Monday, April 22, 2024

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Law Firms Cutting Space, Philadelphia Office Market is getting Hammered

By Jeff Blumenthal – Senior Reporter, Philadelphia Business Journal

Since the onset of the Covid-19 pandemic, Philadelphia’s largest law firms have been on a downsizing tear in Center City.

Blank Rome cut 41% of its office space at One Logan Square, Stradley Ronon Stevens & Young trimmed 25% off its space at One Commerce Square, and Dechert lopped off 43% at Cira Centre.

Morgan Lewis & Bockius reduced its footprint by 29% in the move to its new headquarters at 2222 Market St., Rawle & Henderson trimmed 48% when it relocated from the Widener Building to 1500 Market, and BakerHostetler sawed off 44% after relocating from Cira Centre to 1735 Market.

Post & Schell recently reduced its office space by 40% when relocating to Three Logan Square, and Fox Rothschild is up next with plans to chop off 41% in a move to Two Commerce Square later this year.

Those eight law firms will have cut their combined Center City footprint by almost 500,000 square feet, taking 36% less space in new lease agreements, according to data. An additional 1.9 million square feet occupied by 13 other law firms across Center City will come up for renewal by 2032, with most of those firms assuredly taking significantly less space in their new leases.

Being that law firms are among the largest, if not the largest, consumers of Center City office space, there is a question about how this accelerated move toward efficiency will impact both the legal industry and an already shaky office market.

Tony Rossi, head of the Philadelphia law firm practice at CBRE, said much of the movement is motivated by a perceived flight to higher quality, often newer buildings that are more adaptable to modern law firm space. For example, had Fox Rothschild chosen to stay at its longtime home at 2000 Market St. instead of relocating to 2001 Market, he said it would have required completely gutting what had become outdated space and that would have caused a major disruption to work. With that construction being done in stages by necessity, it would have added 25% to 30% to costs.

“There’s an incentive to relocate at that point,” Rossi said. “When it’s 25- to 30-year-old space, it’s just not going to be efficient and it’s going to be very dated. And for firms right now, I would say their biggest priority when they’re looking at their real estate is the attraction and retention of attorneys.”

Thanksgiving Day problem

Law firms are trying to remain competitive both in how they consume office space and recruit and retain talent by making the space as compelling as possible. Real estate is the second largest line item expense behind personnel. Existing strategies to cut space due to technology eliminating the need for paper files, law libraries and large pools of administrative assistants has been accelerated by the post-pandemic hybrid work arrangements.

Most firms say they expect lawyers and staff to work from the office three days a week. Few are actually enforcing those policies — meaning there are no ramifications for those not complying. As a result, firms need to make their space both compelling and cost-effective.

Midsize and large full-service firms are focused on driving their space-per-lawyer ratio to 500 to 550 square feet, compared to 650 to 750 square feet per lawyer a decade ago and roughly 750 to 850 square feet in the early 2000s. Much of that has come from changing to single-size lawyer offices, which Blumenfeld said gives them a 10% to 15% gain in space efficiency. The interior of floor plans that were once filled with secretarial stations, paper storage areas and word processing departments is now available for other uses, creating an inefficiency that Blumenfeld said has partly resolved by moving offices for professional staff and even some lawyers to the interior. That is a revolutionary idea for law firms that traditionally set their space needs by counting the number of lawyers with the available windows in an office.

“It took a couple of firms to do it first, because no one wants to be the first firm to put associates inside. But now it’s becoming more common.”

Full story:

Friday, April 19, 2024

High-Profile Philadelphia Office Tower Faces Deepening Vacancy Woes With Tenant Exodus

By Katie Burke CoStar News

An iconic downtown Philadelphia office tower is bracing for the loss of another anchor tenant with a law firm's plans to ditch its 111,000-square-foot space and relocate elsewhere in the city.

Saul Ewing, which has been based in the Centre Square complex at 1500 Market St. for half a century and is the property's fourth-largest tenant, confirmed it would be leaving its multifloor space at the property within the next couple of years as it prepares to move to another office tower just a couple blocks away. The decision will help align the company's space to meet the needs of its hybrid work policy, a spokesperson with the law firm said in a statement, adding it plans to make the shift sometime in 2026.

The firm's relocation means it will considerably shrink its corporate footprint in the city. Saul Ewing leased about 53,330 square feet for its future office at 1735 Market St., according to an Avison Young market report, roughly half of its existing headquarters space in Centre Square. The company's post-pandemic work policy allows most of its lawyers to commute to an office every Wednesday and four other days each month, a plan it has maintained since 2022 that "encourages" employees to venture into physical space but doesn't formally mandate it.

The move coincides with an ongoing trend across the national office market in which companies are adjusting, and often dramatically downsizing, their real estate portfolios to adapt to the declining use of their physical spaces. While there are companies still signing deals, they are now typically for smaller spaces in nicer properties.

Tenants collectively signed on for about 395 million square feet last year, according to CoStar data, about 13% below the annual average reported in the years leading up to the pandemic's 2020 outbreak. What's more, those deals are about 16% smaller on average than those signed between 2015 and 2019, exacerbating the vacancy challenges and onslaught of available space littered across the country's largest office markets.

The looming Saul Ewing vacancy is the latest blow for the two-building Centre Square complex, which spans more than 2.2 million square feet and — without factoring in Saul Ewing's pending relocation — is now less than 70% occupied, according to CoStar data. It fell into receivership a year ago when landlords Nightingale Properties and Wafra Capital Partners failed to pay off a $368 million loan.

The owners acquired the Market Street properties as part of a $328 million portfolio deal that closed in mid-2017. Wafra at the time was named InterVest Capital Partners.

The departure extends a string of other occupancy losses the Centre Square complex has faced in recent months. Dilworth Paxson, another law firm, is expected to relocate from its 83,100-square-foot office to about 50,000 square feet at One Liberty Place. Conrad O’Brien last November opted not to renew its lease for 40,000 square feet of Centre Square space, instead consolidating its Philadelphia office footprint as a result of a merger with fellow law firm Clark Hill.

Those departures compounded large vacancies by international insurance company Willis Towers Watson, investment management company Berwind and Comcast, which combined ditched more than 380,000 square feet from mid-2020 to August 2021.

Neither Nightingale Properties nor Wafra Capital Partners responded to CoStar News' emailed requests for comment.

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Tuesday, April 16, 2024

Philadelphia’s Multifamily Development Boom Starts To Cool


By Brenda Nguyen Costar

Philadelphia's apartment boom is cooling down after a record-breaking period of construction. As the spring leasing season kicks off, the number of new units under construction has shrunk by more than 30% compared to the peak in late 2022. This downshift reflects developers' and lenders' more cautious approach amid elevated interest rates, slowing rent growth and increasing supply-driven vacancies.

However, the recent pullback is not a complete halt. Current construction levels are still above the region's 10-year quarterly average of 12,800 units. While fewer new projects have broken ground in recent quarters, Philadelphia’s ongoing apartment development pipeline remains robust.

Between now and mid-2025, the region can expect between 2,000 and 3,000 units to be completed each quarter, with the majority located within the City of Philadelphia. The total in 2024 is expected to be the second-highest year of project completions, following last year's record, which will combine to produce plentiful new options in the market for renters.

Greater Center City continues to be a focal point for apartment development, boasting the region's largest multifamily project. Tower Investments' 1,111-unit cornerstone development, encompassing an entire city block just 12 blocks from City Hall, accounts for 6.5% of the region's units under construction. This mega-development ranks as the 11th largest ongoing apartment project across the U.S.

Beyond the city limits, Philadelphia suburban areas are also experiencing growth, albeit at a much slower pace. Cornerstone Tracy's 614-unit project at Oxford Valley Mall in Langhorne stands as the largest suburban development currently underway.

On the horizon, at least 17,200 units across 99 projects are in the proposal stage. Construction starts could pick up as interest rates stabilize, market confidence strengthens, and the surplus of units is absorbed. In the meantime, construction levels are rebalancing toward long-term market trends.

Thursday, April 11, 2024

Philadelphia’s Urban-to-Suburban Migration Hits a Three-Year Streak

By Brenda Nguyen Costar

The latest U.S. Census Bureau data reveals demographic shifts within the Philadelphia-Camden-Wilmington metropolitan area. While the overall region added more than 3,400 new residents between July 2022 and July 2023, closer analysis uncovers an urban-to-suburban migration trend.

Despite overall regional growth, the City of Philadelphia experienced another year of a shrinking population. The city's population declined by 1% in 2023, translating to roughly 16,300 residents for the third consecutive year, returning its population of 1.55 million to 2012 levels. This trend mirrors national population trends, reflecting a pandemic-induced migration from major urban centers such as New York City, Los Angeles, and Chicago.

While not exclusive to Philadelphia, a significant portion of former Pennsylvanians have relocated to other states such as Florida, New Jersey, New York, Virginia, and California.

Regionally, this urban out-migration has been offset by robust growth in the surrounding suburbs. The South New Jersey suburbs saw the most significant in-migration totals. Collectively they saw a 0.5% population growth in 2023, followed by Philadelphia's Pennsylvania suburbs at 0.3% growth. This suggests a growing preference for suburban living, driven by factors such as the cost of living, increased space, public safety, and the evolving work-from-home landscape.

Specific suburban counties showed particularly strong growth. Montgomery County in Pennsylvania led the region in adding nearly 3,700 new residents, reflecting a 0.4% increase. New Castle County in Delaware followed closely behind, welcoming over 3,330 new residents—a solid 0.6% year-over-year growth.

As a growing number of residents are opting for suburban life over urban living, the suburbs will continue to appeal to businesses, developers, and investors. This trend has already played out, as the suburbs have already seen stronger rent performance across all property types except offices in recent years.

Monday, April 1, 2024

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Former GSK office building in Navy Yard set for sheriff's sale to satisfy $78M foreclosure judgment

By Paul Schwedelson – Reporter, Philadelphia Business Journal
One of the Philadelphia Navy Yard's signature office properties is scheduled to be sold at a sheriff’s sale in June.

Hailed for ushering in a new era of workspaces when it was built for pharmaceutical giant GlaxoSmithKline a little more than a decade ago, the building at 5 Crescent Drive is now mired in foreclosure procedures over its owner's unpaid $85 million mortgage on the property.

The 207,779-square-foot office building will go up for public auction on the online platform Bid4Assets on June 4 to satisfy a foreclosure judgment against owner Korea Investment Management Co. Ltd., according to documents filed with the Court of Common Pleas in Philadelphia.
The building has been vacant since early 2022, when GSK downsized and relocated its offices to the FMC Tower in University City. GSK (NYSE: GSK) continues to pay rent on the Navy Yard space despite no longer occupying the building. The company's 15.5-year lease on the entirety of 5 Crescent Drive, which was custom-built for the Big Pharma firm by developer Liberty Property Trust, does not expire until September 2028.

Korea Investment Management bought the building from Liberty Property Trust for $130.5 million in May 2018, with the price of $628 per square foot setting a record for Philadelphia office sales. The company's $85 million loan on the building was originated by Goldman Sachs the same month, and the debt was subsequently converted into a commercial mortgage-backed security (CMBS) and sold to investors.

Developer hopes planned 150,000-SF Northeast Philadelphia warehouse hits ‘sweet spot’

By Paul Schwedelson – Reporter, Philadelphia Business Journal

Crow Holdings Development has bought a 14.4-acre Northeast Philadelphia site for $8 million with plans to develop a 150,000-square-foot industrial building.

The Dallas real estate investment firm bought the site at 14515 McNulty Road from Philadelphia Authority for Industrial Development, a subsidiary of the quasi-public Philadelphia Industrial Development Corp.

Since most new industrial warehouses tend to be 300,000 square feet or larger, Crow Holdings Development Senior Managing Director Clark Machemer said he sees opportunity in a building with a smaller footprint at the site.

“You’re going to start to see some larger projects being delivered and soon to be delivered, which gets back to our thesis of the building size,” Machemer said. “We really find it attractive and feel like it’s a sweet spot in the market.”

While the building is being built speculatively without a tenant, Machemer said Crow Holdings has already had preliminary conversations with prospective tenants. That’s ahead of schedule since typically those conversations wouldn’t happen until walls of the building are constructed.

Crow Holdings came up with 150,000 square feet since it’s the largest size that could fit on the site, but Machemer believes the early tenant interest reflects how desirable a new building of this size could be.

In the fourth quarter of 2023, the vacancy rate of industrial properties in the Philadelphia market rose to 7.7%, according to brokerage firm CBRE. After staying below 4% from late 2020 through 2022, the vacancy rate of industrial properties has been rising as new buildings are completed and supply increases.

“When you go ahead and make that investment, you’re making a bet,” Machemer said. “We liked the bet of a building of that size.”

The building is being designed to fit two tenants if needed but Machemer said it’s more likely that one tenant would lease the entire building.

Including the $8 million land cost, Machemer estimated the project will cost between $35 million and $40 million. Site work began last week and the development is expected to take around a year to complete with a planned spring 2025 delivery date.

“The capital markets have been in disarray for the last 18 months. They’re starting to stabilize,” Machemer said. “A building of this size is attractive to lenders out in the market. Some of it was luck that when we went to capitalize the project, it was of the right size given the check is a little smaller than if you were doing a half-a-million or a million-square-foot building.”

The site sits south of I-276 between I-95 and Route 1 near the border between Philadelphia and Bensalem. The proximity to I-95 and nearby highways that access the Northeast corridor attracted Crow Holdings, Machemer said. The property is also in a business park, another perk, Machemer said, since trucks don’t need to drive through residential neighborhoods.

Nearby, New York-based Rockefeller Group and Los Angeles-based PCCP partnered to buy the 50-acre former Byberry State Hospital site at 15000 Roosevelt Blvd. for $44.8 million from Philadelphia Authority for Industrial Development in December. The joint venture plans to build two warehouses totaling 656,904 square feet.

Full story:

BioTechnique Expands Manufacturing Operations in Central Pennsylvania

By Sam Bixler, Costar 

BioTechnique, a contract manufacturing organization that provides sterile injectable products and packaging services for liquid and lyophilized, or freeze-dried vaccines and medications. signed a lease to occupy a warehouse in the Orchard Business Park in York, Pennsylvania, owned by locally based Kinsley Properties.

The pharmaceutical manufacturing firm will occupy the entire 111,367-square-foot facility at 625 Willow Springs Lane situated just off I-83 north of York. The firm is currently located at 250 Cross Farm Lane in the Greenspring Industrial Park.

Thursday, March 28, 2024

Philadelphia’s Suburban Office Struggles Pre-Date the Pandemic

By Brenda Nguyen Costar Research
Philadelphia's office market has in some ways become a tale of two cities, highlighting challenges that preceded the pandemic and those that followed.

The Philadelphia suburbs have grappled with high office availability rates for over a decade, well above the historical regional average. For them, a large amount of available office space is standard operating procedure.

However, the large amount of available office space comes as a shock to Philadelphia’s central business district. Center City, which had previously maintained the region's lowest availability rate, now leads the Philadelphia region in office availability with an 18.1% availability rate, translating to 12.1 million square feet of office space for lease. Meanwhile, the suburbs, which encompass a significantly larger geography—recorded a 16.6% availability rate, which translates to 23.2 million square feet on the market.

Signs of softening demand in the office market first surfaced over a decade ago. Philadelphia’s lowest recorded availability rate of 10.8% occurred in 2007, the year before the Great Financial Crisis. Since then, Philadelphia’s office availability has never dropped below that marker.

The office surplus has been evident in Philadelphia's historically high office availability rates. Over the past two decades, the availability rate for office space has consistently exceeded those of multifamily, industrial, and even retail properties.

Philadelphia’s structural office issue is rooted in the 1980s, a record year of office development locally and nationally. As of 2024, 1980s buildings comprise 22% of existing office space, while offices built between 1960 and 2009 comprise 65%.

The area's aging office inventory presents a challenge. Without modernization efforts, a growing number of buildings risk obsolescence. Furthermore, financing hurdles, structural limitations, and investor risk aversion hinder large-scale renovations or repurposing efforts in 2024, leaving the office market in flux.

Looking ahead, both Center City and the suburbs face a wave of expiring office leases. Over 2.3 million square feet in Center City and 5.3 million square feet in the Pennsylvania suburbs are slated to expire over the next two years. With office tenants downsizing by an average of between 20% and 35%, the Philadelphia region’s office availability is projected to continue to climb, adding to mounting pressures on the office sector.

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Wednesday, March 27, 2024

Lease by JAS Worldwide Solidifies Central Pennsylvania as a Growing Hub for Logistics and Distribution

By Linda Moss CoStar News

Atlanta-based JAS Worldwide last year signed a big industrial lease in the central Pennsylvania region, helping to solidify the area's position as a growing hub for logistics facilities and distribution centers.

JAS, a global freight and logistics service provider, occupies 349,242 square feet at the First Logistics Center @ 283 at 2701 Market St., a nearly 700,000-square-foot facility owned by Chicago-based First Industrial Realty Trust in Elizabethtown. Because the large lease demonstrates JAS's substantial commitment to the region, a panel of local industry professionals selected the transaction as the winner of the 2024 CoStar Impact Award for lease of the year for Philadelphia.

As a leading global freight and logistics company, JAS is expected to create many job opportunities for Elizabethtown and the surrounding area, since it requires a substantial workforce for its operations. And the addition of a company like JAS is expected to attract other businesses and investors to the region, driving economic growth and diversifying employment opportunities. There is also expected to be a halo effect from JAS's presence, which is anticipated to spur the creation of small businesses in logistics and supply-chain operations, as well as complementary retail and services to support the larger workforce.

About the Project: First Logistics Center @ 283 was developed and is owned by First Industrial Realty Trust. JAS, due to its dedication to reducing greenhouse emissions and promoting green initiatives, was drawn to the new property as it aligned with its corporate goals and those of its clients. The tenant broker, Landmark Commercial Realty, in a press release valued the lease at $40 million over its 10-year term.

The JAS lease affirms central Pennsylvania's position as a growing market for relocation and development. The company's new location is seven miles from Harrisburg International Airport and just east of the Susquehanna River, in close proximity to Interstates 76, 83 and 81, along with airfreight capabilities. Harrisburg has received national attention for making the "Best Place to Live" list in U.S. News & World Report.

What the Judges Said: "This industrial warehouse is impactful in the immediate community of Elizabethtown, creating employment as well as providing other economic opportunities and traffic for other businesses," said Kenneth Penn, president of Benchmark Construction Group. "A natural growth in this community as a result of this industrial space will eventually support housing and rental units. This will contribute to this town and this region in their long term sustainability."

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Wednesday, March 20, 2024

Law firm office-leasing activity hit a milestone in 2023. It could fuel a domino effect.

 By Ashley Fahey – Editor, The National Observer: Real Estate Edition, The Business Journals

The legal industry leased more office space last year than it has since the Covid-19 pandemic.

In 2023, U.S. law firms leased a collective 16.9 million square feet. That's not only more office space leased by the sector since the Covid-19 pandemic, but exceeds the amount leased nationally by law firms in 2017, 2018 and 2019.

The legal industry has bucked the broader trend of office-market leasing since the pandemic upended norms around office-space usage. While law firms, like other industries, have taken a hard look at their office real estate, they on the whole are using the office more regularly than other industries. Therefore, they've occupied a more robust segment of the leasing market while other industries have slowed their deal activity, put spaces on the sublease market or exited big chunks of space.

For those in commercial real estate who work with law firms on their office-space needs or otherwise track the industry, the legal sector's recent leasing activity is indicative of its new normal.

Many law firms that saw their leases expire in 2020 or 2021 inked a short-term extension because of the uncertainty during the height of the pandemic. But in the past two years, law firms have gone back to the office more frequently and overall feel more confident making longer-term decisions about their space.

The biggest relocation signed by a law firm since the pandemic, according to Savills plc, was Paul, Weiss, Rifkind, Wharton & Garrison LLP's deal inked late last year. The international law firm agreed to take 765,931 square feet at 1345 Avenue of the Americas in Manhattan. Not only was it the largest law office relocation since the pandemic, it was also the largest office lease signed across all industries and the U.S. last year.

What law firm leasing activity says about U.S. office market

Although it's only one sector — and legal tenants only made up 8.8% of the national leasing market in 2023, according to Savills — how this industry is making office-space decisions is somewhat indicative of broader trends affecting the U.S. office market.

For example, like many professional-services tenants, law firms are largely seeking to be in the top 10% of office buildings in the markets they're in. Many law firms that have made leasing decisions in the past couple of years have departed office buildings that, while not necessarily Class B or C space, are no longer considered the top-tier towers in town.

"It's almost an office market within an office market. You’ve got this really premium level of office buildings that tenants are competing (for) ... (There's) a lot more tightness and competition for space in those premium assets that you might not necessarily see in a dated Class A building, and definitely not a Class B or C building."

Notably, a growing share of legal-industry tenants have decided to renew their leases in their current buildings rather than relocate, which may be indicative of the shrinking amount of top-tier office space available in a given market. That's especially true of office tenants that require 100,000 square feet or more.

Data found, in 2023, 56% of leases signed within the legal sector were stay in place, compared to 33.9% in 2022.

But when a law firm departs a somewhat dated Class A building for a brand-new office tower, they leave behind what's generally considered an attractive office option for other companies, law firms included, to backfill, McWilliams said.

"It creates a domino effect in backfilling office space into the nicer buildings," he said, adding lesser desirable space subsequently ends up becoming unoccupied.

Tom Fulcher, chair of the legal practice group at Savills, echoed that sentiment, saying moves by the legal industry tend to benefit the upper echelon of office space in a given market, ripple effects that ultimately create more vacancy in Class B and C buildings.

And as office space at the high end of the office market is leased, and buildout construction costs are growing, a greater number of legal tenants are considering higher-quality sublease space on the market, experts say.

Full story:

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Friday, March 15, 2024

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Apartment Rent Growth in Pennsylvania Exceeds National Average

By Brenda Nguyen and Veronica Miniello

Pennsylvania's largest apartment markets have demonstrated resilience, surpassing both national and statewide rent growth trends in the first quarter of 2024, except for Pittsburgh.

Lancaster, Scranton and York posted impressive annual rent increases exceeding an average of 3%, making them the top performers in the state. These tertiary apartment markets, along with the state capital Harrisburg and Reading, have benefitted by not seeing the same level of new apartment construction as larger cities such as Philadelphia. Limited supply, alongside a modestly growing population and an influx of residents from costlier areas like New Jersey and New York, has contributed to stable rent growth.

What's more, Harrisburg, Reading, Lancaster, Scranton and Allentown were recently recognized as the nation’s top places to retire in 2024 by U.S. News. This publicity, combined with the region’s existing affordability, has attracted renters seeking a slower-paced lifestyle near amenities like healthcare, local shops, restaurants and community events. The appeal of smaller towns with limited development has created an increasingly competitive apartment market for renters seeking alternatives to costlier cities.

Philadelphia presents a contrasting picture. Rent growth has softened more significantly, dropping from an average of 3.4% in the first quarter of 2023 to 1.5% in the first quarter of 2024. Despite experiencing the highest level of development since the 1970s, Philadelphia's annual rent growth has outperformed national and state averages, although marginally.

This performance can be attributed to robust rent growth in Philadelphia's suburbs, where construction has been limited. Meanwhile, the city has seen stagnant rent growth in some neighborhoods due to a high concentration of new development. However, Greater Center City's residential population has grown by 3% in the last four years, helping buoy rent growth in the city’s downtown neighborhoods amid a surge of apartment completions.

On the western side of Pennsylvania, Pittsburgh posted positive annual rent growth of 1%, outperforming the national average but falling slightly below the statewide average of 1.3%. Pittsburgh is the only metropolitan area in Pennsylvania that has consistently lost residents since 2020. Similar to Philadelphia, an influx of new units in downtown Pittsburgh has weighed on rent growth, which has been negative in the downtown area over the past six months.

Overall, Pennsylvania's apartment market offers a mix of opportunities for renters and investors alike, with Central Pennsylvania emerging as a region to watch for continued rent growth and stability.

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Thursday, March 14, 2024

Netflix plans two-story Netflix House at King of Prussia Mall with themed experiences and dining

By Emma Dooling – Reporter, Philadelphia Business Journal

Netflix is targeting Philadelphia for one of the first locations of its new retail, dining and live entertainment experience.

The streaming giant plans to open a Netflix House in the former Lord & Taylor space at the King of Prussia Mall. The brick-and-mortar concept aims to immerse customers in their favorite Netflix shows and movies through themed merchandise, food and activities.

Netflix has previously created several temporary activations around the world based on its content, including the "Stranger Things Experience" and "The Queen's Ball: A Bridgerton Experience," as well as a pop-up restaurant called Netflix Bites. Netflix House gives the streaming service a permanent venue to host its themed experiences.

"This isn't a place that folks are going to travel to once a year," Brent Nikolin, senior program manager for Netflix's live experience team, told members of the Upper Merion Township Planning Commission during a presentation Wednesday night. "We want to be in the communities. We want to be in city centers. We want to be in great malls like King of Prussia where people come over and over again."

Nikolin said Netflix expects to open the venue in late 2025. Bloomberg reported in October that Netflix plans to open its first two Netflix House locations that year.

Netflix is seeking approval from the Upper Merion Township Board of Supervisors for conditional use of the former department store as a performing arts facility and movie theater to host the proposed activations within Netflix House. The Planning Commission unanimously recommended the application for approval during the Wednesday meeting. The entertainment company will go before the Board of Supervisors for final approval on April 11.

Full story:

Assessed value of Philadelphia office buildings to plummet by $1 billion, city officials project

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

Philadelphia officials expect the total assessed value of office buildings across the city to drop by an estimated $1 billion as property owners battle financial woes and vacancy rates continue to rise.

Finance Director Rob Dubow said the sinking valuations had to be factored into Mayor Cherelle Parker's $6.29 billion proposed budget for fiscal year 2025, released Thursday, and the city’s five-year plan, as the plummeting value of office buildings means fewer property tax dollars flowing into city coffers.

While Philadelphia does not lean on property tax revenue as heavily as some other big cities across the country, Dubow admitted the significant reduction of assessed values across the office market is "a big concern."

“We are different from a lot of governments in that we’re really dependent on wage tax rather than property tax,” he said. “The office sector is a small percentage of our property tax. So it’s a concern, it’s something that we’re building into our plan. It will be a hit to revenue.”

Dubow attributed the projected $1 billion decline to a flurry of assessment appeals. As office property owners witness the sinking value of their buildings, they’re petitioning the city to adjust their assessments accordingly. The vacancy rate for Philadelphia office buildings is creeping toward 25%, and reduced leasing revenue and rising interest rates over the past two years have squeezed property owners with floating-rate loans.

In January, Centre Square owners Nightingale Properties and Wafra Capital Partners negotiated a decrease in the assessment of the two-building office complex for both the 2023 and 2024 tax years. The 1500 Market St. property has been in receivership for almost a year after its owners failed to pay off a $368 million commercial mortgage-backed security (CMBS) loan on the property before its maturity date, according to CMBS reports.

he city's Board of Revision of Taxes approved a 31% reduction in Centre Square's property tax assessment, previously set at $362.6 million, to $250 million for 2024 and dropped the 2023 assessment 24% to $275 million.

Based on Philadelphia’s property tax rate, Centre Square's owners are now responsible for paying about $3.85 million in property taxes for 2023 and $3.5 million for 2024. That’s a reduction from $5.1 million in taxes that would have been owed in each of the two years had the assessment remained the same, giving Nightingale and Wafra a combined savings of more than $2.8 million.

The uncertainty surrounding the future of office space has led to a lack of office building sales in the last few years. In turn, accurate assessments have become more difficult to achieve, industry experts say, because there’s little sales data to set current market prices.

A few recent and potential sales could soon provide some clarity.

A four-building Old City office portfolio was recently handed over to a lender, which is now in talks to sell at least two of the buildings. On the other side of City Hall, a 15-story office building at 1760 Market St. was recently listed for sale and positioned as a potential conversion to residential.

Last fall, Alterra Property Group bought a nearby 18-story office building at 1701 Market St. for $26.25 million and is now converting it into 299 apartments. Less than a year prior to the sale, the building was under contract to sell for nearly double that price.

In recent weeks, Parker has made a public push to encourage businesses to bring workers back to offices. While the long-term effects are still playing out, increasing the occupancy of office buildings would help both property owners and the city.

Full story:

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Monday, March 11, 2024

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Amazon Pays $650 Million for Nuclear-Powered Data Center in Pennsylvania

 By Mark Heschmeyer CoStar News

Amazon Web Services bought a northeast Pennsylvania data center site in the shadow of a nuclear power plant, a source of carbon-free energy for the digital hub to help the tech giant meet its emission goals.

The deal comes as data center demand surges, driven by the rapid growth of artificial intelligence, and pushes developers into new markets.

AWS paid $650 million for the 1,200-acre property, making it the largest individual U.S. commercial sale of the year. The cloud computing business of Seattle-based e-commerce giant Amazon is one of the world's largest providers of those services with more than 100 data centers in over 20 countries.

Houston-based Talen Energy sold the site as-is with one data center on the property. AWS expects to expand the campus to up to 960 megawatts of data center capacity, or the equivalent of the energy consumption of nearly 900,000 houses. Data centers are measured in their power-handling ability as opposed to square footage.

Amazon has set a goal to reach net-zero carbon emissions by 2040 — 10 years ahead of the Paris Agreement deadline, a legally binding international accord on climate change.

“We’re on a path to power our operations with 100% renewable energy by 2025 — five years ahead of our original 2030 target,” Erika Reynoso, an Amazon spokesperson, said in an email to CoStar News. “To supplement our wind and solar energy projects, which depend on weather conditions to generate energy, we’re also exploring new innovations and technologies, and investing in other sources of clean, carbon-free energy. This agreement with Talen Energy for carbon-free energy is one project in that effort.”

Data centers are attracting a broad swath of investors across the globe. Blackstone acquired data center developer and owner QTS Data Centers in 2021 for $10 billion and, just last year, QTS signed at least $8.5 billion of development deals preleased to major technology companies that need more AI capabilities.

The sites generate significant heat and humidity that must be mitigated to keep equipment functioning and prevent fire hazards and other safety issues. While cost-effective, cooling data centers takes a significant amount of water. The average data center uses 1 million to 5 million gallons of water per day, equivalent to the daily water use of a town with a population of 10,000 to 50,000 residents, according to a study this month by Frederick County, Maryland.

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National Office Attendance Rises With Slow but Steady Gains

More In-Person Mandates Help Boost Daily Foot Traffic, but Numbers Still Short of Pre-Pandemic Days

By Katie Burke and Nicole Shih CoStar News

It hasn't been quick or easy to get office attendance rates closer to what they were prior to the pandemic, but workplace foot traffic is on a slow but steady climb.

As more companies add stricter in-person mandates and adjust to longer-term flexible work policies, attendance rates for days in the middle of the week have jumped 27% from 2022, data firm's National Office Index shows. The data analyzed foot traffic among roughly 1,000 commercial office buildings in the United States, excluding buildings that are both residential and commercial.

While foot traffic on Mondays and Fridays — popular work-from-home days — is down as much as 49% from the years leading up to the pandemic, several elements in the return-to-office shift are proving to be a benefit for a property type struggling with record-high vacancy rates.

For starters, companies in industries including finance, insurance and real estate are propelling attendance rates in cities with larger shares of those types of employers because they tend to require more in-person workdays. New York, Dallas and Miami, cities with a high concentration of workers in those fields, have led the national office recovery push as attendance rates have come close to nearly 80% of their pre-pandemic levels, according to the data.

What's more, young professionals — especially affluent, educated ones — prefer to commute to an office more regularly to avoid missing out on mentoring, professional development and other social opportunities. Attendance rates for that demographic have exceeded those reported before the pandemic, according to, with cities such as San Francisco posting the largest jump in its share of "educated urbanites."

To be clear, the office market still has a long way to go before it regains its balance. The national vacancy rate has climbed to a record high of nearly 14%, according to CoStar data, a figure propelled by a greater portion of tenants looking to offload space rather than take it on.

Wednesday, March 6, 2024

Majority of Industrial Space Under Construction in New Jersey Is Not Pre-Leased

By Mateusz Wnek CoStar Analytics

Industrial developers and property owners are bracing for a challenging leasing environment later this year and into 2025 owing to the amount of new industrial space set to be completed this year and what appears to be a shift in tenant preferences since many of the largest projects first broke ground.

Currently, there are 18.2 million square feet of industrial space under construction in New Jersey, with 90% still available for lease. This year's influx of new supply is widely expected to weigh on the Garden State’s fundamentals, particularly in Northern New Jersey.

The metropolitan area is already reeling from an abnormally weak year for industrial space demand. Last year, net absorption, or the change in occupied space, posted the first annual negative reading since 2012. CoStar expects a second consecutive negative print in 2024, pushing the average industrial vacancy rate for the region roughly 100 basis points higher to 5.1%.

Middlesex County has the most new industrial space underway in the state, with 4.7 million square feet in the pipeline and 4.3 million square feet of that being marketed as available. Perth Amboy is the epicenter of development activity here, with over 1 million square feet being developed in a pair of Bridge Point Perth Amboy buildings. Both distribution centers are expected to be move-in ready on April 1.

Like these two facilities, New Jersey's industrial construction pipeline is littered with mega-sized properties still looking for tenants. According to CoStar’s construction data, the average property being built is 172,000 square feet. Additionally, 32 logistics assets currently under construction are larger than 200,000 square feet, accounting for 67% of all space underway. Meanwhile, just 8% of space at the largest properties is pre-leased, setting the stage for a fierce concession environment early in 2025.

Against this backdrop, industrial operators have noted that over the past 12 to 18 months, industrial tenants have largely ceased committing to new space before touring the completed property. Few expect pre-leasing volumes to return to pandemic-era highs.

Additionally, CoStar data, backed up by broker sentiment, has shown that industrial tenants in the market today increasingly prefer buildings sized between 50,000 square feet and 150,000 square feet. That could work against new properties measuring over 250,000 square feet that are nearing the finish line but designed for single-tenant use.

With landlords facing the choice of holding out for a big-box tenant or opting to subdivide their new buildings, it’s conceivable that full occupancy for many of these large properties may be a long way off. As a last resort, property owners might eventually contemplate repositioning some assets into alternate uses, such as cold storage facilities, data centers or film studios.

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Monday, March 4, 2024

Retail Is Only Property Type in Philadelphia To See Vacancy Shrink

By Brenda Nguyen Costar

The Philadelphia commercial real estate market has undergone divergent trends across its major property sectors—retail, industrial, multifamily and office—between the first quarters of 2020 and 2024. While retail defied expectations and experienced steady demand and declining vacancy, the industrial and multifamily property sectors faced interim supply challenges due to the recent development boom.

The retail property sector surprised many by showing resilience amid the pandemic, witnessing a decline in vacancy rate since early 2020. Robust consumer spending fueled by stimulus checks and growing wages, alongside limited new retail construction, had driven strong demand for store space among retailers. Low-interest rates and easy access to capital further facilitated retail business expansions, bolstering absorption performance across the Philadelphia region.

As a result, Philadelphia’s retail vacancy has declined by 0.4% to 4.2% in the first quarter of 2024, the lowest level since CoStar began tracking data in 2006.

The industrial sector also experienced substantial demand but has encountered a distinct short-term challenge. Developers swarmed into the sector, building more than 46 million square feet of new inventory in just four years, an unprecedented pace. The recent construction boom surpassed even healthy demand, which totaled over 36 million square feet during the same period. Consequently, Philadelphia's industrial vacancy rate increased by 1.4% to 6.9% in the first quarter of 2024 as new supply flooded the market.

Similar supply trends played out in the multifamily sector. While developers produced over 35,600 new apartments in the past four years, the absorption, or net change in occupied units, of 29,000 units could only partially keep up, resulting in a 1.2% vacancy increase from the first quarter of 2020 to 7% in 2024.

Meanwhile, the office sector experienced the most significant vacancy run-up during this period largely the result of deteriorating demand rather than new construction. While nearly 1.8 million square feet of new office space was still built over the past four years, over 8.7 million square feet of existing office space was returned to the market, leading Philadelphia's office vacancy rate to climb by 3.2%—the highest among all the property types in the region.

Unlike the short-term, supply-driven challenges of industrial and multifamily in early 2024, the office sector's challenges are longer-term and demand-driven.

These divergent performances across the Philadelphia commercial market suggest that each sector is navigating its own unique set of opportunities and challenges in the post-pandemic era.

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Here's where office space inventory is actually shrinking — and what's driving the trend

 By Ashley Fahey – Editor, The National Observer: Real Estate Edition, The Business Journals

Office inventory is holding steady or shrinking in select cities across the country, due in part to an increase in conversion projects and a slowdown in new construction.

That's according to a recent analysis found office inventory shrank in seven metro areas tracked by the commercial real estate firm. Those markets are Washington, D.C., as well as the adjacent northern Virginia and suburban Maryland markets; New York; Phoenix; Orange County, California; and Baltimore, which saw its inventory shrink the most, by 3.2%.

The analysis examined office inventory between the fourth quarter of 2022 and the final three-month period of 2023.

Notably, though, more metro areas examined by Savills posted gains in office inventory, led by Salt Lake City and Austin, Texas, which posted 4% and 3.7% gains in office space, respectively, on a yearly basis. The Dallas-Fort Worth metro area and Seattle-Puget Sound followed, at 3.6% and 2.8%, respectively.

San Diego and Philadelphia saw their inventory remain unchanged year over year.

United States has been oversupplied on office space since even before the Covid-19 pandemic. Most markets seeing their inventory grow have projects that broke ground two or three years ago that delivered in 2023.

"Now there are redevelopment pressures in these markets to finally deal with some of the office stock that has long-term office vacancy."

The conversion of office space into a new uses — primarily residential — has become a hot topic of discussion as reduced office-use patterns become permanent, office buildings with high vacancy see their values decline, and massive loans those properties back reach maturity. Developers in some metro areas, including D.C., have completed conversions successfully for a long time and also have an abundant supply of buildings considered ideal for such conversions. Other cities that have seen little to no conversions historically are starting to develop policies and incentives around conversions.

Despite that uptick in conversion activity shrinking office inventory in a few places, most of the office markets analyzed by Savills are still considered oversupplied. The firm examined average square feet per office-using worker and average utilization levels nationally, determining 151 square feet per employee to be a national baseline.

Based on that, only three markets — Nashville, Tennessee; south Florida and Tampa-St. Petersburg, Florida — were considered undersupplied at the end of 2023. Boston, New York, and Raleigh-Durham, North Carolina, ranked as the most oversupplied.

Sublease space dips for first time in two years

For the first time since the fourth quarter of 2021, sublease inventory shrank nationally at the end of 2023.

It went from 176.4 million square feet in Q3 2023 among markets tracked by the firm to 173.7 million square feet in Q4. Still, compared to 127.5 million square feet of sublease space on the market in Q4 2020, that market overall has continued to grow since the pandemic.

It was surprising to see sublease space decrease nationally at the end of 2023 but, he added, there were some high-profile subleases around the country in which the lease term expired, which meant that space turned into direct vacancy.

Full story:

Wednesday, February 28, 2024

Philadelphia’s Industrial Development Shifts Gears in 2024


By Brenda Nguyen Costar

Following a record year of building completions in 2023, Philadelphia's industrial development momentum has slowed down considerably in early 2024. Increased financing costs and an accumulation of unleased inventory have prompted developers to exercise caution as industrial rent growth slows across the market.

The industrial leasing heydays of 2021 and 2022 propelled developers to pursue a record-breaking volume of new development in recent years. In 2023 alone, nearly 21.7 million square feet of industrial space spanning 80 buildings were completed, including six structures exceeding 1 million square feet.

Industrial development activity was concentrated in Burlington, Bucks, Cecil and Gloucester counties, which collectively accounted for 80% of the industrial space completed over the past 12 months.

This recent surge brought Philadelphia's three-year cumulative delivery total to 52.7 million square feet, reflecting a substantial 7.7% growth in the region's industrial footprint. However, the surge in new supply pressured Philadelphia's industrial vacancy rate to rise from a historic low of 4% in mid-2021 to 7% in the first quarter of 2024. In particular, Burlington County has reached a 12% vacancy rate—among the highest in the region.

However, the number of new industrial projects starting construction has incrementally subsided as developers and lenders adopt a more cautious approach. New construction starts across the region have declined by 50% from 2022 levels.

As the number of new developments underway has dwindled, the Philadelphia region will see a quieter year in terms of completions in 2025. This development slowdown is expected to align with an anticipated improvement in economic growth and a reduction in interest rates, potentially strengthening leasing demand just as the reduced amount of new space hits the market.

In the meantime, with another 11.4 million square feet underway, the average vacancy for industrial space is expected to trend upward for several more quarters before stabilizing.

The amount of available inventory has already grown by 50% to 61 million square feet within the Philadelphia region in the first quarter of 2024, a stark contrast from the 40.5 million square feet that were listed as available in mid-2022. Industrial property owners should anticipate a more competitive lease-up environment through at least mid-2024.

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Tuesday, February 27, 2024

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Victory Brewing Co. completes a Sale Lease Back Chester County facility for $21.79M

 By Emma Dooling – Reporter, Philadelphia Business Journal

Victory Brewing Co. has sold one of its Chester County properties, and will use the money to fund upgrades at its other locations.

The Downingtown craft brewer sold its 212,000-square-foot Parkesburg brewery and taproom for $21.79 million in late January to New York asset manager Fortress Investment Group LLC, according to property records. The transaction was a sale-leaseback and will not impact the facility's operations, John Struble, CFO for Artisanal Brewing Ventures, the parent company of Victory Brewing, told the Business Journal.

"The commercial property market is active, and this was a pure financial transaction for us," Struble said in a statement.

Victory Brewing acquired the 42-acre property for $10.75 million in 2016, several years after its operations at the site began. The facility started bottling and brewing in 2013, and a 10,000-square-foot taproom was added to its offerings in 2015.

The brewery now has a 25-year lease on the facility, located at 3127 Lower Valley Road, with multiple options to extend it up to 40 years.

Artisanal Brewing Ventures plans to reinvest the money it received from the transaction into marketing efforts and facility upgrades at some of its locations. Struble said a "significant portion" of the funds allocated for facility renovations will go toward updates at the Parkesburg brewery and taproom but did not disclose what the project will entail.

In addition to the Parkesburg facility, Victory Brewing also operates a brewery and taproom in Downingtown and taprooms in Kennett Square; Philadelphia; and Charlotte, North Carolina; The Philadelphia location, the brewer's newest taproom, opened in October 2021 at 1776 Benjamin Franklin Parkway in Center City.

Full story:

Monday, February 26, 2024

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Toll Brothers nets $180M in cash from unexpected sale it 'couldn't refuse'

 By Dan Brendel and Michael Potter – Philadelphia Business Journal

Toll Brothers Inc. began February with an unexpected windfall, netting more than $180 million from the sale of vacant land it once tabbed for an expansive residential development.

The Fort Washington-based homebuilder announced the sale Tuesday in conjunction with its earnings report for the fiscal first quarter ended Jan. 31. Toll Brothers CEO Douglas Yearley Jr., speaking to investors on the company's earnings call Wednesday, called the all-cash deal a "one-off."

"We had a unique piece of property in Virginia that we were processing for approvals to build homes on and a data center operator came along and made us an offer that we couldn't refuse," Yearley said.

JK Land Holdings, a major Virginia data center investor led by CEO Chuck Kuhn, bought the 108-acre lot at 19508 Freedom Trail Road in Ashburn. Toll Brothers previously planned to build some 1,300 apartments and townhouses at the site, located about 35 miles west of Washington, D.C., in affluent Loudoun County.

Yearley did not identify JK Land Holdings as the buyer when discussing the deal on Wednesday's call. The sale took place in Toll's second quarter, which began Feb. 1, according to the company.

Toll Brothers said it expects a pre-tax land sale gain of about $175 million in the second quarter as a result of the sale, and Yearley told investors the proceeds will be used to increase its budget for share repurchases from $400 million to $500 million in fiscal 2024.

Full story:

Friday, February 23, 2024

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Over $1 Billion of Philadelphia Office Properties Traded in 2023 Amid Shaky Market Conditions


By Brenda Nguyen

Office sales activity persisted in Philadelphia last year despite disruptive office market fluctuations, revealing resourceful developers, investors and companies capitalizing on a shifting market.

Before 2020, office buildings reigned supreme, regularly commanding top dollar among commercial real estate property types from investors.

However, the lasting effects of the pandemic disrupted that trend. As employers and employees navigate the evolving future of in-person work amid lingering economic uncertainties, the office investment landscape remains in flux.

Subsequently, the level of office investment has declined with each passing year since 2019.

Interestingly, office investment—which was the least-favored asset for Philadelphia investors in 2021-2022—accounted for 25% of the total investments across retail, multifamily and industrial property types in 2023, up from 17% in 2021. Philadelphia office sales in 2023 even surpassed the volume of multifamily sales.

Several categories have buoyed the recent office sales volume, particularly projects primed for redevelopment and stabilized office buildings with a value-added component.

In a notable example from October 2023, a joint venture between FLD Group and A&H Acquisitions acquired the Bala Plaza portfolio in one of the top deals in the fourth quarter. The five-building, 1.14 million-square-foot office campus traded for $185 million, or approximately $163 per square foot. The new owners plan to redevelop the campus, incorporating 2.1 million square feet of retail, a 168-room hotel, 750,000 square feet of office space, and 750 residential units.

Medical office buildings and sale-leasebacks have also contributed to the heightened recent office sales activity.

The investment figures reflect a quietly opportunistic mindset among a small enclave of investors and developers despite lingering uncertainties from the pandemic.

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Wednesday, February 21, 2024

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Done Deals: Sansone pays $20M for Tac-Pal project site; Yellow Corp. sells Montco property out of bankruptcy

By Paul Schwedelson – Reporter, Philadelphia Business Journal

Here’s a roundup of recent real estate news and transactions in the Philadelphia area.

$20 million

Palmyra Urban Redevelopment Entity sold 60 acres off Route 73 just over the Tacony-Palmyra Bridge for $20 million to an entity affiliated with St. Louis-based Sansone Group, which is developing Phase 2 of the Tac-Pal Logistics Center at the New Jersey site.

The first phase of the project, developed in partnership with Dallas-based Crow Holdings Capital, was completed with a 702,450-square-foot industrial building. YesWay Logistics leased 252,000 square feet of that building, leaving about 450,000 square feet remaining. The second phase will see construction of a 704,182-square-foot industrial building, which is expected to be completed by the end of 2024.

$7.7 million

PECO paid $7.7 million for a 7-acre property with a vacant 13,700-square-foot office and truck servicing building at 480 S. Gravers Road in Plymouth Meeting. Proudfoot Investments was the seller.

$3.2 million

Transportation logistics company Realterm bought a 7.4-acre industrial truck terminal with 71 doors from Yellow Corp. for $3.2 million, according to Montgomery County property records. The property is at 750 County Line Road in Colmar.

Nashville, Tennessee-based Yellow sold the property out of bankruptcy. Yellow previously sold a 13.3-acre truck terminal in Bensalem to XPO Inc. for $36.2 million.

$2.5 million

Bala Cynwyd-based Velocity Venture Partners paid $2.5 million for a 47,800-square-foot industrial property at 1310 Stanbridge St. in Norristown. Velocity bought the property from Weber Real Estate Holdings. The building is fully leased by Norfab, which manufactures heat-resistant materials for firefighters.

The building is attached to a 127,000-square-foot industrial building at 1210 Stanbridge St. that Velocity bought for $4 million in 2019 when it was mostly vacant. Since then, Velocity has leased the entire building. VonC Brewing, HVAC supplier Cianci and Daimion, and Sweet Prosperity Bakery are among the tenants.

$1.475 million

An entity affiliated with Barnegat, New Jersey-based Walters Group bought an undeveloped 4.1-acre site at 1500 Pennbrook Parkway in Upper Gwynedd for $1.475 million. Walters Group plans to build 60 apartments across multiple buildings on the property.

38,000 square feet

Buccini/Pollin Group expanded coworking space in downtown Wilmington named The Mill by 38,000 square feet, bringing the space to a total of 104,700 square feet.

The coworking space is at Market West, formerly known as the Nemours building, at 221 W. 10th St. The expansion to the third floor of the building includes an additional 30 furnished offices, outdoor terraces, a podcasting suite and recreational activities like foosball and cornhole.

The 14-story, 800,000-square-foot Market West building is undergoing a $100 million renovation that will eventually feature 355 apartments while reducing the building’s office footprint from 450,000 square feet to 150,000 square feet.

Full story:

Wednesday, February 14, 2024

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Top Commercial Property Sales Recognized for Philadelphia

TOP SALE: Bala Plaza Portfolio of 5 Properties

Sale Price: $185,000,000

Sale Date: October 30, 2023

Size: 1,136,771 SF

Buyer: FLD Group, Jackson, NJ, A&H Acquisitions, New York, NY and MS Management, Eatontown, NJ

Seller: Tishman Speyer, New York, NY

Deal Commentary: Tishman Speyer's sale of Bala Plaza, handing off the long-planned renovation of the Main Line complex to a new set of stakeholders, ranked as the top sale of the fourth quarter for the Philadelphia region. The sale involved three Bala Plaza office buildings in the Philadelphia suburb of Bala Cynwyd, along with a freestanding Saks Fifth Avenue department store off City Ave. All were acquired by FLD Group, Inc. and the Adjmi family's A & H Acquisitions Corp. for $185 million. The property's new ownership group is expected to continue the redevelopment plans for the property based on the approved master plan obtained by Tishman that calls for the 2.1 million square feet of new development encompassing multiple retail sites, a 168-room hotel, approximately 750,000 square feet of office space and 750 residential units. Work on the properties is expected to take place over the next two decades.

TOP SALE: Cindel Business Park, Cinnaminson, NJ

Sale Price: Not disclosed

Sale Date: December 20, 2023

Size: 1,123,325 SF

Buyer: ARES Management, Denver, CO

Seller: Whitesell Construction Company, Mount Laurel, NJ

Deal Commentary: In another top deal that closed in the fourth quarter, Whitesell Construction sold the 14-building Cindel Business Park to Colorado-based ARES Management LLC for an undisclosed price. The industrial/flex portfolio totaled 1,123,325 square feet and was built between 1985 and 1990 on 85.6 acres. The sale included a pair of properties in the Pennsauken Industrial Park totaling 85,921 square feet. The group of properties includes a mix of flex properties and warehouse space that range in size and occupancy levels located off of Taylor Lane.

TOP SALE: 84 Zions View Road, Manchester, PA

Sale Price: $110,250,000

Sale Date: November 28, 2023

Size: 1,000,350 SF

Buyer: Prologis, San Francisco, CA

Seller: GLP Capital Partners, Santa Monica, CA

Deal Commentary: San Francisco-based Prologis picked up a major industrial facility located on Zions View Road in in Manchester, Pennsylvania, that totals more than one million square feet from another California-based owner GLP Capital Partners in a fourth-quarter deal. Originally developed by DHL in 2019, the global freight transport firm occupies 330,350 square feet in the building, while healthcare and nutrition conglomerate Bayer occupies the remaining 670,000 square feet. GLP acquired the property from DHL at the end of 2019 for $85,216,000.

TOP SALE: 325 Centerpoint Blvd., Jenkins Township, PA

Sale Price: $78,200,000

Sale Date: October 20, 2023

Size: 744,080 SF

Buyer: EQT Exeter, Radnor, PA

Seller: Blackstone, New York, NY

Deal Commentary: Blackstone, the New York-based global asset manager, sold this large industrial property located off Centerpoint Blvd. in Jenkins Township to EQT Exeter in a top fourth-quarter transaction. The distribution building situated across nearly 50 acres delivered in 2008 and was fully leased to Lowe’s Companies Inc. under a lease through March 2027.

TOP SALE: Codorus Quarry Logistics Center, 520 and 540 Busser Road, York, PA

Sale Price: $66,565,000

Sale Date: December 19, 2023

Size: 507,099 SF

Buyer: Hillwood Development, Dallas, TX

Seller: Core5 Industrial Partners, Atlanta, GA

Deal Commentary: In another top deal from the fourth quarter, Core5 Industrial Partners sold two single-tenant warehouses to Texas-based Hillwood Development Corp. for approximately $131.27 per square foot. The fully leased single-tenant buildings delivered in 2023 in the Core5 at Codorus Creek industrial park and include one building measuring 204,269 square feet at 520 Busser Road leased to Middleby Residential, and a second building totaling 302,830 square feet at 540 Busser Road leased to Aurora Parts.

TOP SALE: Portfolio of 4 Multifamily Properties, Upper Darby, PA

Sale Price: Not disclosed

Sale Date: December 12, 2023

Size: 400,406 SF

Buyer: Woodward Properties, Havertown, PA

Seller: The McKee Group, Springfield, PA

Deal Commentary: The McKee Group finalized the fourth-quarter sale of a 436-unit multifamily portfolio to Woodward Properties, which assumed the seller’s outstanding debt on the properties. The four rental apartment properties in the Upper Darby Township include the 232-unit Merion Trace Apts. at 7200 Merion Terrance, the 106-unit Lindenwood Apts. at 100 Shadeland Ave., the 66-unit Lindenwood North & West at 100 Shadeland Ave. and the 32-unit Carole House Apartments at 8650 West Chester Pike. The buyer assumed the seller’s outstanding debt on the properties.

TOP SALE: The Cubes at Lehigh Valley, 7378 Airport Road, Bath, PA

Sale Price: $60,250,000

Sale Date: December 14, 2023

Size: 450,000 SF

Buyer: Prologis, San Francisco, CA

Seller: CRG, Chicago, IL

Deal Commentary: Prologis remained quite active in the Philadelphia region in the fourth quarter with the acquisition of another major industrial property, the 450,000-square-foot The Cubes at Lehigh Valley in a December deal.

TOP SALE: 15000 Roosevelt Blvd., Philadelphia, PA

Sale Price: $54,464,456

Sale Date: December 12, 2023

Size: 51.67 Acres

Buyer: Rockefeller Group, New York, NY and PCCP, Los Angeles, CA

Seller: PAID, Philadelphia, PA

Deal Commentary: The Philadelphia Authority for Industrial Development (PAID) sold a fully entitled development site measuring more than 50 acres to a joint venture between Rockefeller Group and PCCP. The two firms plan to develop the Rockefeller Group Logistics Center at Roosevelt Boulevard, to include a pair of large logistics buildings measuring 318,696 square feet and 338,208 square feet, respectively, for a total of 656,904 square feet. The seller is a subsidiary of the Philadelphia Industrial Development Corp. or PIDC, Philadelphia’s public-private economic development corporation.

TOP SALE: Le Méridien Philadelphia, 1421 Arch St., Philadelphia, PA

Sale Price: $46,650,000

Sale Date: December 19, 2023

Size: 112,383 SF

Buyer: Hersha Hospitality Trust, Philadelphia, PA and Certares Management, New York, NY

Seller: Walton Street Capital, Chicago, IL

Deal Commentary: A joint venture between Hersha Hospitality Trust and New York-based investment firm Certares Management acquired the Le Meridien hotel in Philadelphia in a top fourth-quarter deal from Chicago-based real estate investment trust, Walton Street Capital. Certares and Hersha have an investment partnership in which the two entities jointly purchase hotels. The 10-story Le Meridien Philadelphia was constructed in the Georgian Revival style in the early 20th century and designed by Philadelphia architect, Horace Trumbauer. Originally operated as a YMCA community center, the property was redeveloped into a hotel as part of an adaptive reuse project in 2010.

TOP SALE: Portfolio of 5 Shallow-Bay Industrial Properties

Sale Price: $40,800,000

Sale Date: November 10, 2023

Size: 339,136 SF

Buyer: Taurus Investment Holdings, Boston, MA

Seller: PCCP, Los Angeles, CA and Endurance Real Estate Group, Radnor, PA

Deal Commentary: PCCP and Endurance Real Estate Group, both based in Pennsylvania, sold a fully leased, five-building shallow-bay industrial portfolio to Boston-based Taurus Investment Holdings, which plans to develop a new 64,500-square-foot industrial building on an unused portion of a parking lot on the 600 Delran Parkway property. Taurus also said it plans to take advantage of the New Jersey Community Solar Program to install rooftop solar panels on four of the existing assets and the new building, rendering the project carbon-negative. The Boston-based industrial investment firm also said southern New Jersey has emerged as a cost-effective alternative to Northern New Jersey, with tenants increasingly relocating to South Jersey to take advantage of lower operational costs, including reduced occupancy expenses, an abundance of affordable labor, and lower real estate taxes.