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APPLIED KNOWLEDGE IN REAL ESTATE
Winter 2015
Partner’s Brief.................................................................................3 Greater Philadelphia Proposed Office Projects.......................4 - 5 Philadelphia Area Market: Office Insights.......................................6 Area Transactions & News.............................................................7 About...............................................................................................7
This report and publications discussed are intended solely for information purposes and obtained from sources believed to be reliable. No guarantee of any kind is implied or possible where projections of future conditions are attempted. © Jackson Cross Partners • 2015 All Rights Reserved
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PROCESS | PEOPLE | TECHNOLOGY
Winter 2015
PARTNER’S BRIEF There is a serious issue brewing in the regional real estate market. While the economy is doing better, and Philadelphia is clearly in a recovery, this means the supply of office space is tightening, rental rates are going up, and tenants with large requirements have fewer and fewer alternatives. For most of the last seven years, the regional commercial market has been oversupplied, keeping rates down, and developers aggressive. New construction projects were confined to institutional expansions, or municipal projects, not Class-A office projects. Demand was nonexistent thanks to little or no job growth. Suburban Office as an Industry sector is taking its turn at the bottom of the investment food chain. Due in large part to the recovery, vacancy rates in core submarkets are in the single digits. The once plentiful large blocks of space greater than 50,000 sf are leased. “Densification”, a shift in space design resulting from cultural requirements of millennial workers, has rendered much of the existing inventory functionally obsolete. What were once considered Class-A properties, now have a low parking ratio, poor window lines, low ceilings, and not enough building infrastructure to support higher employee counts. Open space planning, like it or not, helps the bottom line.
The short supply of readily available large blocks of space has further complicated the process of matching long term real estate strategy with the vision of leadership. Exciting opportunities exist in building a new facility, or re-purposing existing buildings. The process is complex and time consuming. A successful outcome is the result of a detailed, collaborative effort, with a strong real estate team leader. Feel free to call me directly to discuss our insights and their impact on your vision. I look forward to the conversation.
John P. Morrissey, SIOR Founding Partner 610.265.7700 ext 124 jpm@jacksoncross.com
Customer Testimonial
Jackson Cross Partners never deviated from their commitment to protect our best interest. The ultimate transaction required short term solutions, complicated financial analysis, as well as finesse. Jackson Cross Partners knows how to blend the art and science necessary for creative deal making. Leo Parsons President and COO Communications Test Design, Inc (CTDI)
www.jacksoncross.com
PROCESS | PEOPLE | TECHNOLOGY
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GREATER PHILADELPHIA PROPO
Applied Knowled
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Metroplex Corporate Center Chemical Road, Plymouth Meeting, PA Metroplex Corporate Center I Class - A Office Building Year Built: 2007 Square Feet: 120,877 Percent Leased: 100%
Th
Metroplex Corporate Center II 12 story - 336,000 SF Proposed Metroplex Corporate Center III 5 Story - 120,000 SF Proposed Metroplex Corporate Center is centrally located in Plymouth Meeting, Montgomery County, PA at the convergence of I-476, the Pennsylvania Turnpike and the Northeast Extension. This area is widely recognized as a key transportation hub in Southeastern Pennsylvania. Property Features Include: ■ Dramatic lobbies, granite flooring ■ Cutting edge design ■ Adjacent to Metroplex Shopping Center ■ Convenient to hotels, restaurants, daycare ■ Minutes from the Plymouth Meeting Mall ■ 15 Minutes to King of Prussia ■ 30 Minutes to the Philadelphia Airport ■ Public Transportation
ID
State
Building Park
SQ FT
1
PA
Navy Yard
Navy Yard Corporate Center
95,000
2
PA
Market Street West
FMC Tower/Walnut St South
830,000
3
PA
West Philadelphia
3.0 University Place
189,529
4
PA
Conshohocken
Tower Bridge
260,000
5
PA
Delaware County
Ellis Preserve
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*7
PA
PA
Submarket Name
Exton/Whitelands
Plymouth Mtg/Blue Bell * Featured Property
270,002
Atwater
1,895,360
Great Valley Corp Center
390,000
Bentwood Executive Campus
270,000
Chemical Rd Metroplex
456,000
JPC is not the exclusive a
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PROCESS | PEOPLE | TECHNOLOGY
Winter 2015
OSED OFFICE PROJECTS 100,000 SF
dge in Real Estate
Owners/Management Brandywine Realty Trust (NYSE: BDN) owns and manages Metroplex Corporate Center. Headquartered in Radnor, PA, they are one of the largest full-service, integrated real estate companies in the nation. Organized as a real estate investment trust (REIT), Brandywine owns, leases and manages an urban, town center and suburban office portfolio. One of Brandywine’s key strengths is their Build-to-Suit project management system. They have been named by Forbes as one of America’s 100 Most Trustworthy Companies. Brandywinerealty.com
Area Tenants
■ Citizens Bank
■ First Niagara Bank
■ IMS
■ LaSalle University
■ Mercy Health
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Camden
Center City
Plymouth Meeting Road Mid-County Interchange
he Navy Yard
0
Meeting House Business Center
METROPLEX CORPORATE CENTER
Plymouth Meeting Mall
ID 8
State PA
Submarket Name King of Prussia/Wayne
Building Park
SQ FT
Renaissance Corporate Ctr
300,065
“This map represents the locations of a subset of the
500 American Ave
100,000
available or proposed Build-to-Suit sites in the Phila-
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PA
Norristown/Valley Forge
2660 Audubon Rd
127,000
10
PA
Horsham/Willow Grove
Keith Valley Business Ctr
108,278
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NJ
Gloucester County
Mullica Hill
225,000
12
NJ
North Burlington County
Laurel Creek Exec Center:
266,000
on a new building, requiring large tenants to establish
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NJ
South Camden County
Independence Blvd
100,000
relocation strategies well in advance of pending lease
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PA
Northeast Philadelphia
Eagle Pointe at Byberry
750,000
expirations.”
15
NJ
Camden NJ
Gateway Office Campus
1,600,000
delphia region. Developers are entertaining large requirements two years before actual delivery dates
John P. Morrissey, SIOR
agent for these properties.
www.jacksoncross.com
PROCESS | PEOPLE | TECHNOLOGY
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PHILADELPHIA AREA MARKET: OFFICE INSIGHTS Class-A Office Insights ■
The availability of Class-A Office space for large users has decreased due to lack of construction during the recession, and increased occupancy due to the recovery, leading to unprecedented leasing rates for prime space.
■
Due to a lack of inventory of large Class-A office buildings, Build-to-Suit solutions may be the best and only option a large office user has to choose from in the Greater Philadelphia market.
■
Developers are not building on speculation but are waiting for a lead tenant to pre-lease a large portion of the project before proceeding with construction.
Year-end 2014 Construction Notes ■ Suburban Philadelphia: 3 buildings totaling 176,231 SF under construction. ■ Central Philadelphia: 2,166,682 SF of building space under construction ■ (86.6% pre-leased). ■ Deliveries during the last 7 years were drastically reduced to below the historical average. ■ Lenders have become more stringent requiring higher pre-lease percentages.
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PROCESS | PEOPLE | TECHNOLOGY
Winter 2015
Applied Knowledge in Real Estate TM A process based, technology enabled approach to real estate portfolio management, focused on the alignment of real estate objectives with the goal of an overall strategic business plan.
RECENT TRANSACTIONS ■ A partnership between Nightingale Properties and Carlton Associates purchased 1835 Market St. in Center City for $100M. *bizjournals.com ■ VEVA a 16-acre newly redeveloped office park: 425,000 sf Class-A Office Space formerly known as Sentry Park West was unveiled in Blue Bell. *Keystone Property Group ■ Record-setting price of more than $360 per sf paid for Radnor Court, an office building located in Radnor, Pa. Goldman Sachs bought the property from Equus Capital Partners of Philadelphia. *bizjournals.com/
AREA NEWS ■ King of Prussia office building, owned by a fund comprised of Miller Investment Management and Hayden Realty comes up for sale at 150 S. Warner Road; could trade for $200 per square foot. *bizjournal.com ■ More than $500M in new development planned for Conshohocken with more than 1.27 million square feet of office development. *bizjournal.com ■ Subaru of America announced it will relocate its new corporate headquarters to Camden, NJ from Cherry Hill. *NJBMagazine.com ■ Philadelphia to host the 2016 Democratic National Convention
About Jackson Cross Partners The strategic planning necessary to implement a real estate decision for a large requirement takes time, a significant commitment of resources, and solid analysis of actionable market data. Jackson Cross Partners has led transition teams for large real estate requirements regionally and nationally. We custom design a process that will yield the best possible alternative from a wide array of possibilities, whether a renewal, downsize or, relocation. Our cross-functional teams are equipped to help define, and implement your real estate strategy. You can find us at Facebook: www.facebook.com/JacksonCrossPartners Linkedin: www.linkedin.com/company/jackson-cross-partners-llc
www.jacksoncross.com
Website: www.jacksoncross.com Google+: https://plus.google.com/+Jacksoncrosspartners Twitter: https://twitter.com/JacksonCrossLLC
PROCESS | PEOPLE | TECHNOLOGY
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For more information, please contact: Jackson Cross Partners 1010 W. Ninth Avenue King of Prussia PA 19406 Attn: John Morrissey Phone: 610-265-7700 ext. 124 www.jacksoncross.com
Combining people, process, and technology to transform commercial real estate portfolios into strategic business assets.