Wednesday, February 19, 2025

Pennsylvania shopping center sells for $15 million

 By Lauren Diggs CoStar Research

Agora Commercial Realty Advisors has purchased a 147,916-square-foot shopping center in Enola, Pennsylvania, for $15.15 million.

Built in 2002, the Summerdale Plaza was nearly 80% occupied at the time of the sale. Tenants include Family Dollar, Tractor Supply and Dollar Tree.

First National Realty Partners, which sold the property, had purchased it in December 2021.

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Tuesday, February 18, 2025

As Uncertainty Rises, Stability of CRE Stands Out (Video)

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Northeast Philadelphia cold storage warehouse sells to investor for $41M

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

A Northeast Philadelphia wholesale food distributor sold its cold storage warehouse for $41 million and executed a leaseback for the entire 241,000-square-foot building, allowing the company to remain in place while receiving an infusion of cash.

Phoenix-based Fundamental Income bought the 40-year-old building at 2701 Red Lion Road from Quaker Valley Foods. The Philadelphia-based company purchased the building in 2004 for $9.8 million, according to property records. The property is just north of the Northeast Philadelphia Airport near the intersection of Red Lion Road and Roosevelt Boulevard.

The recent sale of the building comes out to about $170 per square foot.

Quaker Valley Foods signed a long-term lease for the building, Fundamental Income Chief Investment Officer Alexi Panagiotakopoulos said. Operations have continued as usual unaffected by the transaction.

“We’re very business-oriented investors. We generally go where our tenants want to go because they believe they’re in important locations for their business and their operations,” Panagiotakopoulos said. “That was part of it, supporting the tenant and their aspiration to serve the greater MSA as well as the region and density around the Philadelphia area.”

Quaker Valley Foods was founded in 1975 in Northeast Philadelphia. The firm distributes meat, seafood and deli items from Connecticut to Virginia and warehouses over 3,000 fresh and frozen perishable and non-perishable items.

Quaker Valley Foods declined to comment.

Fundamental Income is backed by Brookfield Asset Management (NYSE: BAM) and specializes in buying single-tenant properties and executing leasebacks. It was founded in 2018 and owns more than 450 properties spanning 11.5 million square feet across 44 states and 55 different industries.

The company’s strategy is to hold assets and collect rent from the existing tenants the firm believes in rather than looking to develop properties or quickly flip them, Panagiotakopoulos said.

“We may hold [2701 Red Lion Road] for 10-, 15-, 25-plus years,” Panagiotakopoulos said. “That’s our entire investment thesis is long-term holds.”

Full story: http://tiny.cc/o8ha001

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Ensemble lands 50,000-SF tenant for fully vacant Main Line building

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

An Irish technology product developer has signed a long-term lease for 50,000 square feet in Wayne, moving the company’s local office four miles east and downsizing by 38%.

TE Connectivity plans to move to 680 E. Swedesford Road by January 2026. The firm will take the first two floors of the four-story, 102,000-square-foot building, which is set to undergo a major renovation. It’s a downsize from TE Connectivity’s 80,000 square feet of space at Brandywine Realty Trust-owned 1050 Westlakes Drive in Berwyn.

TE Connectivity (NYSE: TEL) generates approximately $16 billion in revenue annually and has 85,000 global employees. The firm moved its headquarters from Switzerland to Ireland last year.

The lease is a key step for Long Beach, California-based Ensemble Investments, which bought the fully vacant Wayne building two years ago. With half the building now leased, Ensemble is planning to renovate the property with a new façade, roof, floor-to-ceiling windows, mechanical equipment, a modern lobby and updated restrooms. The project is expected to be completed by the end of this year. Architectural firm NORR is designing the renovations.

Ensemble acquired 680 E. Swedesford Road and the office building next door at 650 E. Swedesford Road, which is also 102,000 square feet, for $33.5 million. Ensemble bought the two properties from Prologis, which picked up the buildings as part of its $13 billion acquisition of Liberty Property Trust in 2020.

650 E. Swedesford Road was previously Liberty Property Trust’s headquarters and was renovated in 2018. Ensemble Investments' East Coast managing directors Mark Seltzer and Brian Cohen both previously worked at Liberty Property Trust.

The property is two miles from the King of Prussia Mall and a mile west of the intersection of I-76 and Route 202.

When Ensemble bought the building, Seltzer and Cohen believed demand would still exist for high-quality, well-located office space with natural light and parking access despite rampant downsizing across the office market. They had already seen their theory tested at the Navy Yard in South Philadelphia, which they are redeveloping alongside Mosaic Development Partners.

The lease at 680 E. Swedesford Road “validates the strategy,” Seltzer said.

To secure financing for the renovations, Seltzer said Ensemble felt it needed to lease half the building. That meant finding a tenant looking for at least 50,000 square feet and willing to wait until the renovations are completed.

Full story: http://tiny.cc/48ha001

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Tuesday, February 11, 2025

Navy Yard, landlord Ensemble bullish on 'office resurgence'

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

Mark Seltzer has worked on leasing office space at the Philadelphia Navy Yard since 2006 and he’s never been more optimistic.

2021, 2022 and 2024 were the Navy Yard’s three best years of office leasing in the past two decades, said Seltzer, Ensemble Investments' managing director. Of Ensemble’s 300,000-square-foot Navy Yard office portfolio, there’s only 2,800 square feet available today.

That will change in early 2026 when FS Investments moves to University City and vacates the entirety of 201 Rouse Blvd., an 80,000-square-foot building that was built in 2015. While Seltzer said he’s sad to see FS Investments move on, he's bullish about backfilling the space.

“The 80,000-square-foot block of space at the Navy Yard with the 201 Rouse building is by far the largest block of space and something that doesn’t exist today,” Seltzer said. “So we’re excited about the opportunity to bring another large user to the Navy Yard within the building.”

As news quietly spread of FS Investments’ move to Schuylkill Yards in recent months, Seltzer said Ensemble received inquiries from prospective tenants about the building at 201 Rouse Blvd. Since the move was first reported by the Business Journal on Monday, Ensemble has received more interest.

Though still in the early days of marketing the space, Seltzer believes there will be opportunities to backfill the space either with a single tenant like FS Investments or multiple tenants. If a new user wants to buy the building, Seltzer said he’s open to selling “for the right deal.”

“Given its impeccable condition and ongoing maintenance by both us and FS, it would be an ideal candidate for an 80,000-square-foot user to occupy the entire building,” Seltzer said. “It’s effectively plug and play.”

FS Investments' move largely came down to the ability to occupy a brand new building at 3025 John F. Kennedy Blvd. and being eligible for Keystone Opportunity Zone tax credits. Though Ensemble attempted to retain FS Investments, Seltzer said the relationship remained cordial. The Navy Yard is also in a Keystone Opportunity Zone, but FS Investments will extend its eligibility with the move.

Now in the market to fill the space, Seltzer touted 201 Rouse's high-end fitness center, conference center and café. The open floor plans that were considered a forward-thinking design 10 years ago are now popular among office tenants.

While much of the office demand in recent years came from tenants seeking 5,000 square feet to 20,000 square feet, Seltzer said he’s observed an uptick in larger users looking for space in the past six months.

Full story: http://tiny.cc/8zm9001

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Brandywine will consider putting office tenants in 3151 Market with nearby buildings virtually full

 By Paul Schwedelson – Reporter, Philadelphia Business Journal

While still envisioned as a top-tier life sciences property, Brandywine Realty Trust’s recently completed 14-story building at 3151 Market St. could soon be made available to office tenants.

“To the extent that there are tenants who are of the size and the composition where we cannot accommodate them in one of our traditional office offerings, we would certainly welcome the idea of showing them 3151 as a receiver,” Brandywine CEO Jerry Sweeney told the Business Journal.

The possibility of the 472,000-square-foot building welcoming office tenants only came into focus following FS Investments’ 117,000-square-foot lease at Brandywine's nearby property at 3025 John F. Kennedy Blvd. That lease brought the commercial portion of the office and residential Schuylkill Yards building to 83% leased. With only a little over a floor still vacant at 3025 JFK, Brandywine (NYSE: BDN) will have to look elsewhere to accommodate any prospective tenants looking for a large amount of office space in a brand new building.

Ultimately, Sweeney still sees 3151 Market as a life sciences building. The $317 million project was built with mechanical requirements like floor loads and power capacity designed for life sciences users, and the property has what it needs for high-quality lab space.

Everything that makes 3151 Market St. an attractive lab building carries over to office space too. The building will have a café and ground-floor retail, and is in the heart of University City surrounded by major education and medical anchor institutions near 30th Street Station.

“We’re in the business of leasing space,” Sweeney said. “We try to lease space to the best quality customers and accommodate their growth requirements over time.”

Full story: http://tiny.cc/cym9001

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Monday, February 10, 2025

Brandywine Realty Trust posts occupancy boost despite lingering office challenges

 By Katie Burke CoStar News

One of the nation's largest office owners reported gains in occupancy and lease lengths as it works to build back some of its pandemic-related losses.

Brandywine Realty Trust, a Philadelphia-based real estate investment trust, pointed to longer lease-up periods among some of its newest developments as a sticking point in an effort to stabilize its portfolio for the year ahead. The landlord reported more than 2.3 million square feet of new and renewal deals last year, with roughly 783,000 square feet of that signed within the last quarter of 2024 alone.

"From a broader perspective, our real estate markets are improving, and we're seeing that every day," Brandywine CEO Jerry Sweeney told analysts on the company's earnings call Wednesday. "There are encouraging signs of stabilization, and during last year, we laid a solid operating foundation to capitalize on these improving office market dynamics."

In Philadelphia, for example, the REIT landed nearly half of the roughly 1 million square feet of office deals signed throughout the city's central business district last year, Sweeney said, largely due to the landlord's concentration of high-end properties across its portfolio.

In a sign of renewed tenant demand — with much of that targeted toward the nicest and newest properties — the Brandywine CEO said tour activity "remains well above pre-pandemic levels," and that more than 60% of the leases the company signed in the fourth quarter last year were a result of tenants upgrading their office space to higher quality options.

The REIT's portfolio includes roughly 65 properties that collectively span about 12 million square feet is now just shy of 90% leased, a slight boost compared to the previous quarter.

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Monday, February 3, 2025

FS Investments moving HQ out of Navy Yard to Schuylkill Yards

By Katie Burke CoStar News

As one of Philadelphia's fastest-growing companies and with a recent in-person mandate in effect, FS Investments' search for a new headquarters came down to two requirements: bigger and better than its current digs.

After an extended search across Pennsylvania and Connecticut, the alternative asset manager ultimately decided to keep its corporate hub in Philadelphia with a long-term deal for space at one of the city's newest developments. FS Investments this week signed a 117,000-square-foot lease — one of the largest to be signed in the market over the past half decade — to relocate to Schuylkill Yards, a $3.5 billion mixed-use project spearheaded by Brandywine Realty Trust.

The 16-year agreement at 3025 John F. Kennedy Blvd. will ultimately result in a nearly 50% increase to FS Investments existing real estate footprint in the city. The firm has leased the entirety of the roughly 80,000-square-foot building at 201 Rouse Blvd. in the city's Navy Yard area since early 2015, according to CoStar data.

"The business is just growing significantly," FS Investments CEO Michael Forman said in a statement. "We've been lucky and successful, and we needed more space."

By this time next year, FS Investments will have moved all of its nearly 300-person regional workforce to its new Schuylkill Yards headquarters, where it will occupy four levels of the 28-story building. The company will join law firm Goodwin Procter, which took over about 30,000 square feet in the tower last August, and will occupy more than half of the mixed-use property's office space.

Known as the West Tower, the building is split between more than 200,000 square feet of office; 326 luxury apartment units; and roughly 9,000 square feet of ground-floor retail. Tenants have access to a variety of communal meeting spaces, regionally curated artwork and a 29,000-square-foot amenity space on the ninth floor that includes a fitness club with group classes, game room, fireside lounge, coworking and conference rooms, and an outdoor pool with a sundeck.

"FS Investment's lease adds to the stabilization that has been building across Philadelphia's office market over the past year," said Brenda Nguyen, CoStar's associate director of market analytics. "The company's commitment to the city underscores Philadelphia's ability to support business growth beyond its traditional education and medical sectors."

FS Investments decision to not only expand its office real estate presence, but also significantly upgrade it is indicative of a broader trend rippling across the United States in which tenants are prioritizing space in the newest and nicest properties.

While the average lease size among recent office deals in the country has shrunk by about 20% compared to pre-pandemic levels, properties at the highest end of the quality spectrum have benefitted from a growing surge in demand as companies — many of which are ramping up their in-person requirements — prove willing to pay top dollar for office space in well located, highly amenitized properties.

Rents at Brandywine's West Tower, for example, command about $51.60 per square foot, according to CoStar data, almost double the Philadelphia market average of less than $28 a square foot.

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Commercial Real Estate Market Forecast 2025 (Video)

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