Chat with us, powered by LiveChat

Tag Archives: commercial real estate


Midsize Tenants Dominate Demand for Industrial Space

E-commerce and last-mile logistics tenants in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – are fueling additional demand for expansion in the U.S. and spurring midsize space users to dominate the industrial market.

Midsize industrial tenants – those who occupy 50,000-sq.-ft. to 300,000-sq.-ft. boxes – are driving industrial demand in various segments of the national and Philadelphia commercial real estate market, according to a report from real estate services firm Avison Young in a recent issue of National Real Estate Investor magazine.

For example, between January 2017 to June 2019, tenants in Chicago signed 872 industrial leases totaling 97.3 million sq. ft., with an average size of 111,629 sq. ft. Tenants in Atlanta signed 320 industrial leases totaling 36.2 million sq. ft., with an average size of 113,243 sq. ft. Dallas tenants signed 490 leases totaling 52.5 million sq. ft., with an average size of 107,265 sq. ft. Tenants in Indianapolis signed 41 leases totaling 52.5 million sq. ft., with an average size of 146,341 sq. ft., according to Avison Young.

This CoStar Realty Information Inc. 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.

“[Midsize users] do dominate the market,” says Brooks Staley, senior consultant with The CoStar Group, a research firm dealing with market metrics dealing with U.S. and Philadelphia commercial real estate listings. “There are a lot more users who are looking for space in that kind of sweet spot than those who are looking for big boxes.”

For example, in Indiana, demand for midsize industrial space is booming, but the supply is scarce. As of mid-June 2019, there were 12 speculative industrial buildings of 250,000 sq. ft. or less being developed in Central Indiana, totaling 2.1 million sq. ft. In the state’s southern submarket, there is, however, only one midsize space available, a 70,400-sq.-ft. property in Greenwood.

Florida’s industrial markets also are showing growth among midsize users. Orlando tenants signed 68 industrial leases totaling 7.3 million sq. ft., with an average deal size of 108,095 sq. ft. Tampa Bay tenants signed 53 industrial leases totaling 5.0 million sq. ft., with an average deal size of 94,333 sq. ft. Jacksonville tenants signed 61 leases totaling 7.0 million sq. ft., with an average deal size of 114,590 sq. ft.

The growth in e-commerce and the need for last-mile delivery throughout national and Philadelphia commercial real estate properties has only strengthened the demand for midsize industrial boxes. At the end of June 2019, pricing for these types of assets averaged $68.71 per sq. ft., with around $4.7 billion in sales volume, according to CoStar data. At the end of June 2018, prices averaged $59.08 per sq. ft., with $7.7 billion in sales volume. In June 2017, pricing in the sector was at $59.56 per sq. ft., with $7.3 billion in sales volume.

“You can see that there’s been a pretty steady acceleration of pricing at 300,000 square feet and below. The same goes for larger sizes as well,” says Staley. “Industrial is the hot property type to be in right now, and that makes sense because of the tailwinds we’re seeing from e-commerce, from how all sorts of retailers are looking at their supply chain. We’re going to see pricing boosts for both midsize and large boxes.”

But despite strong demand and rising prices for midsize industrial facilities, investment sales activity in in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – is decelerating. In June 2019, there were 639 deals closed in the sector. In June 2017 and 2018, there were 1,121 and 1,197 deals, respectively. Staley says this drop stems from investors choosing to invest in ground-up construction to dodge rising prices on existing properties.

“We’ve done analysis that shows a lot more players in the industrial space actually are turning to development rather than acquisition in order to make returns,” says Staley. “[Pricing has] gotten so frothy in the marketplace that players are backing off or they’re saying, ‘We can develop. We can scrape a site and develop something.’ That would be the best shot at getting good returns.”

The same story is happening for large industrial facilities, or boxes with more than 300,000 sq. ft. In June 2017, pricing among such national and Philadelphia commercial real estate listings reached $48.18 per sq. ft., with around $3.2 billion in sales volume. By June 2019, prices climbed to an average of $76.20 per sq. ft., but with around $3.9 billion in sales volume.

“We would expect at the moment, because of pricing trends among all size ranges, that price appreciation will maybe stagnate a little bit as deals begin to dry up,” says Staley. “People are little bit leery of overpaying this late cycle.” – By Sebastian Obando; CoStar Realty Information Inc.

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.

Share

Philadelphia’s Unemployment Rate Falls to 30-Year Low

After another month of job growth, the Philadelphia market has reached an important milestone: The metro area’s unemployment rate fell to 3.1 percent in May, the lowest level of unemployment recorded in Philadelphia since the Bureau of Labor Statistics (BLS) began publishing the figure in 1990.

This CoStar Realty Information Inc. report involving Philadelphia commercial properties and employment is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

For the Philadelphia commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – current record-low unemployment represents both a blessing and a potential risk.

On the positive side, it reflects how the local economy and Philadelphia commercial real estate listings are clearly stronger than they were 10, 20, or even 30 years ago. The healthcare sector has powered this transformation, growing its employee count by 25 percent – or more than 100,000 local jobs – since the end of the last recession 10 years ago.

With available workers in short supply, competition for new job recruits across all industries operating out of Philadelphia commercial real estate properties is forcing companies to raise wages across industries and not just for the highest paid positions.

At least five local health systems have announced plans to raise their minimum wage since late 2018. The BLS also reported that average hourly wages across businesses contributing to the local commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – sectors grew by 3.6 percent last year. Pay increases such as these have supported rent growth over 3 percent among Philadelphia’s workforce housing rentals.

But the lower Philadelphia’s unemployment rate goes, the harder it will become for local companies to find the employees they need, making it more difficult for businesses to grow and less likely that they will expand their real estate footprints.

At 1.2 percent year-over-year, Philadelphia’s pace of job growth has already slowed to about two-thirds of the pace recorded in 2014 to 2015, when available workers were easier for companies to find. In line with that trend, the pace at which local office tenants looking for Philadelphia commercial real estate listings are expanding their square footage has also slowed in the past three to four years.

Philadelphia’s tight labor market will likely persist into next year. Under this scenario, wage gains should continue to support accelerated rent growth in workforce housing rentals while slowing job gains keep a lid on office tenant expansions.

Office tenants in Philadelphia commercial real estate markets may not be growing aggressively, but they will likely continue to put increased emphasis on leasing high-end space to help recruit and retain employees, as it is becoming increasingly costly to lose them. – By Adrian Ponsen; CoStar Realty Information Inc.

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.

Share

Property Investors Increasingly Prefer the Flavor of Fast-Casual Restaurants

Sit-down, full-service restaurant chains operating in national and Philadelphia commercial real estate markets continue to face pressure from fast-casual competitors, and not just in the competition to woo diners.

Investors also appear to be losing some of their appetite for real estate in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – that has been leased to such “casual dining” chains such as Hooters, Outback Steakhouse, Red Lobster, Chili’s and Texas Roadhouse.

This CoStar Realty Information Inc. 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.

Cap rates, the annual yield for U.S. and Philadelphia commercial real estate listings, jumped up in the first quarter for so-called “net lease” properties tied to casual dining restaurants.

According to a report from Wilmette, Illinois-based real estate firm The Boulder Group, “cap rates in the net lease casual dining sector increased to 6.32%” in the first quarter, up from 6.05% a year ago. The firm noted that the rate of increase among national and Philadelphia commercial real estate properties was wider than other types of net lease investment properties.

Net lease properties involve leases in which the landlord has little to no responsibility for managing the real estate beyond collecting a rent check. An increasing cap rate in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – can reflect the greater risk that a tenant might struggle or fail to renew at the end of its lease. The length of the term left on a lease is one of several factors used in determining the cap rate. The more years left on a lease tends to attract better prices for the property and lowers cap rates.

Many investors looking for lower risk among national and Philadelphia commercial real estate listings have targeted fast-casual properties, or restaurants that typically do not offer table service. Earlier this month, the dirt underneath a Portillo’s in Normal, Illinois, sold for $4.4 million and is expected to produce an annual yield of 5% for the private investor. – By Richard Lawson; CoStar Realty Information Inc.

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.

Share

May Retail Sales Data Shows Strength in Consumer Spending

May retail sales numbers reported throughout businesses operating in national and Philadelphia commercial real estate markets did not disappoint, suggesting a rebound in consumer spending from a slow start to the year. And that’s good news for commercial real estate.

First-quarter consumption related to the U.S. commercial real estate market – including such action taking place involving Philly office space, Philly retail space and Philly industrial space – was relatively weak and volatile, as consumer spending declined on durable goods, such as cars and furniture.

This CoStar Realty Information Inc. 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 consumption slowdown raised concerns about the health of the U.S. economy, which relies heavily on Americans’ willingness to consume. Despite the choppy retail sales data at the start of the year involving businesses in U.S. and Philadelphia commercial real estate listings, CoStar economists expected consumer spending to rebound. Those expectations were based on the continued strength of consumer fundamentals, including healthy income growth, subdued inflation, rising wealth and access to credit.

May retail sales data from the Census Bureau was in line with those expectations. Retail sales among businesses operating in national and Philadelphia commercial real estate properties grew 0.5 percent compared from the previous month, and the April data was revised higher. Compared to a year ago, retail sales were up a solid 3 percent.

Sales at warehouse clubs and superstores throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – were especially strong in May, as were food sales at supermarkets and other grocery stores. Food services continued to do well, with especially robust growth at limited-service restaurants. By contrast, sales at department stores declined over the past year, dragged down by double-digit declines in conventional chain stores; sales at discount stores, however, have held up better.

While the American consumers who interact with businesses dealing with national and Philadelphia commercial real estate listings appear happy to spend, all this consumption does not translate into demand for physical retail space. The May retail sales data was in line with the ongoing shift in buying preferences. E-commerce continued to grow at roughly four times the pace of total sales – up 12 percent in May on a year-over-year basis. — By Galina Alexeenko; CoStar Realty Information Inc.

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.

Share

Sale and Leaseback of Commercial Real Estate

Sale and Leaseback of Commercial Real EstateLet’s explore the sale and leaseback of commercial real estate. Confer with the professionals at WCRE or ask us for a seasoned real estate or tax attorney but here’s one technique Abo has seen work well with business clients. Although real estate is generally thought of as an illiquid asset, some liquidity can be achieved by taking out a loan backed by the property. Alternatively, a sale and leaseback may be used effectively if a company’s balance sheet is burdened with excessive debt or just having difficulty in obtaining new capital. Typically, the transaction involves the company owned property being sold to a third party and then leased back to the company under a long-term lease.

Download Printable Article (PDF) >>>

Sale and leaseback transactions may be on the rise but clients need to be aware that the IRS often focuses on transactions between closely-held corporations and their controlling shareholder to make sure that these transactions benefit the company as well as the shareholder. In one common type of sale and leaseback transaction, the company sells the land with a building on it to the shareholder and, in turn, the shareholder leases it back to the company. Some of the financial and tax benefits we’ve seen have included:

The rental deductions the company could take might be significantly larger than the former depreciation deductions if the property had been in service for many years.

After the sale and the leaseback transaction, the shareholder’s basis in the property will be its fair market value which is usually greater than the price paid for the property by the corporation. Thus, the shareholder’s depreciation deduction would be much greater than what was previously available to the corporation (also still need to consider the tax consequences of the sale to the corporation).

The sale and leaseback may enable the shareholder to generate passive rental income that could be offset
against passive losses of the shareholder.

The IRS would obviously be concerned that these transactions have economic substance and that they are
based on reasonable market conditions, and not just designed to generate larger tax deductions. Thus, for
a sale to be valid, the controlling shareholder should have taken an equity interest in the property and also
assumed the risk of loss. For the leaseback to be valid, four tests come to mind that really should be met:

1. The useful life of the property should exceed the term of the lease.

2. Repurchase of the property by the corporation at the end of the lease term should be at fair market value and not at a discount.

3. If the leaseback allows for renewal, the rate should be at a fair rental value (speak to WCRE, not necessarily the accountant).

4. The shareholder should have a reasonable expectation that he or she will generate a profit from the sale and leaseback transaction based on the value of the property when it is eventually sold and the rental obtained during the lease term.

I suspect one of the biggest risks for the seller-lessee is the loss of a valuable asset that could have substantially appreciated over its useful life. Also, the rental market could drop, leaving the seller locked into a rental rate in excess of fair value. On the other side of the table, the seller could move or default, leaving the buyer with unattractive real estate in a soft market.

Even if there are no other problems, the benefits of the deal could be substantially reduced if the IRS deems that it is merely a “financial lease.” In that case, the IRS will treat the seller-lessee as the true owner of the real estate, with all the appropriate tax assessed, and the buyer-lessor will be treated as a lender-mortgagee.

Since sale and leaseback transactions can be quite complicated and also have to pass IRS muster, as I stated earlier, whether you are a buyer, seller or investor, you are well advised to consult with WCRE and seasoned real estate/tax counsel about your financial and tax consequences and the manner of structuring and implementing them to withstand possible IRS challenge.

FOR MORE INFORMATION:
Martin H. Abo, CPA/ABV/CVA/CFF is a principle of Abo and Company, LLC and its affiliate, Abo Cipolla Financial Forensics, LLC, Certified Public Accountants – Litigation and Forensic Accountants. With offices in Mount Laurel, NJ and Morrisville, PA, tips like the above can also be accessed by going to the firm’s website at www.aboandcompany.com.

 

Martin H. Abo, CPA/ABV/CVA/CFF
307 Fellowship Road, Suite 202
Mt. Laurel, NJ 08054
(856) 222-4723
marty@aboandcompany.com
For more information, contact:

Share

Is It Time to Refresh or Expand Your Space?

Refresh or Expand Your SpaceYour business is growing and you like your current location, so you’ve decided to renew your lease and either refresh or expand your space. GREAT!

Ready to expand your space? Did you call the movers yet?

Download Printable PDF>>>

That’s right. Movers. And contractors. And space planners. And IT specialists. And a host of other vendors that you haven’t even thought of yet. When you’re staying in the same location, the reality is that the To Do list can seem almost as overwhelming as if you were pulling up stakes and starting all over in a new venue. Because you ARE starting in a new venue. The address may be the same, but how you utilize the space to maximize productivity is a rare opportunity you need to take full advantage of. You have two options: refresh or expand. To capitalize on either one of these options, you need a detailed staging and logistical plan to minimize downtime and keep your employees as close to 100% productivity while you update or expand.

So where do you start? You hire a professional logistics management team to shoulder the responsibility of planning and executing the project. No matter how big or small your space, here’s what an experienced logistics management team brings to the table for each option…

OPTION #1: Refresh Your Space

Also called an office restacking, you need to look at this type of project as an employee retention tool. No doubt your business has markedly changed over the last 10 years, so your office environment needs to evolve to best support that shift in culture. Restacking changes and improves the look and feel of the work environment, and by redefining the space to include collaboration rooms/workspaces, you can change the corporate culture in the  link of an eye to catch up with the times. A refresh re-energizes your employees, and shows you value their presence. New paint, carpeting, furniture, lighting, bathrooms, and more will make employees happier when they are at work, and warmly welcome new clients into your space when they visit. It’s a win-win.

OPTION #2: Expand Your Space

Here the biggest opportunity is to redefine the space. Are you adding new employees? Consolidating employees
from another location? Expanding the space for client interaction? A space planner will help you understand how much new space you really need (square footage/head count), and how much you should allot to common areas, workstation areas, private office areas, client showrooms, product production space, etc. An experienced logistics management team knows exactly what questions to ask to make sure you have the most comprehensive staging and logistics plan possible, so no detail is overlooked and no opportunity is missed:

(1) Where are you going to temporarily move active files and personal contents during your office refresh or expansion?

(2) Does the furniture have to be removed (new carpet installation) or just lifted in place (carpet tile installation)?

(3) Should you upgrade the furniture, or re-use what you have?

(4) How can you maintain productivity when computers or data centers need to be disconnected, moved, and reconnected?

The bottom line is refreshing and/or expanding your office requires careful thought and planning to keep your business thriving. The right logistics management team will help you hit the ground running as you launch your business into its next growth stage!

About Argosy Management Group, LLC

Argosy Management Group (AMG) is a leader in office relocation and logistics project/move management. AMG services companies throughout the U.S. and worldwide. AMG delivers a wide range of comprehensive services:  move management and transition planning, space planning and furniture needs, office and industrial relocation and liquidation, storage solutions and asset management, furniture disassembly and installation, IT/ data center relocation, and rigging.

For more information, contact: 

 

Share

Tips for Investors Entering the Cannabis Real Estate Market

With 10 states plus the District of Columbia legalizing cannabis for recreational use and medical marijuana legal in another 23 states across the national and Philadelphia commercial real estate markets, cannabis sales are projected to grow from $10.8 billion today to about $100 billion over the next five years, according to the National Institute for Cannabis Investors.

As a result, investors in cannabis-related industrial real estate can expect exceptional returns on investment (ROI) throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space. In a 2018 survey by Denver-based PropTech developer Apto, 76 percent of commercial real estate brokers handling cannabis deals in all states where the drug is legal in some form reported cannabis deals pricing above market.

This National Real Estate Investor 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.

Cannabis property deals may be more lucrative than other industrial transactions, but they are also more complicated, according to survey respondents. When asked to compare the difficulty of cannabis transactions involving U.S. and Philadelphia commercial real estate listings with traditional industrial deals, they answered with an average of eight on a scale of one to 10, with 10 being “most difficult.” Even so, 85 percent of brokers surveyed said they are willing to do more cannabis deals.

Investors willing to take a property through local licensing and entitlement processes for national and Philadelphia commercial real estate properties prior to leasing space or putting it on the block will realize the greatest boon in value, however, because there are limited number in any location, according to Rick Frimmer, managing director and head of the national cannabis advisory group at EisnerAmper, an accounting and advisory firm based in New York City.

Cannabis real estate values are likely to continue rising due to the supply-demand imbalance, says Clint Callan, a San Francisco Bay Area-based partner at the national law firm of Duane Morris LLP. “With cannabis, there are only so many spaces and opportunities available, which runs up the price,” he adds.

When asked how well the supply of industrial cannabis real estate in their market aligns with demand for space, respondents in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – answered with an average of four on a scale of one to 10, with one being “not in balance” and 10 being “in perfect balance.”

Commenting on survey results, Apto founder Tanner McGraw says that legalization of marijuana across more states is beginning to impact real estate markets, as local jurisdictions grapple with zoning and other issues that affect availability of sites. “Survey results suggest there is somewhat of a shortage of sites available, likely because allowable zoning has not caught up with demand,” he notes.

Local jurisdictions dealing with national and Philadelphia commercial real estate listings may limit zoning for cannabis uses to specific industrial areas and impose strict security, fire, and safety requirements for cannabis operations because cannabis products are at high risk for theft and manufacturing processes use chemicals to extract compounds, such as THC and CBD oil, according to Frimmer.

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.

Share

Mall Outlook Darkens as Online Sales Surge

A couple of the more than 2,200 numbers buried deep in this month’s Census Bureau report on retail sales in the national and Philadelphia commercial real estate markets may add to mounting concerns for U.S. shopping mall investors about the growing threat from e-commerce.

The report shows that for the first time, non-store retail sales (including e-commerce sales) in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – totaled more than those for the department stores that anchor most traditional Class B and Class C malls.

This Co-Star 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.

Non-store retail sales in February, the most recent month reported, totaled $59.77 billion involving U.S. and Philadelphia commercial real estate listings. E-commerce sales account for about 88 percent of that volume.

The total for general merchandise national and Philadelphia commercial real estate properties housing retailers, the category that includes department stores, totaled $59.74 billion. Ten years ago, general merchandise store sales outpaced non-store sales by 47 percent.

The figures contribute more gust to the intensifying headwinds for shopping mall investors in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – whether they are property owners, lenders or real estate investment trust and commercial mortgage investors.

“Class B and C malls in particular are driving weaker loan performance as they generally have less favorable locations, weaker anchor profiles and are particularly vulnerable to competition, both from other malls and internet sales,” Fitch analysts said in a recent report. “Losses of foot traffic and sales have led to additional store closures with increasing mall vacancies affecting property-level cash flow, thus putting pressure on loan performance.”

Overall, there have been more than 5,800 store closings reported this year among national and Philadelphia commercial real estate listings. That elevated level of closings could lead to a widening gap in performance between property owners with more Class A malls than those with more Class B and Class C malls, Morgan Stanley & Co. analysts reported this week in their outlook for upcoming REIT first quarter earnings results.

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.

Share

Baby Boomers, Retailers Could Change Commercial Lending

Some of the industry’s top commercial real estate mortgage bankers expect business to stay just as strong in the national and Philadelphia commercial real estate markets in 2019 as it was in the past two years even as the economy shows signs of slowing.

The Mortgage Bankers Association predicts loan origination in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – will only reach $530 billion in 2019, essentially on par with 2017 and 2018.

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 amount of financing in the fourth quarter of 2018 beat the year-earlier period by 14 percent, the group said. It suggests that commercial and apartment lenders apparently have not been scared off by government shutdowns, stock market volatility, looming global trade wars and other headline events. And this follows almost a decade of recovery involving U.S. and Philadelphia commercial real estate listings tipped from one of the nation’s worst real estate collapses, as analysts and economists wonder how long this recuperation can last.

Indications for the immediate future of both national and Philadelphia commercial real estate properties are for steady lending activity, bankers agree.

For 2018, “the market as a whole ended the year roughly flat compared to 2017, continuing a plateau we’ve seen in mortgage borrowing and lending since 2015,” said Jamie Woodwell, vice president of commercial research for the mortgage bankers’ group.

These were among the key points from the Washington, D.C.-based trade group, which represents lenders, investors, developers, and others involved in commercial real estate financing.

Financiers avoid retail: Blame the rise of ecommerce and retail chain store closings, but MBA figures show loans in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – posting relatively anemic growth in the past year. They were up 1 percent in the fourth quarter from a year earlier in 2017, compared with 32 percent growth for apartment loans and 28 percent growth for industrial loans.

Aging boomers haven’t yet spurred a healthcare lending boom: US. growth for healthcare and senior-housing-related lending was up 61 percent year-over-year for the fourth quarter, but analysts said aging baby boomers still comprise only a fraction of development and lending activity.

As banks get queasy, others stand by: Even if banks dealing with national and Philadelphia commercial real estate listings are getting skittish about how long the good times can last, a multitude of other financiers stand ready to step in, and the fastest growing contingent includes debt funds. Numerous prominent firms in financial management and private equity have established funds geared primarily to lending to third-party commercial investors and developers, and they are finding rewards even in a tight interest rate environment.

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.

Share

Office Space Decommissioning – The Overlooked Embedded Cost of Moving

Office Space DecommissioningThis article talks about how important Office Space Decommissioning is when moving to a new space.

Here’s a secret that no one ever tells you about moving – the bulk of your relocation costs are NOT transitioning your belongings to the new space. The fact is, office space decommissioning is a significant factor in your budget, sometimes adding up to 3-5 times that of the actual relocation itself.

Office Space Decommissioning Is More Than Just Moving Out

All too often, clients miss the not so obvious “other move” when it comes to their office relocation. Clients split their time and attention operating their core business while also focusing on the “new” space and the endless questions, details, and decisions that are required to get that space ready to unveil. The “old” space, as well as the furniture in it, is often overlooked. If you think you can just leave the furniture and the cleaning for the landlord, you are mistaken!

The problem is that neglecting to properly decommission the old office space leaves you exposed to a wealth of unnecessary costs.
The majority of commercial leases contain very specific requirements as to how the old space needs to be turned back over to the landlord. If not, it’s your deposit that hangs in the balance, just waiting to satisfy those obligations you signed off on in your original lease long ago. The removal of unwanted furniture and equipment can be an expensive undertaking, especially if not handled properly, and your landlord is well within his rights to apply your deposit to those costs.

Most commercial leases require that the occupied space be left “broom swept.” This means that all contents, freestanding furniture, workstations, office/IT equipment, shelving, racking, etc., must be completely removed, and all floors left cleared of debris and vacuumed. That also means following through on tiny details like removing any data/IT cabling that you’ve added while in residence. Overall, you need to return the space back to its original condition prior to your occupancy. Your lease should spell out the specific requirements and standards you will be held to.

So how do you protect your deposit? You need a detailed plan and a schedule! The easiest way to satisfy your lease obligations and get your deposit back is to consult a professional who is well-versed in handling the office decommissioning process. When you partner with the right commercial removal company or transition management company, they can help you properly navigate and negotiate your exit. Most standard moving companies aren’t experienced enough to guide you through this process, and handling it yourself elevates your “soft cost exposure.” Most people over value what they have, don’t fully understand what they’re required to do, and then end up running out of time. The reality is that there is a very tight timeline when you move and the space needs to be vacated. Why wait on a potential buyer to purchase unwanted assets, when it elevates your risk of exceeding that timeline and paying a costly penalty to your former landlord? You need to understand the cost of the distraction to your core business while focusing on something that is only likely to yield a marginal return.

When you value the assets you will not be moving to your new space, factor in the time it takes to liquidate them. It’s often best to hire an expert to advocate for your bottom line, and help you sort it all out in an efficient and expeditious manner. There are three outcomes in an office decommissioning: net positive, net zero, and net negative. To achieve “net positive,” the liquidation of furniture and/or equipment yields a positive cash return and is clearly the optimal outcome to strive for. To attain “net zero,” you can choose to donate contents to a local charity for re-purpose, or have a third-party company remove them at no cost. While you don’t make any money on the transaction, you save the potential cost of having to remove the contents yourself. For those items that simply don’t have much or any value, and need to either be recycled or disposed, you’ll find yourself in a “net negative”
position. Although there’s a nominal return for recycled items, the cost for disposing valueless items leaves you with a fee that an office decommissioning expert can help minimize. You don’t want to incur unnecessary storage costs for assets that won’t garner you a net positive return on that investment.

Quite frankly, there is an enormous difference between a transition management expert and a standard moving company. Before you sign with a relocation company, discuss with them the decommissioning services that they provide. Pin down the price for the services that you need, and compare that cost with hiring various removal providers. Most commercial movers overlook office space decommissioning, and this portion of the job can cost many times your relocation fee depending on how much of your existing furniture you will be taking to your new space. Once you have the transition team in place, establish a facility decommissioning plan and lock in hard dates and deadlines.

Make sure that the company is reliable, and that the personnel have the necessary skills to execute the plan. Often times, it is not worth the risk of going with the vendor with the lowest bid, as the cost for additional “buy back days” at your old space can quickly eclipse those cheap vendor savings.

So what is the takeaway from all of this? Simply that companies that focus all their time and effort on “hard costs” of relocation will be blindsided by the much more important “soft costs” of the move. A transition management expert minimizes your company’s exposure to lost revenue by reducing the distraction to your core business and curtailing downtime. Consult with an expert, and the savings on office space decommissioning will more than likely pay for the actual relocation.

About Argosy Management Group, LLC
Argosy Management Group (AMG) is a leader in office relocation and logistics project/move management. AMG services companies throughout the U.S. and worldwide. AMG delivers a wide range of comprehensive services: move management and transition planning, space planning and furniture needs, office and industrial relocation and liquidation, storage solutions and asset management, furniture disassembly and installation, and I.T./data center relocation.

AMG

For more information contact:
Shawn O’Neil, Partner
609-744-4112

Paul Sipera
609-760-8312

Argosy Management Group, LLC
7905 Browning Rd., Suite 112
Pennsauken, NJ 08109
www.argosymg.com

 

Share

Who Owns the Fixtures at Lease Expiration

Who Owns the Fixtures at Lease ExpirationLet’s examine who owns the fixtures at lease expiration. In order to facilitate a smooth transition between commercial tenants, it is important for landlords to understand their rights regarding items attached to their property. Generally, a lease will govern these rights. However, if the lease is silent on the issue, articles annexed to the property deemed “fixtures” must stay with the property, while articles deemed “trade fixtures” may be removed by a vacating tenant.

Download Printable Article (PDF)

In New Jersey, a fixture is an object that “become[s] so related to particular real estate that an interest… arises under real estate law.” N.J.S.A. 12A:2A-309(1)(a). In contrast, an article may be considered to be a trade fixture if: (1) the article is annexed to the property for the purpose of aiding in the conduct of a trade or business exercised on the premises; and (2) the article is capable of removal from the premises without material injury thereto. Handler v. Horns, 2 N.J. 18, 24-25 (1949). As such, an important distinction between fixtures and trade fixtures is whether removal of the item will cause material injury to the premises. See e.g.
GMC v. City of Linden, 150 N.J. 522, 534 (1997). In applying this test, courts infer that if removal of an article would cause material injury to the premises, the parties must have intended for the article to remain beyond the lease term. Id.

A typical conflict involving this nuanced distinction may involve a vacating tenant removing an item from the leased premises under the assumption that it was (1) attached to the premises for the purpose of conducting a trade or business; and (2) capable of removal without material injury to the premises. A landlord may dispute one or more of these assumptions, arguing that the article was not used in the conduct of business (that it was in fact attached to improve the structure) or is not capable of removal without material injury to the premises.Over the years, vacating tenants have attempted to remove countless items from leased premises, including air conditioning systems, irrigation systems, bolted down light fixtures and even circuit breaker panels, by arguing these items were trade fixtures. See e.g. In re Jackson Tanker Corp., 69 B.R. 850 (Bankr. S.D.N.Y. 1987).

However, it isn’t difficult to imagine a hypothetical where the traditional landlord and tenant arguments are reversed – that is, where the tenant argues that the article must remain with the property and the landlord argues that the tenant is responsible for its removal. This unusual fact pattern may especially arise where the tenant’s business is specialized in nature, and where equipment is not easily removed from the premises.

For example, Landlord rents out space to Tenant, who plans on operating a restaurant. The lease does not specifically address what does and does not constitute a trade fixture. Tenant plans on installing a walk-in freezer and other specialized, complex systems. After several years of operating, Tenant declines to renew the
lease, closes, and vacates the premises. Tenant removes the furniture, appliances not fixed to the premises and other items it deems to be trade fixtures and leaves the walk-in freezer infrastructure. Tenant refuses to remove the walk-in freezer, arguing its removal will cause substantial damage to the premises. Unable to re-let the premises to a restaurant tenant, Landlord is left with a walk-in freezer occupying a substantial portion of the premises. It is important that during the lease negotiation, landlords think carefully about the business their prospective tenant is in, the kinds of equipment the tenant will install and what will happen to that equipment upon termination of the lease. This same thought process applies when landlords receive requests for alterations. In the above hypothetical, Landlord could have avoided being left with a walk-in freezer and a less than desirable space if it addressed the issue during negotiation of the lease. A discussion with prospective tenants concerning the specific kinds equipment the tenant will install is always a good idea, followed by specifications and drawings for approval. Landlords are wise to reduce these conversations to writing, and specifically address each party’s expectations regarding the disposition of specific equipment when the lease inevitably comes to an end. As always, an ounce of prevention is worth a pound of cure.

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.

William F. Hanna, Esquire
Hyland Levin Shapiro LLP
hanna@hylandlevin.com
Hyland Levin Shapiro LLP
6000 Sagemore Drive, Suite 6301
Marlton, NJ 08053-3900
(p) 856.355.2900

Share

Analysts See Strong Warehouse Demand Despite Varied Concerns

Leasing and sales of distribution centers and other industrial properties reached records across the country last year, signaling strengthening demand in the national and Philadelphia commercial real estate markets as shoppers accelerate their shift to buying online.

Industrial activity was robust for a ninth-straight year in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – as overall economic growth and goods consumption drove unprecedented warehouse sales and leasing across the United States in 2018. The data, however, shows some signs pointing to slower growth this year.

This Co-Star 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.

Investors, meanwhile, continue to pile into industrial space given its strong and consistent occupancy, rent growth, and return on investment. Total sales volume involving U.S. and Philadelphia commercial real estate listings tipped the $100 billion mark in 2018, the highest on record, and industrial sale prices rose about 10 percent over the prior year, an impressive feat this late in the economic cycle and easily the largest increase of all the major property types.

CoStar’s forecast expects new logistics buildings will be completed at a record pace this year as developers try to capture the demand. The research firm is tracking about 275 million square feet of industrial space under construction, equal to about 1.7 percent of the nation’s total supply. That amount of development among national and Philadelphia commercial real estate properties translates into what’s likely to be a high-water mark for new warehouse and distribution building this year to support the delivery of goods to households shopping online.

That’s a change from last year when the amount of new industrial space in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – dipped 11 percent in 2018 from the prior year. Construction finished the year on the upswing, but even that still may be insufficient to meet demand as more retailers move onto online platforms that require more warehouse space.

White demand remains robust, CoStar predicts the vacancy rate among national and Philadelphia commercial real estate listings will gradually rise and rent growth will slow as developers finish new buildings, more space hits the market, and the beneficial effects of tax cuts and fiscal stimulus begin to diminish and cool the economy.

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.

Share

Share

Share