Tag Archives: Philadelphia commercial real estate


Philadelphia’s Proposed One Percent Tax on New Construction

One Percent Tax on New ConstructionIs Philadelphia’s proposed one percent tax on new construction a good compromise or a fools bargain? The Philadelphia City Council announced new legislation on April 11, 2018, that includes a new one percent tax on new construction that would raise revenue for the Housing Trust Fund, the city’s dedicated source for developing new affordable housing, preserving existing housing and preventing homelessness.

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WHAT IS THE TAX/IMPACT FEE?

Proposed Bill No. 180351 would impose a new Construction Impact Tax/Impact Fee on all projects that are eligible for the city’s 10-year tax abatement. The funds raised from the tax are intended to help the Housing Trust Fund provide funding for more affordable and workforce housing development, which would be available to both nonprofit and for profit developers.

HOW MUCH IS THE TAX?

The tax/impact fee is 1 percent of the stated cost of construction, including repairs, construction, additions and alterations of the building and is paid when the applying for a building permit. (Note that there is some discussion to change the time when payment would be due from the building permit application to the time a zoning permit is filed.) While a one percent tax on new construction may not sound like a lot, consider the tax on a $1 billion new technology center, a $300 million new multifamily high rise or a new $800 million stadium. In each instance, the tax for these projects would be $10 million, $3
million and $8 million, respectively.

ARE CERTAIN TYPES OF BUILDING EXEMPT?

As currently drafted, all buildings that are “for human occupancy” and that are eligible for the 10-year tax abatement would be subject to the tax/impact fee. These buildings would include not only residential structures, but commercial and industrial structures as well. Rather than single out one particular kind of developer (i.e., multifamily developers), the proposed tax would apply to any project that qualifies for a 10-year tax abatement in Philadelphia.

COALITION BUILDING

There appears to have been more compromise than usual between the trades, the Building Industry Association, City Council members, members of the development community and other civic-minded individuals as the merits and concerns over the 10-year tax abatement were debated, as was the Mixed Income Housing Bill, both being offered as potential solutions for addressing Philadelphia’s affordable and workforce housing needs.

NOVEL APPROACH

Drexel University’s Lindy Institute for Urban Innovation Senior Research Fellow Kevin Gillen told the Philadelphia Business Journal, “The impact fee being considered here is a truly unique hybrid. It is tied to the abatement rather than to inclusionary zoning. And it is the type of program that is traditionally used by low-cost, low-tax Sun Belt suburbs that have experienced decades of rapid population growth, but the bill’s sponsors want to apply it to a relatively high-cost, high-tax Northeastern city that until recently has experienced decades of depopulation.”

Impact on the Mixed-Income Housing Bill

If the new bill is passed, the Mixed-Income Housing Bill will become completely optional and will be amended to include numerous beneficial bonuses such as extra height (7 feet) and density (25 to 50 percent bonus) in RM-1, CMZ-1/2/2.5, amongst other potentially attractive zoning bonuses. These bonuses will continue to have a mixed-income housing requirement or payments in lieu of an additional 1 to 2 percent of construction costs depending on the amount of the
bonus.

EFFECTIVE DATE

As proposed, the effective date would be July 1, 2018, although some are already pushing for a later effective date of January 1, 2019. Duane Morris attorneys will continue to monitor and report on any development in this issue.

FOR MORE INFORMATION

If you have any questions about this Alert, please contact Brad A. Molotsky, any of the attorneys in the Real Estate Practice Group, attorneys in the Project Development/Infrastructure/P3 Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.

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Bala Cynwyd Office Market Appears to be on the Rebound

Bala Cynwyd’s office market, while not currently experiencing five percent rent growth, currently is experiencing its highest occupancy rate in 15 years – 92 percent – and has seen gradual tightening annually since 2010.

Coming out of the Great Recession, Bala Cynwyd struggled to compete for office tenants in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – with nearby suburbs like Conshohocken or Radnor, both of which offer prospective lessees a larger stock of newer or more recently renovated office properties.

However, a gradual progression of development and renovation projects in the national and Philadelphia commercial real estate markets has helped Bala Cynwyd reassert its competitive edge.

This report on U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

The 2007 opening of a 120,000 square foot Target across City Line Avenue from Bala Cynwyd added an additional anchor for retail traffic to the area’s national and Philadelphia commercial real estate properties. That new Target had helped support a range of popular restaurants along the periphery of the relatively new shopping center, including California Pizza Kitchen, Naf Naf Grill and Starbucks.

Since then, more than 750,000 square feet of office space comprising U.S. and Philadelphia commercial real estate listings has been renovated along the portion of City Line Ave., stretching from Interstate 76 to the Bala Regional Rail Station at Conshohocken Road. Lower Merion Township also approved new zoning ordinances to promote dense, mixed-use, and transit-friendly development, and Post Brothers renovated and up-scaled roughly 1,000 apartment units at Presidential City.

Office owners in this area of the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – are beginning to see the benefits of these upgrades as existing financial tenants such as Investedge and Allied Mortgage both chose to stay in Bala Cynywd and expand their office space within the submarket during 2017.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Banks Ease Lending Standards for CRE Loans

For the first time in nearly three years, U.S. banks report they have loosened their lending requirements for some types of commercial real estate loans.

The latest Federal Reserve survey of senior loan officers in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – found banks are easing standards and terms on commercial and industrial loans to large and middle-market firms, while leaving loan standards unchanged for small firms.

Meanwhile, banks working in the national and Philadelphia commercial real estate markets eased standards on nonfarm nonresidential loans and tightened standards on multifamily loans. Lending standards on construction and land development loans were left unchanged.

This report involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

The survey of senior loan officers on the topic of bank lending practices in both the national and Philadelphia commercial real estate properties market included a special set of questions intended to give policy makers more insight on changes in bank lending policies and demand for commercial real estate loans over the past year. In their responses, banks reported they eased lending terms, including maximum loan size and the spread of loan rates over their cost of funds.

Almost all banks that responded they had eased their credit policies cited more aggressive competition from other banks or nonbank lenders as the reason. A significant percentage of banks dealing in U.S. and Philadelphia commercial real estate listings also mentioned increased tolerance for risk and more favorable or less uncertain outlooks for property prices, for vacancy rates or other fundamentals, and for capitalization rates on properties for easing these credit policies over the past year.

A modest number of domestic banks in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – indicated weaker demand for loans across the three main commercial real estate categories, citing a reduced number of property acquisitions or new developments, rising interest rates, and shifts of customer borrowing to other bank or nonbank sources.

Reports of reduced loan demand involving national and Philadelphia commercial real estate listings coincided with the latest Lending Momentum Index, which tracks the pace of U.S. commercial loan closings. The index fell by 8.8 percent between December 2017 and March 2018.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Shopping Center Closures Near 100 Million Square Feet

Retailers are focusing on their top-performing locations and shedding marginal stores with announced closures so far in 2018 totaling nearly 100 million square feet as demand for mall and shopping center space by retailers fell to its lowest level in six years in the first quarter.

This U.S. commercial real estate market balancing act, which includes Philly office space, Philly retail space and Philly industrial space, was reflected in the first quarter 2018 U.S. retail vacancy rate, which at 4.6 percent was unchanged from the fourth quarter of 2017 and just a tenth of a percentage point lower than a year ago.

Net absorption of retail space throughout the national and Philadelphia commercial real estate markets, fell to 11 million square feet, the lowest quarter for mall and shopping center demand since 2012, according to data presented in CoStar’s First-Quarter 2018 State of the U.S. Retail Market report.

This report on U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

“As the national retail vacancy rate has begun to flatten, the pace of the recovery has slowed. In fact, we can call an end to the recovery,” said Ryan McCullough, senior managing consultant for CoStar Portfolio Strategy, who co-presented the report with Director of Research Suzanne Mulvee.

While retailer demand for store space has slowed in the national and Philadelphia commercial real estate properties markets, it has not stopped, contrary to perceptions in the broader market fueled by headlines of closures and bankruptcies of big-box tenants like Kmart and Toys R Us.

Expansions by restaurants, grocery stores and other food-focused retail tenants, as well as health-care and other service providers and smaller local shopping center tenants throughout myriad U.S. and Philadelphia commercial real estate listings, continues to drive leasing and net demand growth for the retail sector, McCullough said.

The retail property segment of the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – is performing differently in different parts of the country. In recovering housing markets and other high-growth Sunbelt metros, retail vacancy has continued to decline and post strong leasing momentum.

The net in-migration throughout the national and Philadelphia commercial real estate listings has produced the kind of population, job and income growth that creates ready-made consumers and drives retail spending, the report noted. For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

CRE Loan Prices Compress as Lending Competition Increases

Despite record liquidity, demand for commercial real estate loans softened in recent months, leaving eager lenders chasing fewer borrowers. As a result, competition among lenders has ratcheted up noticeably with loan prices compressing.

In fact, deal pricing and structures in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – have gotten so competitive that many of the nation’s banks, including its 25 largest cumulatively, are starting to back off from commercial real estate lending.

This report on U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Federal Reserve data earlier this year first revealed the trends among banks, which held up through the entire quarter. Now in the past week, bank executives in the national and Philadelphia commercial real estate market have started providing color and analysis to the data in their first quarter earnings conference calls.

First the numbers. The total amount of commercial real estate loans on bank books related to national and Philadelphia commercial real estate properties increased $26.4 billion to $2.1 trillion through the first quarter from year-end, according to Federal Reserve data.

However, real estate loan exposure concerning U.S. and Philadelphia commercial real estate listings pulled back at the nation’s 25 largest banks, dropping off about 1 percent on an annualized basis. Those 25 banks account for 33 percent of commercial real estate bank loans outstanding.

Meanwhile, the rest of the nation’s domestic banks doing business in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – continued to grow their loan portfolios by 7 percent on annualized basis.

The appreciation that has occurred in property values has contributed to a lower level of inventory available in the market. Deal volume is also down as investors are taking a more cautious stance in the current environment.

Some banks report a majority of their first quarter commercial real estate loan production consisted of refinancing; with interest rates beginning to climb, some bankers expect refinancing volume could slow down.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Outlet Center CRE Market Will Weather Nine West Closures

The recent Chapter 11 bankruptcy reorganization filing of shoe and apparel wholesaler Nine West Holdings Inc. focused the retail spotlight on the outlet center segment of the commercial real estate industry.

Despite the bad news that Nine West is closing all 70 of its stores in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space, the good news is that leasing demand for outlet store space has been outpacing availabilities.

This report on U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Privately held Nine West’s filing seeks to restructure about $1.6 billion in debt, much of it racked up in the national and Philadelphia commercial real estate markets when private equity firm Sycamore Partners Management acquired the company and affiliated brands in the 2014 for $2.2 billion.

While 80 percent of Nine West’s sales come from wholesale operations based in numerous national and Philadelphia commercial real estate properties, it also operates 70 brick-and-mortar retail stores – all of which it has now closed and is asking the court to cancel the leases on those locations. Sixty-seven of those locations were in outlet centers.

The store closures hit two publicly traded retail landlords hardest. Simon Property Group will lose 35 stores. Simon owns and operates a portfolio of 91 centers through Simon Premium Outlets and Tanger Factory Outlet Centers will see 19 stores currently among U.S. and Philadelphia commercial real estate listings closed out of its portfolio of 44 upscale outlet shopping centers.

The stores typically ranged about 3,000 square feet in size on average, which means about 105,000 square feet of newly vacant space for Simon and 57,000 square feet for Tanger.

That is a bigger chunk of the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space –comparatively for Tanger. During 2017, Tanger recaptured 201,000 square feet within its portfolio. The 2017 amount is nearly double the amount it took back a year earlier. Overall occupancy declined from 98 percent in 2016 to 97 percent last year.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

New Fed Chair Expects Inflation Rate to Move Higher

In a widely expected but still worrisome move for commercial real estate investors and financial markets, the Federal Reserve Bank recently raised the federal funds rate a quarter point from 1.5 percent to 1.75 percent, the first of three rate hikes expected in 2018 by the central bank and the sixth quarter-point increase since the beginning of 2016.

The Fed, in its first policy meeting under new Chair Jerome Powell, also raised the longer-term “neutral” rate, the level at which monetary policy neither boosts nor slows the economy. In a news conference, Powell said the economy in general, as well as commercial real estate market – including Philly office space, Philly retail space and Philly industrial space, has recently gained momentum and he expects inflation to finally move higher after years running below its 2 percent historical target.

This CoStar report on the most recent Fed meeting and its effect on national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

The Federal Open Markets Committee noted in a statement at the end of its most-recent two-day meeting that the market of U.S. and Philadelphia commercial real estate properties has continued to strengthen, and that economic activity has been rising at a moderate rate.

The FOMC noted job gains in recent months, underscoring the central bank’s growing confidence that tax cuts and government spending will continue to boost the economy surrounding national and Philadelphia commercial real estate listings.

While the Fed plans to follow a path of gradual rate increases, Powell said policymakers need to be cautious about inflation. The chair warned that financial market asset prices in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – are high relative to their longer-run historical norms in some areas.

“You can think of some equity prices. You can think of commercial real estate prices in certain markets. But we don’t see it in housing, which is key,” Powell said. “Overall, if you put all of that into a pie, what you have is moderate vulnerabilities in our view.”

In its Monetary Policy Report to Congress last month, Fed policymakers noted “valuation pressures continue to be elevated across a range of asset classes, including equities and commercial real estate. In general, valuations are higher than would be expected based solely on the current level of longer-term Treasury yields,” the report said.

Although rates remain low by historical standards, interest rate increases are top of mind for executives this year involving U.S. and Philadelphia commercial real estate listings. In a sentiment survey by law firm Seyfarth Shaw, 80 percent of respondents expected multiple rate increases, and clearly expect that the increases will begin to weigh on commercial property markets in 2018.

More than one-third, 37 percent, of those dealing with U.S. and Philadelphia commercial real estate properties who were surveyed in February by the Chicago-based firm predicted three rate hikes by the Fed over the next 12 months, up from just 14 percent a year ago.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Playtime Is Over; Toys R Us Closes Its Remaining 735 Stores Nationwide

Beloved by kids and landlords, but largely shunned by consumers this past holiday shopping season, Toys R Us has officially announced it is winding down operations and closing 735 stores, encompassing an estimated 29.3 million square feet of mostly big-box retail space.

The Wayne, NJ-based toy retailer already had closed or had planned to close 8.5 million square feet of its brick-and-mortar stores as part of the Ch. 11 bankruptcy reorganization it initiated last September. This latest move by a major player in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – impacts nearly 33,000 employees.

It also wipes out about $1 billion in value of U.S. and Philadelphia commercial real estate properties, according to Toys R Us estimates of the difference in value of 791 occupied vs unoccupied stores. The appraised value of the stores unoccupied was listed at $1.55 billion. Toys R Us owns 273 of those stores and either leases or ground leases the other locations.

“I am very disappointed with the result, but we no longer have the financial support to continue the company’s U.S. operations,” said Dave Brandon, chairman and CEO of Toys R Us, in announcing an “orderly process to shutter” its U.S. operations.

This CoStar report on the Toys R Us closing and its effect on national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Despite the closing announcement, there still is a chance up to 200 U.S. stores among the firm’s national and Philadelphia commercial real estate listings could remain open. Toys R Us is negotiating a deal for its Canadian operations and the bidder is reported to be interested in a transaction that could combine up to 200 of the top performing U.S. stores with the retailer’s Canadian operations.

A spokesperson for Van Nuys, CA-based toymaker MGA Entertainment recently confirmed CEO Isaac Larian and affiliated investors have made a bid for the retailer’s Canada operations.

“If there is no Toys R Us, I don’t think there is a toy business,” Larian said in a statement. “Toys R Us Canada is a good business. They run it efficiently and have good leadership. At the right price, it makes economic sense.”

While discussions continue involving this major development in the U.S. commercial real estate market, including Philly office space, Philly retail space and Philly industrial space, Toys R Us is seeking court approval to implement the liquidation of inventory in all the U.S. stores, subject to a right to recall any stores included in the proposed Canadian transaction.

Although Toys R Us officials said they did not foresee this outcome dealing with its U.S. and Philadelphia commercial real estate listings when it initially filed for bankruptcy reorganization last fall, the timing of the bankruptcy heading into this past holiday shopping season appeared to contribute to a negative perception among shoppers regarding the retailer’s viability.

The retailer reported dramatically lower than expected holiday sales at its stores in its U.S. and Philadelphia commercial real estate properties, a factor on which the company had been counting to bolster support among its creditors, the company detailed in the bankruptcy court filing.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Issues of Declining Occupancy, Rising Rent Spread to Top Properties

Even the best-performing and most well-located U.S. malls and shopping centers are beginning to feel the pinch of flat-lining rent growth and a vacancy uptick as e-commerce continues to take market share from brick-and-mortar retailers, and the retail sector enters the late stages of the real estate cycle.

Despite a relatively strong finish for retailers in the final three months of 2017, buoyed by improved consumer spending and an expanding economy, demand for U.S. retail property in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – was generally lackluster for the year, according to market highlights presented by CoStar managing consultant Ryan McCullough and director of U.S. research Suzanne Mulvee in the Fourth Quarter 2017 State of the U.S. Retail Market.

This CoStar report on national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

“All told, we are seeing some signs of a slowdown in the retail market,” said McCullough, noting that retail absorption totaled about 69 million square feet for 2017, down about 30 percent from 2016 and 2015 levels, with developers expecting to deliver roughly 80 million square feet of new retail space in 2018 as demand from retail tenants begins to soften. “Given the slowdown in demand and some uptick in supply, we might anticipate the national retail vacancy rate, which went flat in 2017, to start to rise modestly in 2018,” McCullough said.

Reflecting the slow investment sales volume observed by CoStar analysts across all commercial property types, retail investment involving U.S. and Philadelphia commercial real estate properties fell to just below $20 billion in the fourth quarter, its lowest level since mid-2014. In addition to a diminished appetite among cautious buyers, many sellers also are pulling properties off the market after failing to achieve pricing that meets their expectations, McCullough said.

One sign of the softening market conditions is a moderate rise in vacancies and flat-lining of rental rate growth in recent quarters at the country’s top located and most productive Class A malls, urban luxury centers and shopping centers. Nationwide, U.S. and Philadelphia commercial real estate properties have consistently logged the highest location quality scores, as ranked by CoStar’s proprietary formula measuring the combined effects of demographics, density of surrounding commercial property and market competition on individual retail centers.

While retailers are readily absorbing some new supply that’s flowing into the national and Philadelphia commercial real estate listings market – especially spaces of 20,000 square feet and below – larger boxes in certain centers ranked in the top 10th percentiles of location quality are in many cases taking longer to lease up, reflecting broader weakness among U.S. power center tenants.

Meanwhile, at the opposite end of the quality spectrum, the number of “zombie” power centers with vacancy rates of 40 percent or more has increased 60 percent since 2016 due to a spike in store closures by Kmart, Toys R Us and other big-box retailers and grocers.

The closures and bankruptcy filings being seen in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – are mounting weekly and likely will not abate any time soon. Toys R Us plans to close another 200 stores and lay off corporate personnel, in addition to the 170 previously announced store closures The Wall Street Journal reported recently. Also, Northeast supermarket chain Tops Markets LLC reports it has filed for Chapter 11 bankruptcy protection.

While total retail space per capita has decreased by about 5 percent since 2009, the amount of anchored space per capita among U.S. and Philadelphia commercial real estate listings increased by the same amount during that period amid competition from big-box chains that have added food and groceries to compete with grocery chains.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Expected Interest Rate Increases This Year Remain Top CRE Concern

Rising interest rates remain the top concern for commercial real estate executives this year, with 80 percent of respondents in a sentiment survey by a Chicago law firm expecting law firm expecting multiple rate increases amid clear expectations that the anticipated increases would begin to weigh on commercial property markets in 2018.

For the second straight year, an overwhelming 98 percent of executives in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – surveyed by the law firm Seyfarth Shaw predicted at least one increase this year, with 37 percent projecting three rate hikes by the Federal Reserve over the next 12 months, up from just 14 percent a year ago.

This CoStar report on national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

“As the real estate industry embraces the tax cuts, low unemployment, and stock market success, industry insiders expect today’s economic factors to force the hand of the new Federal Reserve chair and, consequently, shape their 2018 investment strategies,” Seyfarth Shaw attorneys Christa Dommers and Ronald Gart said in revealing this year’s top concerns of property executives in the third annual Real Estate Market Sentiment Survey.

“Respondents clearly believe that multiple interest rate increases will start to have a material adverse impact on the commercial real estate market,” Gart and Dommers said.

Federal Reserve Chairman Jerome Powell, in his first extensive public comments since taking over for Janet Yellen earlier this month, recently told a Congressional committee the economy encompassing U.S. and Philadelphia commercial real estate properties is stronger than at the beginning of the year, and the central bank plans to raise rates gradually.

“My personal outlook for the economy has strengthened since December,” Powell told the House Financial Services Committee under questioning about whether the Federal Open Market Committee might boost its number of projected increases from three to four next month when the FOMC formally updates its outlook.

“After easing substantially during 2017, financial conditions in the United States have reversed some of that easing,” Powell told the committee. “At this point, we do not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation. Indeed, the economic outlook remains strong.”

Analysts following U.S. and Philadelphia commercial real estate markets attributed part of the recent sharp decline in the Dow Jones Industrial Average to Powell’s optimistic comments. Over the past week or so, the DJIA has shed nearly 1,200 points, falling more than 4.5 percent, including a more than 500-point decline in response to government plans to impose tariffs on steel and aluminum imports.

About 63 percent of the 157 executives dealing in both national and Philadelphia commercial real estate listings, the strongest surveyed by Seyfarth Shaw, believe the U.S. CRE industry can absorb an interest rate increase of between 0.5 percent and 1.5 percent. About 15 percent believe real estate markets can only handle an increase of up to half a percentage point, roughly equal to the number of respondents who said the industry could withstand from roughly 1.5 percent to 2 percent in increases.

The U.S. federal funds rate now stands at 1.5 percent. Three more hikes would take it to 2.25 percent.

However, a newly released CBRE survey of the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – suggests that investors aren’t as concerned about rising interest rates as they are about a potential worldwide “economic shock” that could undermine occupier demand.

“Despite the possibility of escalating interest rates, the majority of investors intend to acquire assets in the Americas,” said Brian McAuliffe, president of institutional properties in CBRE’s Capital Markets group. “Risk tolerance is expected to remain unchanged but investors’ search for yield and asset diversification is pushing them toward value-add assets, secondary markets and alternatives [assets] in 2018.”

The CBRE Americas Investor Intentions Survey revealed that respondents involved with U.S. and Philadelphia commercial real estate listings were more positive going into 2018 than last year due to several factors, including the long economic expansion, new U.S. tax cuts and favorable regulatory changes. The largest share (45 percent) of respondents plan to increase acquisitions in the Americas over last year, a reversal of the downward or flat trend of the prior two surveys.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Largest U.S. Banks Shrinking Commercial Real Estate Loan Balances

The nation’s 25 largest banks, which collectively control more than $11 trillion in assets, reduced their exposure to commercial real estate loans across the board last month, reflecting an ongoing change in the CRE finance markets, and a softening in loan demand.

The amounts on the largest banks’ books for construction and development, multifamily and nonresidential loans in the nation’s commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – all were down at the end of January compared to year end, according to weekly Federal Reserve Bank data. This was the first time all three have dropped in the same month since the Federal Reserve started tracking the individual categories in January 2015.

This CoStar report on real estate loan balances is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Leading the decline was a $2.7 billion drop in nonfarm, nonresidential loans, resulting in an annualized decline of more than 7.5 percent. This is fifth-consecutive month the category has shrunk, the seventh time in the last eight months, and the largest-ever month-to-month decline. Over the last eight months, the amount of nonresidential commercial loans involving the U.S. and Philadelphia commercial real estate markets has dropped by $7.6 billion.

In their fourth-quarter earnings conference calls over the last few weeks, several of the nation’s largest banks working with national and Philadelphia commercial real estate listings reported that some CRE deal activity was being pushed further into 2018, a resurgent CMBS market and competition from smaller banks as well as life insurers also were taking away business.

Some of the decline in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – can be attributed to pipelines being a little softer going into the year following year-end deal activity, said John Turner, president and head of Regions Financial Corp. (NYSE: RF) Corporate Banking Group. But he added, Regions has also intentionally been shrinking and de-risking its investor real estate book.

Weekly Federal Reserve numbers tracking loans on U.S. and Philadelphia commercial real estate listings also show construction and development loans have dropped by $700 million in January from year-end, also an annualized decline of more than 7.5 percent.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

CRE Pricing Trends Continue to Hold Despite Transaction Slowdown

Healthy economic growth combined with steady demand and favorable interest rates provided a backdrop for continued growth in CRE pricing through the final quarter and the full year of 2017, according to the latest release of CoStar Commercial Repeat Sale Indices (CCRSI) data.

The equal-weighted U.S. Composite Index extended its streak of stronger growth with a 14.7 percent increase for 2017 and a 0.7 percent gain for the fourth quarter as the scope of the pricing recovery broadened across the full size and quality spectrum of the nation’s commercial real estate market – including Philly office space, Philly retail space and Philly industrial space. The value-weighted U.S. Composite Index rose 5.7 percent and 0.8 percent, respectively, during the same periods.

This CoStar report on the national pricing trends in the commercial real estate market is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

All the major commercial property-type indices in the U.S. and Philadelphia commercial real estate markets, including land and hospitality, posted gains in 2017 and ended the year on a positive note, marking the sixth consecutive year of pricing recovery.

Reflecting the healthy appetite for logistics properties rate among national and Philadelphia commercial real estate listings, the Industrial index increased 17.7 percent, well ahead of the 9.9 percent pace set over the previous two years as industrial vacancy hit the lowest point of the cycle in 2017 despite a record year for new logistics construction.

The Prime Multifamily Metros Index also increased by a slower 4.2 percent in 2017, suggesting weaker growth in higher-value apartment properties in primary markets. Rising deliveries and already-elevated pricing contributed to a slower rate of multifamily price growth last year in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space. While a slowing from the prior period in 2015 and 2016, the overall U.S. Multifamily index rose by a still-robust 8.5 percent in 2017.

The rate of growth decelerated in the prime market indices and in some property segments among U.S. and Philadelphia commercial real estate listings ticking and the prime markets indices within each property sector dominated by the larger core coastal metros, generally advanced more slowly than the broader property-type indices in 2017, reflecting heightened growth at the lower end of the market.

Despite a high-profile wave of store closures and retailer bankruptcies that have pressured comparable-store sales, the U.S. Retail Index posted a 10 percent gain over the year. Store chains targeting less-productive locations for closure as demand for stronger locations remained robust. For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.