"George Young Co. R&E Partnership sold the industrial complex at 2724 S 20th St. in Philadelphia, to Talshan Properties LLC for $1.9 million or about $55 per square foot.
Located in the Southwest Philly Industrial submarket, the 34,000-square-foot facility was built in 1940 on two acres of land. Building features include six loading docks, six drive-in bays, and ceiling heights of up to 35 feet."
Friday, January 22, 2010
Lansdale School of Business Pays $1.5M for Industrial Bldg.
North Penn Business & Technical Institute Inc., also know as the Lansdale School of Business, has purchased the warehouse property at 290 Wissahickon Ave. in North Wales, PA, from Deltron Inc. for $1.52 million, or nearly $50 per square foot.
The 31,200-square-foot facility is in the East Montgomery County Industrial submarket. Building features include a drive-in bay, a loading dock and 15-foot ceilings.
The 31,200-square-foot facility is in the East Montgomery County Industrial submarket. Building features include a drive-in bay, a loading dock and 15-foot ceilings.
Monday, January 18, 2010
Towers still towers over Market St.
This is a great article about Tower's merger but it also mentions many of the big leases coming up in the next 3 years. It also has a mention of much anticipated American Commerce Center Building. (2.2 million square feet)
"Towers Watson & Co., the post-merger name for the company that was known as Towers Perrin, is poised to sign a lease that would keep 1,000 jobs in Philadelphia.
The merged professional services company that works with clients in human resource, risk and financial management, is expected to sign a long-term lease on 260,000 square feet of office space in Centre Square, where employees are now located.
The deal comes as Towers Perrin and Watson Wyatt Worldwide completed this month a $3.5 billion merger creating Towers Watson. It’s one of at least seven high-profile lease deals coming to a head this year.
There were questions about whether the merged entity would seek to relocate its local operations since Watson Wyatt has its headquarters in Arlington, Va., with Towers Perrin in Stamford, Conn. The combined company is headquartered in New York City.
Negotiations on the lease are still ongoing and Centre Square is one of its leading options, said Dave Duncan, director of corporate real estate at Towers Watson. “We still haven’t finalized the deal,” Duncan said. “Until things are finalized, anything could happen.”
The lease at Centre Square is imminent and likely will be completed this month, according to real estate sources. Duncan anticipates a deal will be done sometime during the first quarter. The company has been at the building since 1975, he noted.
“It’s a good option and a good landlord,” he said. HRPT Properties Trust owns the complex, which is often referred to as the Clothes Pin building.
Towers was formed in Philadelphia in 1934 and had considered relocating to Camden in 2004 when it was being courted with an enticing financial incentive package by New Jersey economic development officials. After a series of negotiations that pitted New Jersey and Pennsylvania against each other, Towers decided to stay in Philadelphia. At the time, it received about $3 million from the Pennsylvania Department of Community and Economic Development and it only tapped $1.5 million of that through an opportunity grant, according to DCED. At that time, it signed a five-year lease that began in 2006 and is scheduled to expire in 2011, prompting the new lease.
This time around, the search and eventual deal weren’t as dramatic, though the company did look again at Camden, Philadelphia’s suburbs, and other Center City buildings, Duncan said. Towers Watson is in discussions with the state and city on financial incentives. “We’re not sure how that will pan out,” Duncan said. The company doesn’t expect the number of employees in the city to change from the current 1,000.
The lease — expected to be one of the biggest of the year — is an early positive note for the Center City office market at a time when activity is likely to be off.
Cozen O'Connor still hasn’t decided where it will go. The big law firm is looking for about 200,000 square feet. While it found Bell Atlantic Tower attractive, it hasn’t been able to work out a deal because of complications stemming from a master lease that Verizon has on the tower until 2012, according to real estate sources. The firm occupies space at the Stock Exchange Building at 1900 Market St., where its lease expires at the end of the year. The firm couldn’t be reached for comment.
KPMG is reportedly nearing a deal to renew on 125,000 square feet at 1601 Market St. and the White and Williams law firm, now in 125,000 square feet at One Liberty, is looking for space. Beneficial Savings Bank is reportedly trying to renew on 125,000 square feet at Penn Mutual Towers. That’s after it flirted with leasing space at the former Rohm and Haas Co. building at 6th and Market streets. One other company out in the market is Janney Montgomery Scott, which is in the market for about 150,000 square feet.
Perhaps the biggest wild card will be GlaxoSmithKline, which has major operations in Center City. The company has a lease that expires in 2013 for about 650,000 square feet at One Franklin Plaza from HRPT Properties Trust. It leases another 220,000 square feet at Three Franklin Plaza from Liberty Property Trust, and that lease runs out in 2014.
GlaxoSmithKline’s decision has the potential to kick off a new downtown building. While the company could stay where it is at One and Three Franklin Plaza overlooking the Vine Street Expressway, it could seek 900,000 square feet of space. If it keeps all of that space in Center City and decides to move, the company would have to relocate into a building that has yet to be built. One office project on the drawing board is the American Commerce Center, a 2.2-million-square-foot proposal for 18th and Arch streets that would create the tallest building in Philadelphia. It would need at least two years of construction time to get out of the ground."
"Towers Watson & Co., the post-merger name for the company that was known as Towers Perrin, is poised to sign a lease that would keep 1,000 jobs in Philadelphia.
The merged professional services company that works with clients in human resource, risk and financial management, is expected to sign a long-term lease on 260,000 square feet of office space in Centre Square, where employees are now located.
The deal comes as Towers Perrin and Watson Wyatt Worldwide completed this month a $3.5 billion merger creating Towers Watson. It’s one of at least seven high-profile lease deals coming to a head this year.
There were questions about whether the merged entity would seek to relocate its local operations since Watson Wyatt has its headquarters in Arlington, Va., with Towers Perrin in Stamford, Conn. The combined company is headquartered in New York City.
Negotiations on the lease are still ongoing and Centre Square is one of its leading options, said Dave Duncan, director of corporate real estate at Towers Watson. “We still haven’t finalized the deal,” Duncan said. “Until things are finalized, anything could happen.”
The lease at Centre Square is imminent and likely will be completed this month, according to real estate sources. Duncan anticipates a deal will be done sometime during the first quarter. The company has been at the building since 1975, he noted.
“It’s a good option and a good landlord,” he said. HRPT Properties Trust owns the complex, which is often referred to as the Clothes Pin building.
Towers was formed in Philadelphia in 1934 and had considered relocating to Camden in 2004 when it was being courted with an enticing financial incentive package by New Jersey economic development officials. After a series of negotiations that pitted New Jersey and Pennsylvania against each other, Towers decided to stay in Philadelphia. At the time, it received about $3 million from the Pennsylvania Department of Community and Economic Development and it only tapped $1.5 million of that through an opportunity grant, according to DCED. At that time, it signed a five-year lease that began in 2006 and is scheduled to expire in 2011, prompting the new lease.
This time around, the search and eventual deal weren’t as dramatic, though the company did look again at Camden, Philadelphia’s suburbs, and other Center City buildings, Duncan said. Towers Watson is in discussions with the state and city on financial incentives. “We’re not sure how that will pan out,” Duncan said. The company doesn’t expect the number of employees in the city to change from the current 1,000.
The lease — expected to be one of the biggest of the year — is an early positive note for the Center City office market at a time when activity is likely to be off.
Cozen O'Connor still hasn’t decided where it will go. The big law firm is looking for about 200,000 square feet. While it found Bell Atlantic Tower attractive, it hasn’t been able to work out a deal because of complications stemming from a master lease that Verizon has on the tower until 2012, according to real estate sources. The firm occupies space at the Stock Exchange Building at 1900 Market St., where its lease expires at the end of the year. The firm couldn’t be reached for comment.
KPMG is reportedly nearing a deal to renew on 125,000 square feet at 1601 Market St. and the White and Williams law firm, now in 125,000 square feet at One Liberty, is looking for space. Beneficial Savings Bank is reportedly trying to renew on 125,000 square feet at Penn Mutual Towers. That’s after it flirted with leasing space at the former Rohm and Haas Co. building at 6th and Market streets. One other company out in the market is Janney Montgomery Scott, which is in the market for about 150,000 square feet.
Perhaps the biggest wild card will be GlaxoSmithKline, which has major operations in Center City. The company has a lease that expires in 2013 for about 650,000 square feet at One Franklin Plaza from HRPT Properties Trust. It leases another 220,000 square feet at Three Franklin Plaza from Liberty Property Trust, and that lease runs out in 2014.
GlaxoSmithKline’s decision has the potential to kick off a new downtown building. While the company could stay where it is at One and Three Franklin Plaza overlooking the Vine Street Expressway, it could seek 900,000 square feet of space. If it keeps all of that space in Center City and decides to move, the company would have to relocate into a building that has yet to be built. One office project on the drawing board is the American Commerce Center, a 2.2-million-square-foot proposal for 18th and Arch streets that would create the tallest building in Philadelphia. It would need at least two years of construction time to get out of the ground."
Recently Signed Real Estate Deals
ReSearch Pharmaceutical Services Inc., needing extra space for 100 employees because of a new contract, has taken 21,350 square feet at 500 Virginia Drive in Fort Washington, Pa. The company, which goes by RPS Inc., has its headquarters next door at 520 Virginia Drive and wanted the expansion space nearby. The deal, from the search to the signing, was done within 60 days. RPS offers clinical development solutions ...
After six years in the Great Valley Corporate Center, GA Communications rented 20,229 square feet at the Oaklands Corporate Center in Exton, Pa., relocating from Great Valley Corporate Center. The company creates multimedia materials primarily for retail clients, including Sears, Lowe’s, Safeway and Supervalu. The company will move in during the second quarter. Brandywine Realty Trust is the landlord.
NextFab Studio leased 3,600 square feet the University City Science Center. The center, billed as a gym for innovators, has workspace equipped with 3D printers, laser cutters, digital embroideries and other high-tech tools. NextFab Studio, a membership-based technology workshop and prototyping center, is unveiling its new facility to the public at 5 p.m., Jan. 22.
After six years in the Great Valley Corporate Center, GA Communications rented 20,229 square feet at the Oaklands Corporate Center in Exton, Pa., relocating from Great Valley Corporate Center. The company creates multimedia materials primarily for retail clients, including Sears, Lowe’s, Safeway and Supervalu. The company will move in during the second quarter. Brandywine Realty Trust is the landlord.
NextFab Studio leased 3,600 square feet the University City Science Center. The center, billed as a gym for innovators, has workspace equipped with 3D printers, laser cutters, digital embroideries and other high-tech tools. NextFab Studio, a membership-based technology workshop and prototyping center, is unveiling its new facility to the public at 5 p.m., Jan. 22.
Thursday, January 14, 2010
Capital Market Recovery Could Start in 2010
Lenders Should (Finally) Begin Writing Off Their Distressed Assets, Allowing for Deployment of Sidelined Capital.
The start of 2010 comes with fresh hopes in the realty capital markets, despite the continued impact of persistent recessionary burdens such as weak demand, falling values and constricted lending, as indicated by a string of commercial real estate industry outlooks.
After a turbulent 18-24 months since the market peaked, 2009 marked a year where transaction volume nearly came to a standstill. There is hope, though, that the economic uncertainty that has sidelined investors will recede resulting in more acquisition opportunities in the coming year as banks and financial institutions get around to cleaning up their balance sheets and move more aggressively to dispose of commercial real estate loans and financially distressed real estate assets, according to annual outlook.
Grubb & Ellis in its annual outlook is predicting an increase in sales volume of 20% to 30% over 2009 levels. However, prices, already down 40% from their peak in October 2007, may decline another 10% to 20% in order to meet buyers' expectations.
Property and Portfolio Research (PPR), is expecting an even bigger increase in transaction activity in 2010, fueled by increased distress on banks from loan delinquencies and "droves" of capital, led initially by foreign investors, expected to target major U.S. metro areas. In its recent "2010 Predictions" report, the CoStar subsidiary noted that, in the past year, banks were given and successfully used latitude in valuations and modifications. Along with the TARP injection, this latitude helped preclude a flood of distress and transactions.
PPR expects that trend to partially reverse in 2010 due to an expected increase in traditional payment distress and continued bank closures.
"Unlike loans with LTV issues, extensions are not the solution for those that cannot cover their payments, and many will be foreclosed upon and sold," according to the PPR report. "Delinquencies will continue to trend higher in 2010 as NOIs head lower."
Overall, the fact that banks likely will begin writing off their losses on distressed assets in 2010 means that the capital accumulating on the sidelines will start being deployed, and highly leveraged buildings, many without the capital necessary to attract tenants, will transfer to new ownership, removing what was a major impediment to recovery in the investment market.
The hopes have been fueled by the federal government's financial industry stimulus money to prop up banks, financial support for the acquisition of some legacy assets and from the fed's continued support of low interest rates. In essence, the fed's action have created a "dual-personality" investment play, according to the Real Estate Capital Institute (RECI), a Chicago-based volunteer-based research organization that tracks realty rates data for debt and equity yields. Investors are seeking relief on legacy debt assets; while also trolling for fresh new debt and equity assets based on more attractively reset prices.
"Due to government intervention, the concept of distressed selling and buying did not materialize anywhere in North America," said Mark E. Rose, chairman and CEO of Avison Young. "The U.S. government put money into the major banks, which in turn extended every loan they could to avoid realizing losses. The Securities and Exchange Commission watched from the sidelines and allowed the impacted lenders to postpone the inevitable."
"2010 is shaping up to be more of the same, but with a slightly positive bias," Rose said. "Fundamentals have firmed, decision makers are getting their sea legs back and the second half of 2010 should produce favorable comparisons to 2009. This, in turn, will drive the confidence we have been sorely missing and allow for activity to return to more normal levels."
The hopes may be realized but only with some sacrifice and a rethinking of investment criteria.
"Before recovery can occur in 2010, private markets must solve their own problems, even if that means capitulation; the bid and ask spreads need to narrow; and we must see job growth in North America."
John Oharenko, RECI's advisory board member, said he believes this year we'll be bouncing along the market bottom as values continue to slide, but at less dramatic levels than last year.
"Some of the greatest investment opportunities lie ahead, especially for those buyers willing to sacrifice current return and rely upon overall market momentum to improve during the next three to five years," Oharenko said.
Until the hopes for the new year begin to become reality, however, RECI suggests that investors will continue to be frustrated in that more funds exist than there are placement opportunities in which to sink their money. The main reason is that buyers still expect lower prices but sellers don't want to realize heavy losses unless it is forced upon them.
According to analysis there seems to be a steady stream of private and public money flowing into investment funds. During the past year, public funds (mainly REITs) raised more than $25 billion of equity for income properties funds. And, more than 650 new funds and companies raised more than $65 billion last year for real estate acquisitions. Most of the money raised (almost half) was being targeted for debt investments; about 25% was being earmarked for traditional commercial real estate properties; and the remainder for other types of real estate, including residential development and construction funding.
"Senior debt purchases are preferred by many investors who prefer to avoid untangling equity positions often plagued by multiple capital tiers including preferred and mezzanine funds," Oharenko said. "Multifamily continues to be the 'darling' of the income-property capital markets as the agencies [such as Fannie Mae and Freddie Mac] provide ample liquidity into this sector. Otherwise, commercial real estate property fundings are mostly focused on refinancing and workouts."
"The short leases of multifamily would be a pretty good hedge against inflation, particularly if you had long-term fixed rate debt in place through Fannie and Freddie," said Dr. Peter Linneman, Global chief economist and principal at Linneman Associates. "Multifamily held up better in the recession until the capital markets fell apart, and as they fell apart, multifamily production fell to the lowest level in the last 60 years. That will pick up, though more slowly [than single-family] because it's more capital market dependent."
"The recession has been over for six months and job growth is just months away, but the fact remains it will be impossible to predict what will happen next," Linneman said. "With significant tax, health care and regulatory proposals still in the offing, there is little clarity as to the ultimate outcomes or costs. We're concerned with commercial mortgage delinquency rates as they have been on the rise and could keep the commercial real estate industry in neutral for several more months."
Aaron Gruen, principal of Gruen Gruen & Associates, a Chicago-based economics, strategic marketing and land use/public policy analysis firm, told CoStar Group that: "Real estate market demand for many markets and uses can be expected to be weak over the next few years. Foreclosures are rapidly rising. Transactions/development was limited in 2009 but should increase in 2010. Core assets have already been repriced and some liquidity from balance sheet lenders is returning, but underwriting standards will be much higher and therefore highly leveraged transactions will be constrained."
"Historically, real estate was viewed as an income-producing asset that provides an inflation hedge and is not correlated strongly with equity securities," Gruen said. "It may be the pension and other groups investing in real estate funds will find this historic role appealing and focus on backing groups using relatively low level of leverage and buying well located core assets perceived to have less risk in the short term and better long-term potential to produce long-term cash flows. These kinds of properties are priced lower than has been the case for at least five years. But those that do not need to sell will hold on to them."
"Perhaps, given the stress and adjustments required, it will simply take some more time for sellers to become motivated and buyers to raise and place capital," Gruen continued. "After all, [the] Great Recession has permanently altered consumer, investment, and governmental behavior. Both public and private sector interests which influence land use and economic development need to reset their models and practices to work out projects and plans affected by the Great Recession and to respond to the opportunities the economic recovery will present. But this will take time and not be easy."
The start of 2010 comes with fresh hopes in the realty capital markets, despite the continued impact of persistent recessionary burdens such as weak demand, falling values and constricted lending, as indicated by a string of commercial real estate industry outlooks.
After a turbulent 18-24 months since the market peaked, 2009 marked a year where transaction volume nearly came to a standstill. There is hope, though, that the economic uncertainty that has sidelined investors will recede resulting in more acquisition opportunities in the coming year as banks and financial institutions get around to cleaning up their balance sheets and move more aggressively to dispose of commercial real estate loans and financially distressed real estate assets, according to annual outlook.
Grubb & Ellis in its annual outlook is predicting an increase in sales volume of 20% to 30% over 2009 levels. However, prices, already down 40% from their peak in October 2007, may decline another 10% to 20% in order to meet buyers' expectations.
Property and Portfolio Research (PPR), is expecting an even bigger increase in transaction activity in 2010, fueled by increased distress on banks from loan delinquencies and "droves" of capital, led initially by foreign investors, expected to target major U.S. metro areas. In its recent "2010 Predictions" report, the CoStar subsidiary noted that, in the past year, banks were given and successfully used latitude in valuations and modifications. Along with the TARP injection, this latitude helped preclude a flood of distress and transactions.
PPR expects that trend to partially reverse in 2010 due to an expected increase in traditional payment distress and continued bank closures.
"Unlike loans with LTV issues, extensions are not the solution for those that cannot cover their payments, and many will be foreclosed upon and sold," according to the PPR report. "Delinquencies will continue to trend higher in 2010 as NOIs head lower."
Overall, the fact that banks likely will begin writing off their losses on distressed assets in 2010 means that the capital accumulating on the sidelines will start being deployed, and highly leveraged buildings, many without the capital necessary to attract tenants, will transfer to new ownership, removing what was a major impediment to recovery in the investment market.
The hopes have been fueled by the federal government's financial industry stimulus money to prop up banks, financial support for the acquisition of some legacy assets and from the fed's continued support of low interest rates. In essence, the fed's action have created a "dual-personality" investment play, according to the Real Estate Capital Institute (RECI), a Chicago-based volunteer-based research organization that tracks realty rates data for debt and equity yields. Investors are seeking relief on legacy debt assets; while also trolling for fresh new debt and equity assets based on more attractively reset prices.
"Due to government intervention, the concept of distressed selling and buying did not materialize anywhere in North America," said Mark E. Rose, chairman and CEO of Avison Young. "The U.S. government put money into the major banks, which in turn extended every loan they could to avoid realizing losses. The Securities and Exchange Commission watched from the sidelines and allowed the impacted lenders to postpone the inevitable."
"2010 is shaping up to be more of the same, but with a slightly positive bias," Rose said. "Fundamentals have firmed, decision makers are getting their sea legs back and the second half of 2010 should produce favorable comparisons to 2009. This, in turn, will drive the confidence we have been sorely missing and allow for activity to return to more normal levels."
The hopes may be realized but only with some sacrifice and a rethinking of investment criteria.
"Before recovery can occur in 2010, private markets must solve their own problems, even if that means capitulation; the bid and ask spreads need to narrow; and we must see job growth in North America."
John Oharenko, RECI's advisory board member, said he believes this year we'll be bouncing along the market bottom as values continue to slide, but at less dramatic levels than last year.
"Some of the greatest investment opportunities lie ahead, especially for those buyers willing to sacrifice current return and rely upon overall market momentum to improve during the next three to five years," Oharenko said.
Until the hopes for the new year begin to become reality, however, RECI suggests that investors will continue to be frustrated in that more funds exist than there are placement opportunities in which to sink their money. The main reason is that buyers still expect lower prices but sellers don't want to realize heavy losses unless it is forced upon them.
According to analysis there seems to be a steady stream of private and public money flowing into investment funds. During the past year, public funds (mainly REITs) raised more than $25 billion of equity for income properties funds. And, more than 650 new funds and companies raised more than $65 billion last year for real estate acquisitions. Most of the money raised (almost half) was being targeted for debt investments; about 25% was being earmarked for traditional commercial real estate properties; and the remainder for other types of real estate, including residential development and construction funding.
"Senior debt purchases are preferred by many investors who prefer to avoid untangling equity positions often plagued by multiple capital tiers including preferred and mezzanine funds," Oharenko said. "Multifamily continues to be the 'darling' of the income-property capital markets as the agencies [such as Fannie Mae and Freddie Mac] provide ample liquidity into this sector. Otherwise, commercial real estate property fundings are mostly focused on refinancing and workouts."
"The short leases of multifamily would be a pretty good hedge against inflation, particularly if you had long-term fixed rate debt in place through Fannie and Freddie," said Dr. Peter Linneman, Global chief economist and principal at Linneman Associates. "Multifamily held up better in the recession until the capital markets fell apart, and as they fell apart, multifamily production fell to the lowest level in the last 60 years. That will pick up, though more slowly [than single-family] because it's more capital market dependent."
"The recession has been over for six months and job growth is just months away, but the fact remains it will be impossible to predict what will happen next," Linneman said. "With significant tax, health care and regulatory proposals still in the offing, there is little clarity as to the ultimate outcomes or costs. We're concerned with commercial mortgage delinquency rates as they have been on the rise and could keep the commercial real estate industry in neutral for several more months."
Aaron Gruen, principal of Gruen Gruen & Associates, a Chicago-based economics, strategic marketing and land use/public policy analysis firm, told CoStar Group that: "Real estate market demand for many markets and uses can be expected to be weak over the next few years. Foreclosures are rapidly rising. Transactions/development was limited in 2009 but should increase in 2010. Core assets have already been repriced and some liquidity from balance sheet lenders is returning, but underwriting standards will be much higher and therefore highly leveraged transactions will be constrained."
"Historically, real estate was viewed as an income-producing asset that provides an inflation hedge and is not correlated strongly with equity securities," Gruen said. "It may be the pension and other groups investing in real estate funds will find this historic role appealing and focus on backing groups using relatively low level of leverage and buying well located core assets perceived to have less risk in the short term and better long-term potential to produce long-term cash flows. These kinds of properties are priced lower than has been the case for at least five years. But those that do not need to sell will hold on to them."
"Perhaps, given the stress and adjustments required, it will simply take some more time for sellers to become motivated and buyers to raise and place capital," Gruen continued. "After all, [the] Great Recession has permanently altered consumer, investment, and governmental behavior. Both public and private sector interests which influence land use and economic development need to reset their models and practices to work out projects and plans affected by the Great Recession and to respond to the opportunities the economic recovery will present. But this will take time and not be easy."
Monday, January 11, 2010
Philadelphia 4Q Vacancy Reports
4Q Philadelphia Office vacancy decreases to 12.4% and Industrial vacancy decrease to 12.4%. Full reports can be viewed at: http://tinyurl.com/yh8adc9
The quarter over quarter decreases were small. 4th quarter office vacancy was 12.4% where in 3Q it was 12.5%. This is helps prove the new saying of “flat is the new growth.” Although the vacancy decreases are small they are encouraging. Many tenants are taking advantage of the softer market and trading up into a better class of building. Class A office space recorded a net absorption of positive 409,646 square feet in the 4th quarter where it was a negative (1,612,551) square feet absorption rate in the 3rd quarter. These are signs we are moving in the right direction. The Philadelphia office market tends not to overbuild. The vacant space gets absorbed faster and therefore our market bounces back quickly from downturns. Class B and C office building also saw positive absorption of vacancy but not as large as the Class A office buildings.
The vacancy rate for Philadelphia 4th quarter flex/industrial markets decreased to 10.8%. This is down from 11% as compared to the 3rd quarter. 10.8% vacancy rate is what we had in the 2nd quarter 2009. Again, this is incremental absorption but the signs are encouraging. This translates into 3,903,123 square feet being absorbed in the 4th quarter. Average rents for Industrial space dropped from $4.76 per square foot in the 3rd quarter to $4.63 in the 4th quarter. These are quoted as triple net numbers. Average rental rate for Flex space also decreased from $9.66 per square foot in the 3rd quarter to $9.38 per square foot in the 4th quarter. These numbers are also quoted as triple net.
If you have further questions or inquiries about the Philadelphia area real estate market please feel free to contact me at (610) 616-4604 or jodonnell@OmegaRE.com
The quarter over quarter decreases were small. 4th quarter office vacancy was 12.4% where in 3Q it was 12.5%. This is helps prove the new saying of “flat is the new growth.” Although the vacancy decreases are small they are encouraging. Many tenants are taking advantage of the softer market and trading up into a better class of building. Class A office space recorded a net absorption of positive 409,646 square feet in the 4th quarter where it was a negative (1,612,551) square feet absorption rate in the 3rd quarter. These are signs we are moving in the right direction. The Philadelphia office market tends not to overbuild. The vacant space gets absorbed faster and therefore our market bounces back quickly from downturns. Class B and C office building also saw positive absorption of vacancy but not as large as the Class A office buildings.
The vacancy rate for Philadelphia 4th quarter flex/industrial markets decreased to 10.8%. This is down from 11% as compared to the 3rd quarter. 10.8% vacancy rate is what we had in the 2nd quarter 2009. Again, this is incremental absorption but the signs are encouraging. This translates into 3,903,123 square feet being absorbed in the 4th quarter. Average rents for Industrial space dropped from $4.76 per square foot in the 3rd quarter to $4.63 in the 4th quarter. These are quoted as triple net numbers. Average rental rate for Flex space also decreased from $9.66 per square foot in the 3rd quarter to $9.38 per square foot in the 4th quarter. These numbers are also quoted as triple net.
If you have further questions or inquiries about the Philadelphia area real estate market please feel free to contact me at (610) 616-4604 or jodonnell@OmegaRE.com
Sunday, January 10, 2010
Valley Forge Corporate Center is getting a facelift
This is very much overdue to make VFCC & Lower Providence competitive again.
"A Montgomery County township is a step closer to revitalizing an aging business park.
Lower Providence hopes to bring new life to the 300-acre Valley Forge Corporate Center, enticing developers to add retail, restaurants and possibly apartments or condominiums.
Last month, it received zoning approval for the changes that would open the door to retail and other uses, and now the township is moving aggressively to invite developers in.
“The feedback we were getting from businesses was that there were no amenities. It’s a real ’60s-style business park,” said Township Manager Joseph Dunbar, adding that businesses there want transportation, casual dining restaurants, recreation, energy efficient buildings and walking trails.
The business park was developed in the late 1960s. At its peak, in 1982, it had 4,341 employees. Today, there are about 3,220, said Project Manager Bill Roth. About 43 percent of the park’s space is vacant, though that figure was more than 50 percent in 2004. There are more than 40 individual building owners within the compound.
About 775 jobs have been lost in recent years, including cuts at Lockheed Martin, bearing maker SKF Group and United Kingdom-based Almac Group, which has a clinical-services site here.
Municipal officials describe the business park as a hybrid of dated industrial warehouses and aging office buildings with a sprinkling of modern facilities.
“In its heyday, it was an industrial park,” Dunbar said.
At that time, the site was bustling with plants run by Hewlett-Packard, General Electric and Allen-Bradley (now a division of Rockwell Automation Solution), a maker of industrial equipment. Volkswagen had a parts distribution facility.
In 2007, the township started the process of reinventing the industrial center and creating a master plan for growth. It hired a landscape architect, urban planner and engineer to work with township officials, property owners and tenants. Its goals were simple: create and retain jobs, fill buildings and increase property values.
Lower Providence Township, 17 miles west of Philadelphia, includes the villages of Audubon, Collegeville, Trooper, Eagleville, Yerkes and Evansburg.
To date, the township has invested $144,000 on the master plan study, $620,000 for infrastructure improvements and $120,000 for the plan implementation.
Marie Altieri, a member of the board of supervisors, described the 300-acre business park as “a lifeline.”
“We look at this as the future; it’s revenue generating. Lower Providence Township is built out. This business park had been ignored for many, many years. The vision of the board is to revitalize it and create long-term revenue. That’s been our focus for three years,” Altieri said.
Officials are rolling out the welcome mat for pharmaceutical, biotechnology, financial services, medical uses and data companies.
Access to the site could improve with a new interchange planned for Route 422. But construction on the $15.6 million interchange is expected to start next year, and its impact likely won’t be felt for a few years.
With development money in the deep freeze and the recession still fresh on people’s minds, redevelopment will be a long-term effort, officials said. Several developers have expressed interest in the parcel, though to date no one has stepped forward.
"A Montgomery County township is a step closer to revitalizing an aging business park.
Lower Providence hopes to bring new life to the 300-acre Valley Forge Corporate Center, enticing developers to add retail, restaurants and possibly apartments or condominiums.
Last month, it received zoning approval for the changes that would open the door to retail and other uses, and now the township is moving aggressively to invite developers in.
“The feedback we were getting from businesses was that there were no amenities. It’s a real ’60s-style business park,” said Township Manager Joseph Dunbar, adding that businesses there want transportation, casual dining restaurants, recreation, energy efficient buildings and walking trails.
The business park was developed in the late 1960s. At its peak, in 1982, it had 4,341 employees. Today, there are about 3,220, said Project Manager Bill Roth. About 43 percent of the park’s space is vacant, though that figure was more than 50 percent in 2004. There are more than 40 individual building owners within the compound.
About 775 jobs have been lost in recent years, including cuts at Lockheed Martin, bearing maker SKF Group and United Kingdom-based Almac Group, which has a clinical-services site here.
Municipal officials describe the business park as a hybrid of dated industrial warehouses and aging office buildings with a sprinkling of modern facilities.
“In its heyday, it was an industrial park,” Dunbar said.
At that time, the site was bustling with plants run by Hewlett-Packard, General Electric and Allen-Bradley (now a division of Rockwell Automation Solution), a maker of industrial equipment. Volkswagen had a parts distribution facility.
In 2007, the township started the process of reinventing the industrial center and creating a master plan for growth. It hired a landscape architect, urban planner and engineer to work with township officials, property owners and tenants. Its goals were simple: create and retain jobs, fill buildings and increase property values.
Lower Providence Township, 17 miles west of Philadelphia, includes the villages of Audubon, Collegeville, Trooper, Eagleville, Yerkes and Evansburg.
To date, the township has invested $144,000 on the master plan study, $620,000 for infrastructure improvements and $120,000 for the plan implementation.
Marie Altieri, a member of the board of supervisors, described the 300-acre business park as “a lifeline.”
“We look at this as the future; it’s revenue generating. Lower Providence Township is built out. This business park had been ignored for many, many years. The vision of the board is to revitalize it and create long-term revenue. That’s been our focus for three years,” Altieri said.
Officials are rolling out the welcome mat for pharmaceutical, biotechnology, financial services, medical uses and data companies.
Access to the site could improve with a new interchange planned for Route 422. But construction on the $15.6 million interchange is expected to start next year, and its impact likely won’t be felt for a few years.
With development money in the deep freeze and the recession still fresh on people’s minds, redevelopment will be a long-term effort, officials said. Several developers have expressed interest in the parcel, though to date no one has stepped forward.
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