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.

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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:

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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.

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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.

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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:

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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.