Wednesday, March 29, 2023

BioMérieux tripling Philadelphia footprint with first lease at new Navy Yard building

 Paul Schwedelson Reporter - Philadelphia Business Journal

Development of 1201 Normandy Place, a life sciences and lab building at the Navy Yard, is nearing completion. The 137,000-square-foot building is planned to open in June.

Fast-growing French biotechnology company bioMérieux has outgrown its space at the University City Science Center and will relocate into 32,000 square feet at a building under development at the Philadelphia Navy Yard. 

It’s the first lease signed for the new building at 1201 Normandy Place, a project scheduled to open in June. BioMérieux plans to move there in early 2024. The building is being developed by Ensemble Real Estate Investments and Mosaic Development Partners in partnership with Oxford Properties.

BioMérieux bought Philadelphia-based Invisible Sentinel in 2019 for $75 million. The new site will house Invisible Sentinel, a provider of DNA detection tools to protect against impurities in food, beer, wine and medical cannabis production.

“This is going to be a showcase for our company,” said Ben Pascal, bioMérieux’s global head of its xPRO Program and chief business officer of Invisible Sentinel

For now, there’s about 45 employees working out of Invisible Sentinel’s 10,000 square feet at the Science Center. The new space allows for the company’s significant growth to continue and for the company to add “quite a number of jobs over the next few years” in both biotech research and development and also in manufacturing, Pascal said. The lease is for 10 years, he said.

Since bioMérieux bought Invisible Sentinel, Pascal said Invisible Sentinel has seen "significant double-digit growth year over year" in both revenue and production volume. Space in its University City location had become tighter as the company increased its employees and operations, creating a need for what 1201 Normandy can provide.

“It’s beautiful. The space and the building we’re moving into is top of the line, state of the art,” Pascal said. “[It] can support our manufacturing operation, has the equipment, has the infrastructure.”

1201 Normandy is the first speculative multi-tenant research and development lab building at the Navy Yard in South Philadelphia. The 137,000-square-foot building is designed to be optimized for cell and gene therapy companies and able to accommodate all life sciences users.

Ensemble Managing Director Mark Seltzer said bioMérieux’s lease proves speculative life sciences development in the Navy Yard can be successful. BioMérieux is taking most of the second floor of the four-story building, which leaves about 100,000 square feet remaining. The Navy Yard is a 1,200-acre campus that's become a hub for life sciences companies. The team of Ensemble and Mosaic is developing part of the property with a $6 billion development plan scheduled to take place over the next two decades.

Invisible Sentinel was founded in 2006 in University City and Pascal said it was important to remain in Philadelphia. He’s found it beneficial to be in a life sciences hub like University City to be aware of new industry trends, innovations and in close proximity to similar companies and workers. Being in the Navy Yard could provide a similar experience near other life sciences companies. And a brand new building means more opportunities.

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Friday, March 17, 2023

Penn State puts two Philadelphia Navy Yard buildings up for sale

 Paul Schwedelson Reporter - Philadelphia Business Journal

Penn State's building at 1101 Kitty Hawk Ave. is up for sale. It was built in 2015 and has 26,709 square feet.

Penn State University has listed two Philadelphia Navy Yard buildings totaling 65,057 square feet for sale as the school relocates remaining offices at the locations elsewhere.

The buildings had been used for academic programming, research, startup incubator space and events. Those uses have already moved out while some administrative offices remain but will also eventually relocate.

Penn State spokesperson Wyatt DuBois said the school is selling the properties because they have been underused. Penn State is still planning where the administrative offices will move, he said.

The pair of two-story buildings for sale are at 4960 S. 12th St., also known as Building 661, and 1101 Kitty Hawk Ave., or Building 7R. The two buildings face each other with South 12th Street in between. League Island Park is just north of Building 7R and the Delaware River is two blocks to the south.They could be sold together or separately, said CBRE broker Robert Fahey, who has the listing.

Either way, Penn State is looking for a combined $20 million for the buildings, Fahey said.

Building 661 was built in 1942, renovated in 2014 and has 38,348 square feet. Building 7R was built in 2015 and has 26,709 square feet. Both are in a CMX-3 zone, which allows for office, life sciences, medical office, industrial, multifamily and retail. The two buildings will be fully vacant once sold.

“They’re both very adaptable to a series of potential uses that fit in very well in that innovation system that’s thriving in the Navy Yard,” Fahey said.

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Monday, March 13, 2023

Philadelphia Emerges as Top Mid-Atlantic Industrial Market in 2023

As of early 2023, Philadelphia is leading the Mid-Atlantic region in terms of industrial performance metrics, surpassing New York, Northern New Jersey, Washington D.C. and Boston. Philadelphia’s construction levels are now 400% above the three-year annual average before the pandemic. Driven by high market liquidity and e-commerce growth, industrial activity flourished throughout the country in recent years, particularly in areas near major ports, such as Philadelphia.

While fluctuating market conditions and increased construction expenses have led to a slowdown in financing and groundbreakings for some new projects, many that are already underway are continuing. Even though demand has softened, supply-side dynamics in early 2023 remain robust due to the delayed nature of real estate development.

The categories where Philadelphia has eclipsed other Mid-Atlantic markets include the most new industrial space added over the past 12 months, at 15.3 million square feet; the most new space under construction, at 27.7 million square feet; and the highest annual absorption volume, at 11.1 million square feet. Of the industrial property projects under construction in the Philadelphia region, approximately 25% have been pre-leased.

By comparison, New York, the second highest performer across the Mid-Atlantic, delivered 9 million square feet in the past 12 months, has 21.8 million square feet under construction and clocked in a negative annual absorption rate of -1.2 million square feet.

Philadelphia’s proximity to one of the largest ports in the country, the ports of New York and New Jersey, has positioned the metropolitan area to capture spillover demand from New York and Northern New Jersey. The port’s 25% increase in processing volumes from 2020 had temporarily elevated the port to become the country’s busiest in late-2022, further fueling strong industrial growth in nearby locales.

Philadelphia was equipped to attract occupiers seeking alternatives to New York and Northern New Jersey’s highly saturated, traffic-burdened and costlier markets. Operationally, the Philadelphia area can serve the country’s densest populations within a day’s drive at about half the rent expenses of New York and a steep discount to average industrial rents in Washington D.C., Northern New Jersey and Boston. These factors have geographically and economically positioned the Philadelphia area to capitalize on recent spillover demand. Additionally, Philadelphia's port is the largest refrigerated port in the country.

Burlington County in southern New Jersey has helped to significantly drive the Philadelphia area’s recent industrial real estate performance. This county alone accounts for 32% of Philadelphia’s inventory under construction, 36% of annual delivery, and nearly 50% of annual net absorption. When evaluating smaller locales across the U.S., Burlington County is among the top 10 highest-performing industrial submarkets among the 2,900 covered by CoStar. Cecil County and Gloucester County have also significantly contributed to Philadelphia’s overall industrial performance.

Philadelphia’s supply-side metrics are solid, but at the same time, it begs the question of whether demand is sufficient to absorb the immense amount of new space that will hit the market over the next couple of years. While 7 million square feet, or 25%, of developments under construction, have already been pre-leased, 31 million square feet remains available across existing industrial sites in the Philadelphia area. In a simplified snapshot, this results in 52 million square feet of available spaces actively looking for occupants.

It will be interesting to see if leasing momentum keeps up with the performance seen between 2020-22, which averaged 28.5 million square feet of space absorbed annually. At that rate, the numbers look manageable, even with moderately softened demand ahead.

Given Philadelphia’s recent absorption performance, strategic location and economic advantages mentioned earlier, it is a well-established contender to continue attracting retailers, manufacturers and third-party logistics companies over the short and long term.

by By Brenda Nguyen Costar

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