Wednesday, January 26, 2022

Hilco Secures $500 Million Loan for Philadelphia Oil Refinery Redevelopment

 PCCP has provided $500 million in financing to Hilco Redevelopment Partners for the multibillion-dollar redevelopment of the former Philadelphia Energy Solutions oil refinery.

The 1,300-acre South Philadelphia property, now called the Bellwether District, is set to be transformed into a state-of-the-art, 15 million-square-foot life science, e-commerce and logistics campus.

The borrower is a joint venture, led by operating partner Hilco Redevelopment Partners with co-investors, including Caisse de dépôt et placement du Québec, which acquired the property out of bankruptcy in 2020 for $225.5 million. The transformation of the former oil refinery includes the decommissioning of the refinery and significant demolition and remediation work, including the removal of roughly 30,000 tons of asbestos.

Redevelopment efforts initially began in June 2020 and substantial progress has been made to date. Site work and vertical construction are expected to commence this year with the first tenants expected to occupy buildings in 2023.

Once home to a 150-year-old oil refinery that produced 16% of all Philadelphia’s greenhouse gasses, Bellwether District is expected to become an economic engine for Philadelphia, supporting businesses, generating an estimated 19,000 permanent jobs, creating millions in tax revenue and preparing hundreds of students for their future careers through internship and apprenticeship programs, according to a press release announcing the financing for the project.

Novaya pays $50M for nearly 80 acres in Bucks County, sells Target-leased building in Upper Merion

By Natalie Kostelni  –  Reporter, Philadelphia Business Journal

Affiliates of Bruce E. Toll sold 79.5 acres of land in Langhorne for $50 million to Novaya Foxfield Industrial, a Boston real estate company that has been active in the Philadelphia area.

At the same time, Novaya Foxfield has moved on from the first property it acquired in the region, selling 900 River Road in Upper Merion as part of the disposition of that building and one in Georgia for a total of $142 million at the end of last year.

The building at 900 River Road traded for around $116 million, or roughly $350 a square foot, according to market sources. At that price, it exceeds 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 $265 million.

The Langhorne property was considered “underutilized” land of the Reedman Toll Auto World, said Michael Markman, president of BET Investments Inc., which is Bruce E. Toll’s real estate company. A total of 37 parcels along Lincoln Highway, Old Lincoln Highway and Virginia Avenue were sold in two separate transactions, according to Bucks County property records. 

The land comprising Reedman Toll at 1700 Lincoln Highway was retained and the auto dealership continues to operate business as usual, Markman said.

Full story:

What Makes A Great Industrial Real Estate Investment? (Video)

Where and How to Invest in U.S. Real Estate (Video)

Traditional Retailers, Not Pure E-Commerce Sellers, Led to Record Large Warehouse Leases

 By Linda Moss CoStar News

Big warehouse leases hit a record last year, driven by not only e-commerce but traditional retailers as the economy rebounded and the boom in the U.S. industrial market forged ahead.

Companies committed to 57 warehouse leases of 1 million square feet or larger in 2021, a 19% increase from 2020. By market, Chicago led the list with the greatest number of the top 100 lease transactions, at 12, representing 12 million square feet.

The company looked at the increase in mega-warehouse leases as part of its analysis of the 100 largest U.S. industrial and logistics leases last year. It found among those 100 leases the average 2021 transaction size increased to 1,053,000 square feet, slightly above 2020’s average of 1,038,183 square feet. 

The industrial market overall is so strong that the demand has been outstripping supply, with record-low vacancy rates and rents soaring. While e-commerce and juggernauts such as Amazon have fueled a lot of logistics demand in the past, CBRE instead found general retail and wholesale dominated 2021’s largest industrial leases. General retail sales have been rising after the peak of the pandemic in 2020, and they increased about 14% this holiday season, with shoppers returning to stores and malls. On top of that, even traditional retailers need more warehouse space to hold merchandise to fulfill their online orders.

“The trend of broad industrial demand by a variety of industries is expected to continue this year, as strong retail sales and the need to hold more inventory close to consumer markets is expected to increase the average transaction size. A possible headwind to this forecast is a dwindling supply of mega facilities, especially in core markets such as central New Jersey with little land available for development.”

The industry making up the largest share of the 100 biggest leases was general retail and wholesale, which recorded 44 transactions for 46.1 million square feet. That was a significant increase from 2020, when that sector had 32 such leases, representing 35 million square feet. E-commerce-only occupiers, last year’s leader, were second at 21 deals, for 27 million square feet, followed by food-and-beverage users at 15 deals, for 14.2 million square feet.

The brokerage’s study was notable in “that only one quarter of the deals were signed by e-commerce-only firms,” Adrian Ponsen, CoStar’s director of U.S. industrial analytics, said in an email.

“This is a sign that the recent surge in industrial leasing isn’t just about households shopping online more during the pandemic, it is also about financially healthy U.S. consumers that are spending more across a broad range of brick-and-mortar retail categories."

Pennsylvania Is a Leader

The Pennsylvania Interstate 78/81 corridor — an area that includes Lehigh Valley — was just behind Chicago in terms of the greatest number of the top 100 transactions, with 11. But that area of the Keystone State racked up the most square feet, at 12.4 million.

“One thing that stands out from the report is that thanks to its optimal location within a half day’s drive of the largest cluster of purchasing power in the U.S., Pennsylvania’s I-78/I-81 corridor continues to garner an outsized share of leases. It registered a comparable number of top 100 leases to what Chicago and Dallas-Fort Worth tallied, despite having an industrial inventory that is only about two-thirds the size of those other major markets.”

Scranton, Lehigh Valley and Harrisburg are the major logistics hubs on Interstates 78 and 81, “but many smaller ones are popping up along those highways,” according to Ponsen.

As industrial space has tightened in north and central Jersey, developers have been going over the border to Pennsylvania to build massive distribution hubs. Land is more available and cheaper there than in the Garden State, driving a surge in construction.

The company also found that California’s Inland Empire posted 10 large transactions. And Greenville-Spartanburg, South Carolina, a fast-growing Southeast market, made the top 10 for the first time, according to the brokerage.

The complete list of the top leading markets in terms of warehouse leases, by number of transactions and square feet, is:

  • Chicago, 12 leases, 12 million square feet.
  • Pennsylvania’s Interstate 78/81 Corridor, 11 leases, 12.4 million square feet.
  • California's Inland Empire, 10 leases, 10.2 million square feet.
  • Dallas-Fort Worth, nine leases, 8.6 million square feet.
  • Atlanta, eight leases, 8.4 million square feet.
  • Indianapolis, six leases, 5.5 million square feet.
  • Phoenix, five leases, 6 million square feet.
  • Columbus, Ohio, five leases, 5 million square feet.
  • Central Jersey, five leases, 4.6 million square feet.
  • Greenville-Spartanburg, South Carolina, three leases, 2.7 million square feet.

Wednesday, January 19, 2022

Office Real Estate Investors Will Bypass Primary Markets in 2022

By Lynn Pollack

Despite a relatively strong end to the fourth quarter, office investors are still likely to remain on the sidelines in primary markets as rent remains flat and outpaced by inflation and high borrowing costs.

A new analysis from research economist Scholastica Cororaton of the National Association of Realtors predicts that secondary office markets will continue to drive demand in 2022 as they did last year. The fourth quarter saw 14.5 million square feet in absorption, an improvement over Q3’s 5.6 MSF. But “given the massive amount of space given up during 2020 Q2 through 2021 Q2, office occupancy is still down by 117.8 million square feet as of 2021 Q4,” she says. 

Citing CoStar data, Cororaton notes that “secondary markets drove the absorption of office space in the second half of 2021,” led by Atlanta (3.3 MSF), Austin (2 MSF), San Jose (2 MSF), Dallas-Fort Worth (1.9 MSF), Houston (1.3 MSF), Seattle (1.3 MSF), Palm Beach (1.1 MSF), and Nashville (1 MSF). 

By contrast, Chicago, New York, and Washington D.C. all showed losses in office space occupancy. Notwithstanding a relatively improved second half of the year, 117. 8 MSF of office space remains unoccupied, with at least 10 MSF of office space released to the market since 2020 Q2 across New York (-29 MSF), Los Angeles (-10.5 MSF), Washington, D.C. (-10.2 MSF), San Francisco (-9 MSF), Chicago (-8.2 MSF), and Boston (-5 MSF).

“The office market will continue to see significant headwinds in 2022 arising from the impact of inflation on investor office acquisitions and the effect of the omicron variant on office re-entry,” Cororaton writes. “The high inflation rate is likely to have an impact on office acquisitions in metro areas that are suffering large office vacancy rates, which are mainly the major office markets. With inflation currently hovering at 7%, with construction costs up 15%, and with a tight labor market with wage growth hovering at 4.5%, investors are facing negative real returns. Rents are not likely to rise on pace with inflation in the primary major markets of New York, Chicago, Washington, D.C., Los Angeles, and San Francisco given the large vacancy rate in these markets. So, expect investors to remain on the sidelines in these markets.”

That aligns with reports from late last year, which pointed to suburban assets continuing to be the focus of investor favor. Buyers socked more than $25 billion into these properties in the third quarter alone, while just $9.6 billion was allocated to CBD locations. Boston was the most active city for office investment in the first three quarters of the year, according to Colliers,  with $8.5 billion of sales closed. San Jose and Seattle followed behind at $4.9 billion and $4.8 billion, respectively.

The Industrial Real Estate Market: Be Prepared For 2022 w/ Dr. Peter Linneman (Video)

Dermody Properties to Redevelop 342K-SF Warehouse in York, PA

 By Ingrid Tunberg

Privately-owned real estate investment, development and management firm, Dermody Properties has acquired 29.5 acres of land in York, PA.  The company plans to redevelop the former Glen-Gery manufacturing site into a 342,720-square-foot warehouse.

The state-of-the-art warehouse will be known as LogistiCenter, which is a nationally-trademarked brand owned and developed by Dermody Properties. The LogistiCenter brand represents the firm’s philosophy of developing class A distribution and logistics facilities that meet supply-chain requirements for companies.

Dermody Properties originally acquired the property in April 2021 from Glen-Gery Corp., which has occupied the site for more than 50 years. Glen-Gery Corp. will lease back the facility for two years, until development on the LogistiCenter begins.

Located one mile away from the new Interstate 83 interchange, the property is situated within the industrial region of Spring Garden Township. The site is zoned for warehouse development and Dermody Properties also plans to complete roadwork improvements to the adjoining intersection.

“This is a rare opportunity to build a new warehouse in an infill location with access to a newly constructed interchange,” says Robert Borny, East region partner at Dermody Properties. “The York submarket continues to be one of the best-performing submarkets in Central Pennsylvania.”

“Though redevelopment of the site will not happen for some time, industrial vacancies are expected to remain minimal for several years as consumers continue to respond to e-commerce trends,” says Tim Walsh, partner and chief investment officer at Dermody Properties. “We appreciate the opportunity to work with Glen-Gery on the acquisition of this project and look forward to being able to offer it to our customers.”

Tuesday, January 18, 2022

National Coatings & Supplies, Inc. Signs a Long Term Lease in Reading, PA

 National Coatings & Supplies, Inc. (“NCS”) at signed a 119,537 SF lease at Berks 222, Building A, located in Reading, PA.  The lease with NCS kicks off leasing at the recently developed two building, Class A 327,000 square foot park.

“A key to our growth is working with proven partners like Endurance that can deliver differentiated solutions” stated Bruce Cuthbertson, Chief Operating Officer of NCS.  “This distribution center provides an excellent operational backbone and enables NCS to successfully meet the unique needs of our expanding customer base.”

 Berks 222 Industrial Center is a newly constructed two building industrial complex which features 32’ clear heights, LED lighting and ESFR sprinkler systems in both buildings. The Property is also the recipient of a full 10-year LERTA.  The Property is located minutes from Routes 61, 222, 22, 422 and Interstates 78 and 76, placing over 44 million people within a four-hour drive of the property and over one third of the total US population within a day’s drive. Building B has a 46,460 SF suite that is available. Building A has 160,212 SF available.

Cost Segregation Made Simple (Video)

Thursday, January 13, 2022

Realty Resource Capital Corp. Snags Bucks County Shopping Center for $22.5 Million

 Realty Resource Capital Corp. has purchased Warrington Plaza, a fully occupied shopping center in Warrington, Pennsylvania, for $22.5 million.

The Woodbury, New York-based real estate investment and commercial financing firm acquired the shopping center from Valley Forge Investment Corp.

Located at the intersection of Street and Easton roads, two of the busiest commercial arteries in Bucks County, Warrington Plaza totals 87,581 square feet and is anchored by a 35,000-square-foot regional specialty home improvement retailer Avalon Floor & Tile.

"The property was resilient during COVID, retaining 100% of its existing tenants while also getting anchor tenants Avalon and Rite Aid to sign long-term leases. Warrington is one of Avalon's highest-grossing locations of the 17 stores in the chain."

Wednesday, January 12, 2022

Rihanna Brand Savage X Fenty To Open Five Stores Including Philadelphia

 By Linda Moss CoStar News

In another endorsement of brick-and-mortar retail, singer-entrepreneur Rihanna is opening five stores for her lingerie line, kicking off with Las Vegas later this month.

The beauty-and-fashion tycoon, who was deemed a billionaire by Forbes last year, plans to open Savage X Fenty stores in Los Angeles, Houston, Philadelphia and Washington, D.C., as well as Nevada’s gambling capital.

Rihanna, whose full name is Robyn Rihanna Fenty, announced the news on her Instagram account but didn’t disclose exactly where the store sites will be. Savage X Fenty is the latest digital-native company — a group that ranges form e-commerce giant Amazon to eyewear maker Warby Parker and footwear seller Allbirds — that has opted to debut physical stores as a way to expand its reach and market share.

“On the heels of the brand’s incredible growth since first launching in 2018, this new direct-to-consumer experience is the next step to bringing a fuller expression of the brand to consumers in key markets,” Savage X Fenty said in a statement to the media on the planned stores.

The company made waves by being the antithesis of mall staple Victoria’s Secret. Instead of promoting and doing marketing featuring what critics have called unrealistically slim models, the so-called Victoria's Secret Angels, Rihanna's collection sells intimate apparel online for women of all sizes, with her marketing including images of women of all body types. It offers sizes from 30A to 42H in bras and extra small to 3X in underwear and sleepwear.

With young women abandoning structured push-up bras for more comfortable lingerie such as bralets, and some women bristling at conventional wisdom of what they should look like, Reynoldsburg, Ohio-based Victoria’s Secret struggled and eventually retooled its marketing efforts. The retailer still has a formidable brick-and-mortar presence, with roughly 1,400 stores globally. The chain was spun off from L Brands last August and just posted a strong holiday season.

‘Coming in Hot’

Regarding her planned stores, on Instagram Rihanna posted that in “2022, we coming in HOT! we bout to bring you a whole new #SavageXFenty experience with the launch of our brick-and-mortar retailer stores!”

A rendering on Instagram depicts the Savage X Fenty store has having bright blue, red and yellow colors.

And under “stores locations,” Savage X Fenty’s website now says, “The Wait Is Almost Over. Check back here for more details.”

Savage X Fenty is based at 2150 Park Place in El Segundo, California, according to CoStar data.

Last October, a Savage X Fenty marketing chief first disclosed to Bloomberg News that the brand would be opening up physical stores in 2022.

While Rihanna, a pop icon, has had much success with her cosmetics line, Fenty Beauty, her partner luxury conglomerate LVMH — parent of brands such as Louis Vuitton, Chanel, Hermès and Gucci — put a hold on plans to launch a Fenty luxury apparel line in February last year.

Also that month, Savage X Fenty completed a $115 million Series B fundraising round to support its growth, an infusion led by the growth fund of L Catterton, the largest global consumer-focused private-equity firm, with participation from existing investors such as Marcy Venture Partners and Avenir. L Catterton is controlled by Bernard Arnault, LVMH’s CEO.

Last year, Jon Owsley, co-managing partner of L Catterton’s growth fund, in a statement said Savage X Fenty in just a couple of years had achieved remarkable success by disrupting the intimates category.

“The brand strikes a unique balance between affordability, fashion, and comfort, stands deeply for inclusivity and diversity, and has differentiated itself by building an extraordinary level of affinity and unmatched customer loyalty,” he said. “We believe the opportunities ahead for Savage X Fenty are enormous.”

Last August, Forbes identified Rihanna as the wealthiest female musician in the world, and ranking No. 2 behind Oprah Winfrey as the richest female entertainer. It estimated her wealth as $1.7 billion, with $1.4 billion from the value of Fenty Beauty and $270 million from Savage X Fenty.

Monday, January 10, 2022

TA Realty Buys Fully Leased South Jersey Industrial Facility

 By Rachel Whaley CoStar Research

TA Realty has purchased a newly built industrial facility at 1950 River Road in Florence, New Jersey, on a forward basis from Carson Cos., which developed the property.

The 486,812-square-foot Burlington County warehouse was completed this year and was fully leased leased to LC Logistics Services at the time of the sale. Financial terms of the sale were not disclosed.

LC Logistics was attracted to the facility, which is located adjacent to the New Jersey Turnpike and the Delaware River, due to its "best in class building specifications, robust parking capacity and ideal logistics dynamics," according to Lee & Associates, which brokered both the sale and LC Logistics' lease agreement. LC Logistics' 10-year lease term is valued at over $47 million.

“Burlington County is one of the most desirable locations for industrial development throughout the Northeast Corridor due to its proximity to both the New York City and Philadelphia metropolitan areas. In addition, the need for Class A distribution space that can conveniently service large consumer bases has been significantly magnified as shopping habits have shifted online with staggering growth."

P.J. Whelihan’s Restaurant Chain Acquired by New York Investment Firm

 By Linda Moss CoStar News

A Southern New Jersey restaurant chain, the owner of P.J. Whelihan’s Pub + Restaurant, has been acquired by a New York City investment firm.

PJW Restaurant Group, based in Westmont, New Jersey, was purchased by Garnett Station Partners. Financial terms of the deal weren’t disclosed.

But the buyer said it will recapitalize and provide growth capital for PJW, which owns 26 restaurants with six different dining concepts throughout New Jersey and Pennsylvania. Those include its namesake P.J. Whelihan’s, The PourHouse, a high-end gastro-pub, The Chophouse, a high-end steakhouse, The Chophouse Grille, a casual steakhouse, Treno, a casual Italian-and-pizza concept, and Central, a taco-and-tequila bar.

PJW was Founded in 1983 by Bob Platzer, with the help of his wife, Donna. His first restaurant, Platz’s, eventually became a P.J. Whelihan’s.

Matt Perelman, co-founder and managing partner at Garnett Station, described P.J. Whelican’s as an an iconic brand in one of America’s biggest sports markets.

“Over the last three years, we’ve worked closely with Bob and (CEO) Jim (Fris) to thoughtfully develop a strategic growth plan to extend the P.J. Whelihan’s magic to additional communities in New Jersey and Pennsylvania,” Perelman said in a statement. “We are grateful to Bob and Jim for the opportunity to further invest in this incredible brand.”

Garnett has investments in a number of restaurant companies, including Burger King, Popeyes Louisiana Kitchen, Mambo Seafood and Twin Peaks.

Friday, January 7, 2022

LBA Realty Pays $28 Million for Northeast Philadelphia Amazon Facility

 By Carlos Likins CoStar News

LBA Realty has purchased a newly renovated distribution facility leased by Amazon for $27.95 million, or about $283 per square foot.

The California-based investment firm acquired the facility from SBG Real Estate, which initiated the renovation of the property. SBG Real Estate originally paid $8.5 million for the facility in May 2020.

Located at 700 Ramona Ave., the 98,652-square-foot facility sits on 17.5 acres of industrial land in Northeast Philadelphia and provides parking capacity for 352 delivery vans. Amazon's lease encompasses both the building and parking areas as the need for vehicular storage is needed for same-day delivery operations. Amazon's 10-year lease commitment is valued at nearly $12 million.

Amazon's parking requirements pushed the developer to forgo renovations to a second building and instead raze the existing facility to provide for the heavy parking requirement. The facility adds to a growing number of facilities Amazon operates in Philadelphia.

"The site's inner-city location in conjunction with Amazon's tenancy attracted widespread interest to the opportunity."

Wednesday, January 5, 2022

Office Property Values Today (Video)

The Outlook For REITs And Commercial Real Estate (Video)

New York Investor Pays $24.4 Million for Harrisburg-Area Distribution Facility

 Brickman has purchased a fully leased distribution facility in the West Shore of Harrisburg, Pennsylvania, for $24.4 million.

The New York-based real estate investor and operator acquired the 254,449-square-foot warehouse from a wholly owned subsidiary of a private real estate investment fund managed by West Hartford, Connecticut-based Penwood Real Estate Investment Management. Penwood originally paid $15.55 million for the facility in 2017.

Located at 301 Railroad Ave., the distribution facility is fully occupied by four tenants and features a 24-foot clear height, 27 dock-high doors, two drive-in doors, ESFR fire protection and ample parking. The facility was originally built in 1963 and expanded in 1972. It received upgrades and renovations between 2018 and 2020 to modernize the facility.

"The location, functionality and in-place cash flow attracted strong interest from a variety of investors," Plower said in a statement. "The property is well situated within the coveted west shore pocket of Harrisburg providing access to an abundant labor force and impressive distribution network."

Suburbs have become popular for office destinations (Video)