EQT real estate fund acquires Amazon-leased logistics facility near Scranton, PA

 By CoStar News Staff

EQT said its EQT Real Estate Industrial Core-Plus Fund IV acquired the Scranton North Logistics Center, a recently constructed logistics facility located in Olyphant, Pennsylvania, as the Sweden-based logistics giant continues to remake its U.S. industrial portfolio.

EQT has been actively selling older industrial properties and acquiring newer ones that better fit the modern specifications coveted by the logistics industry. Over the past two months, it has completed three U.S. industrial portfolio dispositions totaling 13.2 million square feet, including one of the year's largest U.S. industrial portfolio sales last month, while purchasing 4.8 million square feet of newly constructed facilities.

According to a deed, EQT paid $133.35 million for the Scranton North Logistics Center, a cross-dock distribution center spanning 1 million square feet completed in 2023. The building features modern logistics specifications, including 40-foot clear heights, a 600-foot building depth, a 185-foot truck court, 233 trailer stalls, and 163 dock-high doors, along with four additional drive-in doors.

Amazon signed a full-building lease shortly after the facility was completed to cap the successful speculative development of the property by an affiliate of Radnor, Pennsylvania-based Endurance Real Estate Group and Boston-based Cabot Properties.

The facility is located at 1300 Corporate Way and includes a small office buildout and full truck circulation. It serves as an inbound cross-dock node for inventory distribution to regional fulfillment centers.

The building is approximately one mile from U.S. Route 6 and five miles from the confluence of Interstates 81 and 84. According to EQT, the I-81 Corridor is one of the most competitive big-box industrial markets in the country, with a vacancy rate below 4% and limited availability.

EQT has been especially active of late. Over the past two months, the Stockholm-based firm completed three U.S. industrial portfolio dispositions totaling 13.2 million square feet while purchasing 4.8 million square feet of newly constructed facilities, according to multiple company statements. The transactions reveal a deliberate strategy to harvest gains from stabilized holdings and redeploy capital into higher-quality assets.

It recently dropped $70.2 million to acquire Gateway Logistics Center Building III, a 748,791-square-foot complex in West Jefferson, Ohio, and in October, EQT acquired an 11-building portfolio of newly constructed warehouses located in Houston, Texas; Greenville and Spartanburg, South Carolina, Jacksonville, Florida, and Indianapolis, Indiana.

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Full ULI PwC report: https://www.pwc.com/us/en/industries/financial-services/asset-wealth-management/real-estate/emerging-trends-in-real-estate-pwc-uli/trends.html

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2M+ SF Industrial Park Planned for Central Pennsylvania

 By Margaret Sutherland

After acquiring a 182-acre development site earlier this year near Mechanicsburg in Silver Spring Township, Pennsylvania, for its first development project in Central Pennsylvania, New York-based developer Rockefeller Group has commenced construction on the first two buildings in the Silver Spring Logistics Park, a three-building, two-million-square-foot logistics development. Rockefeller is developing the project in a joint venture with MBK Real Estate LLC, a subsidiary of Mitsui & Co. Ltd.

The development site, part of the former 451-acre Hempt Farm, is located off Carlisle Pike, also known as U.S. Route 11, approximately three miles from Interstate 81. Silver Spring is also five miles from Interstate 76 and 10 miles from Interstate 83 at its southbound ramp.

The development team is proceeding to build the first two logistics buildings at 261 Hempt Road on a speculative basis, without tenant commitments in place. A third building at 281 Hempt Road is also planned.

"Due to continued demand for industrial space in the region, we will develop the 803,520-square-foot building and the 318,060-square-foot building immediately. These buildings will be completed by spring 2026,” said Jacqueline Schwartz, associate for Rockefeller Group’s North Central region, in a statement announcing the new project. “The third building, a 892,620-square-foot distribution center, will follow thereafter."

All three buildings will include 40-foot clear heights, 54-foot x 50-foot column spacing and 185 truck courts. The larger two buildings, each measuring more than 800,000 square feet, will be cross-docked facilities.

The project architect is Margulies Hoelzli Architecture, PLLC, the civil engineer is Alpha Consulting, and the general contractor is Penntex Construction.

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Medical office building in downtown Philadelphia hits market for potential redevelopment

 By Jonathan Lehrfeld CoStar News

A 10-story medical office building in downtown Philadelphia has hit the market as a potential redevelopment opportunity, joining other workplace properties in the city that have been pitched for or undergone a transformation to another commercial use.

The 135,825-square-foot property at 919–921 Walnut St. in Center City is available for $13.5 million, according to a listing on CoStar Group’s LoopNet platform. The property, built in the early 20th century, is known as the Neville Building.

The site “supports a broad range of potential uses, including residential, office, hospitality, retail, or institutional redevelopment,” according to the listing. The building is a "High Vacancy Property," the listing says.

The office property could become the next to transform to another purpose, as CoStar data shows demand contracting in the office market in the final stretch of the year.

“Looking ahead, Philadelphia will find it difficult to sustain the rent growth seen prior to 2020. With tenants continuing to downsize as leases expire, rents are expected to remain soft.”

Owners of other Philly office buildings intend to pursue plans to convert them or have completed projects to transform them.

The four-story office building at 1232 Chancellor St. sold this fall for $1.75 million, CoStar data shows. The new owner plans to convert the upper floors to boutique apartments, Philadelphia Business Journal reported. Alterra Property Group this year turned the 18-story office building at 1701 Market St. into a 299-unit luxury apartment complex.

The Neville Building, three blocks west of the historic Washington Square park, is owned by Thomas Jefferson University and has been used by Jefferson Health. The university bought the building for $13 million in 2013, CoStar data shows. The university did not immediately respond to an email request for comment.

The property’s commercial history includes a stint as the home of Associated Services for the Blind and Visually Impaired, the marketing material notes.

“Its incorporation into Jefferson’s expanding urban campus supported the institution’s broader strategy of integrating nearby properties to support clinical, administrative, and academic functions," according to the marketing materials. "This latest chapter underscores the building’s continued adaptability and enduring relevance within Center City’s evolving institutional corridor."

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Long Island real estate firm buys Lehigh Valley's Forks Town Center

 By Ryan Cashion Costar

The Cassata Organization, a Long Island-based real estate firm that owns and operates a large portfolio of apartments, diversified its investment focus with the recent acquisition of Forks Town Center, a grocery-anchored shopping complex in Forks Township, Pennsylvania.

The sale of the Lehigh Valley retail center was arranged by CBRE and transacted through Nike Equities, a real estate advisory firm specializing in real estate development and asset management, on behalf of Cassata. The fully-leased center located at 301 Town Center Blvd. measures 112,741 square feet and traded for $25.5 million, or about $254.36 per square foot.

The sale did not include the freestanding CVS-leased building.

Cassata acquired the property as part of a 1031-exchange following the recent sale of an apartment complex. The retail center wsa sold by J.C. Bar Properties, a commercial real estate company based in York, Pennsylvania.

The retail center is anchored by the grocery chain Giant and has Dunkin’, PNC Bank, Fine Wine & Good Spirits and Verizon as tenants

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Endurance Real Estate Group sells South Jersey distribution facility

 By Holly Polivka CoStar Research

Radnor, Pennsylvania-based Endurance Real Estate Group sold the East Gate Center, a fully leased distribution facility located at 116 Gaither Dr. in Mount Laurel, New Jersey, to Associated Builders and Contractors, a national construction industry trade association based in Washington, D.C.

ABC purchased the building for $17.55 million, or approximately $165.57 per square foot, in what is described by brokers as an owner-user deal. The building is currently occupied by Food Sciences Corp., a contract/private label manufacturer that develops, blends and packages nutritional food products intended to combat the disease of obesity and its related chronic conditions. Food Science Corp. has been located here since 2019.

Built in 1982 ,the 106,000-square-foot building includes 8,105 square feet of office, 13 loading docks and 10 drive-in bays. 

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Eli Lilly to open shared lab space for fledgling biotech startups in Philadelphia

 By CoStar News Staff

Eli Lilly announced plans to open a new Lilly Gateway Labs in Philadelphia, bringing what it describes as a "distinctive model of scientific partnership" to the city that has a sizable healthcare and medical research presence. According to the Indianapolis-based medicine maker, the lab is intended to provide fully equipped space and the drugmaker's expertise to promising, early-stage biotechs.

"By fostering scientific breakthroughs and helping biotechs remove hurdles, we help companies speed the development of life-changing medicines for patients around the world," the company said.

The new Gateway Labs site will occupy 44,000 square feet on the first and second levels of 2300 Market, a new life sciences facility in Center City developed and operated by Breakthrough Properties. The Los Angeles-based developer of life science facilities is structured as a joint venture between Tishman Speyer and Bellco Capital. It recently raised $430 million in a second investment fund to back biotech property investments in major life science hubs such as Boston, San Francisco and San Diego.

The new lab facility will operate as a type of coworking/incubator space for biotech firms, providing access to fully equipped wet lab facilities, building amenities, as well as the opportunity for startups housed in the lab to consult with members of Breakthrough Properties' Scientific Advisory Board and Eli Lilly scientists and executives, who will offer "strategic engagement to help accelerate innovation," according to the building's developer.

The space will be equipped with cold storage, centrifuges, autoclave and other equipment used in life science research. On-site staff including concierge service, lab operations and dock management will further support research and development services and business development efforts, while also minimizing participating companies' upfront costs. Building amenities include an on-site café, conferencing space and a fitness center.

"By providing innovative scientists with comprehensive lab space, flexible growth opportunities and ready access to top minds and funding sources, Lilly Gateway Labs at Breakthrough will help reinforce Philadelphia as a hub for life changing discoveries," said Breakthrough Properties Chief Investment Officer Daniel D'Orazi, in a statement announcing the new facility.

"Philadelphia has long led biotech innovation, from early vaccine development to pioneering gene therapy and CAR-T treatments and discovering new approaches to Alzheimer's disease. Today's local biotech scene builds on that legacy with founders tackling medicine's toughest challenges," said Julie Gilmore, Ph.D., vice president, and global head of Lilly Gateway Labs and Catalyze360 Portfolio Management in a statement. "Access to top-notch lab infrastructure is essential, but success for early-stage companies also requires experienced thought partners who understand the science and can help navigate the challenging journey from discovery through early clinical development."

Lilly Gateway Labs joins cell-therapy research firm Legend Biotech as the first two tenants signed in the eight-story building designed by Philadelphia-based architecture studio KieranTimberlake and measuring nearly 227,000-square feet. The new building is located next to academic medical centers at the University of Pennsylvania and Drexel University, as well as number of life science-related firms in Philadelphia's University City neighborhood.

The remaining space in the building offers lab-ready shell space in flexible lab zones that can accommodate a wide range of research uses. Leasing for 2300 Market is being handled by Cushman & Wakefield.

Since the opening of the first Gateway Labs site in December 2019, Eli Lilly said participating companies have attracted more than $3 billion in capital supporting more than 50 therapeutics and platforms currently in development. In addition to Philadelphia, Lilly has Gateway Labs sites in South San Francisco, San Diego, Boston, Beijing and Shanghai.

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AI Company Lease 23,000SF in Philadelphia

 By Katie Burke CoStar News

An artificial intelligence company is relocating its corporate headquarters to Philadelphia, proving that sparks from the national office leasing boom have officially landed in the city.

Datavault AI, a data trading company previously based in Oregon, inked a deal with landlord Brandywine Realty Trust to replant its primary hub in the One Commerce Square tower at 2005 Market St. The lease is one of the early indicators that the momentum fueled by demand among AI companies is spilling over from tech-concentrated hubs such as Silicon Valley and San Francisco into other markets.

The Center City lease, finalized earlier this month, spans a little more than 23,000 square feet on a five-year term.

"Our Philadelphia headquarters marks more than a new address, it is a statement of intent," Datavault CEO Nathaniel Bradley said in a statement. The new space will be able to accommodate and support the company's future growth goals, ensuring that "the foundation is now set for our next phase of expansion."

Datavault's outpost in the more than 1 million-square-foot tower is set to house the bulk of the company's development, sales and operations teams, all of which are expected to expand as the company ramps up acquisitions, licensing deals and targets up to $50 million in revenue for next year.

It isn't yet clear when the AI company plans to take over its space in the 41-story tower overlooking the Schuylkill River. A couple of years ago, it signed a deal for 10,800 square feet for its soon-to-be-former headquarters in Beaverton, Oregon, an agreement that isn't scheduled to expire until 2029.

Art of some new deals

Explosive growth across the AI sector, coupled with many companies' emphasis on in-person work, has translated into a procession of office deals across the United States that has helped to reshape demand dynamics in many pandemic-battered cities.

Leasing among tech companies rose by more than 21% through the first quarter of the year compared with the same period in 2024, a spike that accounted for just shy of 8 million square feet worth of deals. That activity represented a roughly 16.5% share of total office leasing volume nationally and builds off the momentum tech companies generated last year when they accounted for about 18% of all U.S. leasing.

By comparison, leasing among tech companies represented a little more than 14% of the total national leasing volume in 2023.

In San Francisco alone, AI tenants are on the hunt for about 9 million square feet of office space, up from 6.5 million earlier this year. And AI companies have signed upward of 85 leases in San Francisco so far this year.

The typical deal has averaged about 16,655 square feet, but the average term is just 31 months. That is much shorter than the typical office commitment and a sign that many AI startups are unclear about how quickly they'll be growing — and how much more space they'll need.

That deal structure is now extending beyond the Bay Area, as AI-driven demand is unfurling in markets such as Seattle, Boston, New York, Philadelphia, Denver and Austin, Texas.

Beyond the base

Landlords are especially optimistic about the global AI boom, given how quickly many startups are expanding their real estate portfolios by adding office locations or rapidly making existing ones bigger.

Some AI companies, such as Datavault, are starting small. But these companies' spatial requirements have been quick to build as they scramble to keep up with headcount and revenue growth. And while shorter lease terms used to be reflective of tenant uncertainty or caution, landlords now say it's a sign of growth to come.

West Coast landlord Kilroy Realty, for example, reported an influx of demand for shorter-term deals from AI companies. That's not because they aren't willing to commit, but rather because they aren't yet clear on how quickly they'll be growing.

"They're prioritizing that flexibility as it relates to the shorter-lease term because they believe their businesses are going to grow and evolve and they want to make sure that they can have space over the next five to 10 years that's going to meet their needs," CEO Angela Aman told analysts.

To be clear, Philadelphia is far from becoming the next AI hub or reaching a level similar to San Francisco, where the sector has helped rocket the region back to pre-pandemic levels of activity.

Yet the Datavault deal shows companies are both expanding to secondary tech markets or looking to them directly as alternatives to the nation's leading cities. For the now Philadelphia-based company, CEO Bradley said the new headquarters location was chosen "for its access to diverse technology talent, robust infrastructure, and proximity to major financial and academic institutions," all of which come at a significantly cheaper price than if it were to land a spot in San Francisco's SoMa neighborhood or Midtown Manhattan.

Rents in Philadelphia's Center City average a little more than $36 per square foot, according to CoStar data. Rents in parts of Silicon Valley, meanwhile, are now climbing to an average of nearly $72 a square foot.

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Office Deep Dive: Philadelphia ranks 12th nationally in big-block office availability

 

By Brenda Nguyen CoStar Analytics

As the nation's ninth-largest office market, Philadelphia ranks 12th out of 15 major metropolitan markets for big-block office availability. The local market currently lists 62 spaces exceeding 100,000 square feet in four- and five-star buildings — enough to offer options for large companies, but still far behind the top-performing cities.

Dallas-Fort Worth leads all markets with 156 big-block spaces, while Washington, D.C., nearly matches that with 154, providing more than twice the number of large spaces available in Philadelphia. These markets and metropolitan areas give companies a wide range of choices and stronger leverage in lease negotiations.

New York lists 123 big-box spaces, and Boston has 104 available, leading the Northeast region.

Phoenix lists 69 spaces, and Seattle lists 66 spaces, both surpassing Philadelphia despite having smaller commercial real estate markets. Chicago also edges ahead with 68 spaces.

Philadelphia's 62 big-box options may attract certain tenant profiles while deterring others. Financial services, law firms and healthcare companies often find the market appealing because of lower rents, a strong local industry base and proximity to top universities.

Conversely, despite fewer space options, the market struggles to attract technology firms that prioritize Austin or San Francisco’s tech ecosystems. Government contractors naturally cluster around Washington's federal agencies, while Boston's biotech concentration pulls life sciences companies despite higher costs. Dallas-Fort Worth's central location and vast inventory appeal to logistics and distribution operations that require a national reach.

Philadelphia’s role in this landscape is that of a budget-friendly alternative, rather than a hub defined by industry focus or a large supply of expansive commercial space. Its appeal lies in affordability, accessibility and institutional strength — distinct advantages in the national office hierarchy.

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Brandywine bets on improving office dynamics with purchase of high-profile tower

 By Katie Burke CoStar News

In Philadelphia, office tour activity is on the rise as tenants hunt for larger amounts of space. Brandywine Realty Trust is one firm widening its bet on the market's brightening dynamics with a deal to acquire its joint venture partner's stake in a prominent Philadelphia development.

The real estate investment trust dropped $70.5 million to become the sole owner of the mixed-use tower at 3025 John F. Kennedy Blvd., a property split between office and residential that spans about 570,000 square feet. The Philadelphia-based firm, one of the project's original developers, initially had a 66% stake in the project.

The buyout deal is a small slice of the REIT's burgeoning optimism in the national office market's recovery.

"From an overall standpoint, the real estate markets and overall sentiment continue to improve," Brandywine CEO Jerry Sweeney told analysts on the company's recent earnings call. "Our pipeline activity continues to grow, tour volume remains at very healthy levels, rent levels and concession packages remain very much in line with our business plan and in select submarkets and buildings, and we continue to push both nominal and effective rents."

The 200,000-square-foot office portion of the 28-story building at the heart of the REIT's Schuylkill Yards development finished in 2023, and speaks to the demand Brandywine is seeing for "high-quality, highly amenitized buildings."

The offices are more than 90% leased to tenants including law firm Goodwin Procter and financial services provider Future Standard. The 326 multifamily units spread across the upper levels of the project are 99% occupied.

Brandywine declined to disclose the identity of its global institutional investment partner. The buyout deal, which closed earlier this month, also meant the REIT has assumed responsibility for the $178 million construction loan the joint venture took out to finance the roughly $325 million project. That debt is scheduled to mature in July, and CEO Jerry Sweeney said he is weighing whether to refinance the property next year in order to cut down on interest expenses.

“With the debt coming due, we think we have some positive refinancing outcomes at a very straightforward level,” Sweeney said. He added that the construction loan for the building is currently held to an 8% interest rate. If the REIT decided to refinance, Brandywine could net an annual savings of about $4 million.

Brightened outlook

To be clear, Brandywine is still slogging through some residual pandemic-related impacts that have resulted in declining occupancy and a challenged leasing landscape across its office portfolio. The landlord signed about 343,000 square feet of new and renewal deals throughout the quarter ended Sept. 30, boosting its total leased rate to just shy of 90.5% — a slight but steady boost compared to the same period last year.

Yet the ingredients for a widespread recovery, such as larger spatial requirements among tenants and boosted leasing activity, are pushing a number of the nation's largest landlords to widen their bets on the market's continued improvement.

BXP, for example, has kicked off construction for two ground-up developments in New York and Washington, D.C. Tishman Speyer recently closed its first Manhattan office purchase since 2019. And Kilroy Realty is drawing up plans for its long-awaited Flower Mart development in San Francisco.

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Quarry Center in Havertown, PA, co-anchored by Giant and Lowe's, sells for more than $80M

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

A 222,500-square-foot shopping center in Havertown with two national anchor tenants has sold for more than $80 million, according to an industry source.

Developer Eureka Ventures traded Quarry Center to Ohio-based Mid-America Management Corp. roughly four months after putting the Delaware County retail property on the market.

The sale price for Quarry Center comes out to more than $360 per square foot.

Buyer Mid-America Management is an investment firm based outside Cleveland with a $1 billion portfolio that includes more than 50 retail, industrial and residential properties.

Quarry Center is co-anchored by a Giant supermarket and a Lowe’s home improvement store, which together make up about 77% of the property’s income. The shopping center was built in 2013 and remains fully occupied by all of its original tenants, including an Xfinity Store, Panera Bread and Chipotle.

The 31-acre property is located at 116 Township Line Road near the intersection of routes 1 and 3.

Full story:  https://www.bizjournals.com/philadelphia/news/2025/10/23/quarry-center-sold-lowes-giant-retail.html

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Brandywine pays $70.5M for partner’s stake in University City building

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

Brandywine Realty Trust has acquired its joint venture partner's stake in 3025 John F. Kennedy Blvd. for $70.5 million, giving it complete ownership of the 570,000-square-foot property.

Philadelphia-based Brandywine originally had a 66% stake in the recently developed building, while its global institutional investment partner owned the balance. Brandywine (NYSE: BDN) declined to name the former joint venture partner. As part of the deal, Brandywine also assumed its share of the debt on the property.

The 28-story mixed-use University City building, just west of 30th Street Station,is split between 326 apartments on floors 10 through 28 and 200,000 square feet of office space on floors two through eight. Shared amenity space is on the ninth floor.

The project's total cost was $325 million, Brandywine reported.

Construction was completed in the fourth quarter of 2023, and Brandywine reported this week the residential portion of the building is 99% leased. The office portion will be 92% leased when anchor tenant Future Standard takes occupancy in the first quarter of 2026. Law firm Goodwin Procter occupies 31,000 square feet in the building.

Brandywine and its global institutional investor partner exercised a one-year loan extension for the property in the second quarter. Following the acquisition of the partner’s equity stake, Brandywine CEO Jerry Sweeney said Thursday on the company’s quarterly earnings call with investors that the firm is considering refinancing in 2026.

“With the debt coming due, we think we have some positive refinancing outcomes at a very straightforward level,” Sweeney said.

Full story: https://www.bizjournals.com/philadelphia/news/2025/10/23/brandywine-3025-jfk-equity-stake-acquired.html

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Rising US office leasing still remains below pre-pandemic pace

 By Phil Mobley CoStar Analytics

Leasing volume in the U.S. office market ticked up in the third quarter, according to preliminary estimates, but remains just shy of its pre-2020 norm.

The total square footage leased on new agreements — excluding renewals — is estimated to have reached between 100 million and 110 million square feet, or about 1.2% of inventory. While this marks a modest increase over recent quarters, it still trails the quarterly average of 115 million square feet recorded between 2015 and 2019.

A closer look at the data reveals that small lease sizes continue to weigh on overall volume. For more than two years, the average lease size has been 15% to 20% below its pre-pandemic level. At the same time, the number of transactions has been edging upward and is now nearly 10% higher than before 2020.

One possible explanation for this shift is the limited availability of large blocks of premium new space typically sought by major occupiers. With hiring generally slow, many large tenants appear to be renewing existing leases rather than expanding or relocating into new space.

The recovery in leasing is not evenly distributed across the country. A handful of major cities are seeing activity well above pre-2020 levels. New York leads the nation, buoyed by a strong rebound in office attendance and robust hiring by big banks. Charlotte, North Carolina, as well as Miami, Houston and Dallas-Fort Worth, also posted strong and accelerating leasing, driven by comparatively solid population and economic growth. San Francisco, meanwhile, has nearly returned to its pre-pandemic leasing pace, as artificial intelligence companies and other tech firms have begun to backfill a glut of sublet space.

In contrast, leasing in several other markets remains well below pre-pandemic norms. Cities such as Boston, Chicago, Los Angeles, San Diego and Washington, D.C., continue to lag, probably reflecting ongoing adjustments to per-worker space needs and local economic factors.

Despite generally slow hiring and an uncertain economic outlook, the upward trend in leasing volume signals that tenants still have an appetite for office space. However, with the supply pipeline contracting and prime availabilities becoming scarce, sustaining high levels of leasing may prove challenging. Some tenants may find themselves reconsidering space they previously passed over if their needs become acute.

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1650 Arch St., Center City office tower with $43M debt heads to auction

Paul Schwedelson / Philadelphia Business Journal

The foreclosure case for 1650 Arch St. could be nearing an end.

1650 Arch Investor LP, the affiliate of ASI Management that owns the 553,000-square-foot office building, is scheduled to be sold at a public auction on Nov. 5. Bidding will be conducted online, as well as in person in front of the New York Supreme Court building in Manhattan, according to a published auction notice.

The half-vacant Center City property was hit with a foreclosure complaint in the Philadelphia Court of Common Pleas in June and has been in receivership since July.

An affiliate of Wilmington-based Delphi Financial Group originated a $75.8 million loan on 1650 Arch St. to Philadelphia-based ASI Management in 2018, according to the foreclosure complaint. The loan’s maturity date was later extended two years to July 2024, but the complaint shows ASI Management did not pay off the debt.

The auction notice states the loan has an outstanding balance of $43 million.

ACORE Capital Mortgage is the administrative agent for the loan and is offering 1650 Arch Investor LP for sale on behalf of the lender. OPEX CRE Management is the property’s receiver. Colliers’ Carl Neilson is leading the auction process.

As the debtholder, Delphi Financial Group has the option to join the bidding and use the full amount it is owed as a credit toward the purchase price. The scenario is similar to the process that played out with the Wanamaker building earlier this year, when New York real estate firm TF Cornerstone leveraged the $120 million in debt it held on that distressed office property to acquire it at auction and complete a foreclosure process.

Full story:  https://www.bizjournals.com/philadelphia/news/2025/10/20/center-city-office-tower-auction-date-set-loan.html

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Recent big-box departures mask Lehigh Valley’s underlying stability

By Brenda Nguyen CoStar Analytics

While the region's market-level indicators suggest widespread weakness, a closer look reveals that massive warehouses skew the data. Mega-distribution centers’ outsized influence has lately largely driven the Lehigh Valley’s underperforming headline figures.

Over the past year, occupiers returned or listed 3 million square feet within buildings larger than 500,000 square feet, while properties smaller than this threshold experienced negative absorption of 194,000 square feet.

Two prominent closures contributed to recent underperformance. Earlier this year, Shopify vacated and listed its 1.25 million-square-foot facility at Bridge Point 78, with eight years remaining on its lease. Last month, United Natural Foods also listed its two-building distribution campus, totaling 1.33 million square feet, for sublease after shuttering its operations over the summer.

These two exits alone stripped nearly 2.6 million square feet from occupied inventory, pushing the sublet share of available space above 45%. Meanwhile, the sublet share of availability is only 8.4% for facilities smaller than 500,000 square feet.

Facilities larger than 500,000 square feet now account for 10.1 million square feet of available space compared to 12.4 million square feet across all smaller buildings combined. Subsequently, only a handful of big-box properties represent 45% of the Valley's total industrial availability — an outsized concentration that masks underlying stability in the conventional warehouse market.

While smaller properties maintain steady occupancy, the region's excess supply of large-format buildings amid slowing economic growth will create absorption challenges for the big-box segment in the coming quarters.

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Institutional buyers drive Lancaster industrial investment to a historic high

 

By Brenda Nguyen CoStar Analytics

Lancaster, Pennsylvania's industrial market has hit a historic milestone. Investment reached $418.9 million in the trailing 12 months through the third quarter of 2025 — a record that signals the market has entered a new era of institutional interest.

Institutional investors dominated the action, accounting for more than half of all transaction volume by dollar value over the past year. Private buyers captured 20% of the market, while private equity firms claimed 25%.

In February, institutional investment manager Machine Investment Group acquired two former printing press facilities for $130 million with plans to redevelop them into data centers. This marked the highest valued industrial trade in Lancaster’s history.

Dalfen Industrial, Spectre Equities and Upward Investments are among other institutional players that have acquired local industrial facilities in the past year.

Lancaster’s recent performance surpassed its previous record of $402 million in trailing 12-month sales, set during the third quarter of 2021. That earlier peak came during the pandemic boom, when surging demand for logistics and distribution space drove industrial development across the Mid-Atlantic to new heights. Lancaster's ability to exceed that mark demonstrates a fundamental shift in the county's industrial real estate landscape.

The surge reflects the growing strength of Pennsylvania's industrial corridor. Lancaster offers proximity to major metropolitan markets, robust logistics infrastructure and competitive operating costs — a combination that continues to draw warehouse, distribution and manufacturing operations. Amid limited new development, Lancaster punches above its weight as a small industrial market delivering outsized results.

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Recent big-box departures mask Lehigh Valley’s underlying stability

 By Brenda Nguyen CoStar Analytics

While the region's market-level indicators suggest widespread weakness, a closer look reveals that massive warehouses skew the data. Mega-distribution centers’ outsized influence has lately largely driven the Lehigh Valley’s underperforming headline figures.

Over the past year, occupiers returned or listed 3 million square feet within buildings larger than 500,000 square feet, while properties smaller than this threshold experienced negative absorption of 194,000 square feet.

Two prominent closures contributed to recent underperformance. Earlier this year, Shopify vacated and listed its 1.25 million-square-foot facility at Bridge Point 78, with eight years remaining on its lease. Last month, United Natural Foods also listed its two-building distribution campus, totaling 1.33 million square feet, for sublease after shuttering its operations over the summer.

These two exits alone stripped nearly 2.6 million square feet from occupied inventory, pushing the sublet share of available space above 45%. Meanwhile, the sublet share of availability is only 8.4% for facilities smaller than 500,000 square feet.

Facilities larger than 500,000 square feet now account for 10.1 million square feet of available space compared to 12.4 million square feet across all smaller buildings combined. Subsequently, only a handful of big-box properties represent 45% of the Valley's total industrial availability — an outsized concentration that masks underlying stability in the conventional warehouse market.

While smaller properties maintain steady occupancy, the region's excess supply of large-format buildings amid slowing economic growth will create absorption challenges for the big-box segment in the coming quarters.

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Pennsylvania Biotech Center eyes campus expansion with Fred Beans Automotive

 By John George – Senior Reporter, Philadelphia Business Journal

The Pennsylvania Biotechnology Center of Bucks County is exploring further expansion.

The center is looking at developing a new laboratory and office building on a 2.85-acre lot directly across the street from its campus at 3805 Old Easton Road in Buckingham Township, near its Doylestown border.

The vacant property, owned by the Fred Beans Automotive Group, was previously home to a swimming pool construction company.

The Bucks County Industrial Development Authority recently received a $150,000 state grant from the PA SITES (Strategic Investments to Enhance Sites) program to fund engineering costs for a feasibility study on the potential expansion.

While specific plans are still in development, the proposed structure would likely span 30,000 to 35,000 square feet and could support a range of life sciences uses.

"We’re a big believer in the Doylestown biotech corridor," said Lou Kassa, CEO of the Pennsylvania Biotech Center. "While the industry currently is in a slowdown, we still see great possibilities ahead."

The Pennsylvania Biotech Center operates B+labs at the Cira Centre in University City. B+labs, which last year doubled in size to four floors comprising 100,000 square feet at Cira Centre, is home to 19 resident companies.

Its Bucks County campus, which has about 100 members, including 58 companies and four nonprofits, consists of four buildings totaling 150,000 square feet. Its most recent building addition occurred in 2022, when its opened a $13 million, 37,000-square-foot building that housed an auditorium, a cafeteria, and expanded lab, freezer and office space.

Kassa said the organization recently had to turn down a request for space at the Bucks County center because the company needed more space than what is available.

Along with the potential for further growth in biotech, the Pennsylvania Biotech Center sees opportunities in other areas such as radiopharmaceuticals, animal health and agricultural sciences, Kassa said.

"We also anticipate working with AI innovators in various aspects of biotech and the life sciences," he said.

If the center moves forward with the project, it is not planning to purchase the property but would instead be the operator of the new building in a partnership with the Fred Beans Automotive Group.

Full story: https://www.bizjournals.com/philadelphia/news/2025/10/14/pennsylvania-biotechnology-center-bucks-county.html

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Philadelphia's retail slowdown hits city rents harder than the suburbs

 By Brenda Nguyen CoStar Analytics

Philadelphia's retail rent growth has slowed in recent quarters, matching a nationwide pattern. A wave of store closures has swept through the metropolitan area, with Rite Aid, Party City, Walgreens and Big Lots shuttering multiple locations. The slowdown has hit the city and suburbs differently, driven by changing shopping habits and contrasting population trends.

The city's retail rents have fallen more steeply than in suburban areas. By October, asking rents declined 1.7%, weighed down by sluggish population growth that has depended heavily on international immigration.

While pedestrian foot traffic has improved downtown, recovery is still hovering between 80% and 85% of 2019 levels, according to the Center City District's analysis of Placer.ai data. As a result, more area residents are redirecting their spending to the suburbs, a shift that has propped up suburban retail rents in recent years.

Suburban asking rents also dipped, falling 0.5%. However, steady population growth has kept suburban rent performance ahead of the city's decline.

Grocery chains have claimed the largest suburban retail leases. Giant, Whole Foods Markets, Sprouts Farmers Market, Grocery Outlet and others lead the list. Fitness operators have also expanded, with Club Studio Fitness, The Picklr and Planet Fitness committing to spaces exceeding 10,000 square feet over the past year. In the city, experiential venues, healthcare providers and discount retailers have signed the largest leases.

Looking ahead, forecasts indicate that regional rent growth is unlikely to improve until mid-2026, when uncertainty surrounding tariff policies, labor market conditions and broader economic factors dissipates.

Site Centers strikes deals to sell four retail properties, including two in New Jersey

 By Linda Moss CoStar News

Site Centers has taken another step in offloading its retail properties, with deals in place to sell four shopping centers for $263.6 million, including two in New Jersey.

Beachwood, Ohio-based Site, a real estate investment trust, said it was under contract to sell Nassau Park Pavilion in Princeton, New Jersey, for an aggregate price of roughly $137.6 million in cash to B33 Nassau Park Pavilion.

And in a separate deal, Site has an agreement to sell three shopping centers for $126 million in cash to Haverford Retail Partners, based in Bryn Mawr, Pennsylvania, according to a regulatory filing. The deal covers East Hanover Plaza in East Hanover, New Jersey; Southmont Plaza in Easton, Pennsylvania, and Stow Community Center in Stow, Ohio.

All the sales are expected to close in the fourth quarter, Site said.

Site has been divesting a long list of shopping centers. The REIT has sold many of its retail centers in addition to spinning off Curbline Properties, a collection of its strip malls, a year ago as a standalone public company.

Nassau Park Pavilion is a 1.1 million-square-foot multibuilding property in the heart of the busy U.S. Route 1 retail corridor. Its major tenants include Home Depot, Dick’s Sporting Goods, Target, Walmart, Wegmans, Dollar Tree and Five Below.

The shopping center is encumbered by a mortgage loan with an outstanding principal balance of about $98.5 million, according to Site. Based on current interest rates, when the sale closes, Site expects to pay a make-whole premium of roughly $7.6 million in connection with its repayment of the loan.

East Hanover Plaza on Route 10 is roughly 360,000 square feet, with a tenant roster that includes Costco, HomeGoods, HomeSense and Sierra Trading.

Southmont Plaza is about 386,000 square feet, with tenants including Barnes & Noble, Dick’s Sporting Goods, Lowe’s, Best Buy, Dollar Tree and Ross Dress for Less.

East Hanover Plaza and Southmont Plaza currently serve as collateral for part of Site’s mortgage indebtedness, according to the REIT, and the release price applicable is expected to be about $39.1 million in aggregate.

Stow Community Center is around 508,000 square feet, with major tenants such as Kohl’s, Old Navy, Hobby Lobby, Target and Ulta Beauty.

In another New Jersey deal, Site recently sold Edgewater Towne Center, a mixed-use property in Edgewater, New Jersey, for $53.2 million. The buyer was Daibes Enterprises of Edgewater, according to CoStar data.

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Ecopax expanding Lehigh Valley headquarters

 By Holly Polivka CoStar Research

Ecopax is expanding its Bethlehem headquarters by 104,238 square feet.

The manufacturing facility at 1355 Easton Road will gain six more loading docks, 12 additional parking spaces for trucks and upgraded fire protection infrastructure.

The family-owned company produces takeout containers, food trays, cups, bags and other products in a variety of materials and finishes that are said to be eco-friendly. 

The building was constructed in 2017, and was originally around 145,500 square feet. The facility was then expanded in 2021 to the current square footage of 315,643 square feet.

J.G. Petrucci Company, a development and design/build company, has partnered with Ecopax in the latest expansion.

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Stateside Vodka moving headquarters to Philadelphia

By Samuel Murch CoStar Research

Stateside Vodka has signed a 34,200-square-foot sublease at 1100 Ludlow St. in Philadelphia, marking a major move for the beverage company as it relocates its corporate headquarters to Center City.

Known for its vodka and Surfside canned cocktails, Stateside Vodka currently operates out of a smaller facility in Feasterville-Trevose, Pennsylvania. The new headquarters will span the fifth and sixth floors of 1100 Ludlow St., where the company plans to renovate the space to suit its operational needs.

The move-in is targeted for May 2026.

The company has committed to an 11-year lease, which will begin as a sublease and transition into a direct lease toward the end of the term.

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Celebrations Wedding Venue and shopping center in Bensalem sell for $6.9M

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

Celebrations Wedding Venue and the adjacent shopping center in Bensalem have been sold for $6.85 million.

Bensalem Landmark Plaza GP and Celebrations owner Francesco Dicianni sold the 7.8-acre commercial strip at 2201 Galloway Road to an entity called Bensalem Landmark Shopping Center LP, according to Bucks County property records.

The liquor license for Celebrations was also recently transferred to the new owner, according to the Pennsylvania Liquor Control Board. Dicianni is listed as manager of the reissued liquor license, and employees who answered the phone at Celebrations said the venue will continue to operate as normal.

An individual identifying themselves as the general manager of Celebrations declined to provide additional information on the sale.

The retail center included in the deal has a Fine Wine & Good Spirits store, Fabricare Laundromat, H.F. Hornberger’s Bakery and Nate Gordon’s Black Belt Academy among its tenants.

Full story: https://www.bizjournals.com/philadelphia/news/2025/10/08/celebrations-wedding-venue-sold-bensalem.html

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Starr Insurance expanding Center City footprint by 66% with office move

 Paul Schwedelson / Philadelphia Business Journal

Starr Insurance is expanding its Philadelphia office footprint by 66% as Center City leasing activity has shown signs of picking up.

The New York-based insurance and investment firm will take the entire 31,600-square-foot top floor of 30 S. 17th St., also known as the Duane Morris Plaza, according to industry sources and brokerage firm Savills’ quarterly market report.

Starr will make the move from about 19,000 square feet at 1601 Market St., according to real estate data firm CoStar, which is less than a block away from the firm’s future office. Starr Insurance lists the location as its Mid-Atlantic regional office.

Starr reported $11.9 billion in gross written premiums and $41.1 billion in total assets as of Dec. 31.

The deal is the first major lease signed at the 20-story Duane Morris Plaza since owner Los Angeles-based Oaktree Capital Management announced plans to refurbish the lobby and implement system upgrades.

The renovations were planned in connection with law firm Duane Morris agreeing to a long-term lease renewal that included a 45,000-square-foot downsize. Duane Morris agreed to take retain 195,000 square feet, remaining the building’s anchor tenant and holding onto naming rights. The building fronts both 17th and 18th streets between Ludlow and Ranstead streets, just south of Market Street.

Full story: https://www.bizjournals.com/philadelphia/news/2025/10/08/starr-insurance-office-lease-center-city-expansion.html

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Day & Zimmermann to slash office space by half in Center City HQ move

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

Construction and engineering firm Day & Zimmermann will slash its office space by half when it moves to 1835 Market St. next year.

The firm signed a long-term, 48,074-square-foot lease and will relocate from more than 100,000 square feet at 1500 Spring Garden St., where it’s been headquartered for nearly two decades, according to brokerage firm Savills’ quarterly market report and industry sources.

Day & Zimmermann generated $3 billion in revenue in 2024, up from $2.3 billion the year earlier, to rank sixth in the Business Journal’s List of the largest private companies in the Philadelphia area. The firm had more than 1,600 employees in the region and 37,000 employees total, according to Business Journal data.

Day & Zimmerman didn’t respond to requests for comment. The third-generation family owned company was founded in 1901 and specializes in construction, engineering, staffing and defense for global corporations and governments.

Despite the significant downsize, the lease is one of the larger Center City office leases this year.

Both 1500 Spring Garden St. and 1835 Market St. are owned by entities that were partnerships of New York firms InterVest Capital Partners and Nightingale Properties. Nightingale Properties has recently dealt with financial troubles and earlier this year CEO Elie Schwartz was sentenced to seven years in prison for an investment fraud scheme.

The 2024 assessed value of the 13-story, 1.2 million-square-foot 1500 Spring Garden St. building was reduced to $87 million from $192.6 million last year. For tax year 2025, it was reduced to $76 million from $159.2 million.

At 1835 Market, Klehr Harrison Harvey Branzburg signed a short-term extension to retain its 67,000 square feet this past spring. Other tenants in the building include the U.S. Department of Labor, which takes 80,000 square feet, and law firms Burns White and the Gold Law Firm. 1835 Market is also known as Eleven Penn Center.

Full story: https://www.bizjournals.com/philadelphia/news/2025/10/05/day-zimmermann-relocation-philadelphia.html

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Barrack Hebrew Academy receives $10M gift, buys Main Line buildings

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

The Barrack Family Foundation has donated $10 million to the Jack M. Barrack Hebrew Academy, a gift used by the school to help acquire its portion of the Jewish Federation of Philadelphia's Schwartz campus in Bryn Mawr.

The donation is the largest gift from a single donor in the school’s history and comes as the Federation has been reducing its real estate portfolio. It sold its former headquarters at 2100 Arch St. in Philadelphia in 2023 for $12 million, and has looked to sell off its portfolio of campuses totaling 100 acres with more than 600,000 square feet of building space, including the Schwartz campus.

The Jack M. Barrack Hebrew Academy's acquisition is for two buildings, tennis courts and a soccer field, which make up the school’s portion of the Main Line campus at 272 S. Bryn Mawr Ave. The academy, which had been the largest tenant on the property, will rename its portion of the campus to the Leonard and Lynne Barrack Campus for Jewish Life.

The sale included an 86,500-square-foot building and a 30,054-square-foot building. The school has been located at the site since 2008, shortly after the Jewish Federation bought the entire 35-acre campus in 2007.

“The sale [of 272 Bryn Mawr Ave.] frees up more of the Federation’s resources to advance our mission to enrich Jewish life across the region, making it a win for both organizations and for the Greater Philadelphia Jewish community,” Jewish Federation CEO Michael Balaban said.

A spokesperson for the school declined to say what it paid for the two buildings, though an industry source familiar with the transaction said the deal was for more than $10 million.

Full story: https://tinyurl.com/3hx6wcfh

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Ventas secures $475 million CMBS loan on Pennsylvania life sciences buildings

 By Mark Heschmeyer CoStar News

Ventas and partner GIC have refinanced $425 million in debt on three university-leased life sciences buildings in Pennsylvania through a $475 million transaction on the commercial mortgage-backed securities market. The investors pulled out $40.5 million in cash as part of the deal.

Long-term leases with Drexel University in Philadelphia and the University of Pittsburgh in Pittsburgh support the refinancing.

Wells Fargo and JPMorgan Chase originated the four-year, interest-only CMBS loan at 5.75%, according to a KBRA analysis of the upcoming bond offering.

The portfolio includes two properties totaling 811,025 square feet — a single building in Philadelphia and a two-building property in Pittsburgh.

In Philadelphia, Drexel Academic Tower accounts for 52% of the collateral. Drexel fully occupies the roughly 460,000-square-foot complex under a lease running through July 2052. The university's lease extends 23 years past loan maturity, according to KBRA.

Drexel consolidated three academic units in the building: its nursing and health professions college, medical school, and biomedical sciences graduate program.

The Assembly in Pittsburgh comprises about 350,000 square feet across two connected buildings. Assembly I is a former century-old Ford plant converted into about 234,500 square feet of lab and office space. Assembly II, with about 115,600 square feet, was completed in 2022.

The University of Pittsburgh leases all of Assembly I through February 2038, according to KBRA. The space houses wet and dry labs, classrooms, faculty offices and a 250-seat auditorium.

Apple occupies about 72,000 square feet in Assembly II, according to CoStar data. Biohaven Pharmaceuticals holds the remaining 36,445 square feet through November 2035.

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Leasing remains resilient for small bay industrial space

 By Juan Arias CoStar Analytics

Despite industrial leasing performance slowing across all property-size ranges, the small bay segment of the market, typically catering to tenants occupying less than 10,000 square feet, has maintained lower availability and higher rent gains in the past few quarters than its larger counterparts.

This has been driven by limited supply additions and elevated demolition levels of smaller industrial properties. On average, for every 100 square feet of small bay space added to the market, 30 square feet is demolished.

This market segment also has a larger and more liquid tenant demand base, with 1,000 to 10,000 square foot tenants accounting for over 60% of new lease activity annually since 2010. In contrast, industrial tenants in the 10,000 to 25,000 range represent an additional 24% of new leasing activity and those in the 25,000 to 50,000 square foot range account for just 10% of new leasing activity.

Combined, these smaller tenants account for over 90% of leasing activity in any given market, making larger logistics leases of over 50,000 square feet a rarity under normal economic conditions.

Apart from having a more even balance between supply and demand, the small bay industrial sector has also experienced more leasing activity since 2023. New lease activity, specifically for spaces below 10,000 square feet, bottomed out in early 2023 and has climbed higher since. Today, activity for this segment is only 5% below recent highs seen in 2019, as shown by the chart above.

Lease activity for 10,000- to 50,000-square-foot tenants has also remained more consistent, at about 80% to 85% of recent highs. While activity for these small bay tenants appears to be holding up, larger tenants have seen a continuous deterioration in leasing.

New lease transactions for industrial spaces measuring 50,000 to 100,000 square feet have fallen 25% from recent highs, and new leases for larger spaces of over 100,000 square feet have dropped 30%.

Asking rents have also performed better for smaller industrial lease sizes in recent months. Spaces under 10,000 square feet saw asking rents for triple-net leases, those that typically include payment of insurance, taxes and maintenance, climb to all-time highs in June of this year to over $13.50 per square foot. Asking rents for 10,000- to 25,000-square-foot spaces also reached new highs in July at over $11.80 per square foot, on a triple-net basis that's often referred to as NNN.

In contrast, all other larger lease sizes have seen lower asking rents after reaching cyclical highs in 2024, for leases of 25,000 to 50,000 square feet, while asking rents for larger-lease segments have declined since 2023.

That said, in the longer run, since 2019, the larger segments have generally seen stronger asking rent appreciation as newly completed properties leased up. However, the momentum in driving rent growth from leases signed in new properties is now well in the rearview mirror.

In fact, new construction has continued to see higher availability rates in the last few months, with the exception of the largest properties, over 500,000 square feet.

While this largest property segment has maintained a closer balance between supply and demand, and typically has a higher percentage of build-to-suits, the same is not the case for mid-sized industrial properties, those measuring between 100,000 and 500,000 square feet as well as those between 50,000 to 100,000 square feet. These size cohorts have seen an elevated supply wave in the past few years, catering to tenants with similar size requirements. However, tenants in these size ranges have become much less active today.

Industrial properties under 50,000 square feet have also seen space availability increase in new construction, as small bay tenant requirements are not as cut-and-dried as those of larger tenants. Small bay tenants tend to have a stronger preference for proximity to their end-consumer, which is highly dependent on local market dynamics. These consumers can be a high-density residential area, a manufacturing hub or a data center hub, just to name a few.

Also, small-bay tenants tend to place less of a priority on ceiling heights as their business is typically less reliant on warehousing inventory. Therefore, newer properties with elevated clear heights may not appear as attractive to small bay industrial users.

Since 2010, newer small bay properties have, on average, been built 13 miles or more from a city’s central business district, or CBD. However, they have gradually become less competitive relative to older infill properties located closer to the CBD. Although these infill properties may be much older, their proximity to end consumers, which helps tenants save on transportation costs, is an amenity that newly constructed small bay properties cannot easily replicate.

In fact, while properties built within an eight-mile radius of the CBD tend to be of 1960s to 1980s vintage, these tend to have an availability rate that is one percentage point lower than their newer counterparts located 14 miles away from the CBD.

Even so, local market dynamics can vary widely, and distinct regional factors may be contributing to the stronger performance of small bay properties in certain areas.

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Lehigh Valley grapples with record-high industrial vacancy

By Brenda Nguyen CoStar Analytics

The Lehigh Valley industrial sector — long regarded as one of Pennsylvania’s strongest logistics hubs — is experiencing its steepest downturn in more than a decade. Owners of recently completed warehouses are faced with shrinking tenant demand, while a wave of new supply has pushed vacancy to the highest level since 2010.

As of the third quarter, net annual absorption, or the net change in occupancy, was negative 2.7 million square feet, extending last year's occupancy losses. Meanwhile, 1.5 million square feet of new warehouse space was added to the market inventory, driving the vacancy rate up 220 basis points year over year to 8.5%. That average vacancy level exceeds the national average of 7.4% and is expected to climb further before the end of the year.

The amount of available sublease space also increased, with sublease space accounting for 16% of the 21.4 million square feet of available space in the market. The recent closures of several big-box facilities contributed to the recent uptick in sublease availability.

In early 2025, discount retailer Big Lots, which filed for bankruptcy in late 2024, closed its 1.3 million-square-foot distribution center in Tremont, delivering a significant blow to net absorption. Over the summer, Home Depot vacated its 822,500-square-foot facility at The Crossings North in Breinigsville and listed the entire building for sublease with three years remaining on its lease.

Shopify also reduced its footprint, offering 300,000 square feet of its 1.25-million-square-foot facility at Bridge Point 78 for sublease in March.

While continued industrial leasing provided some relief, Lehigh Valley’s industrial market will likely face additional challenges through the end of 2025. The near-term outlook calls for vacancy to continue to increase as demand wavers amid tariff concerns and broader economic uncertainty.

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Philadelphia’s suburban apartment market cools as landlords boost incentives to attract tenants

 

By Brenda Nguyen CoStar Analytics

Philadelphia’s suburban apartment rental market is showing signs of cooling, as landlords with units to fill begin offering more perks to attract tenants. Following a strong spring leasing season, rental activity has slowed in late summer, prompting the enhanced offers for renters.

In August, the share of suburban apartment properties offering incentives increased to 16.7% from 10.5% in July. These incentives include reduced security deposits, waived application fees and free rent for one or more months.

Recent developments reflect this shift. Mi-Place at Downingtown, which opened with 400 units earlier this year, is offering one month of free rent on two-bedroom apartments and half a month free on one-bedroom units and townhouses with 10-month leases. J Veridian at Upper Dublin, a 310-unit complex completed this year, is offering up to two months of free rent and a $500 gift card for tenants signing 16-month leases.

August’s average concession rate is the highest recorded for that month in recent years. It stands 3.7 percentage points above the five-year August average of 13%, indicating the increased pressure landlords are feeling to fill vacancies.

However, this trend also reflects seasonal leasing patterns, as incentives are typically boosted at the end of summer to avoid empty units during the slower fall and winter leasing months.

Despite the recent increase, suburban multifamily properties in Philadelphia still offer fewer incentives than their urban counterparts. Concession rates averaged 25% for apartments in the city of Philadelphia in August.

While the increased concession levels suggest a short-term softening, the suburban market remains relatively strong compared to urban areas. The timing and scale of the changes point to a controlled adjustment rather than a major shift in market conditions.

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PECO buys Montgomery County property for $10.6M as part of expansion

By Paul Schwedelson – Reporter, Philadelphia Business Journal 

PECO has purchased a 70,000-square-foot office and warehouse in Plymouth Meeting to support its operations and future growth.

The energy company paid $10.6 million for the property at 500 S. Gravers Road, according to Montgomery County property records. The building was previously owned by North Jersey-based MSM Equities.

In a statement, PECO COO Nicole LeVine said the real estate acquisition is “part of a comprehensive, multi-year strategy to support the recent expansion and future growth of our operations teams.”

The 500 S. Gravers Road site is adjacent to the 480 S. Gravers Road property that PECO bought for $7.7 million in January 2024. It is located just south of I-276 and just west of the intersection of I-276 and I-476.

“Guided by input from our employees, this acquisition enables PECO to better connect teams and transition many of our employees out of temporary facilities and into permanent building space that better supports their work and well-being,” LeVine said.

Full story: https://shorturl.at/b9SMq

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Where Pennsylvania industrial property values saw the biggest increases

By Brenda Nguyen CoStar Analytics

Industrial real estate across Pennsylvania has seen steady price increases in recent years. The state’s eight largest markets posted gains in industrial property values ranging from 6.9% to 15.7% over the past three years.

Lancaster led the pack, with a 15.7% jump in industrial property values — more than any other location in the state. Fewer new buildings and strong demand for warehouse space helped push prices up. Only 3 million square feet of new industrial space was built in Lancaster during this time, an increase in the total supply of just 3.3%. That’s about half the growth rate seen in Philadelphia, which posted a 7.2% increase, and Lehigh Valley, which also saw a strong increase of 7%.

York came in second, with a 13.6% increase in overall industrial property values. Its lower average building prices and location near Philadelphia and Baltimore made it attractive to businesses and investors.

Philadelphia produced the third-largest increase in industrial property values, with an average increase of 12.7%. Much of that increase resulted from industrial property sales in southern New Jersey's Burlington County, which plays a key role in the Philadelphia region’s logistics network.

The strong performance of Lancaster and York demonstrates how smaller metropolitan areas are gaining ground and increasing in value within Pennsylvania’s industrial market. These areas offer lower costs and access to major highways and cities, making them appealing alternatives for tenants and investors to industrial properties in larger markets such as Philadelphia.

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Crow Holdings adds to growing Northeast Philadelphia portfolio with $25M warehouse project

By Paul Schwedelson – Reporter, Philadelphia Business Journal

Crow Holdings Development has acquired a Northeast Philadelphia property with plans to build a 103,500-square-foot distribution center at the site.

Dallas-based Crow Holdings paid $7 million to general contracting firm James D. Morrissey Inc. for the 10-acre property at 2748 Grant Ave. The site is just south of Northeast Philadelphia Airport and between I-95 to the east and Roosevelt Boulevard to the west.

Clark Machemer, senior managing director of Crow Holdings Development, said the project is expected to cost around $25 million, including the price of the real estate. Despite Philadelphia’s industrial vacancy rate rising in recent years, Machemer said the key to the project is positioning it for an underserved market at roughly 100,000 square feet.

“Any competitive set in that range is buildings that are 30, 40 years old,” Machemer said. “The competitive set of modern, new buildings — call it buildings [developed] in the last five years — are all well over 200,000 square feet.”

The Grant Avenue site is mostly vacant and has some outdoor storage space. It’s surrounded by other industrial properties.

The future one-story warehouse is planned to have 32-foot ceiling heights, 32 dock positions, two drive-in doors and parking for 65 vehicles. Construction, which is already fully approved, is expected to begin this fall and finish by late summer 2026.

Machemer anticipates the building would likely be leased to a single tenant.

“We’re trying to build buildings that meet the individual market,” he said.

The project adds to Crow Holdings Development’s growing Philadelphia portfolio, which includes four projects that have either been recently completed or are under development and total more than 650,000 square feet of industrial space.

A 147,000-square-foot warehouse at 14515 McNulty Road in Philadelphia is expected to be completed this fall and is fully leased to supply chain company Martin Brower. That property is five miles north of the future warehouse on Grant Avenue.

Full story: https://rb.gy/carktp

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111-acre Malvern office park up for sale as redevelopment opportunity

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

A Malvern office park spanning 111 acres is up for sale, offering a prime redevelopment opportunity on the Main Line.

The Malvern Green complex includes three office buildings and a data center building that total 759,901 square feet at 51 Valley Stream Parkway.

The four buildings are occupied by Austin, Texas-based tech giant Oracle but are being marketed for mixed-use redevelopment.

Chester County property records show Malvern Green is owned by health care IT company Cerner Health Services Inc., which Oracle acquired in 2022 for $28.3 billion. Since buying Cerner, Oracle (NYSE: ORCL) has been consolidating the office space acquired in the deal, including at Cerner's headquarters campuses in Kansas City, Kansas.

According to Oracle's 2024 annual report filed with the Securities and Exchange Commission, about 32% of its owned and leased space was either sublet or on the market as of the end of last year.

Malvern Green was built from 1982 to 1999 and can serve more than 1,000 employees. The campus has a parking garage that can fit 400 cars and surface parking that can accommodate 1,400 cars, according to JLL's marketing materials.

The four Malvern Green buildings for are listed as:

• Building I: four-story, 217,221-square-foot office constructed in 1983.
• Building II: four-story, 219,328-square-foot office constructed in 1982.
• Building III: four-story, 227,179-square-foot office constructed in 1999.
• Data Center: two-story, 96,173-square-foot building constructed in 1999.

Existing zoning is limited primarily to office use, a buyer could pursue zoning changes with East Whiteland Township that would allow for other uses on the site.

Full story: https://www.bizjournals.com/philadelphia/news/2025/09/01/111-acre-malvern-office-park-listed-redevelopment.html

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Philadelphia's largest office complex could be converted to different uses after foreclosure

 By Katie Burke CoStar News

Philadelphia's largest office property is prepared to hit the market as a potential conversion play, a move that could boost the future for the complex that has seen its valuation and occupancy plummet.

CBRE, the court-appointed receiver for the two-tower Centre Square property, will soon list the challenged complex for sale in the aftermath of its 2023 foreclosure. Rather than test its appeal as an office, however, the brokerage will pitch the more than 2.2 million-square-foot complex at 1500 Market St. as an opportunity to overhaul it into a future residential, retail or hospitality use.

The property is expected to land a price tag of about $100 million, a sharp decline from the $510 million appraisal Centre Square was valued at in 2020, according to public records.

The upcoming listing is part of a broader trend in which office landlords and brokers are pitching sometimes empty buildings for uses other than a place for desks, conference rooms and coffee stations. The number of office conversions across the country has hit a record high, according to a recent CBRE report, and the pipeline is expected to widen as cities dole out more incentives and landlords — especially those of older buildings — offload their troubled properties at deep discounts.

Centre Square's occupancy has fallen to about 35% in recent years, according to a Morningstar report, and CBRE was appointed to oversee the property in May 2023 after owner Nightingale Properties stopped making payments on more than $375 million in loans.

The New York-based investment firm and InterVest Capital Partners — formerly Wafra Capital Partners — acquired the Market Street properties as part of a $328 million portfolio deal that closed in mid-2017.

String of move-outs

The duo refinanced it with a $390 million loan through JPMorgan Chase two years later, and the property was foreclosed upon after a string of substantial move-outs compounded the landlords' financial challenges.

Those who list distressed or high-vacancy office properties are sometimes trying to sell them as potential conversions to apartments, self-storage facilities and even entertainment venues.

The shift represents a new level of eagerness to build interest in these properties that may be older, face pressure from lenders, or have nonexistent leasing activity.

For office properties listed for sale, potential conversions can serve as somewhat of a fallback strategy among investors who aren't yet sure they want to preserve a building's original use.

More than 81 million square feet of office space is moving through the conversion pipeline, according to CBRE, and U.S. office conversions and demolitions are on track to exceed the market’s new construction for the first time in years.

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