Monday, June 27, 2022

Has the Industrial Real Estate Market Peaked? (Video)

NFI Industries to occupy new 264,600-square-foot industrial building in Quakertown

Natalie Kostelni Reporter Philadelphia Business Journal

NFI Industries Inc. will occupy the Quakertown Logistics Center, a newly constructed 264,600-square-foot building just off the Quakertown Interchange of I-476.

The process that led NFI to take the space was circuitous but reflects the sometimes fast-changing needs of companies that manage the distribution of products for clients.

In July 2020, the Camden-based trucking and logistics company put 33 acres under contract just off Route 663 in Milford as Gorski Engineering Inc., the owner, sought to get the property approved for the development of a 264,600-square-foot warehouse. In October 2021, with the approvals secured, NFI closed on buying the land and moved forward with constructing the new warehouse.

In addition to trucking and logistics, NFI owns more than 60 million square feet of real estate that it uses or leases to tenants. Some of the properties are used for transportation purposes such as truck terminals and others are distribution centers.

Full story:

Thursday, June 23, 2022

Milbrook Properties Purchases Franklin Center in Chambersburg

 By Nathan Cloud CoStar Research

Milbrook Properties has closed on its first purchase in Pennsylvania as it continues to grow its shopping center portfolio.

The Manhasset, New York-based firm purchased the 174,063-square-foot Franklin Center in South Central Pennsylvania community Chambersburg from Coastal Equities. Milbrook paid roughly $20.35 million for the shopping center, according to Franklin County real estate records.

Franklin Center, located at 1320 Lincoln Way East, originally opened in 1990 and was recently renovated in 2015. The 91.5%-leased shopping center is home to a dynamic mix of anchor tenants, including Dick's Sporting Goods, T.J. Maxx, Ulta Beauty, Petco and Ollie's Bargain Outlet, which account for 78% of gross property income, according to JLL. The property also includes value-add opportunities through future building expansion and multiple out-parcel pad site development.

While this is Milbrook's first purchase in Pennsylvania, the company has been active in New Jersey. Milbrook recently paid $47 million for the 189,773-square-foot Essex Mall at 907 Bloomfield Ave. in West Caldwell — its ninth retail center in the Garden State.

"The retail sector continues to attract strong interest from institutional, REIT and private capital. "We saw a tremendous amount of investor interest for Franklin Center due to its best-in-class tenancy in T.J.Maxx, Dicks and Petco as well its irreplaceable location within the Chambersburg market."

Tuesday, June 21, 2022

Philadelphia Inquirer Inks Long-Term Lease for New Headquarters

 By Caleb Hayes CoStar Research

The Philadelphia Inquirer has signed a long-term lease at 100 Independence Mall West for its new headquarters, which is set to accommodate increased hybrid and remote work.

The 193-year-old newspaper is set to occupy 36,744 square feet on the sixth floor of 100 Independence Mall West, a 419,175-square-foot office building owned by Keystone Development + Investment that is now 97% leased.

"This move underscores our commitment to Philadelphia and our work by putting The Philadelphia Inquirer in the most historic setting in the country," Inquirer Publisher and CEO Lisa Hughes said in a press release. "We are eager to be in our new space, which we are designing to allow us to collaborate in new and innovative ways."

The Inquirer is expected to move into its new headquarters space during the first quarter of 2023. The newspaper is the latest major tenant at 100 Independence Mall West, joining The Macquarie Group, U.S. General Services Association and Nelson Worldwide.

Your Office Can Boost Your Business (Video)

What the Fed Rate Hike Means for CRE Investors (Video)

Monday, June 13, 2022

Singapore REIT Buys Grocery-Anchored Center Near Philadelphia

 By Mark Heschmeyer CoStar News

United Hampshire US REIT, a Singapore-based real estate investment trust, has added to its U.S. holdings, acquiring a grocery-anchored center in suburban Philadelphia.

United Hampshire acquired Upland Square Shopping Centre in Pottstown, Pennsylvania, for $85.7 million, the company disclosed in filings with the Singapore Stock Exchange.

The REIT is using money raised from the sale of self-storage properties earlier in the year to boost its holdings in grocery retail properties.

“Following the recently announced divestment of the Elizabeth and Perth Amboy self-storage properties, we are pleased to be able to achieve our goal of recycling the proceeds of the sale into a higher yielding, sizeable, stabilized grocery and necessity asset,” Robert Schmitt, CEO of the REIT, said in a statement. “Upland Square is set to substantially enhance [United Hampshire’s] income visibility and resilience.”

The 400,674-square-foot Upland Square is 100% leased with an average lease term of 6.3 years. The property is tenanted by a Giant grocery anchor, as well as off-price apparel, quick service food and beverage facilities, pet services, and a fitness facility.

With the acquisition, United Hampshire will broaden its tenant base. Rent from its top 10 tenants will reduce from the current 60.2% to 56.8%, providing increased tenant diversification and stabilizing the portfolio’s income, the company said.

Paramount Realty Services of Lakewood, New Jersey, was the seller and had purchased the property for $83.3 million in October 2016, according to CoStar data.

Saturday, June 11, 2022

Longfellow, University of Pennsylvania Partner On Life Science Facility in Philadelphia

 By Linda Moss CoStar News

Longfellow Real Estate Partners is teaming up with the University of Pennsylvania to plan and develop a 455,000-square-foot life science facility at the college's 23-acre innovation incubator, which is adjacent to its Philadelphia campus.

The project — a research, development and manufacturing hub — will mark Longfellow's first development in the Philadelphia market. The Boston-based firm is the largest privately owned commercial developer of life science buildings in the country, with offices in New York City, San Diego, the San Francisco Bay Area, and the Research Triangle area of North Carolina. Its portfolio spans nearly 15 million square feet.

The Philadelphia project will include two adjoining six-story buildings and is scheduled to open in the fourth quarter of 2025. It will be located at 3401 Grays Ferry Ave. at Pennovation Works, which was developed by the university to accommodates science facilities, researchers, entrepreneurs, and industry partners. Roughly 70 companies and an estimated 400 people are currently located at Pennovation.

The demand for purpose-built lab space is growing in the Philadelphia market, with the area now dubbed “Cellicon Valley” because of its track record of developing cell and gene therapies, according to a statement from Longfellow. The Philadelphia region is home to more than 350 life sciences firms, with many having ties to the city’s universities, research institutions, hospitals, and pharmaceutical companies.

The new project will have 387,000 square feet of research-and-development space, and 68,000 square feet of biomanufacturing space, according to Longfellow. It will feature rooftop terraces with views of Philadelphia’s skyline and Penn’s campus, as well as access to amenities at Pennovation Works. The project will include flexible lab/office space, which tenants can customize to meet their needs.

“Philadelphia and the University of Pennsylvania have a long history of academic excellence and fostering innovation," Jessica Brock, Longfellow Partner of Real Estate Operations, said in a statement. "As the region continues to be a leader in cell and gene therapy, Longfellow looks forward to delivering the infrastructure the life science industry needs to thrive.”

Partnering with an institution such as the University of Pennsylvania builds off Longfellow's track record of working with other schools such as Harvard, Duke, Stanford, and the Massachusetts Institute of Technology, according to the company's CEO and co-founder, Adam Sichol.

The new project will be near University City, home to the Hospital of the University of Pennsylvania, Amtrak’s 30th Street station, Drexel University, the University City Science Center, and Children’s Hospital of Philadelphia.

“The pace of innovation coming out of Penn is astounding. We have brilliant scientists generating a record number of new [Food and Drug Administration] approvals in the life sciences. ... Attracting Longfellow to Philadelphia and Pennovation is a vote of confidence in Penn’s efforts to grow Philadelphia’s innovation ecosystem and enable the Lower Schuylkill master plan to flourish,” Craig Carnaroli, the university's senior executive vice president, said in a statement.

Longfellow’s partnership with the University of Pennsylvania extends the firm’s East Coast presence. It has also acquired 43TEN Labs in Long Island City in Queens, New York, and partnered with the New York City Blood Center to develop Center East, a 13-story, 600,000-square-foot life science hub in Manhattan that is expected to break ground next year.

Tuesday, June 7, 2022

Walmart Goes Mega With Four New High-Tech Warehouses Including 1.5M SF in Greencastle, PA

 By Linda Moss CoStar News

Walmart, the nation's biggest retailer, is opening four new high-tech mega-warehouses to beef up its ability to get online orders to customers faster and compete with Amazon.

The Bentonville, Arkansas-based company unveiled its plans on Friday. Its expansion stood in stark contrast to those of Amazon, one of its main competitors. The Seattle-based e-commerce giant several weeks ago sent shock waves through the commercial real estate industry when it said it was slowing down distribution center development.

Walmart said it plans to open automated, state-of-the-art fulfillment centers, totaling 6.3 million square feet, in Joliet, Illinois; Lancaster, Texas; McCordsville, Indiana; and Greencastle, Pennsylvania. The one at 3501 Brandon Road in Joliet, 45 miles from Chicago, is set to open this summer. That facility is 1.1 million square feet.

The size and opening dates for the other three, which will all facilitate next-day and two-day shipping, are:

5259 W. 500 N in McCordsville, Indiana, 20 miles northeast of Indianapolis. The 2.2 million-square-foot facility is set to open spring 2023.

2500 E. Belt Line Road in Lancaster, Texas. The 1.5 million-square-foot facility is slated to open fall 2023.

1915 Ebberts Spring Court in Greencastle, Pennsylvania. The 1.5 million-square-foot facility is set to open in 2024.

Other national retailers such as Target, Macy's and Kroger have been bolstering their distribution networks — and adding advanced automation — to facilitate same-day, next-day and two-day delivery for e-commerce orders. That's an effort to put them in the same league as Amazon, especially when it comes to delivery speed. And it is also seen as enhancing their ability to increase their growing online sales.

The size of Walmart's new fulfillment centers, each over 1 million square feet, mirrors a strategy that Amazon has taken. The online retailer has built a network of mega-warehouses across the country.

Insomnia Cookies To Open New HQ & Storefront in Philadelphia

 By Michelle Stockner CoStar Research

Late-night cookie maker Insomnia Cookies is relocating its headquarters from Newtown Square to Center City Philadelphia.

Insomnia Cookies is taking the former Walgreens space at 1 S. Broad St. for its new headquarters, offering both a "store of the future" and corporate offices for about 80 employees across 26,000 square feet and three floors. Its space will also include a test kitchen.

The landlord is New York-based Aion Partners. It took three separate transactions related to Insomnia's headquarters deal. Walgreens, along with numerous large retailers, declined to renew its lease amid the coronavirus pandemic. Facilitating the complex deal required navigating retail lease terminations, leases for temporary office space and the final lease for the three-story space.

Insomnia Cookies founder Seth Berkowitz began the cookie chain out of his dorm room as a University of Pennsylvania student almost a decade ago.

In addition to opening a new headquarters, Insomnia Cookies also recently announced plans to triple its store count in the next five years to a footprint of 600 shops nationwide.

Monday, June 6, 2022

Why Invest in REITs? (Video)

Tennessee-Based Southern Land Co. Breaks Ground on Multifamily Project in Center City Philadelphia

 By Michelle Stockner CoStar Research

Southern Land Co. has started construction on its new 27-story multifamily development at 1620 Sansom St. in Center City Philadelphia.

The Nashville, Tennessee-based developer's latest Philadelphia project is set to include 254 luxury rental units, including multiple penthouses with private terraces. Southern Land Co. purchased the site for the development project, which was previously home to an aging parking garage, in December 2020 for $24.5 million, according to CoStar data.

The 320-foot tower will include 5,000 square feet of ground-floor restaurant space and 17,000 square feet of space on the second floor ideal for another restaurant or a health and wellness facility. Its amenities will include a club lounge, sky lounge with an outdoor rooftop pool, a fitness center with a yoga room, coworking space and resident storage. A unique feature of the building is its intentional five-foot set-back from the property line, which will widen the sidewalk along Sansom Street

Southern Land Co. utilized Philadelphia's Mixed-Income Housing Bonus program to incorporate an additional 75,000 square feet of residential space in the project, resulting in a $2 million payment to the Philadelphia Housing Trust Fund.

The 1620 Sansom St. project is set to be completed in winter 2023.

This is Southern Land Co.'s latest development project in Center City, following its under-construction, 48-story luxury condominium and apartment high-rise tower, The Laurel Rittenhouse Square, at 1911 Walnut St. That project is expected to welcome its first residents in fall 2022. The developer's first project in Philadelphia was a 28-story apartment tower at 3601 Market St., which was completed in summer 2015.

Friday, June 3, 2022

ATR Corinth Partners has sold West Manchester Town Center in York, PA

ATR Corinth Partners has sold West Manchester Town Center, a shopping center located in the southern Pennsylvania community of York.

The Dallas-based owner, manager and developer sold the 488,037-square-foot shopping center to a Paramount Realty joint venture, according to JLL, which brokered the deal. West Manchester Town Center sold for about $42.5 million, according to York County real estate records.

West Manchester Town Center is anchored by Kohl's, At Home, HomeGoods, Hobby Lobby and Burlington. Formerly operating as an enclosed mall, which opened in 1981, the property was completely redeveloped in 2014 into an open-air shopping center.

The shopping center is located on 94.1 acres at 415 Town Center Drive in an infill location. The center drew more than 4.2 million customer visits over the last year, making it the No. 2 most-visited open-air shopping center within a 15-mile radius.

"ATR Corinth did a phenomenal job executing the redevelopment by curating a dominant super-regional retail center with best-in-class anchor tenants and a complementary lineup emphasizing contemporary retail uses. We are excited to watch the Paramount Realty team continue to add value through future development, expansion of the property’s retail footprint and lease-up potential."

"We have seen renewed demand for best-in-class power centers over the last 24 months, which speaks to the positive macro performance of big box retailers as we exited the pandemic. With an extremely competitive bid process, West Manchester is a perfect example of this ongoing trend."

Wednesday, June 1, 2022

How The Pandemic Impacted CRE Property Types (Video)

PREIT Completes Land Parcel Sales Totaling $35M

 By Ingrid Tunberg

PREIT has agreed to sell 11 outparcels and a vacant hotel land parcel for a total of $35 million.

The sale of the 11 outparcels will generate more than $32 million in gross proceeds for the firm.

The additional vacant parcel at Springfield Town Center in Springfield, VA sold for $2.5 million and will be developed into a hotel site. This transaction aligns with publicly-traded REIT’s mission to deliver one-stop destinations in its communities.

The firm expects the outparcel transactions to close in multiple phases, primarily before June 30, 2022. The hotel parcel transaction is expected close in Q4 2022.

The deals are included in the firm’s asset sale pipeline, which was presented in the REIT’s Q1 2022 earnings release earlier in May, and includes $275 million of in-process transactions.

“Our plan to raise capital is materializing as a result of a portfolio that is thriving due to our efforts to bring in dynamic and compelling uses and our optimally-located platform,” states Joseph F. Coradino, chairman and CEO of PREIT. “We have a clear mandate to raise capital and improve our balance sheet and we are unwavering in our commitment to generate results. As new opportunities continue to arise, we are confident we can strategically harvest value from our portfolio to reduce debt.”

By June 30, 2022, PREIT expects to close on asset sales totaling $109 million in gross proceeds.

Tuesday, May 24, 2022

Puttshack To Open First Philadelphia Location in Center City

 By Javon Roach CoStar Research

Puttshack, an upscale, tech-infused mini golf venue, has signed a lease in Center City for its first Philadelphia location.

Puttshack is set to occupy 26,000 square feet within the Shops at Liberty Place at 1625 Chestnut St. for its maiden Philadelphia venue. The Philadelphia location is expected to open in summer 2023.

Puttshack opened its first two U.S. locations in Atlanta and Chicago in 2021, joining its four locations in London. New locations in the United States will open this summer in Boston and Miami, followed by Denver, Houston, Pittsburgh, Scottsdale, St. Louis, Dallas, Nashville and its second Atlanta location in 2023.

Its Center City location is set to include four tech-driven mini golf courses powered by its patented Trackball technology that keeps score and a "globally inspired" dining menu and cocktail program, Puttshack said in a release. The venue will also have multiple semi- and fully private event spaces for parties and include full-service bars.

"Philadelphia's bustling Center City blends historic sites with skyscrapers and premier destinations, making it a perfect choice for Puttshack," Dave Diamond, president of Puttshack, said in the release. "We can’t wait to bring our tech-infused mini golf experience to Philadelphia and be a part of such a historic and bustling neighborhood of the city."

Monthly Economic Outlook – May 2022 (Video)

Tuesday, May 17, 2022

Breakthrough Properties to Develop 200K-SF Life Science Project

 By Ingrid Tunberg

 Global developer of life science real estate Breakthrough Properties has acquired a site in Philadelphia with plans to develop more than 200,000 square feet of best-in-class life science space.

Through the project, Breakthrough Properties aims to support Philadelphia’s growing demand for modern lab space.

Located on the 2300 Market St. block in Philadelphia’s Center City district, the site is situated near University of Pennsylvania, Drexel University and leading academic medical centers. The property is located between the lifestyle hubs of Rittenhouse Square and University City, and it offers nearby access to the 30th St. transit station, which provides access to the SEPTA bus, trolley and commuter rail lines and Amtrak train routes.

Greater Philadelphia is ranked first in the nation for the National Institutes of Health grant funding for cell and gene therapy. In 2021, the area attracted more than $3.8 billion in venture capital and NIH funding.

“Driven by a highly-educated workforce and an influx of funding flowing to its world-renowned academic research institutions, hospitals, biotech companies and innovative start-ups, Philadelphia has quickly established itself as a leader in the cell, gene and mRNA therapy space, which is driving increasing demand for high quality lab space,” states Aaron Kazam, SVP of acquisitions at Breakthrough Properties.

Kazam adds, “We are thrilled by this opportunity to deliver one of the premier research and development buildings in the country, just steps from 30th St. station and the institutional core at University City.”

For the project, Philadelphia-based D2 Capital Advisors assisted with site selection and will serve as financing advisor. Philadelphia-based architecture firm KieranTimberlake has been retained by Breakthrough Properties as project architect, and Cushman & Wakefield will serve as the development’s exclusive leasing agent.

The firm expects the project to be completed in 2024. The development represents Breakthrough Properties’ first project in Philadelphia.

The company now has more than 4.6 million square feet in its development and under-construction pipeline across the US and Europe. The firm targets LEED Gold certification at all of its US properties and BREEAM Outstanding certification in all of its projects across the UK and European Union.

Monday, May 16, 2022

Retail, Food Services and Restaurant Update (Video)

Will Cap Rates Rise Due To Increasing Interest Rates? (Video)

DH Property Holdings Acquires Philadelphia Industrial Asset

 DH Property Holdings, LLC, a leading developer and owner of urban infill industrial logistics facilities, has acquired 200 Pattison Avenue in Philadelphia, Pennsylvania, for $24 million. The fully tenanted 96,000-square-foot warehouse facility was formerly owned by Ivy Realty. The transaction marks DHPH’s sixth Class-B infill industrial asset acquisition in the last six months as part of the newly launched EIB Ventures I LP fund.

The Pattison Avenue property, set on 7.08 acres, features 25,000 square feet of cold storage, 19,000 square feet of freezer storage, 16 loading docks, 12-foot to 17-foot clear ceiling heights and additional features. 200 Pattison Avenue is fully occupied by tenants Preferred Meals, which has been a tenant for nearly 30 years, and Tristate Intermodal. Situated in South Philadelphia, only minutes from the city center, the property provides convenient access to the Philaport, I-95 and I-76.

This is the 4th  Class-B industrial building acquisition in Philadelphia for DHPH for a total capitalization of $49.2 million across 280,000 square feet of space. As part of EIB Ventures I, DHPH has acquired six Class-B industrial buildings in the Northeast since June 2021, for a total capitalization of $102.3 million across 548,000 square feet. 

In addition to its existing properties, DHPH currently has over 5 million square feet, or over $2.5 billion, of Class-A urban warehouses complete or under development throughout the Northeast, including in New York City, Boston and Philadelphia.

The Newmark team of Michael Margolis, senior managing director; David Dolan, senior managing director; J Eustace Wolfington III, senior managing director, and Ryan Guittare, associate director, represented DHPH and Ivy Realty in the transaction.

“The acquisition of 200 Pattison Avenue further expands and diversifies the company’s portfolio,” said Hertz. “The property is positioned to thrive as demand for logistics space in the market continues to grow, and it provides powerful long-term value.”

Founded in 2016 by Dov Hertz, DHPH is a Manhattan-based industrial real estate development, investment and management firm that has been at the forefront of the industrial logistics trend, developing best-in-class distribution warehouses in complex and challenging urban environments. The company developed 640 Columbia Street, the first multi-story logistics center in New York City.

NJ Based, Lamar, Real Capital Snap Up Sixth Shopping Center for $60 Million

 by Linda Moss Costar

New Jersey-based Lamar Cos. has purchased a shopping center in Pennsylvania for $60 million, one of a half-dozen acquisitions of retail properties it's recently closed totaling over $165 million.

Lamar, based in Fairfield, in conjunction with Real Capital Solutions of Louisville, Colorado, bought The Shops at Valley Square, a 293,550-square-foot "lifestyle center" in Warrington, Pennsylvania. The seller in the April transaction was Ares Real Estate Management Holdings of Los Angeles.

Prior to that, in February, Lamar and Real Capital acquired a four-shopping center portfolio in Puerto Rico. And in December last year, they purchased Stone Creek Towne Center, a shopping center in Cincinnati, for $25.8 million from DRA Advisors of New York City.

The Lamar-Real Capital partnership has acquired nearly $500 million in total over the past 11 years and is continuing to seek shopping centers across the United States and Puerto Rico.

The most recent purchase, The Shops at Valley Square, is a Class A, mixed-use lifestyle center with retail, office and the potential for multifamily development for over 300 units. It has roughly 293,550 square feet and was built in 2007.

The center is located in an affluent suburb about 16 miles north of Philadelphia at the intersection of Street Road and Easton Road, two of Bucks County's busiest commercial arteries, with cumulative traffic counts exceeding 69,000 vehicles a day, according to Lamar.

In addition to being shadow-anchored by a high-performing Wegmans supermarket, the Valley Square center features a tenant mix that includes Ulta Beauty, DSW, Banana Republic, P.F. Chang's, Playa Bowls and Panera Bread.

Friday, May 6, 2022

Philadelphia-based PREIT Mall Landlord Offers Long-Term Game Plan

 By Linda Moss CoStar News

Mall owner Pennsylvania Real Estate Investment Trust plans to raise capital, with $275 million in property sales in the works, to help pay down its debt and looks to unveil a long-term plan to address its nagging financial woes this summer.

Philadelphia-based PREIT reported its first-quarter earnings on Thursday, with CEO Joseph Coradino discussing the company's balance sheet, which at this juncture presents a much less rosy picture than its retail operations. The real estate investment trust, which is at risk of being delisted by the New York Stock Exchange, is poised to receive a one-year extension on its credit facilities, Coradino said during a conference call.

"It’s clear that the mission in front of us is to achieve the credit-facility extension and to raise capital to delever the balance sheet,” he said. "New opportunities to harvest capital are presenting themselves as a result of the strength of the markets we operate in and the compelling opportunity we’ve created."

PREIT said it expects $109 million of its $275 million in pending deals to close before June 30. The company already sold the Exton Square Mall in Exton, Pennsylvania, in March for $27.5 million.

The firm was one of three retail-property REITs to file for Chapter 11 bankruptcy protection in 2020 amid the pandemic, when temporary store closures to stop the spread of the coronavirus wreaked havoc on malls and retailers. PREIT emerged from the proceedings after restructuring about a month after it filed. But it hasn't been an easy road back since then, as PREIT has sustained more than $600 million in losses since 2021, with $39.3 million in the first quarter this year.

In its first-quarter supplemental materials, PREIT said as of March 31 it was in compliance with the terms of its credit agreements.

"However, a material decline in future operating results could affect our ability to comply with the financial covenants, including additional covenants that came into effect starting on June 30," PREIT said.

But on the call, Coradino was reassuring, saying, "We are developing a longer-term plan that will demonstrate value to shareholders and an improved balance sheet that we expect to detail for you this summer."

He touted the strong performance many PREIT malls have enjoyed in the wake of the pandemic. For example, mall sales per square foot hit $613 in March, up from $603 at the end of last year. And strong leasing activity led to core-mall occupancy reaching 94%. PREIT has also had success finding tenants for vacant anchor stores.

PREIT is reviewing its options for the upcoming debt maturity, later this year, for the Cumberland Mall in Vineland, New Jersey, the Woodland Mall in Grand Rapids, Michigan, and the Cherry Hill Mall in Cherry Hill, New Jersey, according to Coradino. All three of these properties have recently experienced strong sales and occupancy growth, he said.

The REIT's portfolio includes 25 retail properties, 24 of which are operating properties and one is a development property. The 24 operating retail properties have a total of 19.6 million square feet and include 20 shopping malls and four other retail properties.

In February, the NYSE informed PREIT it was out of compliance with the exchange's listing standards, which require a company's common stock to maintain a minimum average closing price of $1 per share over a consecutive 30-trading day period.

PREIT has until Aug. 4 to regain its compliance and is reviewing its options with its with advisers and board, according to Coradino.

Tuesday, April 26, 2022

Institutional Investor Survey from AFIRE (Video)

Exelixis Boitech Chose Philadelphia for Its East Coast Hub

 By Katie Burke CoStar News

It has roots in Boston and a recently expanded corporate headquarters in the San Francisco Bay Area, but life science firm Exelixis is planting a flag in the Philadelphia suburbs as demand for research and development space across the country fuels momentum in second-tier biotech markets.

The East Bay developer of cancer drug treatments is setting up a temporary office in King of Prussia, Pennsylvania, as it shops around for sites in the area that would accommodate an East Coast headquarters with up to 200,000 square feet. Exelixis said it is ultimately hoping to house between 135 to 140 employees at the location, which it is expecting to develop within the next two to three years.

The Alameda, California-based company signed a 23,000-square-foot lease at the Brandywine-owned Freedom Business Center to use as a placeholder until its "Exelixis East" hub is developed. The office — which Exelixis said it anticipates will be used for about two years — is slated to open in June.

“We’re growing and expanding our pipeline so our need to bring in talent is increasing,” Exelixis President and Chief Medical Officer Vicki Goodman said. “When we look at where the pharmaceutical and biotech talent is, there is a nexus on the West Coast, which is where the Alameda campus is, and there is one on the East Coast," she said, adding that the Philadelphia area "is an ideal place to set up a center of operations.”

And with fierce competition for space and employees in upper-tier biotech hubs such as Boston, Philadelphia's solid talent base, proximity to other major cities and universities, as well as cheaper lab space, combined to make it the choice from which to grow.

"We’re making a real commitment to the Philadelphia area, it's not a satellite campus for us," Goodman said, adding it could become a "launching pad to expand to Europe."

Exelixis was founded in the early 1990s in Cambridge, Massachusetts, and relocated to California several years later. In 2019 the company preleased a roughly 220,700-square-foot development at 1951 Harbor Bay Parkway to expand its headquarters, which is now moving through the final build-out stages.

Spillover Fuels Growth

The biotech firm is one in a string of research and development companies vying for a dwindling pool of available lab space across the United States. Advances in biotechnology and record levels of venture capital have resulted in the largest construction pipeline of life science projects in the nation's history, with about 25 million square feet of space underway in the nation's 12 largest biotech clusters.

Even with the unprecedented amount of new and incoming space, the gap between what's available and what tenants are demanding is widening, driving rents for life science space to all-time highs and pushing companies farther away from prime biotech clusters in pursuit of space that can accommodate their own unprecedented growth spurts.

In the San Francisco Bay Area, for example, about 3.3 million square feet of life science space was underway by the end of 2021, according to data from brokerage Kidder Mathews. It wasn't even close to the roughly 5.7 million square feet of space that prospective tenants were hunting for, however, and about 50% of the under-construction developments were already preleased.

With the shortage of space in top-tier biotech clusters such as San Diego, Boston, the Bay Area and Seattle becoming increasingly burdensome for tenants, some are beginning to shift their attention to alternatives such as Philadelphia in a move that has helped catapult the secondary city to the forefront of the life science sector's accelerating growth.

"Philadelphia is sitting in a terrific position both because of its own trajectory and because of its spot relative to other leading biotech clusters," Joseph Fetterman, Colliers' executive vice president of healthcare and life sciences, told CoStar News. "The Philadelphia area is proving to be increasingly attractive to companies on the West Coast looking East and those that are getting priced out of Boston. And there's a reason to look at Philadelphia since it's complimented by the fact that, relative to other markets, it offers a significant discount in terms of basic rent for space and the overall cost of living."

By the end of the first quarter this year, average rents for lab space in the Boston area were about $110 per square foot, according to CoStar and Colliers data. By comparison, typical rents in Philadelphia were less than $54 per square foot.

The city has also become popular among startups or firms preparing to graduate from incubator space. Nearly 2.25 million square feet of lab and research space is under construction in the Philadelphia area. Developers are pitching another 9.7 million square feet in order to capitalize on the swelling demand.

"We're looking at a strong pipeline here in Philadelphia that will be buoyed significantly by increased interest from outside the city that will absorb a lot of space," Fetterman said. "We're going to start seeing a dynamic shift in the market for larger spaces as companies relocate to the city and grow within it."

Ireland-based Applegreen To Relocate US Headquarters to Glen Rock, NJ

by Linda Moss Costar

Ireland-based Applegreen, the largest highway rest stop operator in the United States, plans to invest $126 million in New Jersey, opening an American headquarters in Glen Rock, revamping nearly two dozen of its Garden State locations and creating roughly 900 jobs.

The commitment, announced Monday, is the biggest news so far to come out of New Jersey Gov. Phil Murphy's four-day economic mission in Ireland, a trip where he's promoting investment in his state. At a joint news conference in Dublin, the governor welcomed Applegreen’s financial commitment and the improvement it will make to the area's travel infrastructure.

Applegreen, based in Dublin and a major highway service plaza operator in Europe as well as the United States, describes itself as "a major petrol forecourt retailer."

Applegreen said it will relocate its U.S. travel plaza headquarters to Glen Rock, a Bergen County municipality where it already has a presence, adding at least 100 new jobs in finance, administration, development and logistics to the region.

“Northern New Jersey proved an ideal location for our headquarters as it is centrally located amidst many states in which we operate, is close to several major airports and offers top talent for our rapidly growing business," Elizabeth Pierce, president of Applegreen USA operations, said in a statement.

The governor's office referred questions on the current location of Applegreen's U.S. base and exactly where it will be relocated in Glen Rock to the company. Applegreen didn't immediately respond to emails from CoStar News seeking comment.

Applegreen will also be redeveloping all of its New Jersey’s rest stops, a move that will create 800 new jobs over the coming years. The first two redevelopments, at the Woodrow Wilson and Molly Pitcher travel plazas, are expected to be completed before the Fourth of July holiday.

“Applegreen is a world-class travel infrastructure partner who will generate significant economic growth for the state and bring innovation and expertise to the redevelopment of New Jersey’s 21 on-highway services plazas," Murphy said in a statement, where he also described himself as a proud Irish American.

Applegreen has more than 250 sites across 18 states including New Jersey, where the redeveloped plazas will offer commuters the latest technologies and will focus on electric-vehicle charging. In the states, Applegreen is installing EV infrastructure throughout the Northeast, which is in addition to its existing infrastructure portfolio in Europe.

The company acquired the concession for its Garden State service plazas last summer. It has a U.S. workforce of more than 5,000 employees, and its plaza redevelopment project is expected to create at least 800 new jobs, in addition to the 100 skilled new positions created by the relocation of its headquarters.

“Our Northeast footprint is expanding rapidly. ... The creation of hundreds of new jobs through these exciting projects will deliver a significant boost to the New Jersey economy, and, as such, today’s announcement is a genuine Irish-American win-win,” Pierce said.

Applegreen was taken private in March 2021 by a partnership comprised of its founders, Bob Etchingham and Joe Barrett, and Blackstone Infrastructure Partners, a leading investor in U.S. infrastructure assets.

Friday, April 22, 2022

Brandywine Reacquires Interest in Major Philadelphia Office Building

 By Mark Heschmeyer CoStar News

Six years after selling the Cira Square office building in downtown Philadelphia, Brandywine Realty Trust has repurchased an interest in the property in a joint venture with Michael Dell, chairman and CEO of Dell Technologies.

The group paid $383 million for the 863,000-square-foot office property at 2970 Market St. in the University City area of Philadelphia. The building is 100% leased to the General Services Administration on behalf of the IRS through August 2030.

Brandywine previously reported posting a net gain of just $500,000 when it sold the property for $354 million in 2016.

The group is looking to take advantage of University City's office market dynamics. For most of the past 15 years, University City has been one of the tightest office submarkets in the Philadelphia metro area, with its average vacancy rate often less than 5%, according to CoStar data. This comes largely thanks to the market being home to the University of Pennsylvania and its healthcare affiliate, Penn Medicine, which together form the largest employer in Philadelphia’s dominant economic engine: the education and health services sector.

The IRS currently pays rent for Cira Square that is about 40% below the current market rate, Brandywine said. That provides the joint venture an opportunity to significantly increase the rental rate upon renewal. Or, if the IRS does not renew, the building represents an excellent life science conversion opportunity, according to the firm.

Brandywine holds a 20% interest in the joint venture along with Dell’s MSD Capital and a third unidentified institutional investor.

Brandywine’s initial contribution in the new joint venture was $28.6 million, the Philadelphia-based real estate investment trust said in its first-quarter earnings report. The REIT funded the acquisition through the sale of a vacant land parcel at 25 M St. NW in Washington, D.C., for $29.7 million. The Swedish construction firm Skanska said in a statement Thursday it bought the parcel.

At the closing of the Cira Square deal, the joint venture secured a $257.7 million mortgage loan from Bank of America, according to Philadelphia County records. The loan matures in two years, Brandywine said.

The REIT will provide management and construction management services to the joint venture.

Cira Square was sold to the joint venture by a fund set up by Korea Investment Management Co. based in Seoul, South Korea.

Apartment Leasing Season Is Already Breaking Records For Morgan Properties

 By Kelsi Maree Borland

“I anticipate that demand will continue through the end of the year,” Sean Organ of Morgan Properties tells about the current leasing season. Usually, the season runs from April through September, but it has started early, and Organ expects that it will run late.

On student housing properties, Organ already has a waitlist and 100% pre-leasing. “Normally we don’t get to that point until late June,” he says, noting that it is one indication of strong demand, but conventional properties are seeing similarly strong demand. In the Mid-Atlantic region where Organ operates, high occupancy rates have helped to drive strong rent growth. We are seeing very little push-back despite historically high renewals and lease trade-outs for new leases.”

While demand is high, supply is not, and Organ admits that will be a challenge later in the year. “Looking across the entire nation, we have had a significant slowdown in new deliveries,” he says. “As a result of that, the push for new leasing is just tremendous. There has been a lot of pent-up demand, but unfortunately, there are not a lot of options for people to move to due to the slowdown of new deliveries.” Now that inflation has increased above 8%, Organ expects that the dearth of supply and limited new construction will continue to fuel a supply-demand imbalance.

In Organ’s portfolio specifically, the team plans ahead to have limited supply in the fourth quarter to offset the decreasing demand an stabilize performance. Now, that means even fewer available apartments. “We are not going to have nearly enough supply because of our lease expiration management,” he says. “We consolidate our leases through a revenue management software, and because of that, we are going to have fewer expirations in the fourth quarter. We have set ourselves up for a strong fourth quarter for the last several years, and we expect that to continue this year.”

Although rental rates have increased, Organ says they haven’t seen much push-back from tenants. “I would naturally think that coming out of the pandemic, most residents are sensitive to price hikes, and that is actually not the case,” he explains. “People have been able to save and the stimulus has helped people.”

Tuesday, April 19, 2022

Wharton Realty Group Snags Shopping Centers in New Jersey, Pennsylvania

By Michelle Stockner CoStar Research

Wharton Realty Group paid roughly $142 million for two shopping centers in New Jersey and Pennsylvania, according to public real estate records.

The Eatontown, New Jersey-based investment firm purchased Deptford Landing in Deptford, New Jersey, which is located about 12 miles from Center City Philadelphia, and Exeter Commons in Reading, Pennsylvania. Wharton acquired both centers from Chicago-based ShopCore Properties, according to CoStar data.

The South Jersey shopping center sold for about $70 million, according to Gloucester County real estate records. Wharton paid about $72 million for the Reading property, according to Berks County records.

Located on 67.33 acres, Deptford Center totals 517,096 square feet and is fully leased. The South Jersey center is anchored by a Walmart Supercenter and Sams Club. Other tenants located at Deptford Center include DSW, Michaels, Five Below, PetSmart, Raymour & Flanigan Outlet, The Mattress Factory, Hand & Stone, Carter’s, Five Guys, Great Clips, Chipotle and National Vision.

Built in 2009, the 361,095-square-foot Exeter Commons is located off Perkiomen Avenue and is 99.5% leased. The center features a mix of necessity and contemporary retail tenants, including Giant Food, Lowe's, Ross, PA Wine & Spirits, Five Below, Petco, Staples, Famous Footwear, America’s Best Contacts, Moe’s Southwest Grill, Red Robin, Supercuts and Mattress Firm. The center is also shadow anchored by Target.

Monday, April 4, 2022

Is An Economic Recession on the Near-Term Horizon? (Video)

Hotel Forecast with LARC 2022 (Video)

Commercial real estate to hit ‘inflection point’ this year, analyst says (Video)

Philly Based Five Below Looks To Triple Its Store Count to 3,500

By Linda Moss CoStar News

Discount retailer Five Below is aggressively ratcheting up its growth plans, looking to triple its store count to 3,500 by the end of 2030 and double its sales by 2025 as it creates a shopping experience that caters to younger customers.

The Philadelphia-based chain, which now has 1,190 stores in 40 states, unveiled its “Triple-Double” strategy Wednesday at the company's first investor day event. The retailer said it aims to open about 1,000 more stores by the end of fiscal 2025 alone. In addition, the company reported its fiscal fourth-quarter earnings and gave Wall Street analysts a tour of its newest store prototype, the latest iteration of what has typically involved increasing the square footage at a typical brick-and-mortar site.

Five Below targets tweens, generally considered those 9 to 12 years old, and teens with an array of toys, candy, tech accessories and gadgets, bedroom decor, sports items and other merchandise that they can play with or “experience,” priced from $1 to $5. The idea is to offer young shoppers a venue where they can “treasure hunt” and spend their allowances, CEO Joel Anderson said. That's something online shopping can't provide.

In addition to its ambitious expansion plans, the company will be offering ear piercing, a more extensive selection of balloons, and pet products at some sites this year, looking to cater to customers that might have gone to Toys R Us before it liquidated, while also adopting the appeal of discount chains like Target. It will also offer buy online, pick up in store service for the first time, according to Anderson. The CEO, and all the Five Below executives who spoke at the investor event, wore blue T-shirts that said “2025: Ignite the Vision.”

The rise of e-commerce and the pandemic’s blow winnowed out many weak retailers and left a pool of survivors that came out stronger and are opening more stores, particularly discounters and off-price chains such as Burlington Stores, T.J. Maxx and Target. Five Below is part of this group.

Philadelphia, New York Openings

Company officials on Wednesday said part of their strategy is to open more locations in urban areas, not only its home base of Philadelphia but also in New York City, including one in Times Square. The chain recently debuted a store in Manhattan’s Union Square neighborhood at 40 E. 14th St., and 11 of its 15 urban store openings this year will be in the Big Apple. Five Below is seeking to double its stores in Philadelphia, to 120 from 60, as well.

Back in December during a third-quarter earnings call, Anderson said Five Below was targeting more than doubling its number of stores, to 2,500. But that long-term goal has been ramped up, to a fleet of 3,500 or more stores by the end of fiscal 2030, Anderson said. Five Below is also looking to double both its sales — $2.85 billion in fiscal 2021, up 45% compared with the prior year — and its earnings per share by the end of fiscal 2025.

That will entail debuting 375 to 400 new stores over the next two fiscal years and 550 to 600 new stores over fiscal years 2024 and 2025. For the year ending Jan. 29, Five Below opened 170 net new stores compared to 120 net new stores in fiscal 2020.

Five Below now has a portfolio of five distribution centers that it owns and operates, including one that is about to open in Indianapolis. That network as it stands now can handle inventory for 2,000 stores, and those existing sites can be expanded by 1 million square feet to serve Five Below’s brick-and-mortar fleet as its growth continues, according to officials.

Five Below has even opened up a store at its distribution center located in Buckeye, Arizona. The chain has found success in not only that experiment, but with opening stores in suburban, urban and even semi-rural areas such as Flowood, Mississippi, which is among the company’s top five stores overall in terms of volume.

In some ways, Five Below is seeking to fill the Toys R Us gap. While that toy retailer is aiming for a revival under new ownership, with a flagship at the American Dream mega-mall and store-within-store sites at Macy’s. But Toys R Us is essentially starting out again and doesn’t have the national footprint it once did. Five Below looks to cater to the tweens and teens that Toys R Us once served.

Five Below looks to help its young shoppers celebrate “the rituals of life and the milestones of growing up,” said Michael Romanko, the retailer’s chief merchandising officer. In line with that, Five Below will pilot offering ear piercing at 150 stores this year. It will also offer an expanded selection of balloons at 250 stores in a test. And the retailer will be selling more accessories for pets, as well as offering items for first-time drivers and car owners, products like steering wheel covers, according to Romanko.

The new store prototype is located at Pembroke Commons at 450 N. University Drive in Pembroke Pines, Florida. The prototype includes a new upgraded technology department and a store-within-store layout for Five Beyond, the select merchandise that costs more than $5 that the retailer is now selling at some stores. That prototype also offers ear piercing and the expanded selection of balloons.

Thursday, March 31, 2022

Redevelopment of Former Philadelphia Power Plant To ‘Transform Obsolete Industrial Site’

 By Katie Burke CoStar News

Hilco Redevelopment Partners has embarked on what it expects to be a 15-year construction timeline for an ambitious project called the Bellwether District, a redevelopment of the former Philadelphia Energy Solutions refinery on a site that encompasses about 2% of Philadelphia's entire land mass.

Backed by a $500 million loan from PCCP, a Los Angeles private equity firm, Hilco's plan is to transform the former refinery into an environmentally friendly industrial and life science hub. The developer said it is expecting to include about 10 million square feet of Class A industrial space and between 4 million to 5 million square feet of research and development space at at 3144 W. Passyunk Ave. HRP's joint venture partner on the project is Caisse de dépôt et placement du Québec, the real estate arm of one of Canada's largest pension funds.

Why it matters: Once completed, the site is projected to create an estimated 19,000 permanent jobs, and the developer said it will serve as home to global giants in the e-commerce, logistics and life sciences industries. HRP CEO Roberto Perez said the 150-year-old oil refinery used to produce 16% of all of the city's greenhouse gases but will now become "an environmentally sustainable home for Philly workers and some of the world's leading businesses."

Similar to Previous Project: Neither the $500 million loan from PCCP nor the process of redeveloping a complex industrial site is unfamiliar to Hilco Redevelopment Partners. Perez said the developer was drawn to the potential to overhaul the former Philadelphia Energy Solutions refinery because of a similar endeavor it completed in its transformation of a 3,300-acre former Bethlehem Steel mill site in Baltimore. There, HRP completed Tradepoint Atlantic, a trimodal logistics complex that has so far created more than 8,500 jobs and is expected to contribute as much as 1% to the state of Maryland's gross domestic product by 2025.

PCCP has backed several HRP projects to date, and HRP Chief Operating Officer Benjamin Spera said the private equity firm "understands the complexities of our projects, which often require complicated remediation and site-clearing work."

What they're saying: "We feel privileged to be stewards of a project that will have a lasting impact on the region and elevate Philadelphia’s role in both the e-commerce and life science industries," Perez said, adding that 99% of legacy petroleum products already have been removed from the site and demolition is about 60% completed. "We started with one ambitious project, and now we’re re-creating the gateway to Philadelphia and we’re building new communities in Boston and Washington, D.C. I look at every project and think, 'How are we going to transform the economy, environment and community here?' We’re just getting started."

Fun fact: Hundreds of miles of pipeline have been dismantled so far, and Perez said there are still hundreds of miles left to go. Once removed, HRP will have taken out enough pipeline to stretch from Philadelphia to Florida.

Potential Red Flags for Commercial Real Estate (Video)

Saturday, March 19, 2022

Gattuso, Drexel To Develop 11-Story Life Science Building in Philadelphia

 By Caleb Hayes CoStar Research

Gattuso Development Partners is partnering with Drexel University to build an 11-story, 500,000-square-foot life science research and laboratory facility on the school's campus in Philadelphia's University City area.

The building will be located at 3201 Cuthberg St., adjacent to the historic Armory. The building will be developed on a site currently being used as a recreational field by some of Drexel's varsity athletic teams, student organizations and intramural and sports clubs, which will be relocated to the university's Vidas Athletics Complex.

Gattuso, which is teaming up Vigilant Real Estate Holdings and The Baupost Group on the project, plans to lease the Cuthberg Street site from Drexel. Drexel plans to lease about 60,000 square feet of the building for academic and research uses. The university will host its core research and business development operations, as well as labs that will be used for research space and academic programs within the Drexel community, at the new space. Gattuso also has signed commitments from other life science tenants representing more than 55% of the available space at the project, the partnership said in a press release.

"This project will offer the life science community the kind of space they need and where they need it: in the middle of the University City research corridor," Anne Cummins, co-founder and chief operating officer of Gattuso, said in the press release. "The building's robust infrastructure and unique features will provide substantial functionality and flexibility that will enable and accelerate the development of science and commercialization."

The facility, designed by Robert A.M. Stern Architects, is being custom-designed for life science research and will include expanded floor-to-floor heights, a state-of-the-art HVAC system specially designed for laboratory research, fully enclosed loading docks, best practice chemical storage space and pH neutralization capability, five service elevators and generous amounts of space designated for tenant equipment and vertical shaft infrastructure, according to the release.

Construction on the 11-story life science facility is slated to begin this fall and is expected to be completed by fall 2024.

This facility is one of the latest proposed life science projects in University City. Spark Therapeutics is planning to build a $575 million, 500,000-square-foot gene therapy innovation center at Drexe's campus at 30th and Chestnut streets through a 99-year ground lease.

"The demand for life science development continues to hold incredible potential for economic growth throughout the city and region," John Gattuso, co-founder and CEO of the namesake company, said in the release. "We see the Drexel project as a catalyst for that growth, which will continue to leverage new private investment and generate jobs as it anchors the next great wave of life sciences development.”

This Drexel facility also marks the third major life science project for Gattuso, including the recent completion of the $125 million, 137,000-square-foot Iovance Biotherapeutics research and production facility at 300 Rouse Blvd. in Philadelphia's Navy Yard. Gattusso is also leading the ongoing construction of a 130,000-square-foot cGMP facility at 2500 League Island Blvd. at the Navy Yard.

Friday, March 18, 2022

SEKO, LaserShip Sign Leases for Nearly 500,000 Square Feet in NJ

 By Linda Moss CoStar News

Advance Realty Investors and Greek Development have signed up two tenants, leasing nearly 500,000 square feet, for Logan North, their 3.2 million-square-foot distribution park in South Jersey.

SEKO Logistics, a global logistics freight and delivery company based in Itasca, Illinois, has signed a 164,000-square-foot lease to occupy Building A, located at 100 Crossroads Blvd. in Logan Township. The second tenant, LaserShip Logistics, headquartered in Vienna, Virginia, will occupy Building F, which is located at 701 Crossroads Blvd. and has 327,000 square feet.

Both leases were executed three months prior to the anticipated completion of the otherwise speculative projects, according to a statement Thursday from Advance, based in Bedminster, New Jersey, and Greek, based in East Brunswick, New Jersey.

“Today’s leasing milestone serves as testament to the quality and magnetism of Logan North and further underscores the ongoing demand for well-situated, Class A modern logistics space,” Advance Realty Investors CEO Peter Cocoziello said in a statement. “As a result, Logan North has continued to attract top-tier tenants and represents one of Southern New Jersey’s premier distribution locations, in one of the most active submarkets in the state.”

In October, Advance and Greek announced the $265 million sale of the Target Flow Center at Logan North. The 1.1 million-square-foot warehouse and distribution facility occupied by retail giant Target was acquired by Torchlight Investors.

The Logan site is 14 miles from Philadelphia International Airport and less than 20 miles from the recently upgraded Port of Philadelphia and the Port of Wilmington.

Steel has been ordered for the construction of the next phase of Logan North, which includes 401 Crossroads Blvd., Building C/D, with 475,000 square feet, and 301 Crossroads Blvd., Building B, with 274,000 square feet. That work is slated to be completed in the second quarter next year. The Advance-Greek partnership also has 15 acres available at 200 Crossroads Blvd. with potential for a build-to-suit project or as additional parking space for future tenants of the park.

Tuesday, March 15, 2022

PREIT to sell Exton Square Mall as it tries to raise funds to pay down debt

Natalie Kostelni Reporter Philadelphia Business Journal

PREIT, an owner of regional malls throughout the Philadelphia region and mid-Atlantic, saw its shares slide throughout Tuesday despite its CEO’s attempt to assure investors during a brief earnings call that the company was on track to pay down debt with several pending sales.

The company’s stock price ended the day down by 11% to 74 cents a share.

During the 20-minute call reviewing results from last year and the fourth quarter, Joe Coradino, PREIT’s CEO, rattled off properties and parcels that were under agreement including the Exton Square Mall, a 1-million-square-foot property that is 50% occupied and has sales of $283 a square foot. PREIT does not consider the Macy's-anchored Chester County mall as one of its core properties.

The Philadelphia company expects to close on its sale in the next 90 days, Coradino said. It did not indicate who had the property under agreement or at what price.

Full story:

What the Russian Oil Ban Means for Real Estate Investors (Video)

Monday, March 14, 2022

Walmart To Open Massive Fulfillment Center in Shippensburg Pennsylvania

 By Michelle Stockner CoStar Research

Walmart is opening a new fulfillment center in southern Pennsylvania to support its growing supply chain network and e-commerce operations.

The 1.8 million-square-foot facility will be located at 2281 United Drive in Shippensburg and is set to open this spring, creating up to 600 permanent, full-time jobs across the region, Walmart said in a press release.

Unlike its distribution centers, which focus on receiving, storing and distributing products to stores, Walmart's fulfillment centers are designed to store millions of items that are picked, packed and shipped directly to customers as soon as next-day.

The Shippensburg facility is part of a broader initiative to add more capacity to the retailer's supply chain as it prepares for growth. In the fourth quarter of fiscal year 2022, Walmart U.S. e-commerce cited 70% growth over the past two years.

"We are proud to open a new state-of-the-art fulfillment center in Shippensburg, which will be instrumental in providing our customers with increased access and faster shipping on millions of every-day low priced items," Steve Miller, senior vice president of supply chain operations for Walmart U.S., said in the release. "In addition to faster shipping, our investment in Shippensburg will bring a positive impact to the community by bringing even more employment opportunities to a growing local economy."

Walmart currently operates seven distribution centers, 160 retail stores and employs more than 60,000 associates in Pennsylvania.

2022 Commercial Real Estate Market Forecast (Video)

Thursday, March 3, 2022

Prologis Buys New Jersey Office Site To Redevelop as Industrial Property

By Linda Moss CoStar News

Giant industrial landlord Prologis has acquired an office property in southern New Jersey, a site that it plans to redevelop into a logistics facility as the demand in that sector continues to soar.

Prologis, which is based in San Francisco, purchased a 114,676-square-foot Class A office building at 112 W. Park Drive in Mount Laurel from Veritas Real Estate, whose headquarters is in Marlton, New Jersey.

Terms of the transaction weren’t disclosed. But Prologis plans to develop a 184,500-square-foot, state-of-the-art logistics facility at the 17-acre site, which is in Burlington County.

In the Garden State as well as across the country, real estate firms are buying office sites — even former corporate headquarters — to redevelop as distribution centers. That’s because the growth of e-commerce, accelerated by the pandemic, is driving demand for warehouses and logistics facilities, without enough supply. In contrast, in the wake of the peak of the outbreak, demand for office space has softened as employees work from home on a full-time or part-time basis.

“The acquisition of a Class A office property for repositioning and developing a warehouse reinforces the strength of the industrial market in New Jersey and the need for more modern logistics facilities. Across the region, several office buildings are being purchased with the intent to convert to industrial use. Towns throughout New Jersey are supportive to this type of redevelopment as it helps alleviate supply chain pain points and meets the insatiable demand by companies for industrial space.”

The Mount Laurel site is adjacent to the New Jersey Turnpike and is roughly 20 minutes from Philadelphia International Airport and PhilaPort, the Port of Philadelphia.

The BEST Commercial Real Estate Property Type (For You) -Video

Wednesday, March 2, 2022

Gwynedd Mercy University sells 150 acres to Boston firm for $31.5M

 Natalie Kostelni Reporter Philadelphia Business Journal

Gwynedd Mercy University has sold 150 acres for $31.5 million to Beacon Capital Partners, a Boston real estate investment firm that intends to use the property to expand its life sciences footprint in the Philadelphia suburbs.

Beacon already has a presence roughly two miles down the road from the university at Spring House Innovation Park, a 133-acre life sciences campus in Lower Gwynedd it bought for more than $100 million in early 2021.

Beacon’s acquisition of the 150 acres from Gwynedd Mercy demonstrates how companies are eager to secure sites throughout the suburbs and Philadelphia that can be developed into life sciences space. The region's growing life sciences sector has attracted domestic and international investors.

The latest came earlier this week when Oxford Properties Group, a global real estate firm based in Ontario, announced it formalized a deal to own and develop 3 million square feet of life sciences space at the Philadelphia Navy Yard with Ensemble Real Estate Investments and Mosaic Development Partners. Another was announced last month and involves a venture among Sterling Bay and Harrison Street Capital of Chicago and Botanic Properties of New York, which plans a 310,000-square-foot life sciences building at 38th and Chestnut streets in University City.

Full story:

Why Invest in REITs (Video)

Philadelphia Navy Yard Development Get Huge Life Science Investment from Oxford Properties

By Mark Heschmeyer CoStar News

Canada’s Oxford Properties Group is partnering with Ensemble/Mosaic to own and create a 3 million-square-foot life science hub at the Navy Yard in Philadelphia.

The agreement includes Oxford’s investment in five existing life sciences assets owned by Ensemble Real Estate Investments, and Ensemble/Mosaic’s first two planned life sciences properties. In addition, Oxford will look to partner in all future life sciences projects on sites controlled by Ensemble/Mosaic at the Navy Yard.

This is Oxford’s first investment in Philadelphia and further expands the firm’s extensive life science portfolio, which includes over 2 billion U.S. dollars of investment activity in North America in the past year. Oxford has now grown its North American life science business to 10 strategic markets from coast to coast.

“Building a dedicated life science business of scale remains one of our highest conviction global investment strategies, and our teams continue to do so in a sustained, yet highly targeted fashion,” Chad Remis, executive vice president of North America operations at Oxford, said in a statement.

Remis added that Oxford believes Philadelphia is poised to become a leading life science market due to the confluence of first-class educational and research institutions plus a number of innovative companies and talent whose growth is being powered by increasing levels of governmental and private funding.

“The Navy Yard has emerged as the heart of gene and cell therapy, and we are excited to bring our capital and capabilities in partnership with Ensemble/Mosaic to create a world-class life science innovation hub,” Remis said.

The two companies came together via a formal investor selection process, according to Kam Babaoff, chairman of Ensemble.

Key components of the agreement include the following:

  • Oxford providing an undisclosed amount but what it calls a “substantial investment” in five existing life sciences buildings in the Navy Yard owned by Ensemble Real Estate Investments: 300, 351 and 400 Rouse Blvd. and 4701 and 4751 League Island Blvd. The buildings are fully leased to life sciences companies including Iovance Biotherapeutics, Adaptimmune Therapeutics and WuXi Advanced Therapies.
  • Oxford will also invest an undisclosed but substantial investment in the first phase of the partnership’s two new development projects: 1201 Normandy Place, a four story, 137,000-square-foot lab building, and 333 Rouse Blvd., a two story, 105,000-square-foot lab building. Construction of both buildings will commence in 2022 on a speculative basis.
  • Through its agreement with PIDC — Philadelphia’s public-private economic development corporation which oversees all management and development of the Navy Yard — the partners envision developing in excess of 2 million square feet of life science space.

Ensemble/Mosaic will continue as developer and asset manager, collaborating closely with Oxford. Ensemble will provide property management services for the partnership’s Navy Yard life science portfolio.

Monday, February 21, 2022

Wegmans-Anchored Shopping Center Outside Philadelphia Trades for $161 Million

By Linda Moss CoStar News

A shopping center in the Philadelphia suburbs has sold for $162 million as investors continue to prize retail sites that are anchored by grocery stores.

Finmarc Management, based in Bethesda, Maryland, and KPR Centers of New York City have acquired Providence Town Center, a 759,945-square-foot, open-air shopping center in Collegeville, Pennsylvania. The property, anchored by a Wegmans grocery store, is the No. 4 most-visited retail center in Pennsylvania. Wegmans has operated at the site since it was developed between 2008 and 2009.

The seller was Brandolini Cos. of Berwyn, Pennsylvania, and the deal marks the second-largest open-air retail transaction by square footage in the Philadelphia market behind East Gate Square, which sold in 2015 for $188 million. That property spans Moorestown and Mount Laurel in New Jersey.

Investors continue to snap 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 pandemic.

A diverse group of private, institutional and real estate investment trust investors expressed interest in Providence Town Center.

“Throughout the process, it became evident from the abundance of new, unique capital showing up to participate that demand for grocery-anchored product and large-format shopping centers in general is steadily on the rise. With the current lack of supply of like-kind inventory available to market, we anticipate this product to continue to price at a premium.”

Providence Town Center, which is 92% leased, has a tenant roster that includes Best Buy, Old Navy, Dick’s Sporting Goods, HomeGoods, Michaels, LA Fitness and Movie Tavern.

Thursday, February 17, 2022

How To Analyze a Commercial Real Estate Market (Video)

Conshohocken building leased to Amazon sells for $97M, smashes record for price per square foot

 Natalie Kostelni Reporter Philadelphia Business Journal

An institutional buyer has paid $97 million for a 120,000-square-foot building leased to Amazon in Conshohocken, setting yet another high-water market on a per-square-foot basis for an industrial sale in the region, according to multiple market sources.

An undisclosed Korean pension fund bought the building at 1113 W. Ridge Pike for what amounts to just over $808 a square foot. E. Kahn Development Co. was the seller.

The new sale price threshold comes on the heels of a 331,525-square-foot building leased to Target Corp. 900 River Road trading for around $116 million, or roughly $350 a square foot. That exceeded a $240 a square foot high water mark set last year when a 1.1-million-square-foot warehouse-distribution center leased to Target Corp. in Logan, New Jersey, sold for $265 million.

E. Kahn Development paid $6.85 million for the property at 1113 W. Ridge in 2020. The developer razed a building that had been constructed in 1959 for Stroehmann Bakeries, secured Amazon as a tenant and developed the online retailer the building for last-mile distribution. It is located at the confluence of several major arteries including I-476.

Full story:

Mega Amazon Warehouse in Delaware Trades for $392 Million

By Linda Moss CoStar News

 An Australian company has expanded its U.S. industrial portfolio with a $392 million purchase of a mega Amazon distribution center in Wilmington, Delaware, the second sale of a nearly 4 million-square-foot warehouse leased by the e-commerce giant in almost four months. The deal ranks among the largest industrial sales of 2021.

Macquarie Asset Management Real Estate on Tuesday said it had finalized its acquisition of a multistory fulfillment facility at 1025 Boxwood Road from Dermody Properties of Reno, Nevada. The purchase is the largest to date made on behalf of a U.S. investment account managed by Macquarie’s U.S. core/core-plus real estate team. The warehouse, which incorporates Amazon’s robotics technology, opened in September and has 3.8 million square feet.

Demand has outpaced supply for industrial space across the United States as online purchasing has risen, growth that was propelled by the COVID-19 pandemic. In response, Seattle-based e-commerce giant Amazon has vastly expanded its distribution network, in part by opening dozens of warehouses 2 million square feet and larger across the nation. And the properties they are leasing have drawn big offers from buyers.

“This is a highly efficient fulfillment center format in a strategic location which provides access to more than 17 million people within a two-hour drive,” Christopher Quiett, head of U.S. core/core-plus real estate at Macquarie, said of the Wilmington center.

The Wilmington transaction took place in October, but Macquarie didn’t announce it until this week. And earlier this month, a 2.68 million-square-foot distribution center that Amazon leases at 500 32nd St. in Bondurant, Iowa, sold for $326.2 million. That’s the biggest industrial deal so far this year, and one of the nation’s biggest real estate transactions overall thus far in 2022.

In March 2020, Macquarie’s U.S. real estate team acquired Brandon Woods III, a logistics portfolio in Baltimore’s Anne Arundel County, in the town of Glen Burnie, with two warehouse buildings totaling 840,000 square feet and 50 acres of developable land. The sale price for 7550 Perryman Court, with 500,000 square feet, and 7659 Solley Road, with 340,000 square feet, was $90 million.

At the time of the acquisition, the Perryman Court building was leased to Best Buy and the other was still under construction on a speculative basis, with no tenant signed up. That building was leased to Amazon within six months of the acquisition.

In the past 90 days, Macquarie Asset Management’s U.S. core real estate team has also acquired 375 Broadway, a fully leased mixed-use building in New York City’s SoHo neighborhood for $130 million,  as well as fully leased creative office buildings in Phoenix and Seattle.

Macquarie Asset Management’s real estate division is a global real estate investment business with an extensive network and capability across real estate investment management, asset management and direct investment.

Tuesday, February 8, 2022

Cescaphe's Joe Volpe buys building on Fairmount Avenue, fills it with events-related tenants

 By Natalie Kostelni  –  Reporter, Philadelphia Business Journal

Cescaphe founder and CEO Joe Volpe has purchased a warehouse at Fairmount Avenue and 10th Street in Philadelphia and is converting it into an extension of his event business.

Volpe paid $7 million for 920-942 Fairmount Ave., which consists of four connected warehouse buildings totaling about 35,000 square feet. The seller was an entity affiliated with Tracey Furniture.

When marketing the property, they initially targeted developers since the parcel totals about 50,000 square feet and is steps away from the Rail Park. When the reception from developers was tepid, they switched gears and began to focus on businesses that could use the existing structure.

“It’s a crazy, funny story as to how I got to that property,” Volpe said. “When we opened up Vie on Broad Street and moved our offices there, I bought 50 desks from the building.”

Volpe recalled thinking at the time, which was nearly 10 years ago, about how big the building was, what good condition it was in and made a mental note. When the property came up for sale, Volpe seized on the opportunity to buy it, attracted to its size, unobstructed floors and gated parking.

Three tenants in the events business are moving into the space. They are: Beautiful Blooms, a floral design company that did more than 800 weddings last year; Papertini, a boutique event design studio; and Delaware Valley School of Floral Design, which was established by Carl Schwartz of Carl Alan Floral Artistry.

The idea is essentially a one-stop shop for those planning a wedding or event. “A couple will be able to go there and pick out all of their needs. It will be really convenient,” Volpe said. “It’s going to be an awesome space.”

Full story:

Friday, February 4, 2022

Warehouse Loading Basics - What You Need to Know (Video)

Philadelphia Apartment Tower Trades for Market High of $233 Million

 By Linda Moss CoStar News

An apartment high-rise in Philadelphia has sold for $233 million in what's being touted as the largest single-building sale in the history of the city's multifamily market.

In its first acquisition in Philadelphia, private equity fund Fairstead of New York purchased 1500 Locust St., a 612-unit property, from Barings Real Estate Advisers, which is based in Hartford, Connecticut, according to the broker on the deal. The 45-story mixed-use building is located in the Rittenhouse Square area.

The transaction marks a new high for a multifamily sale of its kind in the City of Brotherly Love. It tops one in 2015, when 2116 Chestnut St. sold for $156.6 million, according to CoStar data.

In its most recent report on multifamily in Philadelphia, CoStar said investment volume remains about half of 2018-19 levels. But there's a silver lining.

"The most recent deals still show intense investor demand for large apartment properties and no significant decline in pricing as a result of the coronavirus crisis. In fact, most deals are showing significant gains in pricing compared to pre-pandemic levels. As was the case prior to the pandemic, New York and Lakewood, New Jersey-based buyers remain a leading source of investment into Philadelphia's apartment market."

Sales volume for U.S. multifamily properties totaled $78.7 billion during the third quarter, the largest quarterly sales figure on record as demand for multifamily properties continued to surge. The third-quarter volume marked a 31.4% increase from the prior quarter and a 192.1% year-over-year increase. For the 12 months ending with the third quarter, the greater Philadelphia area totaled $2.2 billion in multifamily sales volume.

The Locust Street property has 828,679 gross square feet, with 7,770 square feet of street-level retail and a 398-space parking garage. The tower features a mix of studio, one-, two- and three-bedroom units with an average unit size of 852 square feet. Its amenities include a resident lounge with a catering kitchen, a fitness center, a 10-seat theater room, a glass-enclosed heated rooftop swimming pool with retractable windows and a roof deck with private cabanas and grilling areas. The street-level retail is occupied by two full-service restaurants, Blume and Fado Irish Pub.

The high-rise, on the corner of 15th and Locust streets, is at the junction of three Center City neighborhoods — Rittenhouse Square, the Avenue of the Arts and the West Market Street office corridor.

Tuesday, February 1, 2022

How Economic Risk Factors Influence Commercial Real Estate (Video)

Equus Capital Partners closes nearly $1B industrial transaction

 Natalie Kostelni Reporter Philadelphia Business Journal

Equus Capital Partners Ltd. has closed on a nearly $1 billion acquisition of a portfolio of 75 buildings totaling 5.4 million square feet across several key industrial markets.

The Newtown Square real estate firm bought the buildings from Prologis Inc., and most of the properties – about 80% — were once owned by Liberty Property Trust, according to those familiar with the transaction. Prologis bought Liberty, which had been based in Malvern, in early 2020.

The Equus-Prologis deal, inked at a little more than $900 million, is the third billion-dollar deal Equus has completed in less than a year.

In October, it closed on the $1.15 billion acquisition of a portfolio of 74 buildings totaling about 7.3 million square feet in Phoenix and Tucson. Last spring, Equus was involved with AIG in a $1 billion recapitalization of an industrial portfolio.

When it came to the Arizona acquisition, referred to by the firm as the Pegasus Project, Equus tapped its $500 million value-add fund, Equus Investment Partnership XII L.P., as well as a $200 million separate co-investment it raised.

Full story: