Friday, August 30, 2024
Thursday, August 29, 2024
Amazon warehouse part of $198M Philadelphia-area portfolio acquisition
By Paul Schwedelson – Reporter, Philadelphia Business Journal
Investment giant KKR bought three Philadelphia-area warehouses as part of a $377 million acquisition of six total properties across the U.S. that are all fully leased.
KKR (NYSE: KKR) declined to share details about individual properties within the portfolio.
Data from real estate research firm CoStar Group show the three local warehouses sold for a combined $198 million.
Below, the three properties and sales price, according to CoStar:
Amazon’s 650,000-square-foot fulfillment center at 240 Mantua Grove Road in West Deptford, New Jersey. The building sold for $90.8 million.
Dunkin’s 301,872 square-foot distribution center at 20 E. Park Drive in Westampton, New Jersey. The building sold for $61 million.
Penn Jersey Packaging’s 255,336-square-foot warehouse at 9355 Blue Grass Road in Philadelphia. The building sold for $46.2 million.
The buildings were previously owned by New York-based Link Logistics, according to the company's website and property records. Link Logistics is the industrial real estate arm of asset manager Blackstone Group.
The Amazon fulfillment center at 240 Mantua Grove Road in West Deptford last traded for $78 million in 2019, according to property records. Built in 2018, it has a 41-foot clear height and 57 dock doors.
Located near Northeast Philadelphia Airport, the 255,336-square-foot warehouse at 9355 Blue Grass Road last traded for $26.1 million in 2015. The warehouse was built in 2011 with a 32-foot clear height and 40 dock doors.
The transaction comes as the Philadelphia region’s industrial market has transitioned away from large-scale buildings of more than 500,000 square feet. Tenant demand has shifted from larger types of buildings to smaller properties in the 200,000-square-foot or 300,000-square-foot range.
The six properties KKR bought are an average of 10 years old with 35-foot clear heights. They’re all fully leased to a “high-quality tenant mix,” KKR said in a news release.
The other markets where properties were bought include Seattle, Atlanta and San Francisco. Since January, New York-based KKR has bought nearly six million square feet of industrial space.
Full story: https://tinyurl.com/yn79dhdh
More than 1B square feet of US office space deemed viable for residential conversion
By Ashley Fahey – Editor, The National Observer: Real Estate Edition, The Business Journals
More than 1 billion square feet of U.S. office space is feasible for residential conversion.
That's according to a recent analysis by CommercialEdge, part of Santa Barbara, California-based real estate software company Yardi Systems Inc. The analysis featured a new Conversion Feasibility Index developed by CommercialEdge, which uses a weighted scoring system to evaluate a building's physical characteristics to determine its suitability for conversion.
The CFI has three categories of potential conversion, with Tier I buildings being top candidates for conversion and Tier II buildings having strong potential for conversion but likely requiring a bit more work and investment than Tier I properties. Tier III buildings face significant challenges and limitations for conversion.
More than 228.3 million square feet of office space nationally — or 2.7% of existing stock — was classified as Tier I, while an estimated 1 billion square feet (12.1% of existing stock) was considered Tier II. Most of the identified viable conversion candidates are within central business districts or urban submarkets.
Doug Ressler, manager of business intelligence at Yardi, said the CFI considers an office building's physical characteristics, such as its floorplates, ceiling heights and dimensions, in addition to location considerations, such as a property's proximity to transit or its Walk Score, a gauge of its walkability.
A building's age also is an important factor and one of the biggest differentiators between Tier I and Tier II buildings, Ressler said. Building codes largely changed in the 1980s, so office towers built before then may have unique structural considerations — and require additional cost to address those differences — as a result.
The CFI is intended to give more visibility into the untapped potential of conversions, which have been challenging for many developers to fully realize, despite surging office-vacancy rates across the U.S.
"You’re starting to see the number of potential conversions ratcheting up," Ressler said. "[It] gives a sense of validation to the fact that, if you’re a mayor of a major gateway city and you don’t have potential property revenue coming in, what do you do with this building?"
The vast majority of the buildings analyzed by CommercialEdge — more than 85% — were deemed Tier III, or least suitable for conversion. The higher interest-rate environment and a tough financing market have become additional wrinkles to making a lot of real estate deals, including conversions, financially feasible. There also remain gaps between what buyers and sellers feel a building is worth, as many groups looking to convert offices into housing or another use are looking to buy those structures at deep discounts.
It's prompted questions in some corners of the industry about whether demolition of some vacant office towers makes more sense than reuse. But in many circumstances, there's still hesitancy to demolish, Ressler said.
"It's not a panacea to demolish," he said. "If you demolish, which is a cost, then you have to look at the next steps. Am I building an economic demand center in that location? Unless you have that planned out, demolition is maybe the first step but it [might be] the wrong step."
Full story: https://tinyurl.com/yyesxvzw
