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WCRE Exclusively Represents Samaritan Healthcare & Hospice Secure Their New Mount Laurel Headquarters Location

Redevelopment Continues in Region

Samaritan Healthcare & Hospice

WCRE is proud to have played a key role in representing Samaritan Healthcare & Hospice procure their new Headquarter location in Mount Laurel, New Jersey. Samaritan Healthcare & Hospice completed a long-term lease at the 27,600 square foot free standing office building located at 3906 Church Road in Mount Laurel, NJ. The property is positioned directly across from Lifetime Fitness and directly next to several other well-known community service occupiers, including Bancroft. 3906 Church Road provides immediate access to I-295 (Exit 36) and The New Jersey Turnpike providing for convenient access for their clients and employees.

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Samaritan plans to relocate their entire Marlton office where they currently occupy approximately 21,000 SF of office space for the last 20 plus years.

The new Mount Laurel facility will be a complete interior and exterior renovation bringing a fresh, new look to the building.

Samaritan will relocate its corporate office to the new location in the beginning of 2020, the year of Samaritan’s 40th anniversary. “It’s an exciting time for Samaritan. A new year, new expanded services, and a new home,” says Mary Ann Boccolini, President and CEO of Samaritan Healthcare & Hospice. “The expanded space in the new building will enable us to support our growing family of services and employee base that touches over 10,000 lives every year. This new space will support our growth in years to come as we provide more and more essential healthcare services across the healthcare continuum to more and more people in the south Jersey and surrounding communities.”

WCRE’s Managing Principal, Jason Wolf noted the complexity involved in matching the parties according to their needs. “This assignment showcases our ability to work with multiple parties to structure a long-term investment and redevelopment transaction that will provide excellent outcomes for everyone involved,” Wolf said.

This transaction adds to WCRE’s growing number of educational, non-profit and institutional transactions in the Philadelphia and Southern New Jersey region. This highly specialized sector is an area of strength and growth for WCRE.

The local ownership of 3906 Church Road was represented by Evan Zweben at Colliers International and Veritas Real Estate.

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

 

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East and West Trade Deals Bring Sighs of Relief, for Now

Recession and trade talks recently have been in the same sentence, with political entrenchment a risk to sap growth through the rest of this year and next. In that case, new preliminary trade agreements between both the U.S. and China and U.K. and European Union offer seemingly good news for national and Philadelphia commercial real estate markets. However, while these two pre-deals are a relief on their face, neither appears completely satisfying, nor complete.

The U.S. agreement with China, announced late on Oct. 11 with details slow to leak, appears far from a done deal in relation to the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space. The faint sketch of the terms appears to focus on a phased agreement, where China would purchase more agricultural products from the U.S. and agree to new currency management standards.

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.

Meanwhile, across the pond, U.K. Prime Minister Boris Johnson returned home to sell his Brexit deal to Parliament last weekend, and the initial response was hardly positive. Parliament is likely to remain in a frantic state as the deal appears to choose a much harsher Brexit than that agreed to by Johnson’s predecessor, Theresa May, and some favor further delay until a consensus can be reached.

With industrial production growth turning negative compared to a year prior, based on August data released last week, any further slowdown in trade is everyone’s problem; U.S. and Philadelphia commercial real estate listings already are peripherally dealing with the consequences.

China’s industrial production, while staying positive, has slowed dramatically as well with GDP growth falling to a 30-year low, according to figures announced this past week. The industrial real estate sector in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – is cooling in the face of these headwinds.

Overall, third quarter growth for national and Philadelphia commercial real estate properties should continue, but it faces plenty of crosscurrents. One major plus has been personal consumption, which remains elevated because of the tight labor market and despite a modestly weaker retail sales report this past week.

The second biggest boost is likely to be from government, though U.S. subsidies may not be enough to counteract the more significant drag from trade. Non-residential investment is a concern, with businesses confidence dropping severely recently amid uncertainty. All those factors portend a mixed message for office and retail, ultimately with their fate determined by whatever long-term clarity can be glimpsed as the economy settles into a slower growth path.

One noteworthy data point: Investment in residential housing among the varied national and Philadelphia commercial real estate listings has been muted since the financial crisis, but it looks on track to have a stellar second half of 2019. Housing starts surged in September according to data released last week, and a rise in homebuilder confidence means it is likely to stay near that level.

This is good for the economy but perhaps negative for multifamily investors, as lower rates and higher incomes are spurring home ownership. Note: Robert Calhoun is a managing director and senior economist and Matt Powers is associate director of market analytics for CoStar Market Analytics in New York City.

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.

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.

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HOME SWEET HOME FOR OFFICE DESIGN – RIGHT HERE AT COFCO

With many of us spending so much time at work, Office Design is changing. Office Design is beginning to look more like our homes. This article takes a look at how Office Design is changing.

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By Dean Molz, VP of Business Development, COFCO

Office DesignWe have seen a tremendous evolution in Office Design in the last 35 years. The freestanding “tank” desk with a typewriter stand was the standard at one point. In came the “cubicle” – a modular wall that provided privacy, and data connectivity. We’ve since seen the cubicle “farm” go by the wayside in favor of open office space. Corner Offices – well moved out of the corner, and the completely “open plan” with non-assigned seats came in vogue. Am I showing my age??

All interesting concepts, with a lot of buzz words.

So, what’s next? According to Jeff Pochepan of StrongProject, Inc., there’s no place like home – unless your office can recreate it. This is an interesting trend, of which you will see signs of at COFCO’s newly renovated Resource Center. It is called close-tohome design.

On average we spend 35% of our waking hours in the office. That’s a lot of time. Therefore, our clients are listening to the wants and needs of their workforce now more than ever. They are also paying attention to what recent graduates are looking for, given the recent influx of millennials in the workforce. This makes for good business, and is a time when we must compete to attract and retain top talent for future generations.

What is it? It’s the simple idea of making your office feel more like home – a place where you are relaxed, have no trouble putting in more hours and feel comfortable doing so. A place that creates a sense of community where you can collaborate with colleagues, work anywhere and in a variety of different types of spaces, based on what you need and want at the moment.

Office DesignThe institutional breakroom has turned into a café. A place where more intimate lighting, restaurant style comfort, and large café’ tables inspire casual conversation. A place to bond, share a meal, and where some of the best inspiration can happen. Maybe the happy hour can come to us, instead of going out to the corner restaurant.

The board room has turned into a living room of sorts. Where more comfortable couches make conversation feel more like friends having a get together, than doing business. This is a space where you may be encouraged to formulate ideas, before they become formal presentations. A place where you enjoy spending time, and can put your feet up.

The office space is more bright, open and collaborative. We are creating a sense of community where you can collaborate, see, talk and mingle with my colleagues. A place where meetings can be simple conversations in the hallway and ideas can come casually and without pretense; where decisions can be made and executed in a flash. It’s about fostering a culture of involvement. The saying “two heads are better than one” has real meaning.

Some common ideas include:

  • Game rooms
  • Yoga rooms (generally in the vicinity of onsite exercise facilities)
  • Food trucks
  • Showers
  • Living room style conversation pits
  • Quiet spaces designed like a study
  • Phone rooms
  • Outdoor spaces

Office DesignHow far should you go?? Your individual culture will determine the answer to that question. Here at COFCO, we have created a sense of relaxed professionalism. This is a perfect blend of comfort, design, collaboration and culture.

Creating this comfort is so intrinsic, that people relax when they enter their workplace. Just like you would when you get home from a long day. We put in longer hours than ever at work now. Technology has allowed us to work “anywhere, and at any time”. Why not create a space where people won’t HAVE TO go to work every day, they’ll WANT TOO.

Office Design - COFCO

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Grocery, Fitness Emerge as Retail Market Bright Spots

As e-commerce accelerates its sweeping disruption of the traditional U.S. retail industry throughout national and Philadelphia commercial real estate markets, store tenants that offer experiences and use smaller spaces are driving demand for brick-and-mortar leases, according to a CoStar analysis.

Tenants offering something to do rather than buy — think yoga studios, ax-throwing clubs and trampoline parks — are emerging as viable alternatives to big-box retailers in the U.S. commercial real estate market – including Philly retail space, CoStar economists say in a new video (available by clicking here). Discount apparel stores, fitness concepts and grocers, the latter two being something consumers don’t always seek online, are the fastest-growing users.

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

Tenants, according to two CoStar market analysts, are helping to fill large blocks of space vacated by more traditional retailers.

“Landlords with empty big-box space are finding other creative approaches to replace traditional tenants,” said Abby Corbett, managing director and senior economist in CoStar’s Chicago office.

The rise of e-commerce throughout U.S. and Philadelphia commercial real estate listings has contributed to an overall cut in spending at physical retail stores by 7 percent and counting, Corbett said.

In addition to experiential users, retail landlords involved in national and Philadelphia commercial real estate properties also are finding success among smaller tenants. More than 50 percent of the leases signed in 2019 were for spaces smaller than 5,000 square feet, and 80 percent of all leasing activity in 2019 has taken place in spaces smaller than 25,000 square feet.

“While leasing activity has decelerated over the past year, tenants clearly remain focused on incorporating physical space in their retail strategies,” said Galina Alexeenko, managing director and senior economist in CoStar’s Atlanta office.

Despite the demand for these nontraditional tenants, overall retail demand is weakening. Over the past year, net absorption — the change in the supply of commercial space — totaled 30 million square feet, a record low. Just 10 million square feet of new retail space broke ground in the third quarter, adding up to a total of 67 million square feet of space in the national pipeline. – By Cara Smith-Tenta, CoStar Realty Information Inc.

For more information about Philly retail 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 retail 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 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 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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Philadelphia Job Growth Slows Heading Into 2020

With construction activity ramped up throughout the national and Philadelphia commercial real estate markets, and with Center City’s restaurants packed, most residents maintain a positive feeling about the current health of Philadelphia’s economy.

But the pace of job growth has also been disappointing in recent months, with total jobs in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – growing by 1.1 percent year-over-year as of August. This is well below the national pace and about half the rate of job growth achieved in Philadelphia just two years ago.

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

Store closures are hurting workers in the retail trade sector, which has lost 7,000 jobs over the past 12 months. Meanwhile, growth in the education and health services sector of U.S. and Philadelphia commercial real estate listings has slowed significantly, following the more than 2,500 layoffs tied to the closure of Hahnemann Hospital.

There are a few silver linings to the current labor market picture. The professional and business services sector among national and Philadelphia commercial real estate properties is growing at some of the fastest rates observed during the current economic expansion. This category is comprised of high paying subsectors such as information technology, legal services, accounting and scientific research and development.

Moreover, much of the current slowdown in aggregate job growth is happening for a good reason. With the local unemployment rate now below 4 percent in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space, it simply is becoming difficult for companies to find available candidates.

All and all, Philadelphia’s labor market is awash in mixed signals, as is the overall U.S. economy. With profits among most of the region’s largest publicly traded companies remaining near record highs, a recession over the next several quarters does not appear to be likely.

But local job growth is slowing while national and Philadelphia commercial real estate listings also are showing weakness in the manufacturing, agricultural and homebuilding industries. Election uncertainty could also be an increased drag on business investment in the quarters ahead.

All of this means that while recession signals are not imminent, Philadelphia’s economic outlook is less bullish heading into 2020 than it was heading into 2019. – 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.

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Winter Weather and Its Impact On Your Business

Winter weather is unpredictable and can have a large impact on your business. While maintaining business operations is always at the forefront of your mind, it is important to consider employee safety as well. You should have policies and procedures in place before bad weather hits so that your company and employees are as prepared as possible.

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Driving in Winter Weather on Company Time

winter weatherA major concern regarding winter weather is employees who drive a company car or vehicle as part of their workday. All vehicles should be given a safety check by a mechanic before the bad weather hits, and they should also be equipped with emergency materials such as a snow scraper, blanket, first aid kit and
flashlight.

In addition, employees should be instructed to dress properly for the weather, including a hat, scarf and gloves, or have extra clothing on hand in case of a breakdown or accident. In order to protect your company against liability, any employees who may drive in bad weather on company time should be trained in safe, cautious driving techniques and what to do in case of an accident. Also consider employees who drive as part of their commute—it may be wise to educate them in cautious winter driving techniques to ensure their safety while driving to and from work.

Employee Pay During Winter Weather

Pay issues arise when weather forces your business to close for any length of time or prevents employees from making it to work even if your business remains open. For non-exempt (typically hourly) employees, you are only required to pay them for the hours they actually work. Thus, if your business opens late, closes early or closes for an entire day, you are not required to pay them for any time missed.

If an exempt (typically salaried) employee works any part of the day, you must pay them for a full day. Similarly, if the business is closed for a day or more but less than a full week, you need to pay exempt employees their normal salary if they worked any part of that week. You do not need to pay employees if business is closed for a full week. This applies whether your company uses a five-day or seven-day workweek. You may, however, require that they use available paid time off or vacation time, if available. If your business remains open but an exempt employee cannot come in due to weather conditions, this is a personal reason, and you do not need to pay them. One option to ease the loss of a business day or any missed productivity is to ask exempt employees to work from home if you are already paying them for the day. You may also consider offering a telecommuting option during inclement weather even if your business remains open so employees can avoid the dangers of driving in the extreme cold or snow.

Be Prepared for Winter Weather

Employees should be informed of your company policies related to inclement weather—safety, attendance and pay-related. You should have an established communication method to inform your employees of a business closing or delay. When bad weather is coming, address all your policies again, remind employees of communication channels to address attendance and plan for the worst potential outcome to ensure your company is prepared for the weather.

Brian Blaston
Commercial Lines – Manager
Hardenbergh Insurance Group
phone: 856.489.9100 x 139
fax: 856.673.5955
www.hig.net

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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:

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