of their loans of $150 million each backed by the 1.3 million-square-foot regional mall in the Philadelphia suburb of Cherry Hill, New Jersey, according to a PREIT filing with the Securities and Exchange Commission.

The new due date is February 2023, having been extended from its previous due date of this month. The November date was already an extension of the original due date in September. And the new agreement gives PREIT the option to extend one more time until May 2023.

The extensions point to lenders’ willingness to work with retail borrowers whose malls are rebounding from the initial impact of the coronavirus pandemic. They also buy both the borrower and lenders more time to see where interest rates end up as the Federal Reserve continues to fight off inflation with higher borrowing rates.

The total of the two loans represents the largest near-term individual property debt maturity that PREIT is dealing with, according to its latest quarterly report.

The extensions have cost PREIT more than $3.5 million in fees, according to the SEC filing.

PREIT representatives did not immediately respond to request for additional information on the Cherry Hill debt negotiations.

Late this summer, PREIT announced several new tenants at Cherry Hill Mall, including eyewear retailer Warby Parker, women’s fashion chain Marc Cain, a Levi’s store and menswear brand Psycho Bunny.

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Tuesday, November 8, 2022

QVC Sells Headquarters, Studio and Distribution Centers for $443 Million to Oak Street

 By Linda Moss CoStar News

Home shopping giant QVC has sold five properties, including its headquarters and main studio facility, for $443 million to Oak Street, a private equity firm that's made several similar acquisitions from retailers facing a tough economy.

QVC in a third-quarter earning release reported that it had sold sites in Pennsylvania, South Carolina, Tennessee and Virginia to Chicago-based Oak Street, which is owned by Blue Owl Capital of New York. QVC, which operates a video TV channel and also sells goods online, plans to lease those properties back.

The location in Pennsylvania that traded was QVC Studio Park, the company's 585,000-square-foot global headquarters and studios, at 1200 Wilson Drive in West Chester, CoStar data shows. That facility is located on a 48-acre campus, according to CoStar.

The other sites that CoStar identified as being sold to Oak Street were: 2200 TV Road, a 1.1 million-square-foot distribution center in Florence, South Carolina; 1 QVC Drive, a 1 million-square-foot distribution center in Suffolk, Virginia; and 857 Mountain View Drive, a 1 million-square-foot distribution center in Piney Flats, Tennessee.

QVC and Englewood, Colorado-based Qurate Retail, which owns both the No. 1 home channel and St. Petersburg, Florida-based HSN, didn't immediately respond to emails seeking comment Monday. Blue Owl declined to comment on behalf of Oak Street.

Oak Street has been involved in several sale-leaseback deals with struggling retailers that were looking to raise capital by cashing in their real estate holdings after facing a troubled economy. In December 2019, beleaguered home goods chain Bed Bath & Beyond sold roughly half its real estate portfolio, some 2.1 million square feet that included its Union, New Jersey, headquarters and some stores, to Oak Street for $267.3 million in such a transaction.

Oak Street has also done sale-leasebacks with Delaware, Ohio-based Franchise Group, whose $8 billion offer to acquire retailer Kohl's chain was rejected in July. Franchise Group in November last year purchased the Badcock furniture chain for roughly $580 million. The next month, Franchise Group said it would repay $400 million of debt with the proceeds from the sale of Badcock's consumer-credit accounts receivable portfolio. Then it put Badcock's owned stores, headquarters and distribution centers on the block.

In March it completed the sale-leaseback of 35 Badcock stores for $94 million to National Retail Properties, saying it would use the cash proceeds to repay part of the remaining $175 million of its acquisition financing for the chain. Then in June, Badcock closed a sale-leaseback deal for three Badcock distribution centers, with Oak Street buying them for about $150 million.

There were several media reports that Franchise Group planned to finance its planned acquisition of Kohl's by doing a sale-leaseback deal with Oak Street for the retailer's real estate.

For the third quarter QVC reported that it posted a $277 million gain on its property sales in the third quarter, and will use the those proceeds to pay down its revolving credit facility.

"We do have several additional material properties," Ben Oren, Qurate executive vice president and treasurer, told Wall Street analysts on the earnings call. "I think the interest in doing additional sale-leasebacks will be opportunistic and dependent on market conditions, but we will continue to look at opportunities across the portfolio."

North Carolina Fire

Qurate, and QVC and HSN, are still reeling from last year's North Carolina warehouse fire, where an employee died. That 1.3-million-square-foot fulfillment center at 100 QVC Blvd. in Rocky Mount, which served both QVC and HSN, was destroyed by a blaze last December.

That facility won't be rebuilt by Qurate, and nearly 2,000 workers were let go as a result. In the aftermath of the fire, Qurate said that facility was the company’s second-largest fulfillment center, processing 25% to 30% of the volume for both its QVC and HSN businesses. And it was the primary returns center for hard goods for the networks.

"While the company has taken steps to minimize the overall impact to its business, it experienced elevated warehouse and logistics costs during the three months ended Sept. 30, and anticipates these increased warehouse and logistics costs to continue during 2022," Qurate said in a statement.

QVC received an additional $180 million in insurance proceeds stemming from the fire in the third quarter. In total, QVC has received $380 million of insurance money since December 2021 and recorded a net gain of $137 million in restructuring and fire-related costs during the first nine months of this year.

In the third quarter, QVC also incurred an additional $2 million in fire-related costs, net, primarily related to personnel costs and legal fees, that are not expected to be reimbursed by the company's insurance policies, as well as $12 million of other fire-related costs that it expects to receover from insurance.

In addition, QVC submitted a business-interruption claim with its insurer.

"QVC expects to continue to record additional costs and recoveries until the insurance claim is fully settled," according to Qurate.

Overall revenue for QVC and HSN combined dipped 8% in the third quarter, dropping to $1.66 billion.

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3 Takeaways from the Latest Fed Meeting (Video)

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Office Market Dynamics with CoStar (Video)

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Thursday, November 3, 2022

1M SF Logistics Center to be Completed in Chambersburg, PA 4Q 2023

 By Linda Moss CoStar News

Endurance Real Estate Group and its partner Guardian Life Insurance Co. of America have started construction on a 1 million-plus-square-foot logistics center in Chambersburg, Pennsylvania.

The Chambersburg Logistics Park is slated for a 93-acre site immediately off of Exit 10 on Interstate 81. Radnor, Pennsylvania-based Endurance over the past two years has obtained the necessary entitlements for the development. The $115 million project will be the first joint venture between Endurance and New York-based Guardian, according to Guardian President Benjamin Cohen, and is expected to be completed in the fourth quarter of next year.

“This project is a continuation of our long-term strategy to acquire and develop sites that offer superior access, proximity to abundant labor, and the ability to provide best-in-class design features to attract a variety of high-quality users,” Jared Newman, Endurance senior vice president and partner, said in a statement.

Endurance will oversee the construction of the cross-dock warehouse-distribution facility, which will include state-of-the-art features such as tilt-wall panel construction; 40-foot clear heights; 60-foot deep speed bays; high-bay LED lighting with motion sensors; 166 overhead dock door positions, 101 equipped with 9-by-10 doors with mechanical levelers, bumpers, seals and dock lights; four 14-by-16 drive-in doors; 213 trailer stalls and 375 car parking spaces; and 4,000 amp, three-phase main electric service.

The location is near major East Coast markets and regional seaports and has access to multiple air, rail and highway systems.

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PREIT Sells New Jersey Mall for $45 Million to Kohan Retail Investment

 By Linda Moss CoStar News

Pennsylvania Real Estate Investment Trust has sold one of its New Jersey malls for $45 million to Kohan Retail Investment Group, that landlord's second recent purchase in the Garden State.

The sale of the Cumberland Mall in Vineland, New Jersey, is part of Philadelphia-based PREIT's effort to raise capital and improve its balance sheet. PREIT didn't disclose the buyer, but according to CoStar data it was Kohan Retail of Great Neck, New York. Kohan Retail didn't immediately respond to to an email and phone call seeking comment Wednesday.

The sale price is a significant discount from the $59.5 million that PREIT paid for Cumberland Mall in February 2005.

This isn't the first time Kohan Retail is buying a New Jersey mall. Known for picking up distressed properties, Kohan Retail acquired Livingston Mall from Simon Property Group in June for $60.5 million.

PREIT, which emerged from Chapter 11 bankruptcy protection in December 2020, has been trying to get its financial house in order. It has been selling some malls and redeveloping others, adding uses such as multifamily housing and medical facilities.

"As a result of completed asset sales, the company has applied proceeds and excess cash from operations to pay down debt by $148 million through Oct. 31," PREIT said in a statement on Wednesday.

The firm also has an additional $127 million of properties under contract or negotiation for sale, deals that are expected to close in the coming months.

With the completion of the sale of the Cumberland Mall and several outparcels, PREIT said it will have raised $110 million in capital this year. The REIT also "has a robust pipeline of additional asset sales in various stages," according to its statement.

Back in August, PREIT officials said they had over $200 million in property sales either completed or pending, capital it planned to use to pay down more of its debt.

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Monthly Economic Outlook 2023 Wells Fargo (Video)

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Tuesday, November 1, 2022

KKR Buys Philly's Presidential City Apartments for $357M

 By Jack Rogers Globest.com

Private equity giant KKR cast a resounding vote of confidence in Philadelphia’s apartment market—at least the part of it with a tenant base of well-paid professionals—with its purchase of the Presidential City apartment complex for a record $357M.

The purchase price for the venerable 1950s-era complex of four 12-story buildings—built by Pentagon developer John McShain—tops the previous record for an apartment sale in Philly by more than $100M.

Prior to this mega-transaction, the most expensive sale of an apartment complex in Philadelphia was 1500 Locust St., a 45-story apartment building that sold for $233M in December.

KKR’s Real Estate Select Trust fund, a non-traded fund aimed at individual investors, made the purchase in partnership with Mack Real Estate Group.

Post Brothers bought Presidential City in 2012; in 2017, Post renovated the entire complex in a $100M spruce-up that included the installation of outdoor swimming pools.

KKR’s big move comes in the midst of a national cooldown in apartment transactions. Apartment transactions totaled $74B in the US in the third quarter, a YOY drop of 17%. Buyers are pulling back on the residential market because of the rising cost of debt and a likely slowdown—possibly even a pullback—in rent growth.

KKR told the Wall Street Journal the lucrative deal for Presidential City made sense because the buyers assumed an existing fixed-rate mortgage held by Post Brothers, a loan with a much lower rate that current levels that are topping 7%.

KKR COO Billy Butcher told WSJ that the occupants of Presidential City are primarily high-wage professionals who spend less as a percentage of their income on rent compared with similar tenants living in properties closer to downtown.

Rents for one-bedroom apartments at Presidential City start around $1,800 per month, compared to average rents in the city center, which generally start above $3,000.

Butcher suggested this puts Presidential City in a strong position to weather a recession. “It provides a lot of stability,” he told WSJ.

McShain originally intended to build 48 apartment towers at Presidential City—and keep naming them after US presidents. The four that were built are named for the first four presidents.

KKR Real Estate Select Trust has invested about 19% of its fund in residential buildings, including a 365-unit apartment complex in Brooklyn that it purchased for $190M in July.

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Monday, October 24, 2022

Comcast & Home Depot Put 500K SF Each of Office Space Across US Up for Sublease

By Jack Witthaus CoStar News

Media giant Comcast, rethinking its needs for physical offices, has added more sublease space to the growing inventory nationwide.

The Philadelphia-based parent of NBCUniversal and other entertainment companies has listed more than 500,000 square feet for sublease across the country. The company occupies more than 5 million square feet of office space in the U.S., according to CoStar data, and in August sent a memo to its 8,000 hometown employees saying they should return to its Philadelphia office towers three days a week as part of a hybrid work plan, according to the Philadelphia Inquirer.

"With increased remote and hybrid working, the facilities needs of our business have evolved, and our teammates are utilizing office space differently than in the past," a Comcast spokesperson told CoStar News in an email. "As part of our ongoing business operations, we regularly review our facilities footprint to ensure the space we’re using matches our business requirements and make adjustments at sites we own or lease as we continue to support our teammates who are both in-office and virtual."

The spokesperson did not respond to requests for confirmation of the amount of space the media company is marketing for sublease or where space is being listed for sublease. According to CoStar data, listings have appeared in at least five locations:

  • Roughly 154,000 square feet at 400 Commerce Drive in Newark, Delaware.
  • Roughly 134,000 square feet at 4690 N. Oracle Road in Tucson, Arizona.
  • Roughly 84,000 square feet at 10 River Park Plaza in Saint Paul, Minnesota.
  • Roughly 71,000 square feet at 3055 Comcast Place in Livermore, California.
  • Roughly 68,000 square feet at 1840 Victory Blvd. in Burbank, California.

At least one of the spaces marketed for sublease appears to be related to layoffs. Comcast earlier this month shut down its Burbank-based video game TV network G4, according to Deadline. Roughly $25 million had been invested into the livestream and broadcast studio space, according to a marketing flier. Comcast launched the channel in late fall 2021.

Comcast is the latest major company to put up office space for sublease as it reassesses needs in light of the adoption of hybrid work models. Earlier this month, Atlanta-based Home Depot listed more than 600,000 square feet for sublease in one of the largest sublease moves in recent weeks. Nationally, more than 197 million square feet of space is available for sublease, up 17.7% year over year.

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First New Hotel Opens in Conshohocken in 22 Years

By Melannie Skinner CoStar Research

Keystone Development & Investment joined with North Carolina-based Concord Hospitality Enterprises to open Hotel West & Main, the first new hotel to be built in the developer's headquarters city of Conshohocken, Pennsylvania, in the last 22 years.

The 127-room boutique hotel operates as part of Hilton's Tapestry Collection and was the final piece in Keystone's $340 million Sora West mixed-use development. The project encompasses 520,000 square feet and includes an 11-story office tower housing AmerisourceBergen, Vertex and Hamilton Lane as major tenants, along with the adaptive reuse of a 148-year-old historic firehouse.

Construction on the hotel began during the height of the COVID-19 pandemic, which prompted Keystone and Concord to redesign plans to reduce the number of rooms and add a rooftop bar and lounge as well as meeting spaces equipped to handle remote conferencing.

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Tuesday, September 20, 2022

Ipex USA Leases 251,200SF Warehouse in Middletown, PA

 By Caleb Hayes CoStar Research

Endurance Real Estate Group signed a full-building lease with plastic pipe extruder Ipex USA to fill its newly constructed Middletown Logistics Center in Middletown, Pennsylvania.

Located at 2070 N. Union St., the 251,200-square-foot bulk warehouse/distribution facility features 36’ clear heights, LED lighting and ESFR sprinkler systems, 21 door positions equipped with 40,000-lbs. mechanical levelers, bumpers and seals, one 14’-by-16’ drive-in door, 33 trailer stalls and 192 car parking spaces.

The property's location off the Middletown exit of S.R. 283 offers access to the Greater Philadelphia, Harrisburg, and Baltimore-Washington areas via I-83 and I-76, putting more than one third of the total U.S. population within a day's drive. The location's appeal to distributors is evident by the fact that four different FedEx warehouses and a new UPS Northeast Regional Super Hub are located nearby.

Based in Pineville, North Carolina, Ipex USA is the North American subsidiary of Belgium's Aliaxis SA, and specializes in extruding plastic piping for the building, industrial, agriculture and infrastructure markets.

"Our decision to develop this project on a speculative basis proved to be the catalyst in leasing the building simultaneously with its delivery to the market," said Endurance Senior Vice President Albert J. Corr in a statement. "Given Ipex’s new space requirement to the region and their desire to secure a state-of-the-art distribution facility, these factors proved to be the perfect combination to fulfill Ipex’s entry into the Central Pennsylvania market."

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Saturday, September 10, 2022

Back to the Office: Employers Push for a Post-Labor Day Return

 By Katie Burke CoStar News

Employers have become increasingly adamant in their efforts to get workers to return to the office, with the week after Labor Day emerging as a turning point to reset workplace norms that for more than two years have been upended by the pandemic.

Companies ranging from small mom-and-pops to global financial giants are setting the calendar for an early September comeback that, if successful, would finally realize more than two years of efforts to get employees back working in office real estate.

Apple, Tesla, Disney and Goldman Sachs have each said they expect employees to work from an office on a more regular basis starting after the holiday weekend, a shift expected to kick off the next stage of the pandemic's impact on the country's economic landscape.

While the goal of getting workers back to some level of in-person interaction is the same, strategies in realizing it are varied. Some companies are doing away with vaccination requirements and enforcing strict return guidelines, while others are trying to lure employees back with perks such as gourmet catered lunches or renovated offices complete with game rooms, rooftop decks and coffee bars.

"The built environment has to be a place folks want to go," Rob Olivet, a senior vice president for global project management firm MGAC, told CoStar News. "Historically, office space was centered around how much square footage each person needed and economizing costs, but the pandemic has made it so that it isn't just about the dollars and cents. The COVID and hybrid workforce has prompted more attention to certain amenities, and those high-end amenities are definitely helpful in getting people back to the office."

The Labor Day 2022 return effort caps a series of delays companies made in their initial office reopening plans, with concerns stemming from a variety of COVID-19 variants, case spikes, local restrictions and mandates, as well as employee worries that kept a big chunk of America's office portfolios unoccupied at least on some days of the week since the onset of the health crisis in early 2020. However, with each postponement, workers' preference for remote or flexible work has strengthened, adding another complicated layer to employers' attempts to return to in-person operations.

Employee Retention Aid

While remote and hybrid work models were initially deployed in response to the pandemic, they have since become a significant benefit for companies looking to keep employees happy and for workers that value the flexibility, said Nicholas Bloom, a Stanford University professor of economics and a co-founder of WFH Research.

More than 90 million workers across the country, just shy of 60% of the American workforce, had the chance to work from home at least once a week in 2022, according to a report from global management consultant McKinsey & Co. Roughly 35% of the nation's workforce was able to work from home five days a week. That's a roughly sixfold increase compared to pre-pandemic days in 2019, when a little more than 5% of workers were able to operate primarily from home, according to U.S. Census Bureau data.

"The long-run trend of work from home is upwards, as it has been over the last 50 years," Bloom said, adding that work-from-home opportunities are now stabilizing as they become a permanent fixture in the U.S. economy.

As remote work became more common in the workplace, many employers were initially hesitant about if and how often workers would be allowed to remain at home.

"In late 2020 there was a big gap between how many work-from-home days workers wanted and how many employers were planning," Bloom said. "That gap has mostly gone."

Companies walk a fine line between mandating employee returns and the accelerating push for more flexibility, a trend that has been fueled by a tightened labor market and dire worker shortage. Yet, as part of the debate for when and how to get employees to return to the office, the big question emerging now is what strategy will end up sticking.

Here's a sampling of how some companies across the United States are asking workers to spend more time in the office:

Apple:

Headquarters: Cupertino, California

Number of employees: More than 37,000 in the U.S.

Return-to-office schedule: The Silicon Valley tech giant told employees to prepare to return to the office for three days a week following the long Labor Day weekend. Workers will be required to head to an office on Tuesdays and Thursdays for mandatory in-person days, with a third day to be determined by individual departments. CEO Tim Cook said in June that the company's return-to-office initiative was "the mother of all experiments." The iPhone maker has received severe blowback from some employees, who argue the blanket return mandate doesn't take into account individual workers' situations.

Credit Karma

Headquarters: Oakland, California

Number of employees: About 1,300 across the country

Return-to-office schedule: The Bay Area fintech firm has been trying for the better part of the past year to get employees into its offices. The company, which relocated its headquarters to Oakland from San Francisco in 2021, recently told workers they would need to be in an office at least a few days a week on a schedule to be determined by individual teams. To make the space more attractive, Credit Karma stocked its new Oakland headquarters with perks such as a game room, coffee bar, rooftop lounge and events such as kombucha by the fire pit.

Goldman Sachs

Headquarters: New York

Number of employees: Nearly 44,000 around the world

Return-to-office schedule: The investment bank is a leader in a cohort of Wall Street powerhouses pushing employees to return to the office on a pre-pandemic schedule. While it has been competing in an increasingly tight labor market, emerging macroeconomic concerns and a volatile stock market bolstered Goldman's efforts to set a post-Labor Day return mandate. The company said Aug. 30th it would lift all COVID-related protocols such as vaccination requirements and masking, and employees would be required to return to an office on a full-time basis after the holiday weekend.

Comcast

Headquarters: Philadelphia

Number of employees: Roughly 190,000 around the world

Return-to-office schedule: The cable, news and entertainment conglomerate will begin requiring a firm three-day workweek for employees across the country, with workers expected to come into an office on Tuesdays, Wednesdays and Thursdays starting Sept. 12. The schedule is a shift from an earlier policy that asked employees to be in an office for a few days each week but didn't specify when. "A big part of our culture is working together," Comcast Cable CEO Dave Watson wrote in a memo to employees last month. "It is clear that in-person interaction and collaboration is core to our company and culture. To optimize the experience while supporting the business, we’ve concluded that we need more certainty and direction to coordinate our in-office time better.”

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Thursday, September 1, 2022

A recession could be great for the Philadelphia office market

 Natalie Kostelni Reporter Philadelphia Business Journal

Would a recession be just the thing the office market, landlords and central business districts need to get things back to — or at least close to — pre-pandemic levels of occupancy?

“If a recession were to occur, that balance between employee and employer could result in employers asking employees to come back into the office, and that would be great for the office market,” said Todd Briddell, CEO of CenterSquare Investment Management, which is based in Plymouth Meeting. “A recession could be a net positive for the office market, which is a little perverse.”

Briddell isn’t the only one who thinks this. Others have quietly murmured that a recession might be the way companies can flex their muscle and force employees to return to the office on a more regular basis. That said, Briddell acknowledged the labor market has proven it can maintain high levels of productivity while many employees have worked from home or maintained hybrid, flexible arrangements. Employers getting workers back to the office full-time or most of the time will need some coaxing.

“We need to earn the commute times,” he said. “I think Philadelphia needs substantial investment in infrastructure, especially in roads, to alleviate congestion and long commute times.”

Aside from the potential impact of a recession, Briddell shared his thoughts on how the firm’s focus on investing in infrastructure worked out, what investments CenterSquare is looking at these days, and where the firm is headed:

Full story: https://tinyurl.com/2mccae7u

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Wednesday, August 31, 2022

Amazon Fresh to open in revamped Montgomery County shopping center

 Ryan Sharrow Editor in Chief Philadelphia Business Journal

A new Amazon Fresh grocery store is being planned for the Willow Grove Shopping Center, state filings show, as part of a multimillion-dollar overhaul taking place at the nearly 70-year-old Montgomery County retail complex.

Filings show Amazon Retail LLC has applied for a Pennsylvania liquor license to be used at 102 Park Ave., the address of a shuttered Barnes & Noble bookstore. In marketing material posted to its website, Federal Realty Investment Trust says an ongoing renovation of the 183,000-square-foot shopping center will include an unnamed "new-to-market grocery concept."

Amazon Fresh stores are considered a lower-price alternative to the company’s Whole Foods Market.

Amazon.com Inc. (NASDAQ: AMZN) opened its first Amazon Fresh store in the Philadelphia region in August 2021 in a 35,000-square-foot space at Creekview Center in Warrington. It is planning to open another store in Bucks County at a former Kmart at the Brookwood Shopping Center on Street Road in Bensalem, in addition to a location along Route 1 in Langhorne near the Oxford Valley Mall. Construction also continues on a planned site at a mixed-use project at 5th and Spring Garden streets in Philadelphia's Northern Liberties neighborhood.

The company is also planning a store at 2940 Springfield Road in Broomall, where it has also secured a liquor license to sell wine and beer, according to Marple documents. 

Full story:  https://tinyurl.com/5n7tsx5k

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Tuesday, August 30, 2022

Workspace Property Trust expands suburban office presence with $1.1B deal

 Natalie Kostelni Reporter Philadelphia Business Journal

A three-story, 111,184-square-foot office building at 1200 Morris Drive in Chesterbrook is part of a $1.13 billion acquisition made by Workspace Property Trust that almost doubles the company’s real estate footprint to 18 million square feet.

Workspace has acquired 53 suburban office buildings totaling 8 million square feet from Griffin Realty Trust. The deal means that Workspace, which has offices in Horsham and Malvern, now owns 200 buildings in 22 markets across the country as the company doubles down on the future strength of the suburban office market.

Workspace first made a bet on the suburbs in 2015 when it paid $245 million to buy Liberty Property Trust’s Horsham office portfolio. A few months later, Workspace was at it again, this time spending nearly $1 billion to buy 108 office and flex buildings totaling 7.6 million square feet from Liberty. All of the buildings were in the suburbs of Philadelphia, Arizona, Florida and Minnesota.

Workspace’s initial desire seven years ago to concentrate on the suburban office market was met by skeptics who saw cities as the place for companies to attract the best talent. Many companies were also convinced of the same and established satellite offices in urban centers as alternatives to their suburban offices.

Workspace was confident in its strategy, which appears to be meeting a moment in which the pandemic is accelerating demographic trends that its executives had predicted would eventually come to fruition.

“When Tom [Rizk] and I started this in 2015, it was a huge contrarian play,” said Roger Thomas, co-founder and president of Workspace. “It was really difficult for us and we got shown the door a number of times.”

The conventional wisdom at the time was that millennials, even as they aged, would continue to live in cities because they didn’t want to drive cars or have a commute and preferred the vibrancy of urban environments over the suburbs.

Full story:  https://tinyurl.com/2p88b5xt

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Encompass Health plans to build $55M rehab hospital in Norristown area

 John George Senior Reporter Philadelphia Business Journal

Alabama-based Encompass Health Corp. plans to build a $55 million inpatient rehabilitation hospital in the Norristown area.

The proposed freestanding, 50-bed medical center on undeveloped property at 2660 Audubon Road in Lower Providence Township will serve patients recovering from debilitating illnesses and injuries including strokes and other neurological disorders, brain injuries, spinal cord injuries, amputations and complex orthopedic conditions. The medical center will offer 24‑hour nursing care along with physical, occupational and speech therapies.

An Encompass Health spokesperson said the company has not yet set a timeline for when construction will begin and when the hospital will open.

The medical center will have between 125 and 175 full-time employees within five years of opening, and feature all private patient rooms, a therapy gym with advanced rehabilitation technology, a cafeteria, dining room, pharmacy and a therapy courtyard.

In a statement, Pat Tuer, president of Encompass Health’s Northeast region, said the company's business model is to improve access to "high-quality and individualized" rehabilitative care." He said the "new hospital will allow even more residents to receive specialized care close to home."

Full story: https://tinyurl.com/ytbrtfd3

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Lehigh Valley industrial market spreads along Route 33, attracting developers and investors

 Natalie Kostelni Reporter Philadelphia Business Journal

Just off the Chrin interchange of Route 33 in Palmer, Carson Cos. is developing a 406,801-square-foot industrial building, adding to its 1.3 million square feet of warehouse space already built in the township.

Carson isn’t stopping with the development of 1051 Carson Court. The California company plans to construct five more buildings totaling 1.2 million square feet in Palmer, which has become a new frontier for industrial development in the Lehigh Valley.

“Route 33 is a relief valve,” said Eric Zahniser, an industrial broker with Lee & Associates of Eastern Pennsylvania. “The Route 33 corridor has really become where the expansion has been pushing. The Route 33 corridor, logistically, is ideal for companies in New Jersey looking to get out of really high lease rates and find opportunities to lease space.”

Other developers have also started to seize on the opportunity Route 33 in Palmer has to offer, including Duke Realty and J.G. Petrucci. Duke Realty is developing 33 Logistics Park, which at build-out will total 2.7 million square feet. In May, the real estate investment trust sold a 1.1-million-square-foot building it built and leased to Amazon there for $154.2 million.

Aside from Amazon, XPO Logistics, FedEx, Porsche and Mondelez International Inc. are among the tenants who have landed in Palmer, and developers such as Carson are betting more will find a place there.

Industrial development along Route 33 is relatively new and the space that has so far been built has occurred over the last five years. It has been spurred by the 2015 opening of a $40 million new Chrin interchange on Route 33 between I-78 and I-80 in Northampton County as a result of industrial submarkets morphing into one another.

Historically, submarkets — whether Bucks County, Northeast Philadelphia, South Jersey or Northern Delaware — were distinct and tenants focused on those narrow geographic areas when searching for space. Now tenants will cast a wider net and look in more expansive geographic areas such as Berks and Northampton counties when evaluating buildings to lease.

Located on the east side of the Lehigh Valley, Palmer is well positioned to capture trucks coming from the Port of New York and New Jersey as they travel west along I-78 and can jump on Route 33. The submarket also draws from Central Pennsylvania and the Philadelphia markets. It’s less than two hours from Harrisburg and just over an hour from the Port of Philadelphia.

Full story:  https://tinyurl.com/2p9x6ne9

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Greek Development NJ to Redevelop Langhorne PA Warehouse for $32.1M

 By Linda Moss CoStar News

Greek Development and its partner have secured $32.1 million in financing to tear down a Pennsylvania warehouse and replace it with a new 210,564-square-foot industrial facility.

Greek Development, based in East Brunswick, New Jersey, and Principal Real Estate Investors of Des Moines, Iowa, obtained a construction loan from Provident Bank for their redevelopment of 900 Wheeler Way in Langhorne.

Greek Development and Principal Real Estate acquired the property in June 2006 for $7.9 million, according to CoStar data. They expanded the first of the two buildings on-site by 60,000 square feet in 2008. Now Greek is preparing for the demolition of a second, unrenovated building.

The new warehouse will feature 40-foot clear ceiling heights, 31 loading-dock doors, a 150-foot truck court, 80 trailer-parking stalls and parking for 242 cars. The Bucks County building is slated to be completed in the second quarter next year.

“As a best-in-class industrial warehouse in a prime last-mile market, the building’s design has been tailored to suit a variety of top-tier tenant needs,” David Greek, managing partner of Greek Development, said in a statement.“We’re eager to deliver this project in a historically supply-constrained area and to create a warehousing destination for blue-chip e-commerce, logistics and distribution companies.”

The construction loan was sourced by Greek Development’s in-house debt team in concert with the Principal’s project finance group.

The site on Wheeler Way is equidistant to the ports of Philadelphia and Newark.

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Keystone Expands Life Science Conversion at Philly Landmark

 By Jack Rogers Globest.com

Keystone Development + Investment has secured a $265M loan from Nuveen Real Estate to expand its conversion of Philadelphia’s landmark The Curtis into life science lab space.

The financing from Nuveen, an affiliate of Teachers Insurance & Annuity Associates of America, will enable the developer to convert another 200K SF to lab space at the former home of Curtis Publishing, which published of the Saturday Evening Post.

A portion of the funding will be allocated to infrastructure upgrades and leasing costs at The Curtis, according to a release from Keystone.

The Curtis, a 12-tory Beaux Arts-styled structure at 699 Walnut Street, was built in 1910. The ornate building features two-story high columns on its entrance façade, along with old-time street lights and steps.

Keystone purchased the 912K SF building in 2014. The developer renovated the building, adding a lobby atrium and converted existing office place in the former publishing house to luxury residential units.

Space that once held printing presses at The Curtis have been converted to wet lab space for life science companies including IMVAX, Vivodyne and Aro Biotherapeutics.

Some of the attributes that were built into The Curtis to support print publishing have made it particularly suitable to life science conversion, including 15-foor-plus ceiling heights, 200 psf vibration-resistant floors, and multiple loading docks and freight elevators.

Elements that have been added during the conversion to lab space include multiple fresh air intakes, dedicated laboratory backup emergency power and numerous venting chases.

Amenities at the property now include a 300-space covered parking garage, a childcare center, a tenant meeting and lounge suite, 24-hour card access and on-site 24/7 security.

BioLabs, a flexible lab space provider, is putting a 53K Sf incubator in The Curtis, offering life science startups turnkey space.

“We’re excited to give promising biotech startups a chance to start, grow and stay in building, embedded in a rich life science community,” said Dr. Melina Blees, site director of BioLabs Philadelphia, in a statement.

According to a Q2 2022 Venture Monitor report from the National Venture Capital Association, Greater Philadelphia has seen nearly $3.8B in VC invested in 241 deals in the region thus far this year, including an estimated $2.4B earmarked for life science projects.

Philadelphia, with an estimated inventory of more than 21M SF, is one of the five largest life sciences markets in the US, a list led by Boston, San Francisco and San Diego.

A block-wide life science campus is set to rise in Philadelphia’s Center City at 2300 Market Street, where a Breakthrough Properties, joint venture of Tishman Speyer and Bellco Capital, will develop a 200K SF life science facility.

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Wednesday, August 10, 2022

REIT Buys Grocery-Anchored Center in Upland Square PA for $85.7 Million

A Singapore real estate investment trust co-sponsored by Hampshire Cos. has acquired a grocery-anchored shopping center outside of Philadelphia for $85.7 million, according to CoStar data.

United Hampshire US REIT, or UHREIT, purchased Upland Square, a 400,674-square-foot retail property at 180 Upland Square Drive in Pottstown, Pennsylvania. The seller was Paramount Realty Services of Lakewood, New Jersey, according to CoStar data.

The shopping center is 95% leased, with a tenant roster that includes supermarket Giant by Ahold Delhaize and T.J. Maxx, and is shadow-anchored by Target and AMC. Other occupants include Petco, Party City, Staples and Bed Bath & Beyond.

UHREIT is sponsored by Morristown, New Jersey-based Hampshire and UOB Global Capital. The latest transaction brings the REIT's holdings up to 23 properties. Spanning over 3.8 million square feet, UHREIT's portfolio now includes 21 grocery-anchored and necessity-based properties and two self-storage facilities along the Interstate 95 corridor, Hampshire said in a statement on Monday.

“The eastern United States’ combination of population density and high household income have ensured it continues to stand out among the nation’s retail markets," Derek Gardella, UHREIT's head of investments, said in a statement. "We expect this momentum to continue over the long-term."

Upland Square is located in Montgomery County, the third-most populous county in the Keystone State. It has a population of 836,948 with an average annual household income of $153,498.

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Current Commercial Real Estate Demand in US (Video)

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Nareit's 2022 Mid-year Outlook Report (Video)

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Tuesday, July 26, 2022

Ares Management Real Estate Secures $367M for Logistics Portfolio

 By Ingrid Tunberg Globest.com

An Ares Management Real Estate fund has secured $367.8 million to finance a 23-building logistics portfolio along the East Coast.

The 3,034,863-square-foot industrial portfolio is 100% leased to 41 tenants. The properties range in size from 7,238 square feet to 478,715 square feet.

The portfolio’s assets are located throughout the I-95 distribution corridor in the Mid-Atlantic region. Situated in New Jersey, Pennsylvania and Maryland, the portfolio includes 2000 Bishops Gate Blvd. in Mount Laurel, NJ, 3201 Pennsy Dr. in Landover, MD and 50 Route 46 E. in Totowa, NJ.

“We believe the East Coast logistics portfolio is well-situated to capitalize on the industrial sector’s rapid expansion within the Mid-Atlantic region with stable market rents and low vacancy rates. We were able to achieve competitive financing terms because of the portfolio’s ideal location throughout the most prolific industrial pockets in the country and its ability to greatly benefit from the sustained e-commerce growth.”

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Thursday, July 21, 2022

NBA’s Philadelphia 76ers Plan $1.3 Billion Downtown Arena

By Andy Peters CoStar News

The Philadelphia 76ers pro basketball team plans to build a $1.3 billion arena with its own money at downtown Philly’s Fashion District shopping mall.

The 76ers reached an agreement with site owner Macerich Co. to develop the arena in a segment of the Fashion District. A new partnership created by 76ers principal owner Josh Harris, minority owner David Blitzer and student housing executive David Adelman will serve as lead developer. Harris is co-founder of private equity firm Apollo Global Management, Blitzer is an executive with private equity firm Blackstone Group and Adelman is CEO of Philadelphia-based developer Campus Apartments.

Pro sports franchises are increasingly developing stadiums and arenas surrounded by shopping districts, apartments, offices, hotels and concert venues. Mixed-use commercial districts are underway, or completed, next to facilities for the Milwaukee Bucks NBA team, the Atlanta Braves baseball team and the St. Louis City SC pro soccer team.

The proposed Philadelphia arena, to be called 76 Place, is penciled in for a site on Market Street between 10th and 11th streets. It would require the demolition of at least one building within the Fashion District complex.

The 76ers said they picked the site in part because it’s served by six mass-transit rail and trolley lines.

If the new coliseum is built, the NBA team would vacate the 26-year-old Wells Fargo Center in South Philadelphia.

Construction on 76 Place is not expected to begin “for several years” and will not be completed until 2031, when its Wells Fargo Center lease expires, the team said.

The 76ers did not say if the Philadelphia Flyers professional ice hockey team will also move to the new arena. The 76ers and Flyers share Wells Fargo Center.

Other NBA teams have recently renovated arenas or planned major upgrades, including the Charlotte Hornets, Phoenix Suns and Indiana Pacers.

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Having Quality Office Buildings Has “Never Been More Important” (Video)

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Hessam Nadji on CNBC (Video)

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Friday, July 15, 2022

Rite Aid Downsizes Headquarters in Relocation to Philadelphia

 By Linda Moss CoStar News

Pharmacy chain Rite Aid has moved to accommodate a more remote workforce, downsizing and relocating its headquarters to Philadelphia and selling its former one in central Pennsylvania.

The retailer this week unveiled its new base on the second floor of 1200 Intrepid Ave. in Philadelphia’s Navy Yard district. It's a 23,000-square-foot space that Rite Aid in a statement called its Collaboration Center, a place that aims to bring the company's "remote corporate workforce and associates together in a modern space with state-of-the-art amenities."

Rite Aid last September announced it was moving its headquarters from a 205,000-square-foot office building it occupies at 30 Hunter Lane in Camp Hill, which is near Harrisburg.

The company owns its former headquarters property, and has put it on the block, Rite Aid spokeswoman Terri Hickey said in an email Thursday. 

Pharmacy chain Rite Aid has moved to accommodate a more remote workforce, downsizing and relocating its headquarters to Philadelphia and selling its former one in central Pennsylvania.

The retailer this week unveiled its new base on the second floor of 1200 Intrepid Ave. in Philadelphia’s Navy Yard district. It's a 23,000-square-foot space that Rite Aid in a statement called its Collaboration Center, a place that aims to bring the company's "remote corporate workforce and associates together in a modern space with state-of-the-art amenities."

Rite Aid last September announced it was moving its headquarters from a 205,000-square-foot office building it occupies at 30 Hunter Lane in Camp Hill, which is near Harrisburg.

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Thursday, July 14, 2022

BioLabs To Expand Footprint in Center City Philadelphia

BioLabs, an incubator for life sciences companies, is expanding its presence in Center City Philadelphia by leasing additional space at Keystone Development + Investment's mixed-use property The Curtis.

Currently occupying 23,378 square feet at the 912,245-square-foot mixed-use property, BioLabs will expand by 30,151 square feet, totaling 53,529 square feet at the property. BioLabs' new lease will commence early 2023.

The Curtis is located at 601 Walnut St. in Center City near Independence Hall. The building was originally constructed in 1910, according to The Curtis' website.

In the past two years, Keystone has spent over $70 million in converting 200,000 square feet of traditional office space at The Curtis into labs. Keystone is looking to convert another 300,000 square feet of traditional office to life science space as well.

The Curtis' other life sciences tenants include Aro Biotherapeutics, Imvax Inc. and Vivodyne.

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Wednesday, July 13, 2022

4 Reasons Why The Industrial Real Estate Outlook Is So Damn Good (Video)

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Will the Next Recession Affect Commercial Real Estate Returns? (Video)

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Philly Navy Yard Plans $6B Development

 By Jack Rogers Globest.com

In the first update of its master plan since 2013, the Philadelphia Navy Yard has unveiled an ambitious blueprint for new development including almost 9M SF of mixed-use space in projects estimated to be worth up to $6B.

Last summer, PIDC, Philadelphia’s public-private economic development corporation and master developer of the Navy Yard, chose a joint venture of Ensemble Real Estate Investments and Mosaic Development Partners (Ensemble/Mosaic) to update the master plan for the Navy Yard.

The deal included a $2.6B commitment from Ensemble/Mosaic to develop 109 acres of the 1,200-acre Navy yard campus. The joint venture said $1B of its investment in the Navy Yard would be targeted for diversity, equity and inclusion (DEI) initiatives.

Ensemble/Mosaic chose James Corner Field Operations to design the master plan update, a 20-year blueprint that calls for a total of 4M SF of multifamily space, 2.8M SF of office and lab space, 1.5M SF of life sciences manufacturing, 440K SF of hospitality, 235K SF of retail and 1.6M SF of public space.

The updated master plan divides the Navy Yard into six sectors, including a Gateway District; Shipyard District; Greenway District; Waterfront District; Corporate Center and Historic Core. The plan specifies that all of the residential square footage, including a total of 3,900 multifamily units, will be located in the Historic Core and Waterfront District.

In the master plan update, Ensemble/Mosaic has increased its development commitment to $4.8B of an estimated total development worth $6B. In March, the partnership brought in Oxford Properties Group, based in Canada, as an equity partner to finance construction of the Navy Yard project.

The Historic Core includes several historic buildings protected by preservation laws and currently being used as creative offices.

The Gateway and Greenway Districts in the Navy Yard development will contain the bio-manufacturing facilities planned for the site, including a lab and a bioprocessing facility. In March, Ensemble/Mosaic broke ground for the 130K SF lab.

The new residential buildings will be the first at the Navy Yard since it housed barracks for Navy officers. Dating back to 1776—and known as the birthplace of the US Navy—the Philadelphia Navy Shipyard continued to operate as a naval base until 1996, employing more than 40,000 during WWII.

The base originally was set to close in 1991, based on a decision by the Base Realignment and Closure Commission (BRAC), an agency Congress formed to cull the US portfolio of military bases. The Philadelphia Naval Shipyard continued to operate for several years due to court challenges to the base closings.

The last ship-building project undertaken by the Philadelphia Naval Shipyard prior to its closure on September 26, 1996 was a two-year overhaul of the USS John F. Kennedy.

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Tuesday, July 12, 2022

Cedar Realty Trust Sells 33 Shopping Centers for $879 Million

 By Mark Heschmeyer CoStar News

A deal for a portfolio of grocery-anchored shopping centers moves Cedar Realty Trust closer to completing the sale of itself and its remaining real estate to Wheeler Real Estate Investment Trust.

The sale of Cedar’s Northeast U.S. portfolio to DRA Advisors and KPR Centers for $879 million including assumed debt is the first step in the process.

Long Island, New York-based Cedar sold the portfolio of 33 centers and a redevelopment property to a joint venture fund managed by DRA.

Cedar previously announced the sale of itself and its assets in a series of related all-cash transactions to four different buyers, including Wheeler. The process is expected to be completed within four to six weeks, Cedar said in a release.

Cedar and DRA did not immediately respond to requests for additional information.

The deals, which combined amount to more than $1.2 billion, follow the real estate investment trust’s dual-track review of strategic alternatives last year.

Believing the real estate it owns is undervalued, In September they began exploring the sale of its entire portfolio of 53 primarily Northeastern U.S. shopping centers that collectively span more than 7.6 million square feet.

Investors are snapping up shopping centers with grocery stores as anchors because that type of tenant sparks repeat visits and generates foot traffic at a property — attributes that have become all the more valuable during the COVID-19 pandemic.

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Monday, July 11, 2022

Multifamily Update with RealPage (Video)

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New Jersey Office Portfolio Anchored by Lockheed Martin Trades for $16 Million Premium

By Linda Moss CoStar News

A New Jersey office portfolio with defense contractor Lockheed Martin as the main tenant has traded for $51 million, about $16 million more than it was purchased for last fall.

Regal Ventures, a real estate investment firm headquartered in New York City, on Thursday said it sold the group of five buildings, which totals 398,460 square feet, in Mount Laurel to Top Terraces, which is based in Santa Monica, California.

Regal Ventures, formerly known as Regal Acquisitions, had purchased the properties in September last year for $35 million, with joint-venture limited partner JDI Realty of Chicago. In a statement, Regal said it primarily attributed its ability to boost the portfolio's value "to the extension of existing leases with its tenants, as well as the removal of termination options."

Four of the buildings in Mount Laurel, which is about 20 miles east of downtown Philadelphia, are occupied by the Rotary and Mission Systems practice of Lockheed Martin. The company, based in Bethesda, Maryland, was ranked as America's largest defense contractor in 2021 by Bloomberg Government.

Each of the five properties is 79,692 square feet. The four buildings occupied by Lockheed Martin are 760, 770, 780 and 790 Centerton Road. The fifth one, 750 Centerton Road, is vacant.

"Regal Ventures quickly formed a solid working relationship with Lockheed Martin's lease management team," Alex Smith, co-managing partner of the firm, said in a statement. "Together, we agreed to lease modifications that enhanced the properties' overall value and elevated their appeal to prospective buyers."

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Wednesday, July 6, 2022

PREIT Sells Two Parcels for $14.2 Million

 By Linda Moss CoStar News

As part of its continuing effort to pay down its debt, mall landlord Pennsylvania Real Estate Investment Trust has divested two parcels of land for $14.2 million.

PREIT, which is based in Philadelphia, on Tuesday said it sold land at the Moorestown Mall in Moorestown, New Jersey, for roughly $12 million. That site will be home to 375 residential units. The buyer is Bel Canto Asset Growth Fund, headquartered in Plymouth Meeting, Pennsylvania.

PREIT, a real estate investment trust, also reported that it had closed on the sale of an outparcel to Four Corners Property Trust, a REIT based in Mill Valley, California, for $2.4 million. That property is a Red Robin restaurant and is located in Maryland, according to Four Corners, which specializes in acquiring and leasing dining establishments.

“The property is located in a strong retail corridor in Maryland and is occupied under a triple-net lease to the corporate entity with approximately 4 years of term remaining,” Four Corners said in a statement.

PREIT, which emerged from Chapter 11 bankruptcy proceedings in December 2020, expects to close on six additional outparcels for $22 million in the coming weeks, it said in its statement. The company owns and operates shopping malls in 12 states on the East Coast, concentrated in the mid-Atlantic and greater Philadelphia region. But it has been attempting to diversify the uses at its malls, by adding healthcare tenants and multifamily units.

The Red Robin property is part of a deal that Four Corners announced in early June, where it said it had signed a definitive agreement to buy 11 outparcel properties from PREIT for $32.5 million. The portfolio includes eight single-tenant restaurants and three nonrestaurant retail properties.

“We have previously executed multiple out-parcel transactions with the PREIT team and they have been an exceptional partner for us,” Bill Lenehan, Four Corners’ CEO, said in a statement in June. “We are excited to announce this 11-property out-parcel portfolio and to continue our strategy of identifying low-rent out-parcel properties leased to strong-credit operators.”

The properties that Four Corners is acquiring from PREIT are located within highly trafficked and populated corridors in Maryland, Massachusetts, Pennsylvania and South Carolina. Each property has a separate, individual lease, and the leases have a current weighted average remaining term of about eight years, according to Four Corners.

On Tuesday, PREIT said it is continuing to implement its plan to raise capital by selling properties, with purchase and sale agreements executed for another $56 million and additional transactions in the pipeline. As part of its debt reduction plan, the company said it has applied asset-sale proceeds and excess cash from operations to pay down debt by $82 million through June 30.

“We are keenly focused on continuing to raise capital to improve our balance sheet as we simultaneously drive operational enhancements, improving the overall quality of our offering,” PREIT Chairman and CEO Joseph Coradino said in a statement. “The closing of the Moorestown land sale evidences the power of the portfolio and the real estate we have aggregated.”

The sale of land for multifamily units at Moorestown Mall “is a meaningful step toward PREIT’s vision to evolve its properties,” according to the company.

“PREIT is focused on evolving its properties into community hubs marked by a healthy mix of apartments, hotels, entertainment, dining, health and wellness, working space, and local small business retail,” the REIT said. “This initiative capitalizes on PREIT’s portfolio of bull’s eye locations to produce a broader consumer base, offering its communities more and driving success for its tenants.”

For example, Cooper University Health Care has taken over a 165,000-square-foot former Sears store at the Moorestown Mall.

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