2016 YEAR-END GREATER PHILADELPHIA OFFICE MARKET REPORT AND OUTLOOK
CONTENTS
2
EXECUTIVE SUMMARY
Page 1
PHILADELPHIA
Page 2
SUBURBAN PHILADELPHIA
Page 14
VACANCY & RENTAL RATES
Page 24
COMPANY NEWS
Page 26
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GREATER PHILADELPHIA IS AN 11-COUNTY NEIGHBORHOOD THAT OFFERS A WELL-EDUCATED WORKFORCE, EASE OF ACCESS, AND A MORE COST-EFFICIENT ENVIRONMENT. COMBINE THESE FEATURES WITH OUR SPIRIT OF INNOVATION AND COLLABORATION, AND YOU’LL DISCOVER A GREAT PLACE TO DO BUSINESS.
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SELECT GREATER PHILADELPHIA COUNCIL SELECTGREATERPHL.COM 3
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EXECUTIVE SUMMARY Rental Rate
Vacancy Rate
$45.00
25.00%
$40.00 20.00%
$35.00 $30.00
15.00%
$25.00 $20.00
10.00%
$15.00 $10.00
5.00%
$5.00 $0.00
0.00%
PHILADELPHIA
SUBURBS Select Lease Transactions
Select Lease Transactions
Tenant
Size (SF)
Building
Type
Tenant
Size (SF)
Building
Type
Aramark
300,000
2400 Market Street
New
Reed Tech
120,000
7 Walnut Grove Drive
Renewal
Five Below
300,000
701 Market Street
New
2501 Seaport Drive
New
127,000
3675 Market Street
New
Power Home Remodeling Group
104,661
Cambridge Innovation Center (CIC)
Voya Financial
100,000
1475 Dunwoody Drive
Renewal
GSA
94,704
801 Market Street
New
Incyte Corp.
48,600
300 Endo Blvd.
New
Zenith Freight Lines
25,000
25 Creek Circle*
New
Select Building Sales
Select Building Sales
Building
Size (SF)
Sale Price
Price /SF
Building
Size (SF)
Sale Price
Price /SF
Two Liberty Place (office portion only)
914,718
$200 M
$213.00
7.6 M
$969 M
$128
801 Market Street
382,801
$30.2 M
$79.00
Liberty Property Trust's 26-Building Portfolio
3520-3550 Market Street
80,000
$25.5 M
$319
Arborcrest Corporate Campus
$143 M
$219 (office only)
33-37 S. 16th Street
10,000
$6.5 M
$650
654,000 of office space 190,000 of redevelopment 27 acres of land
300 and 500 Evergreen Drive
125,000
$52 M
$418.00
935 First Avenue
104,000
$25.5 M
$245.67
ArborRidge Office Complex
128,627
$24.3 M
$189
Tenants in the Market
Tenants in the Market
Tenant
Size (SF)
Submarket
Tenant
Size (SF)
Submarket
Delaware Investments
125,000
Center City
Philadelphia Insurance
200,000
Industrious
25,000
Center City
Bala Cynwyd / Conshohocken
PA Office of Attorney General
25,000
Center City
Morgan Stanley
80,000 - 100,000
Conshohocken
Alkemy-X
20,000
Center City
ModSpace
60,000
202 Corridor Malvern to KOP
Mitchell & Ness
18,000
Center City
Boomi
30,000
King of Prussia / Valley Forge
Children’s Dental Health Associates
12,000
West Chester
* TRANSACTION REPRESENTED BY SSH REAL ESTATE 1
PHILADELPHIA OUTLOOK
INVESTMENT SALES
RENTAL RATES At the end of 2016, the average asking rate for the Philadelphia CBD was $29.09 PSF. This represents a 4.6% increase from the year prior, when the average asking rate was $27.80 PSF. With the opening of the newly constructed FMC Tower in University City and the revitalization of Market Street East, both of these submarkets have exhibited strong Class A rental rates of $44.09 and $30.36 PSF, respectively. The Class A rental rate at Market Street East is now on par with that of Market Street West. Average asking rate in the CBD is likely to increase due to relatively low vacancy rates in key submarkets.
The pace of investment transactions slowed in the second half of 2016. This was due to an imbalance of supply of investment deals versus demand. The reason for this was simple: many of Philadelphia’s larger properties have already traded in the last five-year cycle, and building owners have been focused more on implementing ownership strategies then on selling. Presumably they will look to harvest that value as the economic cycle reaches full maturity over the next several years.
VACANCY At the end of 2016, the average vacancy rate in the Philadelphia CBD was 10.03%, compared to 9.79% at the end of 2015. This slight increase is due to an influx of newly delivered buildings in 2016; for example, the newly completed FMC Tower alone contains approximately 622,000 SF. The fact that new buildings are being constructed and so many existing buildings are being renovated shows that Philadelphia remains vibrant, and that the average CBD vacancy rate will decrease as more companies move into the city.
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In spite of this low supply, capital was still readily available and the few deals that were in the market successfully closed. One major transaction was Core Trust Capital Partners’ $200 million purchase of the 941,000 SF office portion of Two Liberty Place (more information below). Other interesting deals in Philadelphia’s CBD include: FOR SALE Elwyn, a nonprofit organization that serves people with disabilities, has put its 2.75-acre property at 40th and Market Streets up for sale. The nonprofit has operated a care center on the property for over 40 years.
SOLD Coretrust Capital Partners purchased the 914,718 SF office portion of Two Liberty Place from Parkway Properties Inc. of Orlando FL for an estimated $200 million or approximately $213 PSF. The firm plans to invest another $20 million in renovation. The space has about 140,000 SF of vacant space. A partnership consisting of MM Partners, Bluevista Properties and Stolar Capital purchased 33-37 S. 16th Street, a 10,000 SF building that is directly across from Liberty Place, for $6.5 million or $650 PSF from Cortinas Investment Group Inc.
Cohen Equities, a New York real estate firm, purchased a 382,801 SF condominium office space, spanning floors seven through 13, at 801 Market Street for approximately $30.2 million or $78.89 PSF. Current tenants include Community Behavioral Health (112,247 SF) and the General Service Administration (97,283 SF). The purchased portion is currently 54.7 percent occupied, although the vacancy rate will likely increase when another 173,271 SF of space becomes vacant. The buyer was attracted to 801 Market because of the opportunity to add value through leasing up the vacant space, as well as its proximity to the developments in the Market East area.
Miller Real Estate Investment purchased 3520-3550 Market Street, an 80,000 SF medical office building currently occupied by CHOP and some of its physician practices, for $25.5 million or about $319 PSF. CHOP will continue its long term lease on the building, though approximately 12,000 SF will become vacant in 2017.
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NEW OFFICE DEVELOPMENTS 1800 Arch Street
Brandywine Realty Trust completed its development of the 47-story mixed-use FMC Tower. The building is the new home of FMC Corporation, a chemical company, and is the first “vertically integrated campus� in Philadelphia, featuring a 72-foot swimming pool, an urban park, and retail/ residential units. Other long-term tenants include The University of Pennsylvania (100,000 SF), FreedomPay Inc. (24,799 SF), and the luxury hotel AKA University City. Now that the FMC Tower is completed, the remaining major ground-up office development project in Center City Philadelphia is the Comcast Technology Center, a 1.5 million square foot office tower at 1800 Arch Street. The building will consist of 1.3 million square feet of office space, with Comcast as the only tenant, and a 222 room Four Seasons Hotel on the top of the building.
Comcast Technology Center 4
While the FMC tower and the Comcast Technology Center contribute a significant amount of square feet to the Philadelphia office market, there are other major projects that are poised to bring new and/or renovated space to the market. 2400 Market Street (previously home to Marketplace Design Center) - PMC Property Group and Lubert-Adler’s redevelopment project has already signed a 300,000 SF lease with Aramark.
One Franklin Tower (200 N 16th Street) - PMC Property Group is redeveloping the property into a mixed-use property that will include 209,372 SF of renovated office space.
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Pennsylvania Convention Center
Race St
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Arch St
Jefferson Station
City Hall
John F Kennedy Blvd
Independence Mall
Market St
30th Street Station
SOUTH BROAD
30th St
Chestnut St
Walnut St Locust St
Pennsylvania Hospital
MARKET STREET EAST
Rittenhouse Square
Washington Square
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1300 Market Street - Oliver Tyrone Pulver Corp., a West Conshohocken-based developer, is under contract to acquire the vacant lot at 13th and Market Street. The developer is proposing construction of an 840,000 SF, 38-story office building but is seeking to pre-lease a significant portion of the building before breaking ground on the property.
1100 Ludlow Street (previously 34 S. 11th Street) - The developers of the East Market project (National Real Estate Advisors, SSH Real Estate, JOSS Realty Partners and Young Capital) are close to completing a total renovation of the former Family Court building at 1100 Ludlow. The building, which will contain 175,000 SF of new LEED certified office space, is already 50 percent preleased. Tenants will include Mom’s Organic, The Design Center, and Bohlin Cywinski Jackson.
CONSTRUCTION CRANES VISIBLE ACROSS THE SKYLINE REPRESENT AN INVESTMENT BY LOCAL AND NATIONAL DEVELOPERS AND EXPANDING EDUCATION AND HEALTHCARE INSTITUTIONS OF $5.2 BILLION.
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25th St
Spruce St
2016 STATE OF CENTER CITY PHILADELPHIA CENTER CITY DISTRICT
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MARKET WEST 1900 Market Street
In March 2017, WeWork is opening a 55,000 SF co-working space at the recently renovated 1900 Market Street, making this the fourth – and the largest – Philadelphia location for the coworking giant. The other three are located at 1601 Market Street, Schmidt’s brewery building in Northern Liberties and 1430 Walnut Street. Another leased signed at the building was engineering services firm Pennoni Associates for 58,000 SF.
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COWORKING SPACE IS SERVING AS AN INCUBATOR FOR STARTUPS AND A MEANS FOR TENANTS FROM OUTSIDE THE CITY AND REGION TO TEST THE MARKET.
2016 STATE OF CENTER CITY PHILADELPHIA CENTER CITY DISTRICT 6
Law Firm Hogan Lovells signed an 11-year lease for more than 34,700 SF at 1735 Market Street and will relocate from 1836 Market Street in September 2017. Two leases were signed at 1608 Walnut Street, totaling 18,573 SF. Benjamin’s Desk, a co-working space provider, signed a lease on 11,693 SF on the 12th floor. Philadelphia Utility Emergency Services Fund leased 6,880 SF on the 6th floor. Biomeme Inc., a medical technology company, leased 4,542 SF at Two Penn Center (1015 Chestnut Street) and will be relocating from 20 N. 3rd Street. Merrill Lynch, currently located at One Liberty Place, signed a 26,696 SF lease on the seventh floor at 1600 John F. Kennedy (Four Penn Center). Archetype, which specializes in sales analytics, signed a 7,300 SF lease at 2124 Race Street and will relocate from its headquarters at Trevose. Aramark, a food service provider, will relocate from its office at 1101 Market Street to 300,000 SF at 2400 Market Street.
2400 Market Street
7
MARKET EAST
1100 Ludlow
8
MARKET WEST
EAST MARKET HAS ALREADY PRELEASED 50% OF THE BUILDING WITH TENANTS SUCH AS MOM’S ORGANIC, THE DESIGN CENTER, AND BOHLIN CYWINSKI JACKSON.
Bohlin Cywinski Jackson Rendering
The owners of East Market – a group consisting of National Real Estate Advisors, SSH Real Estate, Young Capital, and Joss Realty Partners – are in the final phase of constructing the 1100 Market Street building. Upon completion in the spring of 2017, 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 1100 Ludlow Street (previously 34 S. 11th Street), the owners of East Market have already preleased 50% of the building with tenants such as Mom’s Organic, The Design Center, and Bohlin Cywinski Jackson.
Brickstone transformed various parcels within the Midtown Village area. The redevelopment of the 1100 block of Chestnut Street, previously occupied by the Oppenheim Collins department store, includes 112 rental apartments (The Collins) and 90,000 SF of retail. Target opened its first “express” small-scale store in Philadelphia and occupied the ground floor in July 2016. Oliver Tyrone Pulver Corp., a West Conshohocken-based developer, is under contract to acquire the vacant lot at 13th and Market Street. The developer proposes construction of an 840,000 SF, 38-story office building but is seeking to pre-lease a significant portion of the building before breaking ground on the property. Pennsylvania Real Estate Investment Trust (PREIT) and Macerich, also a real estate investment trust, commenced a major renovation and redevelopment project for The Gallery. The project has received approximately $100 million in public investment from the state and the city through a variety of state grants. The GSA signed two leases totaling 94,704 SF at 801 Market Street, which was recently purchased by Cohen Equities for approximately $30.2 million. Health and Human Services (HHS) will occupy the eighth and ninth floors when it relocates from the Public Ledger Building in June 2018 on a 10-year deal valued at roughly $23 million.
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INDEPENDENCE HALL
Discount retailer Five Below will relocate its current corporate headquarter location from 1818 Market Street into 300,000 SF at 701 Market Street.
One Hundred Independence, previously known as the Dow Building, will undergo more changes as owner Keystone Property Group plans for renovations. These changes will include a new entrance in the front of the building, updates to the lobby, and enhanced security and lighting. The timing of these new upgrades comes as the building faces a vacancy of 225,000 SF, or 56 percent.
601 Walnut Street (the Curtis) saw the arrival of three new tenants. Law firm Weltman Weinberg & Reis Co. signed a 3,500 SF lease, relocating from 325 Chestnut Street; Wiss Janney Elstner Associates Inc., an engineering and architectural firm, leased 5,600 SF, relocating from 400 Market Street; and 365 Health Services, a home health care provider, signed a lease on 3,500 SF and will relocate from its current location at the Bourse building.
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Slice Communications is moving from its 3,200 SF space in the Bourse and relocating to 6,000 SF on the fourth floor of 234 Market Street (Stanley building).
New York- based Carlyle Development Group is putting the east tower portion of the Public Ledger Building (150 Independence Mall West) for sale as a possible residential or hospitality redevelopment project. The firm purchased the 533,945 SF property in 2015 with plans to reposition the bottom floor with restaurants and retail and update the office portion to attract tenants. It also recently received approval to add parking to the property.
SOUTH BROAD 219-225 S. Broad Street
Pearl Properties broke ground on its latest project, located at 219-225 S. Broad Street, which will be the Cambria Hotel. Upon completion, it will feature 14 stories and 222 rooms. 123 S. Broad* signed leases and renewals totaling 22,548 SF, including office furniture distribution firm Pomerantz’s renewal of 8,864 SF and expansion of 2,206 SF, and law firm Earp Cohn’s lease renewal of 3,049 SF. 230 S. Broad* signed leases and renewals totaling approximately 20,000 SF. Law firm Getson & Schatz signed a 2,179 SF new lease; Edelstein Law signed a renewal of 5,057 SF and Communication Workers of America signed a renewal of 4,793 SF. SSH Real Estate is marketing the newly available space for lease at 123 South Broad Street* and the historic Witherspoon Building* (130 S. Juniper Street). Sweat Fitness leased 20,000 SF at 1 S. Broad Street and will relocate from 1425 Arch Street. HipCityVeg, a 100% plant-based fast food provider, opened its brand new store at 121 S. Broad.
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SOUTH BROAD STREET HAS BEEN RECOGNIZED BY THE AMERICAN PLANNING ASSOCIATION AS ONE OF THE “GREAT PLACES OF AMERICA”. THE AVENUE’S RENOWNED PERFORMANCE VENUES, LUXURY HOTELS AND EATERIES, UNIVERSITIES, AND RESIDENCES ARE JUST A FEW REASONS WHY... AVENUE OF THE ARTS WWW.AVENUEOFTHEARTS.ORG 11
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UNIVERSITY CITY
The first phase of Pennovation Works, a 23-acre innovation and research hub, opened at 3401 Grays Ferry Avenue this past summer. This 52,000 SF facility, anchored by a two-story amphitheater in the middle of the complex to promote collaboration, has received strong leasing interest from innovative companies due to the property’s proximity to the University of Pennsylvania and access to talented students. Companies such as Liquid Biotech USA and the Hershey Company have already signed up for space at the building. FreedomPay Inc. has signed a lease on 24,799 SF in the FMC Tower at Cira Centre South (2929 Walnut Street), a mixed-use building developed by Brandywine Realty Trust. The company is currently located at Five Radnor Corporate Center in Radnor but will soon move its headquarter to the FMC Tower. Cambridge Innovation Center (CIC), a co-working space and incubator provider, has signed a 127,000 SF lease at 3675 Market Street. This 345,000 SF 14-story building is currently under construction but is already 50% leased. The project is scheduled to be completed by the 2nd quarter of 2018. Lincoln Technical Institute is vacating 35,000 SF at 3600 Market Street, which is one of the biggest blocks of contiguous office space in the University City submarket, where the vacancy rate is one of the lowest in the Philadelphia area.
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THE NAVY YARD WuXi AppTec Inc. opened a new 150,000 SF building, which is the third building the company has at the Navy Yard, occupying a total of 280,000 SF. This new space will serve a cell and gene therapy manufacturing facility. Corona Environment Consulting opened a new 5,000 SF laboratory and office space at 4900 South Broad Street, a fully leased Class B office building in the Navy Yard submarket.
WuXi AppTec Inc.
4900 South Broad
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THE NAVY YARD HAS THE IDEAL SPACE FOR OFFICES OF ALL TYPES AND SIZES, FROM A GLOBAL CORPORATE HEADQUARTERS TO A SUITE IN A FORMER NAVAL OFFICER’S QUARTERS. THE NAVY YARD PHILADELPHIA WWW.NAVYYARD.ORG/REAL-ESTATE 13
SUBURBAN PHILADELPHIA OUTLOOK
RENTAL RATES At the end of 2016, the average asking rate in suburban Philadelphia was $25.55 PSF, an increase of 2.8% from the end of 2015. The submarkets of Radnor and the Main Line exhibited the strongest average rental rates of $38.14 and $30 PSF, respectively. VACANCY The overall vacancy rate for both Class A and B buildings in suburban Philadelphia decreased from 12.03% at the end of 2015 to 11.15% at the end of 2016, with the Class A vacancy rate contributing to the majority of the decrease. In a clear sign of tenants’ preference for new or renovated space and modern amenities, the Class A vacancy rate decreased from 11.89% at year-end 2015 to just 10.05% at year-end 2016.
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INVESTMENT SALES One Country View Road
The Philadelphia Suburbs continue to have solid investment sales activity, especially when properties are priced with appropriate expectations. There are multiple transactions listed below that traded successfully across all office asset classes from Flex to Trophy. However, there were also multiple instances this year of extremely well-located properties being pulled off the market because investors couldn’t reach the sellers’ pricing expectations.
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SOLD
Cedar Run Corporate Center – a 59,000 SF building at 901 E. 8th Avenue in King of Prussia, has been offered for sale by SJS Realty Management.
1. SSH Real Estate represented MIM-Hayden in the sale of 456 Creamery Way* in Exton. The 47,604 square foot building has been leased to Neutronics since 1993 and was sold for $4,525,000.
The Triad Building – an 180,000 SF building at 2200 Renaissance Blvd., has been put on the market by Kairos Real Estate, who purchased the property in 2013 for $8.1 million. 100 Campbell Drive – a 30,000 SF building in Exton, is being marketed for sale by SSH Real Estate. 611 W. DeKalb Pike – this building is on the market for $12.21 million. The developer purchased the site in 2016 for $4.1 million and subsequently demolished the preexisting structure to make way for a new 18,000 SF building, which is now in construction. The property is already fully leased to Bassett Furniture 480, 500, and 656-675 E. Swedesford Road – Keystone Property Group is marketing for sale its three-building office park in Wayne, totaling 256,000 SF.
2. Pembroke Hobson purchased ArborRidge, a three-building office complex (70, 72, and 74 E. Swedesford Road) in Malvern totaling 128,627 SF, from Alliance Partners HSB for $24.3 million or about $189 PSF. 3. Equus Capital Partners purchased 1000 Chesterbrook Blvd. in Berwyn from a joint venture involving Brandywine Realty Trust for $32 million or $184.93 PSF. 4. Workspace Property Trust purchased 26 office and light industrial buildings totaling more than one million SF in Malvern from Liberty Property Trust. The purchase was part of a portfolio of 108 properties totaling 7.6 million SF, including properties in Pennsylvania and in other states, for a total of $969 million. 5. Anchor Health Properties purchased 300 and 500 Evergreen Drive, two buildings totaling 125,000 SF in Glen Mills, from LaSalle Investment Management for $52 million or $418 PSF.
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BLUE BELL
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NORRISTOWN
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CONSHOHOCKEN
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Arborcrest Corporate Center RADNOR
Center City
6. Spaulding and Slye Investments, a national investment firm based in Boston, purchased 150 S. Warner in King of Prussia for around $28 million, or approximately $182 PSF. The previous owner, Hayden Real Estate Investments, purchased the 155,572 SF building at an auction in 2012 for $11 million. At the time, the building was half vacant. After $3.5 million worth of building upgrades and renovations, the building is now 98 percent leased to credited tenants such as BB&T, Unilife Medical and the Philadelphia Group. 7. Interland Real Estate sold 375 E. Elm Street in Conshohocken to Haverford Properties for $5.2 million, or $164.56 PSF. At the time of sale, the 31,600 SF property was 70 percent occupied with 9,062 SF of vacant spaces. 8. Corporate Office Properties Trust (COPT) sold Arborcrest Corporate Campus (721-751 Arbor Way, 801 Lakeview Drive, and 785 Jolly Road in Blue Bell PA) for $143 million to Spear Street Capital. The campus consists of four buildings totaling 654,000 SF that are 100% leased, a 190,000 SF redevelopment opportunity that is vacant, and 27 acres of additional land.
9. Gladstone Commercial Corp., a real estate investment trust from Virginia, purchased 935 First Avenue, a four-story, 104,000 SF building in King of Prussia, for $25.5 million or $245.67 PSF. The building is fully leased to Radial Inc., an ecommerce company, for the next 15 years. 10. Universal Health purchased 443 S. Gulph Road, a 21,000 SF office building in King of Prussia that is currently occupied by Bala Engineers. In a separate deal, Universal Health also purchased 455 S. Gulph Road, a 132,089 SF office building known as Executive Terrace, for $37.7 million or $285 PSF. 11. King of Prussia Property Investors LP purchased 151 S. Warner Road, an 89,000 SF office building in Wayne, from Liberty Property Trust for $26.8 million, or $301.12 PSF. The property is fully occupied by the Judge Group, which signed a 15-year lease on the space. 12. A three-building complex (620, 640, and 660 Allendale Road), totaling 156,700 SF in King of Prussia, was purchased by Sky Management of New York from Brandywine Realty Trust for $12.8 million, or $81.68 PSF. At the time of the sale, the properties were 100 percent occupied. 17
MAIN LINE
915 and 925 West Lancaster Avenue
Blank Aschkenasy Properties has been constructing a $20 million, 52,000 SF mixed-use development in the village section of Bryn Mawr. Located at 915 and 925 West Lancaster Avenue, the project has 35,000 SF of retail and 17,000 SF of office space and is already 83 percent leased with several tenant fit-outs underway. Tenants include Blue Mercury, Athleta, Solid Core, Kirna Zabete, La Colombe, restaurants such as Tredici, Turning Point, and Bryn and Danes. Eadeh Enterprises purchased 631 Lancaster Avenue in Berwyn for $2.65 million, or $132.50 PSF. The 20,000 SF building is situated on 1.7 acres and is adjacent to the Berwyn train station.
Linden Lane Capital Partners of Philadelphia is proposing to build a $40 million mixed-use project at 37 North Valley Road, which is adjacent to the Paoli Train Station.
The Children’s Hospital of Philadelphia leased 13,458 SF at 663 W. Lancaster Avenue in Bryn Mawr.
Delta-T Group, a health staffing firm, renewed its 19,146 SF lease at 950 Haverford Road in Bryn Mawr.
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THE “MAIN LINE” IS ANOTHER NAME FOR THE AFFLUENT, WESTERN SUBURBS OF PHILADELPHIA. IT DERIVES ITS NAME FROM THE FACT THAT TOWNS WERE BUILT ALONG THE “MAIN LINE” OF THE PENNSYLVANIA RAILROAD...
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MAIN LINE HOMES WWW.MAINLINEHOMES.COM 18
MALVERN / EXTON
DSM Biomedical expanded into an additional 80,000 SF lease at the Eagleview Corporate Center, occupying approximately 250,000 SF in the mixed-use community. The company will use the additional space to aid in the manufacture of contact lenses. 608 Jeffers Circle, a 42,700 SF industrial building on 6.8 acres, completed three leases totaling 37,683 SF. Berg USA, an outdoors product provider, signed 15,183 SF; medical equipment provider Freedom Medical Inc leased 15,000 SF; and Advanced Office Environments Inc. leased 7,500 SF.
Temenos, a banking software provider, signed a seven-year, 42,000 SF lease at 40 General Warren Blvd. The company has an option to expand into the entire 70,000 SF building. 782 Springdale Drive, a 42,000 SF office building in the Whiteland Business Campus, was purchased by the West Chester Area School District for $3.5 million, or about $83 PSF, to house its day-to-day administrative operation. The building previously housed IFM Efector, a sensors manufacturer, which relocated last year to a newly constructed building at the Atwater Corporate Center in Malvern. The school district is expected to move in early next near.
Law firm Barley Snyder LLP leased 3,329 SF at Two County View Road*, which is currently under renovation for a new front entrance.
Two Country View Road
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KING OF PRUSSIA / CONSHOHOCKEN
955 Chesterbrook Blvd.
KING OF PRUSSIA
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1. Hartford Funds Management Group signed an 11-year lease on 76,000 SF at 690 Lee Road in Chesterbrook Corporate Center and will be vacating its 48,000 SF space at Five Radnor Corporate Center in June 2017. 2. Victus Sports, which designs baseball bats, leased 15,250 SF at 650 Clark Avenue. The company believes the King of Prussia location provides better access for its MLB clients coming from the Philadelphia International Airport. The sporting company provides bats to more than 100 major and minor league players. 3. Sprint renewed its 15,424 SF lease at the Glenhardie II office building at 1285 Drummers Lane. The three-story, 62,862 SF office building was constructed in 1983 on five acres in the King of Prussia/Wayne submarket.
4. Turner Investment signed a ten-year, 18,800 SF lease at 1000 Chesterbrook Blvd. The company moved out of its 39,644 SF space at 1205 Westlakes Drive, where it had been since 2002. In another deal in the same building, Envestnet Inc., a Chicagobased financial advisory firm, moved into 60,000 SF of space and is looking to hire 153 employees for its new location. 5. Trevena Inc., a biopharmaceutical company, signed a 10-year, 40,565 SF lease at 955 Chesterbrook Blvd. While the company’s current 17,000 SF lease at 118 W. 8th Avenue doesn’t expire until 2020, the firm determined that it would not accommodate its projected growth rate. 6. CSL Behring leased 19,708 SF at 1000 First Avenue. 7. Cigna vacated 13,000 SF at 1777 Walton Road and relocated to 29,000 SF at 150 South Warner Road.
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2301 Renaissance Blvd. NORRISTOWN
8 CONSHOHOCKEN
Six Tower Bridge 9
8. After an extensive search across multiple suburban markets, Vertex finally signed an 11-year lease on 168,000 SF at 2301 Renaissance Blvd. The corporate tax software provider company plans to invest $23.5 million into the space. Additionally, it will receive a $1.2 million finance package –in the form of grants and tax credits – from Pennsylvania for creating 225 new jobs over the next five years. The company plans to move into its new space in summer 2017.
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9. Suvoda, a technology company, signed a 6-year lease on 11,403 SF at Six Tower Bridge.
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GULPH MILLS
WITH A WAVE OF GROWTH SHAPED BY PROGRESS, KING OF PRUSSIA CONTINUES TO BE SUBURBAN PHILADELPHIA’S LARGEST COMMERCIAL CENTER. KING OF PRUSSIA DISTRICT WWW.VISITKOP.COM/ 21
DELAWARE COUNTY Power Home Remodeling Group occupied 104,661 SF at 2501 Seaport Drive in Chester. After taking occupancy at 100 and 200 Endo Blvd in early 2016, Incyte Corp. expanded into its third building in Chadds Ford at 300 Endo Blvd. for 48,600 SF.
SSRS, a survey and market research firm, executed a 10-year, 20,021 SF lease at 1 Braxton Way* in Glen Mills. Zenith Global Logistics signed a three-year lease for 25,000 SF at 25 Creek Circle* in Boothwyn PA.
2501 Seaport Drive
BALA CYNWYD
WEST CHESTER
DELAWARE COUNTY
WEST CHESTER
BALA CYNWYD
Voya Financial renewed a 100,000 SF lease at 1475 Dunwoody Drive. The 350-person financial company has been in the same space since 1998 and is planning renovations.
Monroe Office Center, a 70,000 SF building at Presidential City purchased by Post Brothers, had a number of deals totaling 22,000 SF of leasing activity, which brought the building’s occupancy to nearly 90 percent. Some of these deals include Rogers Memorial Hospital (11,000 SF), Children’s Choice Inc. (4,000 SF), Elegance Dentistry (3,500 SF), and tech company Everwas (1,700 SF).
Turf Equipment and Supply Company purchased 16 Hagerty Blvd, a 35,150 SF building, from seller VF Technologies for $2.85 million. RedGo Development has launched a $15 million renovation of the Willowbrook Business Park, a two-building complex at 615 Willowbrook Lane totaling 86,000 SF that previously served as flex space. The renovation will help RedGo to reposition the property into a class A space. Penn Medicine has already leased 15,000 SF. Theraplay*, a pediatric therapy service provider, signed an 8,800 SF lease at 1380 Enterprise Drive. 22
First Financial Group, which is part of Mass Mutual Life Insurance Co., leased an additional 4,100 SF at its headquarters at Two Bala Plaza. The expansion will bring the company’s total occupied SF at the property to around 30,000 SF.
PLYMOUTH MEETING / BLUE BELL 5 Sentry Parkway East
Linde Engineering renewed its 60,103 SF lease at 5 Sentry Parkway East building at 325 Sentry Parkway East in Blue Bell.
HORSHAM / WILLOW GROVE Reed Tech renewed its 120,000 SF lease at 7 Walnut Grove Drive.
Corporate Office Properties Trust (COPT) sold Arborcrest Corporate Campus (721-751 Arbor Way, 801 Lakeview Drive, and 785 Jolly Road in Blue Bell PA) for $143 million to Spear Street Capital. The campus consists of four buildings totaling 654,000 SF that are 100% leased, a 190,000 SF redevelopment opportunity that is vacant, and 27 acres of additional land.
Avo Photonics, signed a 40,000 SF lease at 114 Welsh Road and will move into the new space in July 2017.
LOWER BUCKS
FORT WASHINGTON / SPRINGHOUSE
Inventiv Health, a global supplier of drug development services, renewed its 36,560 SF lease at 100 Brandywine Blvd. in Newtown PA. The company is occupying the entire second floor of the threestory, 106,250 SF building.
600-602 Office Center Drive signed four leases totaling 111,226 SF. Citizens Bank signed for 38,000 SF and will relocate from Plymouth Meeting in July 2017. Office Practicum, an electronic health record company, signed 18,000 SF and will relocate from Horsham in March 2017. Compassus, a Nashville-based medical care operator, leased 7,400 SF. Impax Laboratories, Inc. leased and moved into 47,826 SF.
Ethos Health Communications signed a lease for 28,016 SF at 777 Township Line Road in Yardley PA. The three-story, 110,000 SF building’s other tenants include UPenn Health System, Good Shepherd Penn Partners and law firm Stark & Stark.
Telerx, a customer service provider, signed a 44,000 SF lease at 410 Horsham Road.
Ashfield Healthcare signed an 82,000 SF lease at 1100 Virginia Drive. TSI, a manufacturer for aerosol science, moved into 34,096 SF at 500 Virginia Drive. 23
VACANCY & RENTAL RATES PHILADELPHIA Type
Inventory (SF)
Vacancy (%)
Avg. Asking Rent (PSF)
Market Street West
A and B
26,963,250
9.43%
$29.14
Market Street East
A and B
5,246,185
8.81%
$28.32
South Broad Street
A and B
2,863,179
11.43%
$25.66
Independence Hall
A and B
6,133,853
14.64%
$25.52
University City
A and B
4,283,103
7.79%
$37.09
Philadelphia CBD
A and B
45,489,570
10.03%
$29.09
Type
Inventory (SF)
Vacancy
Avg. Asking Rent (PSF)
A and B
1,095,449
3.09%
$31.70
Type
Inventory (SF)
Vacancy
Avg. Asking Rent (PSF)
A
21,707,887
9.46%
$30.33
B
5,255,363
9.29%
$24.23
A
2,663,256
6.17%
$30.36
B
2,582,929
11.54%
$26.22
A
2,714,407
10.29%
$29.00
B
3,419,446
18.10%
$22.76
A
2,547,165
10.16%
$44.09
B
1,735,938
4.32%
$26.82
A
29,632,715
9.30%
$31.39
B
15,856,855
11.40%
$24.78
Navy Yard
Market Street West Market Street East Independence Hall University City Philadelphia CBD
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SUBURBAN PHILADELPHIA Type
Inventory (SF)
Vacancy
Avg. Asking Rent (PSF)
Radnor
A and B
2,389,823
1.98%
$38.14
Main Line
A and B
2,088,661
8.75%
$30.00
Malvern | Exton
A and B
8,060,409
6.27%
$24.90
West Chester
A and B
2,288,581
4.01%
$23.87
Conshohocken
A and B
3,195,599
5.48%
$33.43
Norristown | Valley Forge
A and B
4,565,691
9.92%
$20.65
King of Prussia
A and B
6,360,098
10.78%
$25.79
Bala Cynwyd
A and B
3,363,975
9.01%
$32.18
Delaware County
A and B
10,241,496
7.57%
$23.97
Fort Washington | Springhouse
A and B
3,271,310
20.43%
$23.75
Lower Bucks County
A and B
6,776,422
23.64%
$21.69
Horsham | Willow Grove
A and B
4,105,725
11.05%
$24.30
Plymouth Meeting | Blue Bell
A and B
6,212,616
17.24%
$25.05
Suburban Philadelphia
A and B
62,920,406
11.15%
$25.55
Type
Inventory (SF)
Vacancy
Avg. Asking Rent (PSF)
A
1,954,073
2.42%
$39.29
B
435,750
0%
$33.00
A
608,776
14.13%
$30.67
B
1,479,885
6.54%
$29.73
A
6,136,040
5.56%
$25.04
B
1,924,369
8.52%
$24.44
A
699,228
0.70%
$25.80
B
1,589,353
5.46%
$23.02
A
2,684,526
5.91%
$34.20
B
511,073
3.26%
$29.36
A
2,380,607
7.01%
$22.30
B
2,185,084
13.10%
$18.85
A
4,065,097
7.01%
$28.40
B
2,295,001
17.46%
$21.17
A
2,259,067
10.54%
$33.14
B
1,104,908
5.87%
$30.22
A
3,978,692
8.61%
$27.51
B
6,262,804
6.91%
$21.72
A
1,607,241
25.55%
$24.43
B
1,664,069
15.49%
$23.09
A
2,932,665
25.33%
$24.44
B
3,843,757
22.36%
$19.59
A
2,271,324
11.95%
$24.21
B
1,834,401
9.94%
$24.40
A
3,602,265
12.18%
$26.99
B
2,610,351
24.21%
$22.37
A
35,179,601
10.05%
$27.71
B
27,740,805
12.55%
$22.80
Radnor Main Line Malvern | Exton West Chester Conshohocken Norristown | Valley Forge King of Prussia Bala Cynwyd Delaware County Fort Washington | Springhouse Lower Bucks County Horsham | Willow Grove Plymouth Meeting | Blue Bell Suburban Philadelphia
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ABOUT SSH REAL ESTATE SSH Real Estate is a 75-person, full service real estate company serving the Greater Philadelphia Region. Since the firm’s founding in 1952, it has evolved from a one person operation focusing on leasing storefronts and manufacturing spaces to one of the largest privately held commercial real estate companies in the region with services in brokerage, property management and investments.
About
Brokerage The Brokerage Division consists of a skilled team averaging over 15 years of experience, representing a full range of small to large private, public, and non-profit tenants, landlords and investors. SSH is an established leader in the Philadelphia region in Tenant Representation, Landlord Representation and Investment Brokerage.
Propery Management Our success derives from treating client’s real estate as our own, scaling costs and running buildings efficiently to maximize savings. We have earned a reputation among landlords as being customer-focused professionals adept at attracting and retaining tenants. Our team comprises of a broad base of professionals including certified property managers, certified public accountants, and professionals skilled in financial and database management.
Investments The Investment division along with its partners has acquired a portfolio of 14 buildings in the Mid-Atlantic Region totaling 2.3 million square feet, and valued at over $350 million. SSH has consistently produced superior returns for our investors.
CENTER CITY OFFICE 123 South Broad Street • 8th Floor • Philadelphia, PA 19109 • (215) 893-3000
SUBURBAN OFFICE 2 Country View Road • Suite 110 • Malvern, PA 19355 • (610) 995-1010
Jeffrey R. Seligsohn, SIOR, Partner • (215) 825-1500 Peter C. Soens, Partner • (215) 825-1510 Gregory B. Muller, COO & Partner • (215) 825-1513
Brian D. Mears, CCIM, Partner • (610) 601-4202
COMPANY NEWS NEW HIRES
NEW ASSIGNMENTS
Steve Promislo joins SSH as the Managing Director of Leasing, with a focus on representing SSH in leasing space in 123 S. Broad Street (the Wells Fargo Building) as well as other SSH owned properties, and representing tenants in the leasing of space in other office or commercial properties. For the past 5 years, Steve has been an asset manager at RAIT Financial Trust, a NYSE company with assets throughout the country. While at RAIT, he was involved in assembling and supervising a network of brokers, engaging in lease negotiations with prospective and current tenants, and initiating capital improvements for 34 properties with a total of over 4,000,000 square feet of RAIT owned office, commercial and industrial real estate. Prior to joining RAIT, Steve was a Senior VicePresident at SSH from 2001 to 2011.
•
SSH Real Estate has been appointed to represent Non-profit organization Children’s Literacy Initiative.
•
SSH has been appointed to represent law firm Spector Roseman Kodroff & Willis, P.C..
SELECT TRANSACTIONS •
Bohlin Cywinski Jackson (BCJ), a well-known architectural firm, signed a 18,525 SF lease at 1100 Ludlow Street (previously 34 S. 11th Street).
•
Brian Mears, Kevin Hagenberg and Don Grimes represented 1 Braxton Way in Glen Mills PA with its 20,006 SF lease to SSRS.
•
Eric Muller represented Arcus Medica with a 5,800 SF lease at the Graham Building (30 South 15th Street).
•
Brian Mears and Kevin Hagenberg represented 25 Creek Circle in Boothwyn PA with its 25,000 SF lease to Zenith Freight Lines.
•
The Center City leasing team signed leases and renewals totaling 22,548 SF and 20,000 SF at 123 South Broad and 230 South Broad, respectively.
•
The SSH Suburban team represented RA Giovanetti & Associates with a 17,729 SF lease at 370 Reed Road.
The SSH Investment team, led by Dan Mayock, represented the sellers in the sale of the below:
•
Brian Kash represented Theraplay with their 8,800 SF lease at 1380 Enterprise Drive in West Chester.
•
901 South Bolmar Street, an 87,000 square foot building in West Chester.
•
Eric Muller represented JEVS with a 1,500 SF lease at 1520 Locust Street.
•
456 Creamery Way, a 47,604 square foot building in Exton.
Justina Cwenar joined the company in November 2016 serving as a Property Manager. She graduated from Seattle University with a Business Administration Degree focusing on Marketing. She previously worked as a Community Manager on a residential level for a few years before joining SSH.
INVESTMENT SALES
The Investment Team is marketing two office portfolios in the suburbs for Baxter Properties. One portfolio is comprised of two Exton medical office buildings anchored by Premier Orthopedics, totaling 64,000 square feet. The second portfolio has three small, high-visibility professional buildings in West Chester and Newtown Square with multiple tenants.
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