Tuesday, December 27, 2022

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

 By Javon Roach CoStar Research

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

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

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

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

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

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

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

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


Wednesday, December 21, 2022

Chubb Plans New Philadelphia Office Headquarters

By Mark Heschmeyer CoStar News

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

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

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

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

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

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

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

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


Friday, December 16, 2022

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


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

 Paul Schwedelson Reporter Philadelphia Business Journal

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

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

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

Alterra declined to comment on 1701 Market.

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

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

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

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

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

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

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


Velocity Venture Partners buys Delco industrial building for $41.8 million

 Paul Schwedelson Reporter Philadelphia Business Journal

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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