PDF - SSH Real Estate

Transcription

2015 Greater Philadelphia Year-End Office Market Report
1
EXECUTIVE SUMMARY
Rental Rate
Vacancy Rate
$40.00
30.00%
$35.00
25.00%
$30.00
20.00%
$25.00
$20.00
15.00%
$15.00
10.00%
$10.00
5.00%
$5.00
$0.00
0.00%
Philadelphia - Center City
Suburbs
Select Lease Transactions
Select Lease Transactions
Tenant
Size (SF)
Building
Type
Tenant
Size (SF)
Building
Type
Cigna
300,000400,000
Two Liberty Place
Renewal
Comcast
130,000
955 Chesterbrook Blvd.
New Lease
Radian
150,000
1500 Market St.
New Lease
Asahi Glass Company
105,125
472 California Rd.
Renewal
The Graham
Company*
76,812
The Graham Building
Renewal
Power Home
Remodeling Group
104,661
2501 Seaport Dr.
New Lease
Obermayer Rebman
Maxwell & Hippel
66,000
1500 Market St.
New Lease
Main Line Health
87,000
Ellis Preserve, Route 3
and Route 252
New Lease
MakeOffices
56,776
1635 Market St.
New Lease
Lincoln Investment
Planning
48,412
601 Office Center Dr.
New Lease
The Design Center
48,000
34 S. 11th St.*
New Lease
Pentec Health*
17,387
9 Creek Parkway
New Lease
Select Building Sales
Select Building Sales
Building
Size (SF)
Sale Price
Price /SF
Building
Size (SF)
Sale Price
Price /SF
1513 Walnut St.
9,826
$14.5 M
$1,475.67
CrossPoint
272,360
$89.5 M
$329.00
249 Arch St.
15,000
$5 M
$333.33
1170,1190, & 1190 Devon Park Dr.
250,185
$63.5 M
$254.00
401 Market St.
500,000
$78.4 M
$156.80
Bay Colony Executive Park
247,294
$37.5 M
$152.00
1760 Market St.
128,128
$20 M
$156.09
Two Country View Rd.*
48,686
$7.27 M
$149.00
200 N. 16th St.
607,474
$43 M
$70.78
Liberty Property Trust's Horsham
Portfolio (41 Buildings)
2,400,000
$245.3 M
$102.00
Select Tenants in the Market
Select Tenants in the Market
Tenant
Size (SF)
Submarket
Tenant
Size
Market
Delaware Investments
250,000
Center City
Vertex
250,000
202 Corridor
City of Philadelphia
200,000
Center City
Voya
100,000
Suburbs & Center City
WeWork
70,000
Center City
FIS Global
60,000
Malvern
CDI Corp
35,000
Center City
JEVS*
20,000
Center City
*Represented by SSH Real Estate
1
PHILADELPHIA
2
OUTLOOK
Rental Rates
At the end of the fourth quarter 2015, the average asking rent for
the Philadelphia CBD was $27.80 per SF. This represents a 3.3%
increase from the year prior, when the average rent was $26.90
per SF. Class B showed strong year-over-year rent growth of 4.4%,
which corresponds to the tightening of class B space in the CBD.
We expect rental rates to increase and vacancy rates to decrease
during 2016.
Vacancy
Class B vacancy rates have continued to decrease, a sign that
quality Class B spaces are becoming more sparse in the CBD.
Overall rates have decreased year-over-year from 11.10 to 9.79
percent. Although class A vacancy rates crept up slightly in the 4th
quarter, we expect this aberration to normalize in 2016.
Investment Sales
The Center City investment market has continued to attract significant
interest from local, national, and international investors. Even though
the number of closed deals slowed significantly in the second half of
2015, most observers believe that this was due to a limited supply of
properties in the third quarter, not limited demand. In the late fourth
quarter, however, the number of quality properties for sale picked up,
a sign that owners were encouraged by the strong bidding for those
properties that had been on the market since the summer.
• Shorenstein Properties closed on the purchase of 1700 Market Street
in early 2016. While it did not disclose the purchase price, observers
believe that Shorenstein paid just under $200 million or approximately
$237.53 per SF. At the time of purchase, the building was around 88%
occupied.
•Alterra Property Group and Stockton Real Estate Advisors purchased
1760 Market Street for approximately $20 million or $156 per SF.
The new owners plan to invest several million dollars to renovate the
building into creative office space. Rents are currently in the low-tomid $20s but will likely go up after the renovations.
CBD Inventory
Class A
Class B & C
Overall
27,087,893
14,208,325
41,296,218
41
78
119
Class A
Class B & C
Average
Year-End 2014
$29.36
$22.70
$26.90
Year-End 2015
$29.94
$23.72
$27.80
Square Feet
Buildings
Rental Rate
Vacancy Rate
Class A
Class B & C
Average
Year-End 2014
10.65%
11.87%
11.10%
Year-End 2015
9.65%
10.30%
9.79%
•MRP Residential, a division of MRP Realty, is close to purchasing what
is referred to as the Kaiserman Company portfolio, which consists of
400 Market Street (169,000 SF), Constitution Place (87,760 SF), The
Bourse Building (281,000 SF), and a 453-unit parking garage.
•Rubenstein Partners, a Philadelphia real estate firm, is reportedly
poised to purchase the ownership interest, estimated at $200 million,
in the historic Wanamaker building.
•Miller Real Estate acquired 401 Market Street (The Plaza), an 11-story,
500,000 SF Class-A office building, for $78.4 million or $156 per SF.
The building is fully occupied by Wells Fargo and the American Bible
Society, the latter having moved in recently after a major relocation
from New York. This is the second building that Miller Real Estate has
acquired in Center City.
•Stoltz Real Estate Partners of Bala Cynwyd purchased 1513 Walnut
Street, a 9,826 SF building, for $14.5 million or $1,475.67 per SF
from Ritten Properties of Philadelphia. Brooks Brothers occupies the
building and has been in the space since 1997.
3
In spite of the limited supply of properties for sale, bargains were
still available for investors willing to take on development risk.
Three transactions are particularly noteworthy:
•PMC Property Group purchased 200 N. 16th Street (One Franklin
Plaza) for $43 million or approximately $71 per SF. They plan to
reposition the 607,474 SF building into a mixed-use site for office,
retail and apartments.
•Brickstone continued its parcel-by-parcel transformation of
Chestnut Street by purchasing the Hale Building at 1326 Chestnut
Street for $5 million or approximately $97 per square foot.
•Carlyle Development Group purchased the Public Ledger Building,
located at 150 S. Independence Mall West, for $58 million or
approximately $108 per SF. At the time of purchase, the building
was about 88 percent leased.
In late 2015, some major properties entered the market for sale,
including Two Liberty Place, a skyscraper that will likely generate a
considerable amount of buzz:
• 2000 Market Street. Two years after purchasing it for $110
million, Gemini Rosemont Realty of Santa Fe, NM, is marketing the
29-story building for sale. We expect that the property will trade
for approximately $140 million.
•1525 Locust Street. Equity Commonwealth, a Chicago based
real estate company, is marketing this 98,000 SF nineteen-story
building for sale. We expect that it will achieve a sale price of
approximately $20 million.
•Two Liberty Place. The office portion (940,000 SF) is being
marketed for sale. It is currently 89 percent leased. Some of its
long-term tenants include Cigna Corp, which signed a lease on
322,086 SF through 2027; Buchanan Ingersoll, which will be in
its 77,000 SF of space through 2021; and Republic Bank, which
occupies 53,275 SF until 2020. Industry experts project that the
skyscraper will attract both domestic and international interest and
that the sale price could go for as much as $250 million.
New Office Development
The amount of trophy office space under construction has remained
relatively constant at approximately 2,000,000 square feet in
Center City, with the FMC Tower and the Comcast Innovation and
Technology Center making up the majority of the office space in
the pipeline.
Upon completion, the new FMC tower will have 625,000 square
feet of new office space, retail space, 268 high-end apartments,
and a 72-foot swimming pool with a view of the city. Additionally,
an approximately one-acre urban park, named Cira Green, will
provide tenants, residents, and the surrounding neighborhood a
place for fun and relaxation. To anchor the project, the developer,
Brandywine Realty Trust, struck leases with FMC Corporation and
the University of Pennsylvania, with the former taking up nearly
half of the available office space.
Liberty Property Trust and Comcast are constructing the Comcast
Innovation and Technology Center, a 1,556,000 square foot office
tower at 1800 Arch Street. The building will consist of 1,334,000
square feet of office space, with Comcast as the only tenant, and
a 222 room Four Seasons Hotel.
Due to the limited office space currently available and the continued
tenant demand for new or updated space, landlords are renovating
and redeveloping existing office buildings that have become dated.
SSH Real Estate is about to update the Witherspoon Building (130
S. Juniper Street), located in the heart of Midtown Village, to
attract tenants who are looking for creative spaces. PMC Property
Group acquired One Franklin Plaza for $43 million with plans to
redevelop the building into a mixed-use property. They plan to
convert floors 10 through 24 into apartments and floors 2 through
9 into renovated office space. In a different project, PMC Property
Group and Lubert-Adler plan to develop 2400 Market Street
and the adjacent property, 2324 Market Street, into a mixed-use
project consisting of offices and residences.
West of the Schuylkyill River, at the robust University City market,
University Place Associates (UPA) plans to develop 3.0 University
Place, a proposed LEED Platinum-certified office complex at 41st
and Market.
The developers of the East Market project (National Real Estate
Advisors, SSH Real Estate, JOSS Realty Partners and Young Capital)
have commenced a $45 million total renovation of the former
Family Court building at 34 S. 11th Street into 160,000 square feet
of new, LEED certified office space. The redeveloped building will
add unique class A+ space to a submarket that lacks such newer
office space.
Rendering Comcast Innovation and Technology Center
4
MARKET WEST
Submarket News
The acquisition of 1818 Market Street, a 37-story, 940,000 SF office
building, at the price of approximately $188 per SF by Shorenstein
Properties established the firm’s reentry into Philadelphia earlier this
year. The new owner plans to invest another $20 million on capital
improvements, including upgrading the façade and renovating the
main lobby, the elevators and the bathrooms, and aims to offer
tenants creative spaces. Current tenants include Beneficial Bank (its
lease expires in 2028), eResearch Tenchology, Five Below, Zarwin
Baum Law Firm, and the American College of Radiology.
MakeOffices, a Washington D.C. based co-working company, has
signed a 56,776 SF lease at 1635 Market Street. They will move in
sometime in the third quarter of 2016 and will occupy the biggest
co-working space to date in Philadelphia. While co-working spaces
do not occupy a significant portion of the office market, they are
steadily growing and thriving, filling a demand in the market.
WeWork, another large co-working operator that first started in
New York, also signed a lease in Center City, totaling approximately
18,000 SF in the space above the Cheesecake Factory at 15th and
Walnut.
RAIT Financial Trust has signed a 21,000 SF lease at Two Logan
Square and will move out of its current location at Cira Centre
into the new space by spring 2016. Brandywine, the owner of Cira
Center, has already re-leased the vacant space to another long
term tenant.
1500 Market Street (Centre Square) experienced considerable
interest in the past six months. Radian, a mortgage insurance
company, has decided to move its headquarters from 1601 Market
Street to approximately 150,000 SF at 1500 Market Street. The law
firm Obermayer Rebman Maxwell & Hippel has signed a long term
lease to relocate from One Penn Center to 1500 Market. They will
occupy 66,000 SF on the 33rd and 34th floors of the west tower.
With the addition of these two leases, the building is now around
95% occupied.
Insight Global, a provider of employment services, signed a lease
for 11,699 SF on the 34th floor of 1735 Market Street and will
relocate from its current office in Conshohocken. The company
made the decision to relocate in an effort to appeal more to its
recruits.
The Graham Company, an insurance brokerage and consulting
firm, has extended its 76,812 SF lease at the Graham Building (30
South 15th Street).*
Inventory
Square Feet
Buildings
Class A
Class B & C
Overall
21,717,835
5,271,021
26,988,856
32
36
68
Rental Rate
Class A
Class B & C
Average
Year-End 2014
$29.92
$22.88
$28.19
Year-End 2015
$30.24
$23.26
$28.88
Class A
Class B & C
Average
Year-End 2014
11.07%
10.58%
10.95%
Year-End 2015
9.69%
9.91%
9.73%
Vacancy Rate
5
MARKET EAST
Submarket News
The owners of East Market – a group consisting of National Real Estate
Advisors, SSH Real Estate, Young Capital, and Joss Realty Partners–
have completed demolition of the 1100 Market Street building and
have begun construction at the site. Upon completion, the 1100 block
of Market Street will have 322 new apartments and 100,000 SF of
retail and dining options with underground parking. Next door, at 34
S. 11th Street, the owners of East Market are preparing 150,000 SF of
Class A office space for the installation of a new modern façade with
floor to ceiling windows.
The Design Center, consisting of a group of designers and showrooms,
signed a 48,000 SF lease at 34 S. 11th Street*, which is currently under
development. The well-known Design Center is expected to move into
its new home in mid to late 2016.
Target has confirmed that it will open a small, urban concept store
in the rapidly revitalizing Market East area. The company has signed
a 19,000 SF lease at 12th and Chestnut with Brickstone Companies,
which has been redeveloping the site. The project, at a site previously
occupied by the Oppenheim Collins department store, involves nearly
an entire block of new construction and redevelopment, and upon
completion it will include 112 rental apartments and 90,000 SF of
retail. Target will occupy the ground floor space. This location will be
one of Target’s three stores in Center City. The other two will open at
Rittenhouse Square and the Art Museum area.
Pennsylvania Real Estate Investment Trust (PREIT) and Macerich, also
a real estate investment trust, announced a $575 million renovation
and redevelopment project for The Gallery, which is expected to begin
rennovation in January 2016. Upon completion, the project will serve
as a unique shopping destination in Philadelphia.
Inventory
Square Feet
Buildings
Class A
Class B & C
Overall
2,655,651
2,512,407
5,168,058
4
16
20
Rental Rate
Class A
Class B & C
Average
Year-End 2014
$27.17
$22.64
$24.84
Year-End 2015
$29.54
$24.13
$26.91
Vacancy Rate
34 South 11th Street
Class A
Class B & C
Average
Year-End 2014
9.29%
17.05%
13.28%
Year-End 2015
7.26%
14.09%
10.58%
Rendering of The Gallery
Construction of East Market
6
INDEPENDENCE HALL
Submarket News
Miller Real Estate acquired 401 Market Street (The Plaza), an
11-story, 500,000 SF Class-A office building, for $78.4 million or
$156.8 per SF.
T&M Associates, the project and construction management
division of O’Donnell & Naccarato, has leased 4,000 SF at the
Bourse Building. Attracted by Philadelphia’s exciting development
opportunities, the company is establishing its first office presence
in the city.
Benjamin’s Desk, a co-working space provider, has signed a 10,000
SF lease at the Curtis (601 Walnut Street, previously known as the
Curtis Center).
Linode, a tech company, purchased 249 Arch Street, a 15,000
SF building that is known as the MTV Real World House, for $5
million.
Gray Consulting has signed a long term lease for 6,700 SF at 190
N. Independence Mall West (the American College of Physicians
Building). They will be relocating from 833 Chestnut Street.
Inventory
Class A
Class B & C
Overall
2,714,407
3,415,437
6,129,844
5
17
22
Class A
Class B & C
Average
Year-End 2014
$27.79
$21.65
$24.79
Year-End 2015
$27.89
$22.54
$24.91
Class A
Class B & C
Average
Square Feet
Buildings
Rental Rate
Vacancy Rate
Year-End 2014
9.21%
17.56%
13.29%
Year-End 2015
11.62%
15.57%
13.82%
Bourse Building
Dow Chemical Co. announced in July 2015 that it will be relocating
employees from its 150,000 SF space at 6th and Market to its
Collegeville PA campus. Keystone Property Group, the building
owner, sees this as an opportunity to offer a large block of available
space, with naming rights, at an iconic property.
The Curtis
7
3711 Market Street
UNIVERSITY CITY
Submarket News
Wexford now fully owns 3711 Market Street, a 10-story 155,000
SF building, after University City Science Center sold its partnership
interest in the building to an entity affiliated with Wexford Science
+ Technology for $10 million. The building was previously codeveloped by the Science Center and Wexford in the mid-2000s.
The Science Center continues to lease 37,500 SF in the building.
In a sign of the robust University City real estate market, University
Place Associates (UPA) plans to develop 3.0 University Place
complex, a proposed LEED Platinum-certified office complex at
41st and Market.
Pennovation Works, a 23-acre hub for innovation, research
and entrepreneurialism along the bank of the Schuylkill River, is
expected to be completed by the summer of 2016. The first phase
of the project will consist of a 52,000 SF facility, anchored by a
two-story amphitheater in the middle of the complex to promote
collaboration. Due to the property’s proximity to the University
and access to talented graduates, several innovative companies
from across the country have expressed interest in leasing space.
While nothing has been confirmed, Penn has mentioned that
those who are interested range from tech to engineering, as well
as manufacturing companies.
Brandywine Realty Trust, the owner of Cira Square, a former U.S.
Postal Service Building, has entered into an agreement to sell the
property to the Korea Investment Management Company for $354
million or $410 per SF. The 862,700 SF building is fully leased to
the General Service Administration and occupied by the Internal
Revenue Service.
Inventory
Class A
Class B & C
Overall
1,925,165
1,735,938
3,661,103
6
9
15
Class A
Class B & C
Average
Year-End 2014
$37.62
$26.58
$34.90
Year-End 2015
$40.60
$25.10
$33.25
Class A
Class B & C
Average
Year-End 2014
4.46%
5.48%
4.71%
Year-End 2015
1.13%
7.26%
4.04%
Square Feet
PLEXUS, a new co-working space at 3001 Market Street, seeks
to provide medical and technology start-ups with the necessary
office space requirements. The 20,000 SF of space includes open
workspace, private offices, research and development benches,
a fabrication shop, a metrology/inspection room, as well as
conference rooms, a café, and a locker room. It is leased from
Drexel University.
Buildings
Rental Rate
Vacancy Rate
8
Rendering of 1200 Intrepid
THE NAVY YARD
Submarket News
Liberty Property Trust, the Philadelphia Industrial Development
Corporation, and Synterra Partners broke ground this past summer
on 1200 Intrepid, the 14th development inside Navy Yard. This
speculative development will offer 94,000 SF of trophy quality
office space, designed by the world-renowned Bjarke Ingel Group.
Meanwhile, these same owners have now unveiled plans for
another development inside the urban office park, at 351 Rouse
Boulevard. Upon completion of this 47,400 SF LEED certified
facility, Adaptimmune, a British biopharmaceutical company with
ties to UPenn, will use the space as its US headquarters. The project
is expected to be completed sometime in late 2016.
Axalta Coating System Inc., formerly known as DuPont
Performance Coatings, signed a 20-year lease at the Navy Yard
with Liberty Property Trust. Upon completion in late 2017, the twostory 175,000 SF building will serve as Axalta’s Global Innovation
Center. The Philadelphia-based maker of liquid and powder
coatings will relocate approximately 190 jobs to the new site with
the expectation that that number could double over the next five
to seven years.
Inventory
Overall
Square Feet
Buildings
815,737
14
Rental Rate
Average
Year-End 2014
$27.48
Year-End 2015
$26.53
Vacancy Rate
Average
Year-End 2014
4.87%
Year-End 2015
3.09%
Rendering of Axalta's Global Innovation Center
9
SOUTH BROAD STREET
Submarket News
SSH Real Estate has begun renovations and is marketing 75,000
SF for lease in the historic Witherspoon building (130 S. Juniper
Street). Built in the 1890s, the 157,571 SF building was named
in honor of the Reverend John Witherspoon, a signatory of the
Declaration of Independence and former President of Princeton
University. Upon completion in 2016, the building will feature an
updated lobby and amenities with creative office space.
SSH Real Estate has renewed or signed new leases totaling
approximately 21,000 SF at 123 S. Broad and 17,000 SF at 230 S.
Broad.
RJMetrics has leased an additional 8,655 SF at the Widener
Building (One South Penn Square) and currently occupies a total of
approximately 21,500 SF on the 15th floor.
Pearl Properties plans to build a 206-room hotel at 219-225 South
Broad (near Locust Street). Upon completion, the hotel will be
operated by Concord Hospitality Enterprises, a Raleigh NC-based
company.
Inventory
Overall
Square Feet
SBE Entertainment Group and Dranoff Properties have begun
construction of the 47-story, 152-guest-room SLS Lux Philadelphia
Hotel & Residences. Completion is expected in spring 2018. Just
one block south at Broad and Pine Street, another hotel project
has been proposed by the same developers. This hotel, part of
SBE’s new Hyde chain, would be priced to compete with middle
to high-end hotels, whereas the SLS Lux will compete with Four
Seasons and other ultra-high-end hotels. The different price points
between the two proposed projects will prevent the company
from competing with itself.
Buildings
3,009,460
9
Rental Rate
All Classes
Year-End 2014
$23.53
Year-End 2015
$25.53
Vacancy Rate
All Classes
Witherspoon Building
Year-End 2014
3.25%
Year-End 2015
3.53%
230 South Broad Street
10
SUBURBAN PHILADELPHIA
11
OUTLOOK
Rental Rates
At the end of the fourth quarter 2015, the average asking rental
rate for both Class A and B space in suburban Philadelphia was
$24.84 per SF. Although both Class A rents and Class B rents
increased from the end of 2014, both took a slight dip during the
second half of 2015.
Inventory
Square Feet
63,509,971
Overall
Rental Rate
Vacancy
Overall vacancy rates in suburban Philadelphia decreased yearover-year from 13.15 to 12.03 percent. Strong leasing activities
in submarkets such as Conshohocken, Main Line, West Chester,
Bala Cynwyd, and Horsham/Willow Grove are keeping the average
vacancy rates in these submarkets in the single digits.
Investment Sales
2015 will likely be remembered as the year the suburbs made their
comeback. Investors seeking yield sold off their holdings in the city
and purchased office and/or medical property in the suburbs where
cap rates were more attractive. In the past six months, SSH Real Estate
completed several deals where traditional apartment owners sold
apartments in Philadelphia and inner-core suburbs in the 5% cap rate
range and then replaced the properties with office buildings in Chester
County in the 8% range.
A number of large suburban real estate portfolios were traded. The
size of each deal varied but most transactions, especially ones located
near transportation hubs, obtained strong prices.
•
KBS Real Estate Investment purchased CrossPoint, a 272,360 SF
office building in Valley Forge, for $89.5 million or $328.60 per SF
from a partnership consisting of the Davis Companies of Boston
and Hayden Real Estate of West Conshohocken. KBS made its first
suburban Philadelphia purchase in 2014 when it acquired 1000
Continental Drive, a 205,424 SF office building that is also near the
Swedesford Road corridor.
Class A
Class B
Average
Year-End 2014
$27.11
$21.65
$24.64
Year-End 2015
$27.29
$21.72
$24.84
Class A
Class B & C
Average
Year-End 2014
12.26%
14.51%
13.15%
Year-End 2015
11.89%
12.20%
12.03%
Vacancy Rate
•Liberty Property Trust sold one of its suburban office complexes
consisting of 1170, 1180 and 1190 Devon Park Drive, totaling
approximately 250,185 SF, for $63.5 million or $253.81 per SF. Liberty
received many offers from both local and international buyers, but
the property was sold to a partnership consisting of undisclosed
individuals.
• Equus Capital Partners purchased the Bay Colony Executive Park
in Wayne, PA from Brandywine Realty Trust for $37.5 million or
approximately $151.64 per SF. This office park consists of four office
buildings (565 Swedesford, 575 Swedesford, 585 Swedesford, and 595
Swedesford) totaling 247,294 SF. They were 86.5 percent occupied at
the time of the purchase.
•Workspace Property Trust bought a large Horsham portfolio
consisting of 41 buildings from Liberty Property Trust for $245.3 million
or approximately $102 per SF. This sale marks Liberty Property Trust’s
exit from the Horsham office market. At the time of the sale, the 2.4
million square feet of office space were 84.3 percent leased. The new
owner plans to reposition the buildings to attract more tenants.
12
In a sign of increased confidence in suburban office sales, a couple
of owners put their properties up for sale in late 2015:
•Keystone Property Group has put Devon Square up for sale. This
property, which consists of two office buildings (724 and 744 W.
Lancaster Avenue) with approximately 140,000 SF on 16 acres, is
estimated to sell at around $40 million or $285.71 per SF. Keystone
Property had purchased the buildings in 2005 when they were only
39 percent occupied. After a $6 million renovation, they are now
93 percent occupied, with Penn Liberty Bank and Merrill Lynch as
the anchor tenants.
•After one year of ownership, the Arden Group, a Philadelphia real
estate company, has listed Four Falls (100 and 200 Four Falls) for
sale. They recently spent $3 million to renovate this two building,
six-story site that totals 254,000 SF, with expectation that the
updated space would help attract tenants. A promising sign that
this may happen is the recent signing of an 8,000 SF lease by Hub,
a provider of conference and meeting spaces.
New Office Development
Properties located near transit hubs have continued to attract
interest from investors and developers. In King of Prussia, Davis
Companies of Boston and Hayden Maguire Real Estate Fund of
West Conshohocken, Pa., have drawn preliminary plans for a
five-story, 240,000 SF office building, named CrossPoint II, at
the corner of Swedesford Road and Old Eagle School Road. In
Malvern, Liberty Property Trust has commenced its redevelopment
of 6 Great Valley Parkway. The plans include three high-end
apartment buildings with 800 units, a hotel with approximately
130 rooms, office space totaling 820,000 SF, 25,000 SF of retail,
parking garages, and community space. As part of Liberty’s
massive proposed redevelopment, it received a new zoning overlay
which permits double FAR.
Conshohocken, another transit-oriented suburb, boasts a growing
list of restaurants and amenities, and has approximately 1.25 million
SF of new office space in the pipeline. Keystone Property Group’s
One Conshohocken, a mixed-use project along Fayette Street, will
include a hotel, retail space, parking, a public plaza, and two office
towers totaling 500,000 SF of office space; Equus Capital Partners
has announced plans to develop 340,000 SF of office space at 400
West Elm Street, a site that was originally set aside for multifamily;
two other projects include Seven Tower Bridge, which will include
260,000 SF, and Millennium Four with 300,000 SF.
Rendering of CrossPoint II
13
RADNOR
Submarket News
EMoney Advisor has leased an additional 7,120 SF at Four Radnor
Corporate Center. The financial software company will now occupy
a total of 77,106 SF.
Earlier this year, the University of Pennsylvania Health System
purchased an 18.2 acre-site near King of Prussia Road from
BioMed Realty Trust for an estimated $35 million. In September,
they presented preliminary development plans involving half of the
site, for a $100-$120 million 250,000 SF medical facility. They plan
to develop the remaining portion of the site in the future, although
they haven’t presented specific plans at this point.
Inventory
Square Feet
2,389,941
Overall
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$38.37
$33.00
$37.39
Class A
Class B & C
Average
1.20%
0%
1%
Vacancy Rate
Year-End 2015
After three years of negotiation, Villanova University has finally
received approval for its campus expansion plan from the Radnor
Board of Commissioners. This approval allows the University to
turn its 14-acre surface parking lot into six new residential halls,
a performing arts center, a parking garage, a pedestrian bridge,
and a university-operated retail space. The school believes that
this project, with a 2019 completion date, will allow Villanova to
compete more successfully with other institutions in attracting
students.
Main Line Health has signed an 87,000 SF lease at Ellis Preserve,
located at the intersection of Route 3 and Route 252 in Newtown
Square, as part of an effort to consolidate several offices. With this
new space, they will be splitting their corporate offices between
Radnor and Newtown Square. Main Line Health will be moving
into its new space in spring 2016.
Villanova University
MAIN LINE
Submarket News
Kimco Realty Corporation purchased 29 E. Wynnewood Road from
an entity affiliated with WP Realty of Bryn Mawr for $7.48 million.
This property includes two buildings, of which one 7,650 SF building
is leased to Starbucks, Potbelly, and First Watch; the other 2,900 SF
building is leased to Republic Bank.
Inventory
Square Feet
2,192,020
Overall
Rental Rate
Shipley School, a private college-preparatory school in Bryn Mawr,
has completed construction of a 26,000 SF building that will house
a performing arts center, classrooms, music studios and a new dining
facility. The project is part of the second phase of a two-part expansion
the school has undertaken.
Main Line Classical Academy purchased 455 S. Robert Road, a 10,700
SF building on 2.7 acres, for $1.93 million from Clarke Schools for
Hearing and Speech.
Year-End 2015
Class A
Class B & C
Average
28.11
26.97
$27.35
Class A
Class B & C
Average
3.20%
7.90%
6.33%
Vacancy Rate
Year-End 2015
Shipley School
14
MALVERN / EXTON
Submarket News
IFM Efector Inc. has moved its headquarters into Atwater Corporate
Center in Malvern. The electronic maker initially signed a 13-year lease
with Trammell Crow Company to build the $15 million, two-story,
45,000 SF building. Before Trammel Crow broke ground, it sold the
site for $40 per SF to VEREIT and assigned the IFM lease to it as well.
One of the main reasons why IFM decided to headquarter at Atwater
Corporate Center is the site’s proximity to the many engineering
schools in the region.
Saint-Gobain, the world’s largest building materials company, and its
CertainTeed Corp. subsidiary has been moving employees into its new
headquarters in the redevelopment of 20 Moores Road. The building
has been outfitted with products and materials from the company’s
product offerings, allowing the company to showcase its own
products. Construction is still in progress. However, upon completion,
the property will offer a modern office space, in addition to a fitness
center, a full-service cafeteria, and a café.
Liberty Property Trust plans for a complete redevelopment of the Great
Valley Corporate Center, located along Route 202, which will provide a
live, work and play environment. The developers plan for a mixed-use
development with community space, restaurants, retail, a hotel, luxury
residences, and three or four Class-A buildings.
A partnership between Young Capital and SSH Real Estate purchased
Two Country View Road, a 48,686 SF building in Malvern. At the time
of purchase, the building was 83 percent occupied with BB&T Bank
and SunGard Business System as anchor tenants.
Dollar Financial Group, Inc. leased 33,892 SF in the ArborRidge 3 office
building at 74 E. Swedesford Rd. in Malvern.
Inventory
Square Feet
8,053,251
Overall
20 Moores Road
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$25.60
$23.27
$25.04
Class A
Class B & C
Average
8.30%
10.50%
8.83%
Vacancy Rate
Year-End 2015
Atwater Corporate Center
Two Country View Road
15
901 Washington Street
CONSHOHOCKEN
Submarket News
E. Kahn Development Company is marketing an 82,000 SF office
building at 901 Washington Street. Unlike many other new
developments in Conshohocken, 901 Washington Street is smaller
in size and would be ideal for a single tenant that wants its own
building and identity.
Inventory
Square Feet
3,161,382
Overall
Rental Rate
Brown & Brown, a provider of insurance and reinsurance products,
signed a lease on 16,846 SF at 125 E. Elm Street (Sora East).
Keystone Property Group is developing the building into a mixeduse project that will eventually have 350,000 SF of office space, a
hotel, retail and a public plaza. Keystone also has its headquarters
in the building.
Amerisource Bergen, a wholesale drug company based in
Pennsylvania, expanded its lease by an additional 35,555 SF at
Millennium III (227 Washington Street), bringing the company’s
total occupied space between Millennium II (225 Washington
Street) and III to 105,000 SF.
Year-End 2015
Class A
Class B & C
Average
$32.41
$27.42
$31.65
Class A
Class B & C
Average
7.70%
0%
6.52%
Vacancy Rate
Year-End 2015
100 and 200 Four Falls
Arden Group, a Philadelphia real estate company, has listed Four
Falls for sale. The owner recently invested a $3 million worth of
renovation projects into this two, six-story building site totaling
254,000 SF, at 100 and 200 Four Falls. The renovations have
attracted Hub, a provider of conference and meeting spaces, to
sign an 8,000 SF lease.
227 Washington Street
16
?
H
NORRISTOWN / VALLEY FORGE
Submarket News
The sleepy town of Norristown might soon change with the Lafayette
Street Extension, which will involve reconstructing and widening
the existing Lafayette Street so that the riverfront area will be more
attractive. In tandem with this project, the Pennsylvania Turnpike
Commission has committed to constructing a new interchange
connecting the turnpike with the Lafayette Street Extension. In an
effort to revitalize the town, both municipal and school district officials
are supporting a 10-year tax abatement to help lure private developers
to build in the community.
MRO Corp., a software company, signed a 38,565 SF lease at 1000
Madison Avenue in Lower Providence and will move out of its current
headquarters at 1016 W. 8th Avenue in King of Prussia. With the MRO
Corp. lease, the building is now fully occupied.
Inventory
Square Feet
4,580,787
Overall
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$22.04
$16.68
$19.49
Class A
Class B & C
Average
9.20%
12.50%
10.77%
Vacancy Rate
Year-End 2015
17
KING OF PRUSSIA
Submarket News
Deacom, a software company, has signed a 31,000 SF lease at 601
Lee Road in the Chesterbrook Corporate Center. The company has
been experiencing rapid growth since 2012 (when it only had 12
employees) and expects to have 80 employees by the end of 2015.
The Judge Group, a technology and health-related recruitment
company, has signed a long term lease to occupy 151 S. Warner
Road, an 89,000 SF building. The recruiting firm will be relocating
from West Conshohocken, where it was based for more than ten
years.
Comcast signed a 130,000 SF lease at Chesterbrook Corporate
Center, located at 955 Chesterbrook Blvd.
Hartford Steam Boiler Inspection and Insurance, the United
States’ oldest company devoted to industrial safety, renewed its
lease of 27,693 SF in the 595 Bay Colony office building at 595 E.
Swedesford Rd. in Wayne.
Medrisk, a provider of managed physical medicine and diagnostic
imaging services, has leased an additional 16,622 SF at 2701
Renaissance Blvd. in King of Prussia.
CardConnect, a payment processing and technology company,
leased 22,750 SF at 1000 Continental Drive, where it relocated in
2012 from Cleveland.
Inventory
Square Feet
6,392,522
Overall
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$27.45
$20.96
$25.11
Class A
Class B & C
Average
15.60%
16.00%
15.74%
Vacancy Rate
Year-End 2015
151 S. Warner Road
18
1060 Andrew Drive
WEST CHESTER
Submarket News
Wm. P McGovern Inc., a waste-disposal company, will move its
headquarters from 1144 W. Baltimore Pike in Kennett Square to
68,484 SF at 920 S. Bolmar Street.
TriPoint Properties of Downingtown purchased 1060 Andrew
Drive, a single-story 43,180 SF building, for $6.55 million or almost
$152 per SF.*
Inventory
Square Feet
2,288,581
Overall
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$26.44
$23.12
$24.13
Vacancy Rate
Year-End 2015
Class A
Class B & C
Average
2.10%
4.80%
3.98%
555 City Avenue
BALA CYNWYD
Submarket News
Leases totaling 9,669 SF have been signed at 555 City Avenue,
bringing the building up to 92 percent occupied. The signed leases
comprised of the following: Advance Dental Care Associates’ 15year lease on 2,273 SF; Exactor Tax Services signed a 2,021 SF
lease; Lowenthal & Abrams, a personal injury law firm, signed a
1,075 SF expansion and a 7,051 SF renewal; Professional Flight
Management signed a 4,300 SF lease.
Keystone Property Group purchased the GSB building, located at 1
Belmont Avenue, for an undisclosed price. Situated in the bustling
City Avenue commercial corridor, where Keystone now owns five
office properties, GSB Building comprises 245,000 SF of prime
office and ground-floor retail space. The building is situated on an
eight-acre parcel, which allows for significant additional mixed-use
development opportunities.
Inventory
Square Feet
3,357,148
Overall
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$32.74
$30.50
$32.01
Class A
Class B & C
Average
8.50%
5.50%
7.52%
Vacancy Rate
Year-End 2015
19
DELAWARE COUNTY
Submarket News
Incyte Corp, a biopharmaceutical company based in Wilmington
DE, has signed a 47,000 SF and 64,500 SF lease at 100 Endo Blvd
and 200 Endo Blvd, respectively. The company signed the leases to
accommodate for its rapid growth.
Inventory
Square Feet
10,193,384
Overall
Naaman’s Creek Business Center, a five-building, 190,729 SF
complex in Upper Chichester, recently leased a total of 43,655
SF to three tenants. Roth’s CrossPoint Gym leased 20,160 SF at
7 Creek Parkway, NeighborCare Professional Pharmacies leased
17,378 SF at 9 Creek Parkway, and Custom America Inc. (a maker
of cash registers) leased 6,117 SF at 12 Creek Parkway.
Rental Rate
Janney Montgomery Scott, a full service financial firm, renewed its
5,137 SF lease at 1400 N. Providence Road in Rosetree Corporate
Center.
Year-End 2015
Year-End 2015
Class A
Class B & C
Average
$27.03
$19.19
$22.25
Class A
Class B & C
Average
14.80%
7.40%
10.29%
Vacancy Rate
Power Home Remodeling Group signed a five-year lease for
104,661 SF at The Wharf at Rivertown, located at 2501 Seaport
Dr. in Chester.
Wells Fargo signed a 33,321 SF lease on the first floor of the
Applied Corporate Center, located at 50 Applied Card Way in Glen
Mills, PA.
25 CREEK CIRCLE
12 CREEK PARKWAY
23 CREEK CIRCLE
9 CREEK PARKWAY
7 CREEK PARKWAY
FORT WASHINGTON / SPRINGHOUSE
Submarket News
Lincoln Investment Planning, a national financial advisory firm, has
signed an 11-year lease for 48,412 SF at 601 Office Center Drive,
which is part of the Apex Fort Washington Office Complex.
TruMark Financial Credit Union signed a lease for 75,300 SF at 335
Commerce Drive.
601 Office Center Drive
Inventory
Square Feet
3,574,917
Overall
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$25.33
$22.10
$23.66
Class A
Class B & C
Average
22.60%
14.90%
18.63%
Vacancy Rate
Year-End 2015
20
Inventory
LOWER BUCKS
Submarket News
Old Republic Specialty Insurance Underwriters signed a 10,478 SF
long-term lease at 790 Township Line Road in the Lower Makefield
Corporate Center.
Asahi Glass Company renewed its lease on 105,125 SF at 472
California Road. The Japan-based company makes glass products
for a range of industries such as automotive, commercial
construction, electronic, and others.
Square Feet
6,828,624
Overall
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$25.63
$19.64
$22.22
Class A
Class B & C
Average
28.80%
24.40%
26.29%
Vacancy Rate
Sigmapharm Laboratories, a pharmaceutical company, purchased
a 60,500 SF building at 3369 Progress Drive in Bensalem for an
undisclosed price. The company has occupied the building since
2006.
Year-End 2015
Tetra Tech, Inc., a provider of consulting, engineering, and program
management services, has signed an 11,073 SF lease at One Oxford
Valley in Langhorne.
Saatchi & Saatchi, a global advertising agency, signed a 2,986 SF
lease at 3800 Horizon Blvd. in Bensalem.*
D.R. Horton, the largest home construction company in the United
States, leased a 6,000 SF regional office at the Neshaminy Interplex
Business Center in Trevose PA.
3800 Horizon Blvd.
HORSHAM / WILLOW GROVE
Submarket News
Niagara Bank sold 401 Horsham Road, a two-story 88,045 SF office
building, to a partnership affiliated with PernaFrederick Commercial
Real Estate for $2.45 million or $27.82 per SF.
Quality Systems, a provider of electronic health records solutions,
signed a 110,000 SF lease at 795 Horsham Road.
Alliance Partners HSP sold Station Park for $21 million to a New York
real estate investment firm. The building was 100 percent leased at the
time of the sale.
Inventory
Square Feet
4,243,131
Overall
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$23.88
$24.23
$24.30
Class A
Class B & C
Average
7.40%
9.60%
8.35%
Vacancy Rate
Year-End 2015
401 Horsham Road
21
One Plymouth Meeting
PLYMOUTH MEETING / BLUE BELL
Submarket News
Keystone Property Group plans to redevelop One Plymouth
Meeting, the nine-story, 180,000 SF office building that is connected
to the Plymouth Meeting Mall. They estimate the property to be
less than 30 percent occupied and believe that it is time for it to
be redeveloped. The improvements will include a new exterior,
replacing the mechanical and electrical systems, expanding the
window lines, and gutting the interior. Keystone Property believes
that once the redevelopment is complete, tenants will be attracted
to the property’s proximity to the Pennsylvania Turnpike and easy
access to the shops and restaurants at the Plymouth Meeting Mall.
Connolly iHealth Technologies opened its new 30,000 SF office at
731 Arbor Way to accommodate its rapid growth. The company is
looking to hire 220 people for its Bluebell office.
Exeter Property Group purchased Plymouth Woods Office Park
(521-531 Plymouth Road) at Plymouth Meeting for $20.75 million
or about $110 per SF from GPX Realty Partners.
Company Voice, a full-service inbound and outbound contact
center, has signed a seven-year lease renewal and expansion
totaling 34,525 SF at 930 Harvest Dr. in Blue Bell.
Inventory
Square Feet
6,254,283
Overall
Rental Rate
Year-End 2015
Class A
Class B & C
Average
$25.15
$22.10
$23.86
Class A
Class B & C
Average
11.10%
17.00%
13.60%
Vacancy Rate
Year-End 2015
731 Arbor Way
930 Harvest Drive
22
COMPANY NEWS
Select Transactions:
• Pete Soens represented The Graham Company with their 76,812
SF lease renewal at The Graham Building (30 South 15th Street.)
• Jeff Seligsohn represented Locks Law Firm for a 16,923 SF lease
Updates:
in Center City.
The Design Center signed a lease for 48,000 SF at East Market - 34
South 11th Street.
• Eric Muller transacted over 16,717 SF at 230 South Broad Street.
Investment Brokerage
• Brian Mears and Kevin Hagenberg represented the ownership
• SSH’s Investment Services team represented the Seller in the $7.4
with a 49,000 SF lease renewal at Brinton Lake Medical Center.
million sale of 180 Gordon Drive in Exton. The 66,755 SF building was
100% leased at the time of the sale.
• Kevin Hagenberg represented the ownership in selling 5 Llandillo
Road, an 18,900 SF building in Havertown PA.
• The Investment team is marketing the sale of 955 Mearns Road
in Warminster, Bucks County. This 300,000 SF industrial and office
• Brian Mears and Kevin Hagenberg represented Pentec Health in
property is currently 96% leased.
a 17,387 SF lease at 9 Creek Parkway, Boothwyn PA.
• Marketing is under way for 1025 Andrew Drive, a $4.1 million office
• Mike Kennedy transacted over 20,812 SF at 123 S. Broad.
listing in West Chester that is 100% leased.
• Adam Gillespie is marketing the sale of the Suburban Building,
located at 134 N Wayne Avenue in Wayne. The building is currently
100% leased to seven retail and office tenants, and it represents a
best-in-class asset in one of the most affluent markets in the county.
The property is listed for $4.85 million.
• Currently under contract, 1601 Lombard Street is prime for
redevelopment into residential and retail due to its proximity to
Rittenhouse Square.
Management News:
• SSH has been retained to manage the Sheridan Building, located at
125 S. 9th Street, after it sold its partnership interest to an undisclosed
buyer.
23
New Hires:
Cathryn Coate returns to SSH where she
began her commercial real estate career. She
will continue to provide comprehensive real
estate services, including tenant and landlord
representation; office, land and industrial
acquisition and sales; as well as consulting to a
diverse base of local and national organizations.
With a particular focus on nonprofit organizations, Cathy applies
her expertise and knowledge of Philadelphia's neighborhoods and
resources to help clients achieve their strategic, operational and
financial goals. Before returning to SSH, Cathy was a Senior Vice
President with Colliers International where she handled leasing,
landlord representation and sales. Prior to that, she served as a Director
with GVA Smith Mack.
Donald Grimes recently joined SSH Real Estate
as a Vice President at the firm’s suburban office.
Prior to joining SSH, he spent the last 11 years
with KarMar Realty Group of Chadds Ford,
PA., where he represented clients with their
commercial real estate needs. Donald graduated
from Penn State University with a Bachelor of
Science in Management and Economics.
Brian Hitchings joins SSH with over 20 years
of experience in managing Philadelphia Area
Newspapers, a third generation family business
founded in 1929. He was directly responsible
for handling in excess of $150 million worth
of print and digital placements in 150 regional
newspapers. Prior to his career in advertising,
Brian worked as a leasing and sales broker at Binswanger, where he
had in excess of $200 million in transactions, totaling more than 1.3
million SF.
Andrew Zakroff is an Associate with SSH in
the Philadelphia office. He specializes in tenant
representation and landlord representation
services for clients in the Philadelphia office
market. Prior to joining SSH, Andrew was the cofounder of a wholesale jewelry business. Under
his leadership the company gained a major
presence in both the Northeast and the West Coast.
HOLIDAY PARTY 2015
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24
BROKERAGE
PROPERTY
MANAGEMENT
OVER
60 YEARS
in representing
tenants, landlords
and property
owners
About
SSH Real Estate
INVESTMENTS
SSH REAL ESTATE
SSH Real Estate is one of the largest privately held commercial real
estate companies in the Greater Philadelphia Region. The firm is
unique in that it is the only commercial real estate company in the
area with the size and scope of experience in brokerage, property
management, and investments.
SSH Real Estate’s expertise in each line of service enables the firm
to produce superior results for its clients.
Center City Office
Suburban Office
123 South Broad Street, 8th Floor
Philadelphia, PA 19109
T (215) 893-3000
2 Country View Road, Suite 110
Malvern, PA 19355
T (610) 995-1010
Jeffrey R. Seligsohn, SIOR, Partner
(215) 825-1500
Brian Mears, Partner
(610) 304-3080
Peter C. Soens, Partner
(215) 825-1510
Greg Muller, COO & Partner
(215) 825-1513

PDF - SSH Real Estate

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