Thursday, June 27, 2024
Wednesday, June 26, 2024
Demand for Industrial Space Hits a Speed Bump in Pennsylvania's Lehigh Valley
Despite tremendous demand for Lehigh Valley warehouse and distribution space over the last three years, the regional industrial market has hit a speed bump in the first half of 2024, a trend that mirrors other in-demand industrial hubs nationwide.
Nationally, absorption of industrial space in the first half of 2024 is 70% lower than the same period in 2023. In the Lehigh Valley, the decline has been even more drastic, hitting -1.4 million square feet in negative absorption—the net change in occupied space in the last 12 months.
Rising business expenses, a housing slowdown and the stretched health of the consumer have contributed to the pullback in demand for industrial space in recent quarters. The slowdown has coincided with 3.2 million square feet of new industrial space hitting the market, resulting in a 2% year-over-year increase in vacancy.
Furthermore, none of the 13 speculative industrial buildings under construction in the Lehigh Valley region had yet to secure a tenant as of late June, a stark contrast to prior years when major companies such as Shopify, Uline, Kenco Logistics and Grainger all signed leases for industrial buildings before they had been completed.
NorthPoint Development’s one-million-square-foot building at East Valley Logistics Park in Nazareth is the largest speculative industrial project in the works. Construction began on the mega-warehouse in the summer of 2023 and is slated for completion in mid-2024. The space has been listed on the market for over four years since it was in the proposal phase.
Among existing buildings, Prologis’s Lehigh Valley East in Northampton, another one-million-square-foot facility completed in 2023, remains the largest block of industrial space available in the market and has also been listed for over four years.
In recent months, more tenants have opted to lease existing buildings. According to brokers, prospective tenants prefer to be able to walk through the completed building before committing to a lease. And they also believe they are more likely to secure favorable terms for existing space, especially if the owner has sat on a vacant property longer than anticipated.
Major recent deals signed in existing buildings include Carbel's deal in April for a 470,000-square-foot building at the JW Industrial Park, which was built in 2022 and on the market for over three years. Before that, in January 2024, Glenmark Pharmaceuticals leased a 160,000-square-foot building that was completed in April 2023 and was on the market for 18 months.
While the industrial space market has cooled recently, the region's track record and growing investor interest suggest a promising long-term outlook. Even with the slowdown, the overall industrial vacancy rate remains a modest 6%, lower than the national average of 6.5%. Based on historical demand, Lehigh Valley's surplus industrial inventory could be absorbed within a couple of years.
Tuesday, June 25, 2024
Monday, June 24, 2024
Friday, June 21, 2024
Thursday, June 20, 2024
New York developer plans 150,000-SF self-storage facility in Northeast Philadelphia
By Ryan Mulligan – Reporter, Philadelphia Business Journal
A four-story, 152,720-square-foot self storage facility is being proposed in Northeast Philadelphia at the corner of State Road and Cottman Avenue.
Brooklyn-based Asset Realty and Construction Group is planning the project at 7240 State Road, according to documents filed with the city. In total, the project would span 152,720 square feet and have 77 parking spaces, catering to both commercial and residential customers, documents show. The project is slated to go in front of Philadelphia's Civic Design Review Committee on July 2.
An entity tied to Asset Realty and Construction Group purchased the nearly 3-acre site for $3.35 million last July, according to Philadelphia property records. The company could not be reached for comment.
At the corner of State Road and Cottman Avenue, the parcel sits between I-95 and railroad tracks in the Tacony neighborhood. The parcel is surrounded by other industrial sites, including an EZ Storage Philadelphia about a block north.
The self-storage facility "seeks to support local businesses, homeowners, and tenants," according to the documents filed with the city.
The project would mark Asset Realty and Construction Group's foray into the Philadelphia market. In its portfolio, the company has multifamily developments in several New York neighborhoods, and a number of industrial storage projects in North Jersey.
The company's CEO, Dino Tomassetti Jr., built a portfolio of self-storage facilities in the New York metro area, ultimately creating the Storage Fox brand. The latter sold for $152 million to Southern California-based Clutter in 2019. In 2020, Tomassetti founded Asset Realty and Construction Group.
Full story: https://tinyurl.com/w3mutdvp
Tuesday, June 18, 2024
Monday, June 17, 2024
Friday, June 14, 2024
Thursday, June 13, 2024
Wednesday, June 12, 2024
Philadelphia’s Tight Suburbs Keep Lid on Apartment Concessions
Growing Population Further Bolsters Renter Demand
Tuesday, June 11, 2024
Monday, June 10, 2024
Thursday, June 6, 2024
Tuesday, June 4, 2024
Monday, June 3, 2024
Two Pennsauken warehouses sell for $23 million as part of larger acquisition
By Paul Schwedelson – Reporter, Philadelphia Business Journal
A pair of Pennsauken warehouses sold for $22.95 million as part of a larger acquisition by an upstate New York's food products manufacturer.
Baldwin Richardson Foods announced in April that it acquired Pennsauken Packing Co., and its warehouses at 1550 and 1600 John Tipton Blvd. in Pennsauken. The price of the warehouses has now been revealed via Camden County property records. Pennsauken Packing was a subsidiary of LiDestri Food and Beverage.
The two buildings total 240,000 square feet with space for manufacturing, warehousing and office use.
Macedon, New York-based Baldwin Richardson Foods, a private labeler and custom ingredients manufacturer for the food and beverage industry, declined to share how much it cost to acquire Pennsauken Packing Co.
When the firm announced the acquisition, executives said the move would enhance Baldwin Richardson’s aseptic beverage operations. Aseptic foods and beverages don’t need to be refrigerated.
Full story: https://tinyurl.com/4mpa5ana
CRE loan delinquency still growing but at slower pace as lenders rework deal terms
By Ashley Fahey – Editor, The National Observer: Real Estate Edition, The Business Journals
Commercial real estate loan delinquencies are still rising but at a slower pace than they have been since the post-pandemic disruption in the industry.
Overdue commercial real estate loans tied to U.S. banks increased to 1.25% in the first quarter — a new cycle high, according to a recent analysis by S&P Global Market Intelligence. Even so, the quarter's 10 basis-point increase from the prior quarter was slightly less than the 11 basis-point increase for the fourth quarter of 2023 and a 21 basis-point jump in the third quarter of last year.
Commercial real estate loan delinquencies are being closely monitored as the office market in particular is seeing drops in occupancy and value amid a higher interest-rate environment that looks likely to persist for longer than expected.
Many lenders have reworked terms with borrowers, including on troubled loans, or have extended the maturity date. Despite that, there's palpable concern about what happens to the $929 billion in outstanding commercial mortgages across all CRE lender types the Mortgage Bankers Association estimates will mature this year.
"Although higher interest rates continue to challenge commercial real estate, there are plenty of reasons for cautious optimism that a turnaround is on the horizon," Wells Fargo & Co. economists wrote in a May 28 note. "What's more, the slower pace of price declines is a sign that the air of pessimism surrounding the asset class is beginning to dissipate as less restrictive monetary policy comes closer in view."
But lenders remain cautious about their exposure to commercial real estate, prompting slower lending activity overall in the sector.
Year-over-year commercial real estate loan growth was 3% in the first quarter of the year. That's a slight uptick from the 2.9% growth in the fourth quarter of last year but well below the 12.1% peak in the third and fourth quarters of 2022, according to S&P Global.
Brent Maier, real estate advisory leader at Baker Tilly, told The Business Journals in an interview last month traditional, regulated lenders are having to set aside or increase their reserves for potential write-offs or loan workouts.
Full story: https://tinyurl.com/ysuwuyfu
