Beverage maker signs Philadelphia's largest industrial lease since pandemic

By Jonathan Lehrfeld CoStar News

A company that calls itself the biggest canned beverage contract manufacturer in North America plans to establish a flagship East Coast facility after signing the largest industrial lease in Philadelphia since 2020.

Santa Clarita, California-based DrinkPAK agreed to lease a 1.4 million-square-foot build-to-suit plant that would anchor a commercial redevelopment project underway in southwest Philadelphia known as the Bellwether District. The lease is the largest industrial deal signed in the market since 2020 and one of the biggest ever recorded in Philadelphia, according to a Newmark research analysis of CoStar data.

"This type of investment brings significant upside to Greater Philadelphia, fueling job creation, supply chain expansion and regional economic growth," said Nick Pickard, a broker on the Newmark team that represented DrinkPAK in the transaction.

The libations giant plans to invest at least $195 million into its new facility, with the company expected to move into the property in the first half of 2027.

The DrinkPAK development is part of a 1,300-acre campus currently underway at the former Philadelphia Energy Solutions refinery site that exploded in 2019. At full build-out, the campus is slated to contain more than 14 million square feet of new industrial and "innovation" space, according to HRP Group, the Chicago-based investment company behind the project.

The move could be a step toward reviving interest in warehouse space in the greater Philadelphia market. Industrial leasing in the city slipped in the past year, with demand in the third quarter of 2025 reaching its lowest level in more than a decade, according to CoStar's latest report. That followed trade policy announcements last year that increased uncertainty in the logistics and manufacturing sectors.

One of the last similarly-sized leases in the area was auto manufacturer Cardone Industries' renewal of a more than 1.3 million-square-foot facility in Northeast Philadelphia in 2021. That location is now being marketed for a new tenant, Bisnow reported.

As for the incoming beverage plant, it's expected to manufacture a range of beverages, including energy drinks, sodas, teas, juices, waters, protein beverages, seltzers, beer, wine and spirits, in various can sizes and packaging formats.

"DrinkPAK now features the three largest can manufacturing facilities in North America, with nearly 5 million square feet stretching from coast to coast," CEO Nate Patena said in a statement in December. Those other locations include 1.4 million-square-foot facilities in Santa Clarita and in Fort Worth, Texas.

Pennsylvania Gov. Josh Shapiro said the commonwealth is investing $2 million to support the project, and the company could also receive additional incentives from state programs, including a manufacturing tax credit. 

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Trophy to troubled: Former GSK building in Philadelphia trades at 60% discount

By Katie Burke CoStar News

A global pharmaceutical giant's former Philadelphia hub that once set a pricing record has sold for a major discount after the loss of its anchor tenant.

The Eastern Atlantic States Regional Council of Carpenters paid $52 million for the nearly 207,780-square-foot property at 5 Crescent Drive in the city's Navy Yard area, about 60% less than what it last sold for eight years ago.

The seller and special servicer, Rialto Management, was tasked with landing a buyer of the commercial mortgage-backed security loan that held the debt on the property. The deal closes a tumultuous period for the property after GSK's abrupt exit in the earlier years of the pandemic that reflected dropping demand for offices around the country — and makes the tower a symbol of the resulting lower values.

The British drugmaker prematurely terminated its lease for the entire building in 2022 as part of a broader plan to cut roughly 660,000 square feet from its national office footprint in response to pandemic-era changes that downshifted its spatial needs.

GSK's original deal for the building — which Liberty Property Trust developed for the biotech giant more than a decade ago — wasn't set to expire until September 2028. However, since the company bought out its lease and relocated to smaller space elsewhere in the city, the Navy Yard property has been sitting empty ever since.

The property has faced an increasingly challenging outlook in the years since Liberty sold the building to Korea Investment Management in May 2018. The $130.5 million price tag for the property set a record for Philadelphia's office market at the time of the deal, largely due to GSK's tenancy and supposedly long-term commitment to the space.

The overseas investment firm took out an $85 million loan through Goldman Sachs' mortgage arm to finance the deal, and the debt was subsequently securitized and sold to CMBS investors.

After making interest-only payments, Korea Investment Management defaulted on the property, and the loan was transferred to special servicing in November 2022, shortly after GSK's exit. The loan matured the following year, with Rialto Capital filing a foreclosure complaint against the Korean firm in early 2024.

A sheriff's sale later that year failed to garner a bid high enough to clear the seller's reserve amount, ultimately transferring ownership of the Navy Yard building to the CMBS trust. All the while, the property's value continued to deteriorate, falling from a 2018 appraisal of more than $132.5 million to less than $89.5 million by 2023, according to CBMS reports.

Filling the space

Korea Investment Management's purchase landed shortly before the pandemic sent the national office market into a yearslong freeze when tenants such as GSK offloaded record amounts of space, halted future real estate decisions and left landlords in perilous financial positions.

The combination of depressed demand, stagnant leasing and the ongoing effects of flexible work has helped push the national office vacancy rate to a record high of more than 14%, according to CoStar data. Tenants collectively handed back upward of 65 million square feet in 2024, boosting the total to more than 210 million square feet of move-outs since the start of 2020.

Those pandemic-induced factors have been exacerbated for a number of property owners, and some — especially if they're facing maturing loan deadlines or mounting expenses — have been eager to offload underperforming properties or ones that no longer fit with their investment strategies.

That has led to a wave of discounted deals across the United States, creating a window for buyers, such as the union, to take advantage of lower pricing for properties they otherwise wouldn't be able to afford.

The labor union is expected to move into the Crescent Drive building within the next three to six months, a spokesperson said, filling the space with about 125 employees and leasing out whatever is left over.

And it could have some better luck.

Tour activity among prospective Philadelphia office tenants has been steadily climbing over the past year, local landlord Brandywine Realty Trust recently reported. While companies in the area over the past year have surrendered about 1.3 million square feet more than they've occupied, according to CoStar data, the Philadelphia region as a whole has maintained a track record for having the third-lowest availability rate among the 15 largest U.S. office markets, trailing only New York City and Minneapolis.

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US office leasing increases 5% in past year

 By Phil Mobley CoStar Analytics

Office tenants signed up for an estimated 410 million square feet of space in 2025, a meaningful increase over the prior year. Still, persistently smaller deal sizes and a wide variation in leasing across major cities indicate a choppy recovery from the post-pandemic doldrums.

The result represents an increase of more than 5% from a lackluster 2024, in which office leasing volume fell to its lowest level in 15 years, excluding the pandemic year of 2020. Furthermore, leasing momentum gained traction throughout the year, as 2025 closed out with three consecutive quarters of leasing volume exceeding 100 million square feet, a first since the opening three quarters of 2022.

These figures reflect all new office leases documented in 2025, as well as an estimate of new leases that likely occurred during the year, but have not yet been formally recorded by CoStar Research. Lease renewals are excluded, as they typically have little impact on overall occupancy.

Despite the rebound in 2025, office leasing activity has yet to return to the level typical in the late 2010s. Transaction activity is near its all-time high, with approximately 30,000 lease deals signed in 2025, representing a 5% increase over the average number of leases signed from 2015 to 2019. However, the average lease size was only about 3,500 square feet, more than 15% smaller than the five-year deal-size average before the pandemic.

There is little indication that lease sizes will increase anytime soon. The average size of new office leases has barely budged since the end of 2022, first because many tenants initially chose to downsize when older leases expired, and now because few large blocks of premium space remain available to accommodate major tenants who might otherwise wish to relocate. Thus, the market has become saturated with office tenants having smaller requirements.

The trend toward smaller lease sizes is nearly universal across the country’s largest office markets. Otherwise, however, leasing performance varied widely across local markets. Boston saw the strongest year-over-year recovery, a 52% surge that brought annual leasing volume up to its pre-2020 average.

However, with several deals involving in-market cannibalization and others for yet-to-be-constructed space, the recent strong leasing has done little so far to stem the tide of rising vacancy in the face of Boston's nation-leading supply growth.

Demand from AI firms drove year-over-year office leasing gains of about 40% in both San Francisco and San Jose. Although this was not quite enough to reach the typical 2015-2019 level in either market, associated move-ins in the second half of the year—including some into sublet space — helped reduce office vacancy in both of the West Coast tech hubs.

New York remained a leader in the national recovery, with office leasing volume rising over 20% from 2024 and reaching 10% above its average from the late 2010s.

Elsewhere, however, results were checkered. Chicago, Dallas-Fort Worth, Los Angeles and Washington, D.C., saw modest year-over-year increases in office leasing, but nevertheless remained below their customary levels. Meanwhile, leasing activity declined somewhat in Atlanta, Houston, Philadelphia, and Seattle from 2024.

Going forward, it may be difficult for the national office market to produce further growth in annual leasing activity for some time. Although demand has begun to recover, the rapid contraction in supply growth is a powerful constraint on tenants.

The lack of appealing options in new buildings appears set to choke off major office relocations, leaving many large tenants to bide their time in place, perhaps executing short-term renewals or committing to small expansions where possible.

The likely result could be more of the same: Smaller deal sizes and suppressed overall leasing volume.

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OmniMax International renews three leases ahead of $1.3 billion company sale

 By Andy Peters CoStar News

OmniMax International, a maker of roofing products, renewed leases totaling about 500,000 square feet of industrial space in the Atlanta, Philadelphia and Sacramento markets as it prepares to be acquired by a larger building materials company.

OmniMax's leases are for space at three industrial buildings, according to a news release and public records. The Peachtree Corners, Georgia-based company retained the same amount of space in all three properties. Financial terms weren’t disclosed.

Gibraltar Industries agreed to acquire OmniMax in November for $1.34 billion in cash. The deal is expected to close by June. Gibraltar obtained $1.3 billion in loans from Bank of America, Wells Fargo and KeyBanc Capital Markets to finance the acquisition.

The OmniMax industrial lease renewals were completed for the following locations:

231,000 square feet at 4455 River Green Parkway in Duluth, Georgia.

108,000 square feet at 1835 Diesel Drive in Sacramento, California.

105,000 square feet at 900 Jacksonville Road in Ivyland, Pennsylvania.

The California building owner is Libitzky Property, and the owner of the Pennsylvania property is Evergreen Resource Management, according to CoStar data. The owner of the Georgia property has not been identified.

OmniMax makes roofing accessories and gutters for residential structures. It designs and manufactures products under several brand names, including Amerimax gutters, Berger roof-drainage systems and Hancock Enterprises roofing accessories.

Gibraltar, based in Buffalo, New York, manufactures and distributes a wide range of building materials, including foundation ventilation products, solar panel racks and canopies.

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Philadelphia apartment market turns the corner ahead of national cycle

 

By Brenda Nguyen CoStar Analytics

While U.S. vacancy rates climb higher, Philadelphia has already passed its peak — signaling that the local rental market is finding its footing faster than the rest of the country.

Philadelphia's vacancy rate peaked at 7.9% exactly one year ago and has been steadily compressing ever since. Meanwhile, the U.S. market remains on an upward trajectory, with forecasts projecting a national peak of 8.4% next quarter, followed by a gradual decline.

This timing gap puts Philadelphia roughly four to five quarters ahead of the national cycle. Philadelphia landlords weathered their supply wave earlier, while markets in the Sun Belt and other high-growth regions continue to grapple with elevated new supply levels.

Although newly completed apartments are still offering generous concessions in late 2025, the declining vacancy rate suggests that free rent will likely ease significantly by the spring leasing season.

Several factors are behind Philadelphia's faster cycle. While the Philly area set its own development record, its pipeline never reached the extremes of the Sun Belt. Over the past five years, Philadelphia's inventory grew by 14.2%, a modest increase compared to Austin's 40.5%, Phoenix's 27.4% and Dallas' 20.4%. Philadelphia’s more measured supply growth allowed demand to catch up more quickly, pulling occupancy rates higher while other markets remain oversupplied.

Philadelphia’s faster cycle is a reminder that real estate remains a local story, even in a national narrative.

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