Monthly Archives: October 2020
Brandywine Acquisition & Development has terminated its purchase and sale agreement to acquire the Voorhees Town Center due to the COVID-19 global pandemic, according to a statement from the real estate investment and management company.
Brandywine had been working with the Voorhees Town Center’s current owner, Namdar Realty Group, to acquire the property for redevelopment of the former Echelon Mall. In the statement, Brandywine said it was not able to reach certain required benchmarks during the pandemic in order to acquire the property.
Governor Phil Murphy has extended the state’s public health emergency for another 30 days. This marks the eighth such extension of the public health emergency, which has to be renewed every 30 days under state law.
The state of emergency, under New Jersey law, stays in effect indefinitely. The state logged 1,139 new cases on Oct. 23 and 1,140 new cases on Oct. 25—more than double numbers seen over the summer. They surged to 1,994 new positive cases on Oct. 24.
Iconic retailer Gap Inc. said it would close 350 stores by 2023 across its namesake and Banana Republic brands, a decision that is expected to reduce its mall-based locations by an estimated 80%.
The nation’s largest apparel retailer said Thursday at least 225 of those locations are expected to close before the end of the year, with an additional 75 closures scheduled for 2021. As the company pulls back on locations for its unprofitable brands, it said it plans to move forward with openings for its successful ones — Athleta and Old Navy — as the two steadily contribute a larger portion of the company’s total revenue.
The drastic changes to its brick-and-mortar footprint, which were announced at a virtual investor event, come as the San Francisco-based company scrambles to retool its real estate portfolio amid a yearlong slump in sales and the ongoing coronavirus pandemic.
“We were overly reliant on low productivity, high-rent stores,” Mark Breitbard, Gap’s new president and CEO, told investors. “We will be shrinking our North America footprint and getting out of mall-based locations, and by 2023, we will have reduced our store fleet by 35%. The goal is to create a new operating model in a cost-effective way, and all of the changes will help us become a digitally-led brand.”
Gap Inc. oversees brands including Gap, Banana Republic, Athleta, Old Navy, Janie & Jack, and Intermix. Its latest announcement is the retailer’s most aggressive push in its decades-long history to shift its Gap and Banana Republic business away from brick-and-mortar stores. The company had been struggling long before the pandemic against steep revenue declines, rising e-commerce competition, and declining mall traffic, which sent the number of Gap and Banana Republic stores nosediving over the past half-decade.
The company has shrunk Gap and Banana Republic’s footprint to what is expected to be fewer than 1,420 by this year’s end, from 1,843 stores in 2018. At the beginning of this year, the company had planned to close 90 Gap and Banana Republic locations.
The firm’s dramatic increase in closings for those brands is another sign of how much retailers nationwide are struggling right now. The industry is responding to the financial distress of the pandemic by cutting back on real estate expenses and closing locations at a pace that is expected to make 2020 a record year for store closings, according to a CoStar Market Analytics report on the national retail real estate market.
Gap’s retreat from mall-based locations could be a hefty blow for retail landlords already struggling with declining foot traffic.
The chain plans to use the current healthcare and financial crisis as a springboard for its real estate restructuring plans.
Gap Inc.’s Chief Financial Officer Katrina O’Connell told investors that the brand had “not had great execution over the past several years,” but the company will use current market conditions to reallocate its fixed expenses in rent and shift its resources to the retailer’s growing digital operations.
Retool, Reset Future Growth
In the early stages of the virus’ outbreak across the United States, the retailer said it was forced to push most of its business to digital operations as a result of lockdowns and in-store restrictions. Most of the company’s 3,000 stores have since reopened, but after reporting a 165% leap in e-commerce sales compared to last year, Gap Inc. plans to continue to shift most of its future growth to expanded digital operations.
A majority of Gap Inc.’s anticipated closures will be timed with lease expirations, but the retailer estimates it will have to spend about $210 million to buy out some of those agreements. O’Connell said the company is also aggressively renegotiating lease terms for stores that will remain open, a move that will save the company about $45 million annually.
“Lease buy-out costs and rent reductions are all specific to our real estate restructuring efforts,” the CFO said, adding that the company is also exploring whether it should exit the European market entirely or shift its locations there over to a franchise model.
But the company’s plan to shrink its real estate costs has already hit a few brick walls. The company has been tangled in several lawsuits over the past five months with prominent landlords including Simon Property Group, which is Gap’s largest landlord, and Brookfield over its rental obligations. Simon is suing for $65.9 million in unpaid rent and has countersued Gap’s request for renegotiated rental terms for “taking opportunistic advantage” of the coronavirus’s devastating economic effect.
Gap’s store closure roadmap has already resulted in permanently vacating its 29,043-square-foot San Francisco flagship at 870 Market St. Back in August, the company confirmed it had emptied more than 47,230 square feet of retail space in the city after closing the flagship as well as other locations at the outdoor Embarcadero Centre and indoor Stonestown Mall.
Gap Inc.’s shift from physical space to stronger e-commerce growth will coincide with another transition over the next three years: Old Navy and Athleta’s increasing prominence as the company’s most profitable brands.
Since the pandemic’s outbreak in March, Old Navy has benefited from customers looking for lower price points, while Athleta’s athleisure and loungewear clothing has fueled the brand’s plan to more than double its current $1 billion in annual revenue by 2023.
Shawn Curran, the retailer’s chief operating officer, said Thursday that the company would be shifting its brick-and-mortar footprint to more Old Navy and Athleta locations over the next several years. By 2023, the two companies will make up about 70% of Gap Inc.’s total revenue, a significant increase from their current 55% annual contribution. Revenue from all of the company’s brands last year totaled $16 billion.
While the pandemic has slowed down Old Navy’s store expansion plans, the brand expects to open about 30 to 40 new stores each year through 2023. It currently operates about 1,200 locations.
“Stores matter and will remain an important underpinning to our business,” Old Navy CEO Nancy Green said, adding that “current market conditions will slow the brand’s opening pace. We’ll target new stores in smaller markets as an alternative to big-box competitors, and opening in smaller markets will minimize cannibalization of other locations.”
Athleta, which currently operates a “highly profitable fleet” of 200 stores,” will also continue to expand its brick-and-mortar footprint.
Mary Beth Laughton, the brand’s CEO, didn’t include details as to where and how many, but said physical locations were “top customer acquisition and brand-awareness vehicles that serve as an important role in local communities,” adding that the brand has an “under-penetrated real estate footprint.”
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 (firstname.lastname@example.org) 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.
A Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, Wolf Commercial Real Estate 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.
Gov. Tom Wolf is working with the Pennsylvania Liquor Control Board to waive pricey liquor license fees in 2021, providing more than $20 million in relief to 16,000 Pennsylvania restaurants, bars, catering clubs and hotels.
“My administration continues to look for innovative ways that we can support the bar and restaurant industry,” Wolf said at a press conference in Pittsburgh on Thursday. “Eliminating liquor license fees is an important step toward helping bars and restaurants retain the capital they need to weather the storm of COVID-19.”
Whether Joe Biden and his “Green New Deal” allies or President Trump and his “Preserve Our Existing Energy Superiority” are victors on November 3rd, one thing is for sure, that the words “carbon footprint”, “carbon footprint neutral” and “carbon footprint tax/assessment” will one day in the not so distant future be as much a part of your real estate business vernacular as “NOI” or “credit tenant”.
With the Democratic Party and industry giants such as Wal-Mart and Amazon taking a leading position, the pressure is mounting on all aspects of the real estate industry, from retail shopping center owners to multifamily and student housing developers, from office REITS to resort owners, to conserve energy, utilize all available energy savings measures and to incorporate renewables in order to reduce carbon emissions/greenhouse gases.
Those real estate industry companies that are visionary or at least are out in front of the curve, those companies that capitalize on the opportunity to enter the fray with an energy savings, procurement and green energy plan, and those companies that strategically plan on the changes at their feet, will prosper or at least survive.
Those that wait for legislation or public pressure to force them to comply with carbon footprint or energy savings initiatives, those that do not have a strategic plan, those that do not have the flexibility to modify what they do or how to do it, will suffer dearly or fall by the wayside.
Your Commercial Carbon Footprint
1. What are the benefits of adopting a comprehensive energy plan?
a. On the energy savings side, there are certain federal and, in many instances, state incentive programs available to those property owners that adopt energy savings programs, for example, through energy efficient electrical and mechanical system upgrades to limiting energy use during high utility demand times.
b. With respect to energy procurement, your property’s operating expenses can be significantly reduced by buying your power through an RFP process that you can initiate with national or regional energy procurement companies.
c. With respect to the implementation of a renewable energy program, and we will focus on solar energy, there are (even though the benefits are diminishing at the federal level and in some states) significant federal income tax credits and accelerated depreciation treatments available on the federal level and, in certain states, substantial subsidy or outright payment programs, which are known as solar renewable energy certificates or feed-in-tariffs.
2. What can you as a residential or commercial real estate entrepreneur or company do to be one of the
victors and not one of the victims?
Answer: Surround yourself with, or build, a team of professionals that understands the changes occurring
and the ramifications of those changes, has experience in renewable energy/energy procurement/energy
audit/energy savings industries and that can implement policy, compliance and productivity for you and your
business. Law firms (such as Kotlar Hernandez & Cohen), environmental engineering and consulting firms,
energy procurement specialists, ESCOs (energy savings companies), and tax accountants versed in investment
tax credits and other tax savings/incentive programs and renewable energy development companies can all be
a part of your team. The time is now, and time is not an ally.
The contents of this article are for informational purposes only and none of these materials is offered, nor should be construed, as legal advice or a legal opinion based on any specific facts or circumstances.
Mitchell Cohen is Of Counsel at the firm of Kotlar Hernandez & Cohen and Chairs the firm’s Commercial, Real Estate & Renewable
Energy Practice Group.
Kotlar Hernandez & Cohen, LLC was founded in 1995 as the Law Offices of Adam M. Kotlar to help injured people in New Jersey get justice through the legal system. Attorney Adam Kotlar created the law firm to obtain needed workers’ compensation benefits for injured workers, financial compensation for accident victims and accountability for senior citizens neglected or abused in nursing homes.
The firm has grown since then and features 18 attorneys – including 3 board-certified trial attorneys in the fields of civil litigation and workers’ compensation. In 2019, with the elevation of several new partners, the firm was renamed Kotlar Hernandez & Cohen. Even so, the firm’s goal remains the same – to help clients get the best possible resolution of their cases. The firm’s website can be found at www.peoplefirstlawyers.com.
Wolf Commercial Real Estate (WCRE) is pleased to announce that it has been retained by Landmark Healthcare Facilities as the exclusive agent to market for lease the Medical Office Building located at 6 Earlin Avenue, Browns Mills, New Jersey.
This new listing opportunity adds to WCRE’s growing number of assignments of medical and healthcare properties in the Southern New Jersey and Philadelphia region.
This Medical Office Building is a multi-tenanted healthcare property totaling 57,962 rentable square feet and is located in Burlington County, New Jersey.
The Medical Office Building features 3-stories with approximately 20,000 square foot floor plates offering built-to-suit suites that can accommodate from 1,000 – 20,000 square feet. The trend–setting leaders of Landmark Healthcare Facilities have established the national standard for the development, ownership and management of the complete range of outpatient buildings.
Michael Cleary, Executive Vice President at Landmark Healthcare Facilities LLC said,
“This is the first time that Landmark has engaged a commercial real estate firm to lease space in a Landmark asset. Leasing outpatient buildings is a core competency of Landmark so we wanted to be 100% certain that the firm we selected to partner with was a firm that was aligned with Landmark’s values and a firm that had a deep understanding of the physician and health system relationship. After speaking with several commercial real estate firms Landmark recognized that WCRE has an outstanding track record of leasing success. Landmark believes that partnering with the WCRE team will enable this asset to exceed all expectations.”
WCRE’s New Jersey leasing specialist team of Ryan Barikian and Bethany Brown said,
“Landmark Healthcare Facilities is known for developing modern, technologically advanced assets and this MOB is no exception. We are proud to be representing Landmark for this best in class medical building – an asset to the Southern New Jersey medical community.”
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.
Consumers spent at a much faster pace than expected in September, with retail sales rising 1.9% in a sign that the U.S. economy’s biggest driver remains healthy.
Economists surveyed by Dow Jones expected sales to rise 0.7%, up from a 0.6% rise in August.
Excluding autos, the gain amounted to 1.5%, which also was better than the 0.4% estimate.
On October 14, the New Jersey Economic Development Authority (NJEDA) announced Phase 3 of the Authority’s Small Business Emergency Assistance Grant Program. Phase 3, which will be funded with $70 million in Coronavirus Aid, Relief, and Economic Security (CARES) Act funding, significantly expands eligibility for the Grant Program and increases the amount of funding businesses can receive. To ensure funding goes to businesses hit hardest by the pandemic, Phase 3 sets aside funding for restaurants, micro-businesses, and businesses based in Opportunity Zone-eligible census tracts.
Interested business owners will need to pre-register to receive an application. Pre-registration will begin on Monday, October 19th and will close on Tuesday, October 27th. The application will be available via a phased approach following the end of the pre-registration period. Applicants must complete the full application to be considered for grant funding. Applications will become available on a rolling basis following the pre-registration period.
Pre-registered applicants will need to return to complete an application based on the following schedule:
- Restaurants – 9:00 a.m. on Thursday, October 29, 2020
- Micro businesses – 9:00 a.m. on Friday, October 30, 2020
- All other businesses, excluding restaurants and micro businesses – 9:00 am on Monday, November 2, 2020
Applications for each category will be open for a period of one week will be accepted on a first-come, first-served basis. Feel free to contact us if you have any questions or are in need of assistance. Be well and stay safe.
Indoor sports such as basketball and ice hockey just got the go-ahead in New Jersey amid the coronavirus pandemic, paving the way for youth teams, high schools, colleges, and adult leagues to have a winter season, albeit with some changes.
Gov. Phil Murphy signed an executive order Monday allowing organized sports considered “medium risk” and “high risk” in the state to resume contact practices and games indoors, with restrictions.
What should commercial landlords should know about tenant health screening questionnaires and temperature checks? As we turn towards the colder months and the start of flu season, Coronavirus infections are rising in states across the country prompting commercial landlords to wonder what steps can be taken to keep their tenants healthy and open for business.
More and more commercial landlords are considering whether to take matters into their own hands and implement protocols, including health screening questionnaires and temperature checks for tenants, their employees, customers, vendors and guests. If done properly and effectively, such measures can help ensure a landlord’s tenants stay in operation and do so safely. However, there are many issues to consider and pitfalls to avoid for landlords seeking to implement health screenings, temperature checks and other public health measures. Without the guidance of counsel and proper consideration of the issues, landlords can face liability and hardship. Below are just some of the considerations for landlords to resolve before instituting health screenings and temperature checks.
The WHO, WHAT, WHERE and HOW of Tenant Health Screening
Health questionnaires provide one method of evaluating the health of tenants. Questionnaires should be created with the assistance of counsel as the Equal Employment Opportunity Commission (“EEOC”) has recently revised their guidance for what questions are, and are not, acceptable. All questionnaires must be applied evenly to all tenants to avoid allegations of discrimination or disparate treatment. Notice of the questionnaires, the effect of certain answers, and categories of heightened concern such as exposure to infected individuals or travel to so-called “hot spots” should be spelled out in polices provided to tenants before questionnaires are utilized.
Temperature checks present far more complicated issues and decisions:
Who Should Perform Temperature Checks
• If a landlord, and not the business tenant will perform temperature checks and/or monitors non-invasive screening equipment such as thermal cameras or scanners, the individuals performing such screenings should be properly trained on the use of the equipment as well as the protocols for what the EEOC considers to be a medical examination.
• The landlord’s representative taking the temperatures should wear personal protective equipment (“PPE”) and should administer the screenings so as to reduce close contact.
• An individual performing temperature checks also raises employment issues, including classification and wage issues that must be considered and resolved before any screenings can occur.
Who Should Have Their Temperatures Taken
• Will only tenants, i.e. employees, be screened or will the tenants’ customers, vendors, and guests also be screened?
• It is critical that temperate checks should be applied consistently and evenly. Testing only portions of a population such as customers, or only testing certain employees can lead to allegations of discrimination or even harassment. Having a policy that provides for who will be tested and if any differences in treatment are utilized, the rationale for such differences, is an important facet of any temperature screening plan.
Where Should Temperature Checks be Performed?
• Temperature checks should be a “first-level” screening and should occur prior to any interaction with others and prior to additional security measures.
• Landlords may consider use of a private screening area to ensure the privacy of those being tested and comply with potentially applicable EEOC requirements.
How Will Temperature Checks be Administered and What Happens to the Collected Information?
• When a temperature screening shows a fever, how the landlord will respond is critical. Landlords must decide if they will exclude the individual from the premises or if they will alert the tenant and have the tenant make the ultimate decision.
• What happens if an individual refuses to have their temperature taken upon entry or refuses to leave if they are exhibiting a fever?
• Perhaps the most critical aspect of temperature screenings is what is done with the temperatures that are recorded and collected. This information must remain confidential, and, ideally anonymous.
• What protocols are in place for individuals returning after an infection or displaying symptoms in order to gain entry to the property?
The above list is not an exhaustive one as there are other issues and concerns that would need to be addressed by landlords seeking to implement health screenings at their properties. Some landlords are even considering going a step farther to have their tenants tested for the Coronavirus. The anticipated vaccine(s) would also raise the issue of whether landlords could compel their tenants to get vaccinated before re-entering the property. As these issues are constantly evolving, sometimes on a daily basis, it is important that landlords have the advice of experienced counsel to avoid liability and support healthy and operational business tenants.
In addition to tenant health screening questionnaires and temperature checks, commercial landlords should also be prepared for:
• Situations where an outbreak occurs with their property – Being prepared for an outbreak at a property, and communicating that plan to tenants will avoid confusion, panic and allow for an orderly response.
• Distancing protocols – Landlords may consider reconfiguring their tenants’ spaces and also installing apparatuses that would promote social distancing between a tenants’ employees as well as between a tenant and their customers, vendors and guests.
• Building and Tenant Policies – While thinking about and discussing these and other Covid-related issues is a good practice, having the results of those thoughts and discussions reduced to written policies are a best practice. Having written policies leaves no doubts between landlords and their tenants, and allows landlords to effectuate their preferred way of addressing these issues. Policies can address the above topics as well as elevators, common areas, and face coverings.
The contents of this article are for informational purposes only and none of these materials is offered, nor should be construed, as legal advice or a legal opinion based on any specific facts or circumstances.
The U.S. Small Business Administration and the Treasury Department are making it easier for companies to get their Paycheck Protection Program loans of $50,000 or less forgiven with a simpler loan forgiveness application and interim final rule.
The PPP was part of the CARES Act passed by Congress in March to provide relief to struggling small businesses coping with the impact of the novel coronavirus and the economic downturn precipitated by the pandemic.
First-time claims for unemployment benefits totaled 840,000 last week, higher than expected in another sign that the spike in job growth over the summer has cooled heading into Election Day.
Economists surveyed by Dow Jones had been expecting 825,000 new claims.
Though the total was a bit worse than Wall Street expected, it still represented a modest decline from the upwardly revised 849,000 from a week earlier. It also was the lowest level of claims since the virus-induced shutdown in mid-March.