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Building Successful Relationships

Monthly Archives: April 2016


As Late-Stage Recovery Continues, Office Market Sends Mixed Signals

new Jason stats graphic - June 2015The U.S. commercial real estate market for office space, including Philly office space and Philly retail space – a new study shows – is at a tipping, or turning, point that could presage a slowdown in demand for national and Philadelphia commercial real estate listings.

The study from CoStar Director of Office Research Walter Page indicates the U.S. and Philadelphia commercial real estate market had solid fundamentals during the first quarter, including very strong net absorption.

The report on national and Philadelphia commercial properties was made available through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

“We are seeing mixed signals in the marketplace, although our expectation is the office market will continue to do fairly well for the next few years,” Page said. “The biggest mixed signals are really related to net absorption and sales volumes.”

Total net absorption of 11 million square feet of office space in the first quarter throughout the U.S. commercial real estate market – including Philly office space and Philly retail space – was about the same as first-quarter 2015, a leveling off from the upward trend of recent quarters. On the other hand, Page said, net space of national and Philadelphia commercial properties taken by occupiers over the past four quarters exceeds the similar trailing period ending in 2015’s first quarter by nearly 11 percent at 98 million square feet.

“All in all, it’s still a very good picture, but the market is clearly not growing as rapidly as before,” he said in regard to the overall commercial real estate market. “Our expectation is that going forward, we’re going to see a continuing decline in net absorption, principally because we’re headed for that demographic cliff of retiring baby boomers.”

Despite signs of slowing, solid absorption and occupancy levels in U.S. and Philadelphia commercial real estate listings continue to be enabled by the moderate pace of new office construction and deliveries in most markets. The 127 million square feet of office space under construction in the first quarter was up only slightly from the same period last year.

Early 2016 results for investment sales, coming off a record year for sales volume last year, are also sending mixed signals. The preliminary total of $30 billion in first-quarter 2016 office sales volume is down about 10% from a year ago. That said, the four-quarter trailing total of $151 billion ending last month exceeded the previous four-quarter period that ended a year ago.

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

Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, 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 or Philly retail 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 or Philly retail 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.

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Sitting At Work May Be Killing You

sitting-at-work“Killing you” might sound a little dramatic, but science proves that sitting at work for extended periods of time is detrimental to your health. According to a study done by the Mayo Clinic, 50 to 70% of people spend 6 hours or more sitting at work daily.

Read Full Article Here

20 to 35% spend another 4 hours or more hours sitting watching T.V. The Mayo Clinic concluded that if people would just cut the amount of time they sitting at work, in the car and at home by 50%, they could increase their life by 2 years. That’s pretty significant. Who wants to die 2 years earlier than necessary?

You might feel that you are alleviating the risks by running, going to the gym or generally exercising as much as you can outside work hours. The American Cancer society says that’s not the case. They did a study that showed that it’s not how much exercise you do, it’s how much time you spend sitting that kills you!

The British Journal of Sports Medicine and Diabetologia, a journal of the European Association for the Study of Diabetes, did studies showing that even if you’re relatively active, you’re still at risk regardless if you’re going to the gym every day, doing plenty of cardio and aerobic exercise. The fact is that sitting for extended periods as is often required of those who hold a desk job, is just as dangerous for an active person as it is for the proverbial couch potato.

The scientific research discovered that after an hour or more of sitting, your body functions change
significantly.

Enzymes involved in fat burning are reduced by up to 90%. Your metabolism slows and your HDL cholesterol levels (the good cholesterol) is also reduced. The end result is that you’re not only going to be putting on weight, but you’re now also at a higher risk for Type 2 Diabetes – 112% elevated risk – and an increased risk of 147% for heart disease. (Now you know why it’s so hard to shed those extra pounds as you age!)

The furniture experts at COFCO are interested in what we can do to mitigate the effects of constantly sitting at work.

standing-at-workYou may have seen a flurry of articles about the new Sit-Stand, or Adjustable Height Desks which allow us to work either sitting or standing. This is great news and something that wasn’t available until fairly recently. Office furniture has evolved and continues to do so as designers begin to create systems built around humans rather than forcing humans to operate within the restrictions of the traditional desk/chair scenario.

The Adjustable Height desk concept was developed so that people could quickly and easily switch between sitting and standing while at work. Sit-Stand desks allow you to sit when you want and stand when you want. The height of the work surface is adjusted either manually, electrically, or with gas assistance. It takes just a few seconds. As an additional benefit, these desks can often be used from both sides, allowing you to move your position within the office as you wish, or even to collaborate with someone else at the same desk.

Until recently, it was mainly employees with back pain who asked for alternatives to traditional office chairs or who preferred to stand rather than sit while working, but we’re all becoming more health conscious and most of us are striving to exercise more consistently for our health’s sake.

Now that there’s so much research and publicity about the dangers of the dangers of sitting, employees are beginning to demand more attention be paid to wellness when designing offices and choosing office furniture. The good news is that manufacturers are responding this demand and creating practical, affordable, ergonomically designed office systems that promote wellness at work.

Want more information on these Sit-to-Stand table and desk options? We’ll be more than happy to show you the various options available and discuss how you can enjoy a healthier work day.

FOR INFORMATION, CONTACT:

cofco-office-furniture

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IS THE ASSESSOR YOUR ENEMY WHEN DEALING WITH PROPERTY TAXES?

Download the article (PDF)

By: National Bureau of Property Administration

At a national property tax conference a prominent New Jersey attorney spoke about the “Assessor Being Your Enemy When Dealing With Property Taxes”. In fact, a strong, trusting relationship with an assessor provides far more flexibility in resolving assessment issues compared to an adversarial relationship. How do the approaches differ?
The traditional adversarial appeal process of negotiation has you and your consultant doing whatever is necessary to win your position, irrespective of longer-term consequences such as difficulties with future building permits, zoning changes or the financial impact on the jurisdiction. The negotiation is transaction or deal based, rather than relationship based. It may boil down to “see it my way or see me at the appeal hearing or in court”. This strategy may be successful in the short run or if your future relationship with the jurisdiction is of no consequence. Even if you when appeals take years to resolve in the New Jersey tax court.

Trust Is Important When Dealing With Property Taxes

Relationship based negotiation thrives in an environment of trust. The interests of both parties are understood through open discussion. How do you make integrity the focal point? Simply treat assessing officials as co-workers rather than opponents. This allows you to obtain aggressive results, without the appearance of being aggressive. So, how should you or your tax consultant proceed when dealing with property taxes?

Let the assessing official know that you are there to work with him or her early in the process, rather than taking pot shots at the proposed assessment after the fact and filing an appeal. This allows you to obtain aggressive results, without the appearance of being aggressive, or casting the assessor as the enemy To get started, you and your consultant need to focus on diligent preparation for each assignment and consider “What dangers need to be avoided?” Become proactive and focus on improving your negotiating style and trustworthiness. Consider the dangers you face.

One danger you face is more frequent revaluations, which often result in higher assessments and taxes.
You should work in advance of the revaluation notice where possible with the assessor and/or revaluation firm rather than simply waiting to receive the new revaluation notice and then filing an appeal. This will allow you to maximize tax savings without an appeal.

A second danger to avoid relates to new construction. Most new construction is enrolled at a value close
to cost, but greater than the market value for property tax purposes. You and your consultant should work proactively to get a favorable assessment in relationship to cost of new construction or expansion. Negotiate value proactively as opposed to waiting and challenging the assessor’s value for the new construction by way of a formal appeal.

A third danger is missing an opportunity for a tax abatement. For example, a partial property tax abatement is available state-wide in New Jersey, yet 90% plus of corporate tax payers don’t benefit due to their lack of knowledge. You and your consultant need to be proactive to fully understand all of the applicable real estate tax abatements and how they work.

These are just three of the dangers you face and there are certainly more. Therefore, you and your consultant should protect long-term relationships with assessors. What should you expect from a strong relationship?

You and your consultant should expect the assessor to have an open mind and to give you the time to share your perspective. As importantly, a strong relationship with the assessor and jurisdiction can carry over to the rest of the community at a time when you are seeking zoning changes and other variances.
Winning doesn’t mean the assessor loses…it really should be a win-win situation. Your best strategy is to manage the outcome by first visualizing what you want to accomplish and identifying your dangers.

Then, work proactively with the assessor to resolve assessment issues before they turn into problems that require an extended and expensive appeal. Finally, you may be asking yourself, does this proactive approach work? Based on our 79-year track record, the answer is yes. For example, as consultants we generally have less than 20% of our service locations that require a formal appeal and New Jersey is no different.

In conclusion, negotiate informally and proactively first, before considering an appeal. An assessor relationship based upon mutual respect is reinforced by working proactively. This creates the opportunity to use intelligent, trustworthy persuasion to address the dangers you and your consultant face as you negotiate your assessments.

FOR INFORMATION, CONTACT:
National Bureau of Property Administration
www.nationalbureau.com

Dennis Forte
dforte@nationalbureu.com
610-517-3102

Greg Mangel
gmangel@nationalbureau.com
609-513-8280

Dealing With Property TaxesNational Bureau of Property Administration, a national property tax consulting firm established in 1935 with current assignments in all 50 states, with New Jersey being the largest.

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U.S. Commercial Real Estate Market Sales and Pricing See 2016 Slowdown

new Jason stats graphic - June 2015Prices and investment volume in the U.S. commercial real estate market dropped for the second month in a row in February, even as strong leasing activity strengthened net absorption and CRE fundamentals in the first quarter 2016, according to a new report from the CoStar Group.

CoStar’s Commercial Repeat-Sale Indices (CCRSI) found that February’s decline was evident in both the value-added and equal-weighted U.S. Composite Indices, the broadest measures of aggregate pricing for commercial properties within the CCRSI.

The value-weighted index, which is primarily influenced by larger transactions, dropped by 0.6%, CoStar said, while the equal-weighted index, which reflects activity in a greater number of smaller deals, declined 0.8%.

At the same time, investment sales volume throughout the commercial property sector also fell in February as compared to the fast-paced volume a year ago.  Observed repeat-sale trades dropped 12.1% ending February 2016, compared with the same period in 2015, according to the CCRSI.

The decline in sales activity was evident in both the high and low-end sectors of the U.S. commercial real estate market, as the composite pair count dropped 10% in the investment-grade segment and 12.6% in the general commercial segment in the first two months of 2016 compared to the same period a year ago, CoStar reported.

Despite the sales and pricing slowdown, leasing activity was still robust, the report noted.  Total net absorption in the office, retail and industrial markets stood at of 155.1 million square feet, contributing to the total 655.1 million square feet of net absorption for the 12 months ending in March 2016, up 10.7% from the same period n 2015, according to CoStar.

Investment-grade properties saw the strongest year-over-year absorption growth, CoStar noted, growing by 14.8% in the past 12 months compared to the same period last year and reflecting the “flight to quality” among tenants.  The general commercial segment grew by 1.9%, CoStar said.

The two-month slowdown may indicate that pricing in the U.S. commercial real estate market may have hit a plateau for the 2016 cycle, according to CoStar’s analysis, with trends suggesting the two composite indices could level off this year following years of steady appreciation at an average monthly pace of 1%.

Commercial property markets have performed remarkably well over the past several years, CoStar said, pointing to limited new construction and the ongoing economic expansion that aided in holding vacancies near cyclical lows and spurring rent growth.   The strong performance is evident in the CCRSI value-weighted index, which surpassed its prerecession peak by nearly 20%, while the equal-weighted index came to within 5% of its previous peak, according to Co-Star.

2016’s price growth is being negatively impacted by the overall global economic uncertainty and higher interest rates that jointly have begun to apply upward pressure on capitalization rates, CoStar noted.

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

Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, 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 or Philly retail 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 or Philly retail 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.

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Avoid Lawsuits with Good Tenant Relationships

Good Tenant RelationshipsThis article explains how having good tenant relationships can help you to avoid a lawsuit. Special thanks to Brian Blaston of Hardenbergh Insurance Group for providing this article for Wolf Commercial Real Estate.

Investing the time and money required to maintain and cultivate a positive working relationship with your tenants can be the difference between amicably settling differences and a costly lawsuit. Working on the relationship also creates value by maximizing tenant cooperation with timely rent payments, property upkeep and longer lease terms.

A good tenant relationship  minimizes the likelihood of costly lawsuits and maximizes cooperation with timely rent payments, property upkeep and longer lease terms.

Screening Potential Tenants

Conducting a background check on prospective tenants is a wise way to ensure a mutually successful experience for you and the applicant, and it is an effective risk management tool. Background checks do present some costs, but the risk of not performing the screening on tenants could have more serious financial consequences, resulting in lost income, property damage and litigation costs. Elements of a thorough background check include the following:

  • Criminal history
  • Credit check
  • Previous landlord verification
  • Identity verification
  • Employment verification

Take Care of Your Property

Taking measures to properly maintain the premises sends a powerful message to tenants and can help with good tenant relationships. It proves that you take your role as building manager seriously and encourages them to take pride in the condition of their rented space. Better, it could bolster relationships and lessen the probability that they will take legal action in the event of an incident or dispute. Take these measures to be prepared for
maintenance issues:

  • Establish a procedure for dealing with maintenance requests that guarantees prompt service to tenant requests and maintenance issues.
  • Create, clearly communicate and promptly enforce policies regarding shared spaces.

Security Measures

States and municipalities have differing legislation regarding the duties of building owners and managers. Although you may not be expected to guarantee the safety of tenants, visitors and guests, you must exercise reasonable care to protect them from foreseeable events. What’s more, security measures make tenants feel safe, strengthening your relationship with them and lowering the likelihood of a lawsuit. They can also potentially lower your insurance premiums.

Focus On Customer Service For Good Tenant Relationships

Taking extra steps to make tenants feel welcome helps to create a cooperative relationship that is unlikely to end in legal litigation. Small gestures such as the following can dramatically improve the relationship you have with tenants:

  • Prompt, polite responses to requests
  • Support during moves
  • Clearly outlined policies and swift enforcement for all tenants

Transferring Risk

Even with positive landlord-tenant relationships, there are potential exposures that must be addressed with well-designed property and liability insurance policies.

For more information about vacant property insurance and other strategies to help protect your assets and mitigate loss, contact us today at (856) 489-9100.

For more information, contact:
brian-blaston-hardenbergBrian Blaston
Commercial Lines – Manager

Hardenbergh Insurance Group
phone: 856.489.9100 x 139
fax: 856.673.5955
email: brianb@hig.net

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U.S. Real Estate Market Sees First Sign of Possible Slowdown in Foreign Investment

new Jason stats graphic - June 2015The U.S. real estate market saw a record infusion of $70 billion from foreign investors in 2015, but a decline in the pace of foreign capital fundraising may be the first sign of a slowdown in overall foreign investment in the U.S. real estate market, according to a news report from the CoStar Group.

The growth rate at which overseas investors are raising capital grew by only 3% in 2015 in comparison to 2014’s growth rate of 21%, CoStar reported, noting that the Americas and the Europe-Middle East-Africa (EMEA) regions experienced a foreign capital fundraising growth rate of under 2%.

On one hand, plummeting oil prices have shrunk the amount of investment capital in the Middle East, and government officials in China reportedly are more and more wary about the sum of  investor capital leaving their country for foreign borders, industry experts told CoStar.

But on the other hand, the experts expect market dynamics such as quantitative easing and interest rates to overshadow international market insecurities, keeping foreign capital flowing and real estate appealing to investors, the news report said.

Both large and liquid markets in the U.S., China, the UK, Japan and Germany are likely to benefit from strategic deployment of the record  $443 billion in capital raised for investment in commercial properties worldwide, CoStar’s new report said quoting industry experts.  But look for foreign investors to reduce risk by opting to invest through join ventures and platform deals as opposed to direct investment, an expert told CoStar.

Last year’s record foreign investment in the U.S. real estate market, which contributed to the solid increase in property values and rate of transactions for the entire year, was strongest in the fourth quarter 2015, reaching its highest level since 2007, CoStar reported.

But in the first quarter of 2016, transaction activity fell precipitously as investors worldwide assessed market volatility, confirming expectations that 2015’s high level of foreign investment in the U.S. could not be maintained for very long, the report said.

Preliminary data from CoStar found that overall deal volume dropped about $40 billion in first quarter 2015, including a decline of $30 billion from domestic buyers and $10 billion from foreign investors.  Still, the recent trend for overseas capital to favor U.S. assets is likely to continue, but at “uncertain levels,” according to the report.

One CoStar Portfolio Strategy executive noted that while “there are few economies that look as attractive as the U.S., relative pricing still impacts investor desire.”

“If assets seem too richly priced, then rational capital may look elsewhere,” according to the executive.  “Cap rates have been driven lower and gateway cities are priced dearly relative to history. But relative to alternatives in Europe, they’re on the right side of the chart.”

The record $70 billion in foreign investment in the U.S. real estate market represented 11% of the more than $600 billion invested in all commercial real estate in the U.S. in 2015, CoStar said.  However, foreign investment is likely much higher because foreign entities often co-invest with U.S. companies taking the role as the general partner, meaning the transaction is considered a domestic investment.

The biggest source of foreign investment in the U.S. real estate market comes from the United States’ neighbor to the north.  Canadian investors — primarily pension funds and other institutional capital — have long favored U.S. office buildings and lately, apartment properties.  Since 2014, Canada has represented 28% of direct foreign investment into the U.S., followed by Western Europe at 23%; China and Hong Kong at 14%; Southeast Asia, including Singapore, at 13%; the Middle East nations at 11%; South Korea at 4%; and Japan at 2%.

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

Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, 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 or Philly retail 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 or Philly retail 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.

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WCRE FIRST QUARTER REPORT: SEASONAL SLOW-DOWN, SHAKY FINANCIAL MARKETS TAKE TOLL ON SOUTHERN NEW JERSEY, BUT AREAS OF STRENGTH REMAIN

Philadelphia Continues its Strengthening Trend

Q1 2016 Press Release in PDF

April 7, 2016 – Marlton, NJ –Commercial real estate brokerage WCRE reported in its latest quarterly analysis that 2016 began much as 2015 ended: with Southern New Jersey commercial real estate growth slowing down somewhat. The report included some reasons to stay optimistic, such as continuing healthy activity levels among local bellwether industries, the ongoing decline in office vacancy rates, and signs of gradual business expansion.

“The first quarter was marked by volatility in the financial markets, which seemed to have stabilized by the end of the quarter,” said Jason Wolf, founder and managing principal of WCRE. “This uncertainty, coupled with the expected cyclical slow-down due to winter weather seem to have been a drag on our market, but we believe the overall outlook is still strong.”

There were approximately 326,533 square feet of new leases and renewals executed in the three counties surveyed, which represents a drop of +/- 30 percent compared with the first quarter of 2015. The quarter also saw a drop in prospecting, with about 200,000 SF of lease deals in the pipeline and expected to close in the near term. Still, the trend of positive absorption continued, making up approximately 146,532 square feet of total activity, up about ten percent over the previous quarter. Vacancy rates continued to improve, as well, and several large trophy assets changed hands as owners repositioned and new investors entered our market.

Other office market highlights from the report:

  • Overall vacancy in the market continues to drop, and is now down to approximately 11.45%. This is a slight improvement over the previous quarter.
  • Average rents for Class A & B product continue to show strong support in the range of $10.00-$14.00/sf NNN or $21.00-$25.00/sf gross for the deals completed during the first quarter. This is essentially unchanged from the previous two quarters.
  • All of the major private owners and REITS showed moderate leasing and prospect activity for the first quarter – with Burlington County vacancies tightening up, many larger vacancy opportunities are also shifting towards Camden County, which is not controlled by these ownership entities.
  • New Jersey’s unemployment rate moved lower for the 13th consecutive month, down to 4.3 percent. It is down by two full points over the past year and is now at the lowest level since August 2007.

WCRE has expanded into southeastern Pennsylvania, and the firm’s quarterly reports now include a section on transactions, rates, and news from Philadelphia and the suburbs. Highlights from the first quarter Pennsylvania section include:

  • The Philadelphia regional office market is continuing its positive trajectory from 2015 in terms of rental rate growth and decline in vacancy rates. While much of this is felt in the CBD core, some of the suburban markets are experiencing similar activity. Repositioning of older Class B product to Core Class A assets coupled with the strong investor appetite for value-add deals is anticipated to continue through 2016.
  • Center City Philadelphia, specifically Market East, is experiencing a resurgence of activity including PREIT’s “top-to-bottom” renovation at the Gallery at Market East. Rental rates in the CBD are at all-time highs while demand from both regional and national tenants continuing to flock to the market. In terms of the suburban markets, the appetite for core assets continues to be paramount from institutional investors with value-add plays on older center, similar to the office market. Target will be opening two of its TargetExpress-brand stores in Center City Philadelphia in the summer of 2016.
  • The Philadelphia regional industrial market is strong, with large distribution facilities continuing to hold the greatest demand from institutional players. Rental rates continue to increase while vacancy rates are holding steady. There have been a variety of transactions, specifically in the expanded market area with prices fetching all time high levels. Planned improvements at Philadelphia’s port over the next three years should provide continued demand for warehouse space.
  • Philadelphia’s expanding CBD is seeing new construction across all sectors. The Comcast Innovation and Technology Center and Cira South represent two of the largest office uses under construction. At 16th & Chestnut, the 700-room, dual-brand W/Element hotel has broken ground and is expected to open in 2017. Major mixed-use projects are planned for the long-vacant, block-long parcels at Broad and Washington. Several Market East projects are underway, and Drexel is planning to develop more than 6 million square feet in its University City Innovation Neighborhood.

WCRE also reported on the Southern New Jersey retail market, noting mixed results there, as well. Highlights from the retail section of the report include:

  • Overall retail and food establishment sales dropped during the first quarter, which is expected post-holiday season.
  • Retail vacancy in Camden County stood at 11 percent, with average rents in the range of $12.12/sf NNN.
  • Retail vacancy in Burlington County stood at 14.8 percent, with average rents in the range of $12.05/sf NNN.
  • Retail vacancy in Gloucester County stood at 6.9 percent, with average rents in the range of $11.52/sf NNN.

The full report is available upon request.

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about WCRE online at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com , www.phillymedicalspace.com and www.phillyretailspace.com.

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NJ Permit Extension Period Ending Soon

This article explains the ending of the New Jersey Permit Extension Act. Special thanks to Robert Baranowski of  Hyland Levin for providing this article for Wolf Commercial Real Estate.

NJ Permit Extension Act

The New Jersey Permit Extension Act tolled the expiration of numerous development approvals and permits during the “extension period” starting from January 1, 2007 through December 31, 2015.

Because the NJ Permit Extension Act provides that tolling shall not extend the period of approval more than six months beyond the conclusion of the extension period, some approvals may be extended through but not beyond June 30, 2016. Since approvals such as variances, site plan and subdivisions “run with the land,” the determination of whether such approvals remain valid impacts the marketability and value of real property.

The end of the extension period under the NJ Permit Extension Act does not necessarily mean an approval will soon meet its demise. The NJ Permit Extension Act preserved the right to seek additional extensions as provided by law when the extension period ends. For example, there are extensions available for subdivision and site plan approvals under the Municipal Land Use Law (“MLUL”) for up to one year if the developer was precluded from proceeding because of delays in obtaining other legally required approvals that were diligently pursued. A developer must apply for this type of extension before the subdivision or site plan approval period runs or within 90 days after the receiving the last other required approval, whichever is later. See N.J.S.A. 40:55D-49(f), -52(d). There are also discretionary extensions available under the MLUL such as two one-year extensions of preliminary approvals and up to three one-year extensions of final approvals. See N.J.S.A. 40:55D-49(c), -52(a). A developer can apply for discretionary extensions either before or after the approval period runs but the extension will run from the original expiration date. Larger projects may be eligible for longer extensions under the MLUL.

There is also a “tolling” provision under the MLUL where “…during the period of approval heretofore or hereafter granted to an application for development, the developer is barred or prevented, directly or indirectly, from proceeding with the development otherwise permitted under such approval by a legal action instituted by any State agency, political subdivision or other party to protect the public health and welfare or by a directive or order issued by any State agency, political subdivision or court of competent jurisdiction to protect the public health or welfare and the developer is otherwise ready, willing and able to proceed with said development, the running of the period of approval under this act… shall be suspended for the period of time said legal action is pending or such directive or order is in effect.” See N.J.S.A. 40:55D-21.

Other types of development approvals such as NJDEP permits should be carefully reviewed to determine whether an extension is necessary and possible. During any analysis of such permits, it should also be determined whether commencement of work pursuant to a permit is sufficient to vest the right to complete the work. Certain approvals require completion of all work authorized by the permit prior to expiration.

Whether it is done prior to listing a property for sale or during a due diligence period, all development approvals should be examined to determine whether an application for an extension is warranted, even if work has already commenced on a project. For example, a CAFRA permit may be deemed expired if work has commenced but construction activity has lapsed for over a year.

Location of the real property is a critical issue to examine in this process. Under the NJ Permit Extension Act, there is no tolling for development approvals applicable to property in “environmentally sensitive areas,” i.e. planning areas 4B and 5. An amendment to the NJ Permit Extension Act enacted in 2012 carved out growth areas and coastal centers in Highlands and Pinelands.

Another issue for consideration is that other factors such as sewer service area mapping and public water supply capacity may affect the ability of a developer to construct an approved project, regardless of whether the approval remains valid. Sewer service area changes and water supply capacity issues that have arisen during the extension period may impact a developer’s ability to build what was approved. Regulatory changes that have taken effect since the NJ Permit Extension Act was adopted may also curtail the ability of an administrative agency to further extend an approval that was issued under a prior version of a rule.

The bottom line is that buyers, sellers and real estate agents should be aware that development approvals extended by the NJ Permit Extension Act may soon be expiring and that a careful analysis should be conducted to determine the viability of any further extensions under the MLUL or other applicable laws and regulations. All of the parties to a real estate deal should also be cognizant that for any project being bought or sold “with approvals,” every aspect of development should be examined for the viability of constructing an approved project.

robert-baranowskiRobert S. Baranowski, Jr., Esquire
Hyland Levin LLP

Practice Areas:
Zoning and Land Use, Environmental, Real Estate, Litigation, Eminent Domain, Property Taxation

Hyland Levin Attorneys at Law
6000 Sagemore Drive, Suite 6301
Marlton, NJ 08053

Phone: 856.355.2900

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