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Brandywine Expects Return-to-Office Recovery To Take At Least Three Quarters

Brandywine Realty Trust is seeing a big comeback in leasing activity as more tenants contemplate returning to the office, but executives cautioned it could take several months until operations are back to normal.

More than a year into the pandemic, office landlords across the country are seeing more tenants start to return to their office space as the coronavirus vaccine rollout expands. However, as Brandywine’s portfolio shows, the return to office is likely to unfold in fits and starts over the coming months as companies evaluate their long-term real estate needs.

“We have to keep in mind that we are in the beginning phases of a transition in the return-to-work journey. … We believe it will take three quarters or so to fully play out,” said Jerry Sweeney, CEO of Philadelphia-based Brandywine, during an earnings call Thursday with investors.

Brandywine solely and jointly owns about 25 million square feet located mostly around Philadelphia and Washington, D.C., and is one of the largest office landlords in fast-growing Austin, Texas. It recently expanded into Maryland.

The office-focused real estate investment trust said physical tour activity from prospective tenants increased 40% in the first quarter and it had more than 1,500 virtual tours. The company’s overall pipeline of leasing activity jumped by 400,000 square feet in the first quarter, hitting about 1.2 million, with 165,000 square feet in advanced negotiations.

Most of the midsize to smaller tenants are leading the charge to get back to the office, Sweeney said. Many companies also are still determining how many employees may work from home permanently, he said.

“We are clearly seeing from the pipeline additions that the return-to-work movement will accelerate and the flight to higher-quality office buildings is increasingly clear,” Sweeney said. 

Among the tenants searching for space, there is a greater emphasis on health and safety. Tenants are increasingly favoring spaces with private offices, more air circulation, larger workstations, and smaller gathering areas versus one large central space, Sweeney said. Some tenants in Philadelphia even took more square footage to allow for a more spacious layout, he said. 

“Certainly more and more companies are seeing the value of having people together physically,” Sweeney said. In conversations with larger companies, he said some employees are pushing back on the idea of being remote-only workers and want some flexibility to switch between remote work and being in an office at a dedicated workstation.

Few Workers Want Full-Time Return

While data varies, a January survey of office workers from Slack found that only 17% of office-based workers want to return to the office full time, 20% want to work remotely full time and 63% want the flexibility of a hybrid model.

Overall in the first quarter, Brandywine signed 493,251 square feet of new leases and renewals, according to its earnings results. Its profits were down about 14% year over year to $6.77 million, while revenue dipped 16% to $120 million, according to its first-quarter earnings results. However, about 99% of its office tenants are paying rent despite mostly not being back at the office. Brandywine is expecting some deferred rent later this year.

Although there is still uncertainty about the timing of a full recovery, Brandywine is seeing noticeably more touring activity, with tenants in the Philadelphia market seeing the biggest jump and Austin ranking last in its portfolio for tour activity, Sweeney said.

Brandywine is moving forward with Block A and the first phase of Block F in its massive redevelopment of the IBM Broadmoor campus into a mixed-use district near The Domain in north Austin. (Brandywine)

In downtown Austin, Brandywine has substantially completed construction of the office tower at 405 Colorado St., Sweeney said. The 25-story tower has struggled with leasing in the pandemic, particularly after law firm DLA Piper abruptly dropped its lease commitment last year. 

The 206,000-square-foot tower has remained about 18% leased since at least October, according to Brandywine’s previous earnings and first-quarter supplemental earnings results. However, Sweeney said the firm has a letter of intent for a full floor that it hopes to finalize in the next 30 days.

“Activity is definitely picking up. We’ve had four new tours in the last week alone,” Sweeney said.

Elsewhere in Austin, at Brandywine’s proposed Broadmoor campus in north Austin across from The Domain, IBM has declined to renew its lease at Building 905, and Brandywine expects to demolish the structure as part of its redevelopment of the area into a 66-acre mixed-use development.

Brandywine plans to advance Block A and the first phase of Block F at the project, encompassing $360 million of development. That includes 613 apartments, with about 341 units to start at a cost of about $119 million by the third quarter, Sweeney said. Brandywine also wants to kick off Broadmoor with 350,000 square feet of office but plans to wait until a significant portion is preleased prior to starting construction. Brandywine is looking for a joint-venture partner to help develop the first phase of Broadmoor and expects to select one within the week, Sweeney said.

Philadelphia Life Science Space

In Philadelphia, Brandywine and its joint-venture partner started construction on the $287 million Schuylkill Yards West in March at 3025 JFK Blvd.That project is expected to include 326 apartment units, 100,000 square feet of life science space and 100,000 square feet of office and street retail.

Brandywine struck a deal last month with the Pennsylvania Biotechnology Center to create B.Labs, a life science incubator at Cira Centre directly adjacent to the Schuylkill Yards neighborhood in the University City section of Philadelphia. 

The initial 50,000-square-foot lab and research space is expected to open in the fourth quarter. Sweeney said Brandywine has a pipeline of leasing activity for 35% of the space in that project.

Discovery District in Maryland includes The Hotel at the University of Maryland on U.S. Route 1. (Robert Isacson/CoStar)

Last quarter, Brandywine expanded outside of its core markets into Maryland after it was selected by Terrapin Development Co. and the University of Maryland as the exclusive developer of a 5-acre mixed-use neighborhood within the University of Maryland’s Discovery District. 

Plans for the development include 550,000 square feet of research and life science space and about 200 to 250 multifamily units in several phases. Permitting and planning is underway with a target groundbreaking in the second half of 2022. 

Discovery District is a $2 billion, 150-acre research-focused campus located in College Park, Maryland.

*Article courtesy of Costar

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

 
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WCRE FIRST QUARTER 2021 REPORT

WCRE FIRST QUARTER 2021 REPORT: SOUTHERN NEW JERSEY & PHILLY MARKETS DOWN DUE TO THE PANDEMIC, BUT NOT OUT

Good News on Public Health and the Economy Holds the Promise of Better Days Ahead for CRE

Commercial real estate brokerage WCRE reported in its analysis of the first quarter of the new year that the Southern New Jersey and Southeastern Pennsylvania markets may be through the worst of the downturn brought on a year ago by the pandemic. The widespread availability of effective COVID-19 vaccinations, coupled with large-scale financial relief from the federal government, may bring an optimistic note back to the market. For the moment, market performance on several indicators remains off.

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“CRE performance in the first quarter seems to be tracking with our lived experience. As expected, office vacancy is quite high, while demand for industrial space is surging,” said Jason Wolf, founder and managing principal of WCRE. “Market fundamentals are shaky, but there are pockets of strength and resiliency.”

There were approximately 555,988 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was more than double the previous quarter. New tenant leases comprised approximately 44,952 square feet, or only about 8% of all deals for the three counties.

Other office market highlights from the report:
• Overall vacancy in the market is now approximately 13.55 percent, virtually unchanged from the previous quarter, and an increase of two full points since Q2 last year.

• Unsurprisingly, office vacancy rates have risen throughout the region. At 11.2%, the rate is the highest it’s been since 2014.

• On the other end of pandemic-induced usage shifts, the already strong industrial vacancy rate improved to 5.4%.

• Average rents for Class A & B product remain unchanged, as they continue to show strong support in the range of $10.00-$15.00/sf NNN or $20.00-$25.00/sf gross for the deals completed during the quarter. These averages have hovered near this range for more than a year.

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

• The vacancy rate in Philadelphia’s office market rose another half a point, and now stands at 10.1 percent, after hovering near a 20-year low. Despite the pandemic fallout, the city is still seeing rent and occupancy levels ahead of other major markets.

• The industrial sector in Philadelphia remained the bright spot. The last year saw 4 million SF of net absorption and 7.8% rent growth.

• Retail remains the most responsive to market conditions and the most vulnerable sector. Infection prevention measures and other economic pressures have brought existing issues from before the pandemic into sharper relief. Average retail net absorption for 2020 was 1.8 million square feet, but for the 12 months just concluded, it is -1.4 million square feet. 

WCRE also reports on the Southern New Jersey retail market. Highlights from the retail section of the report include:

• The Consumer Confidence Index rose slightly in February, before rocketing to its highest level in a year in March.

• Retail vacancy in Camden County ticked up to 10.9 percent after posting a large increase in the middle of 2020. While average rents changed little, in the range of $11.76/sf NNN.

• Burlington County inched up to 10.4 percent, representing a small increase on top of the jump from 7.6 percent in Q3 2020. Average rents increased to the range of $14.39/sf NNN.

• Gloucester County saw the biggest jump, up to 15.9 after increasing throughout last year, with average rents up almost a full dollar per square foot in the range of $14.11/sf NNN.

The full report is available upon request.

About WCRE

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

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

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Consumers Spent $900 Billion More Online in 2020. Here’s Who Will Keep the Biggest Gains

Consumers across the globe spent $900 billion more at online retailers in 2020 compared with the prior two-year trend, according to a report released Tuesday by the Mastercard Economics Institute. 

Shoppers are heading back to restaurants and returning to stores to buy clothes and shoes in person. Yet they will continue to stock their fridges and hunt for good deals online — a sticky habit developed during the Covid pandemic, according to the report.

Nearly every retailer’s online sales jumped as shoppers were stuck at home. As consumers picked up online purchases in the parking lot and got packages or takeout dropped at their doorsteps, e-commerce made up about $1 out of every $5 spent on retail globally. That’s an increase from about $1 out of every $7 spent in 2019, the report said.

In an interview on CNBC’s “Worldwide Exchange” with Frank Holland, Mastercard’s chief economist, Bricklin Dwyer, said about 20% to 30% of the $900 billion in additional digital spending will continue into 2021 and the next few years.

However, the long-term e-commerce gains will be uneven and will depend on what a retailer sells, how they adapted their business model and how consumers prefer to shop. For some merchandise, such as clothing, shoppers may prefer to go back to brick-and-mortar stores where they can try on an outfit before buying it. In certain retail categories, such as electronics, online purchases already drove a larger share of overall sales, so there was less room to grow.

Grocery and discount stores will see the most dramatic and lasting shift to e-commerce, according to the report. Discount stores include dollar stores, wholesale clubs, and other retailers that sell to customers at near-wholesale prices. Grocers will likely retain about 70% to 80% of the digital sales gains they saw during the peak of the pandemic and discount stores will hold onto about 40% to 50% of them, the report said.

For both sectors, online sales made up only a single-digit share of overall sales before the pandemic — creating an opportunity for more noticeable growth.

Clothing stores, restaurants, and sporting/toy stores saw the biggest initial spike during the pandemic, however, but only kept 10% to 20% of that peak in sales, according to the report.

Electronics and department stores had the highest penetration of online sales before the pandemic, with e-commerce making up about 55% to 60% and 40% to 50% of their total sales, respectively, according to Mastercard. For the two sectors, their expected permanent shift will be around 20% to 30% of their peak jumps.

Dwyer said grocers face unique hurdles — even as more consumers shop online for produce, meats, and other ingredients. Only about 10% of overall grocery spending is through e-commerce, he said.

“You have to trust someone else to pick your peaches,” he said. “You have to have trust for someone else to deliver your goods and still have them good when they arrive. So that really is some of those barriers that we’re crossing.”

 *Article courtesy of CNBC

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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WCRE APPOINTED EXCLUSIVE LEASING AGENT FOR COLWICK BUSINESS CENTER

LEASING AGENT FOR COLWICK BUSINESS CENTERWolf Commercial Real Estate (WCRE) is pleased to announce that it has been appointed exclusive leasing agent by Golden Gate Management for its recently acquired Cherry Hill office portfolio located at Colwick Business Center, 53-55-57 Haddonfield Road in Cherry Hill, New Jersey. Colwick Business Center consists of three office buildings comprising of approximately 173,000 square feet.

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Among many desirable attributes, Colwick Business Center features highly efficient suite layouts, private 24/7 access to each tenant suite, and ample parking. Available suites range in size from 2,500 to 29,475 square feet.

Current anchor tenants of this premier office complex include Virtua Health, Rutgers University and the State of New Jersey.  The new owner, Golden Gate Management, is committed the southern NJ marketplace with recent acquisitions of flex and office parks and their ability to enhance value with the lease-up of the available space in these buildings.  

“We are excited to be working with WCRE’s leasing team of John Mozzillo, and Bethany Brown, and I am confident they will be very successful in marketing this premier business center,”
– Fishel Schlesinger Principal, Golden Gate Management

All of the available buildings in Colwick Business Center are single story office properties with private entrances, offering all useable space with no loss factor. The efficient layouts not only provide cost savings but also help to ease the logistical and safety concerns Covid-19 has posed for tenants in multi-story properties that require elevators and common areas.

Colwick Business Center is located just west of the Cherry Hill Mall on a stretch of Haddonfield Road that has recently undergone a massive redevelopment renaissance. The area features affluent residential communities, retail centers, hotels, and other amenities attractive to office tenants. Additionally, The Garden State Towne Center, home to Wegman’s, Best Buy, Home Depot, Dick’s Sporting Goods and other high-end retailers, is conveniently located a short distance away on Haddonfield Road.

Colwick Business Center

 

A marketing brochure and tenant information package is available upon request and also in at this link

 

About Golden Gate Management

Golden Gate Management has led the development and repositioning of more than 1,500,000 million square feet of best-in-class commercial and residential properties. The company is highly experienced in managing all aspects of the development process, from site selection and
entitlements, through coordination of tenant move-in.

Golden Gate’s 10-year history as a preeminent management company is unmatched. Reflecting the company’s core competencies and start-to-finish execution capability, Golden Gate has served as a single-source solution for small and large tenants with its full breadth of its in-house capabilities of construction services thus building relationships with their tenants, Leveraging the strength of its experienced team, Golden Gate has emerged as a first-class project management firm.

 

About WCRE

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

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

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WCRE FOURTH QUARTER 2020 REPORT

WCRE FOURTH QUARTER 2020 REPORT: SOUTHERN NEW JERSEY & PHILLY CRE MARKETS REMAIN ON SHAKY GROUND AS PANDEMIC WEARS ON

Industrial was Strong, While Other Sectors Felt the Brunt of COVID’s Worsening Spread

Commercial real estate brokerage WCRE reported in its analysis of the fourth quarter of 2020 that the Southern New Jersey and Southeastern Pennsylvania markets took an expected downturn in many sectors due to the ongoing coronavirus pandemic. At the same time, restrictions and infection control measures helped build strength in the industrial market, and there is sufficient momentum in the overall economy that the downturn is expected to be temporary. 

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“Commercial real estate is challenged by many of the conditions brought on by the pandemic, but the roll-out of the vaccines brings the hope of a return to normal activity sometime this year,” said Jason Wolf, founder and managing principal of WCRE. 

There were approximately 252,823 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was a drop of nearly 58% from the previous quarter. New tenant leases comprised approximately 64,450 square feet, or approximately 25.5% of all deals for the three counties surveyed.

Other office market highlights from the report:

• Overall vacancy in the market is now approximately 13.6 percent, which is a jump of about two-thirds of a point from the previous quarter, and an increase of two full points since Q2.

• Average rents for Class A & B product remain unchanged, as they continue to show strong support in the range of $10.00-$15.00/sf NNN or $20.00-$25.00/sf gross for the deals completed during the fourth quarter. These averages have hovered near this range for more than a year.

• Vacancy in Camden County increased to 15.2 percent for the quarter, but despite this slight increase, Camden County saw gradual improvement and prospect activity.

• Burlington County’s vacancy increased to 12 percent after dropping more than a point during the third quarter.

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

• The vacancy rate in Philadelphia’s office market rose another half a point, to 9.6 percent, after having hovered near a 20-year low. The pandemic has caused a large volume of office space to hit the market.

• The industrial sector in Philadelphia led the market, as it generally does. During Q4 vacancy rates ticked down to 5.1 percent, a slight improvement from the previous quarter. Net absorption for the year was 6.1 square feet. As the pandemic has led to a massive shift toward e-commerce, the industrial sector should remain quite strong.

• Retail CRE remains the most responsive and most vulnerable sector to market conditions. Ongoing coronavirus prevention measures have led to increased vacancy as businesses shutter. Average retail net absorption for 2020 was 1.8 million square feet. The vacancy rate is not expected to improve in the near term. 

WCRE also reports on the Southern New Jersey retail market. Highlights from the retail section of the report include:

• Retail vacancy in Camden County ticked up to 10.5 percent after posting a large increase from Q2 to Q3. While average rents changed little, in the range of $11.78/sf NNN.

• Retail vacancy in Burlington County jumped to 10 percent, up from 7.6 percent, with average rents increasing to the range of $14.14/sf NNN.

• Retail vacancy in Gloucester County went up again, to 13.7 increasing throughout the year, with average rents unchanged in the range of $13.14/sf NNN.

The full report is available upon request.

About WCRE

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

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

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Should Employers Require Employees to Be Vaccinated

Should Employers Require Employees to Be VaccinatedShould employers require employees to be vaccinated? The first doses of the Coronavirus vaccines have been shipped across the country and Employers will soon have to decide whether they will require their employees to be vaccinated. Employers choosing to require vaccinations will also have to enact and enforce quality policies and procedures to prevent opposition and avoid potential litigation. However, as with all COVID-19 issues, there are many open questions, few concrete answers, and significant legal concerns when considering mandatory employee vaccinations.

Employers have a difficult task – they must balance their responsibility to maintain a safe and danger-free workplace with the individual rights of employees. This article will provide an outline of the legal framework currently addressing mandatory employee vaccines, what issues employers must consider, and some recommended best practices and guidance employers can rely on to navigate these unprecedented times.

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The Legal Framework for Employers to Require Employees to Be Vaccinated

The Legal Framework for Employers to Require Employees to Be VaccinatedThe first question any employer must ask themselves is whether to make the vaccine mandatory for its employees or to strongly encourage its workers to receive the vaccine on their own. Still another option is for employers to evaluate their workforce and adopt a hybrid method where certain employees, such as those that are customer-facing, travel-based, or unable to implement other preventive measures such as masks or distancing, are required to get the vaccine while the rest of the workforce is just encouraged to get it. While the impact of the virus may make mandatory vaccines appealing, employers need to be prepared to address and, with the help of counsel, minimize the legal pitfalls that come with a mandatory vaccination policy. Those pitfalls begin with the current state of federal law and federal guidance regarding mandatory employee vaccines.

Federal Law & Guidance

Due to the novel nature of the Coronavirus, the current state of federal and state law and guidance is premised on the flu vaccines. While COVID-19 may be the more prevalent vaccine on employers’ minds, the CDC has indicated the critical importance of flu shots this year, making the below analysis applicable to both vaccines.

Employers must keep in mind three distinct federal laws when considering a vaccine policy: OSHA, ADA and Title VII.

OSHA

The U.S. Occupational Safety and Health Administration (“OSHA”) has taken the position that employers can mandate flu vaccines for their employees as well as other vaccinations. However, OSHA’s position also emphasizes that employers must “properly inform” their employees of the benefits of vaccinations. OSHA also provides for certain exceptions to a vaccine mandate where an employee refused to be vaccinated because of a “reasonable belief that he or she has a medical condition that creates a real danger of serious illness or death (such as a serious reaction to the vaccine)…”

ADA

The Americans with Disabilities Act (“ADA”) provides a basis for individuals with medical disabilities that would be triggered by a vaccine policy to request a reasonable accommodation. The Equal Employment Opportunity Commission (“EEOC”) released vaccine-related guidance in March 2020 addressing whether employers covered by the ADA can require its employees to receive flu vaccines. The guidance explains that the ADA can provide employees with an exemption to the vaccination requirement
based on a disability that would prevent the employee from taking the vaccine. For example, some flu vaccines have contained egg products that would prevent someone allergic to eggs from taking that variety of flu vaccine. Where such a disability exists, the employee would be entitled to a reasonable accommodation that includes not receiving the vaccine. That is, unless that accommodation would present an undue hardship to the employer.

The ADA defines “undue hardship” as “significant difficulty or expense” incurred by the employer in providing an accommodation. Critically, the guidance notes both that the undue influence standard is higher under the ADA than it is under Title VII, and that prior EEOC guidance has identified COVID-19 as meeting the ADA’s
“direct threat standard.” This means that an employee with COVID-19 poses a “significant risk of substantial harm” in the workplace allowing employers to conduct certain tests the ADA would usually forbid, such as temperature checks. This could also mean that the disability exemption may not apply to a mandatory vaccination policy and program.

TITLE VII

Under Title VII, an employee also has a right to an accommodation of not taking a vaccine if the employee has a sincerely held religious belief that would be violated by receiving the vaccine. If providing such an accommodation represents more than a “de minimis” cost, i.e. imposes more than a minimal cost, the employer can enforce its mandatory vaccination policy and program. The costs incurred by the employer of providing the accommodation can be both economic and non-economic costs and would include the increased safety and legal risks presented by a non-vaccinated employee. Given the state of the virus and the compounding effect of flu season, it is possible and even likely that an employee refusing vaccination on religious grounds would present a more than minimal cost to the employer based on increased risk to employees, customers, and business operations. The level of risk brought to bear on an employer by a vaccine-refusing employee may be based on the specific job duties of that employee such as direct customer interaction, regular travel or an inability to use other public health measures to perform their job.

Interactive Dialogue Required

Regardless of whether an employee objects based on health or religious grounds, employers must engage with the objecting employee(s) to determine whether a reasonable accommodation would allow the employee(s) to perform the essential functions of their job without compromising the health and safety of the workplace. Employers should document the interactive process in writing, including the proposing of accommodations such as use of masks or other personal protective equipment, relocating the employee’s workstation, working from home, or even a leave of absence. Only those accommodations that do not present an undue hardship are required to be consider by the employer.

Don’t Forget About State Law – A Look at New Jersey, Pennsylvania & the Third Circuit

State law and the case law of the Third Circuit will also play a critical role in any workplace that may require employees to be vaccinated. As of January 2020, New Jersey law requires that each “health care facility” establish and implement annual flu vaccination programs including mandatory annual vaccinations. New Jersey law also
provides that some employer-required medical examinations, which may include vaccinations, must be paid for by the employer either directly or through reimbursement.

Pennsylvania on the other hand currently does not have a vaccination requirement law. Neither state prohibits private employers from enacting mandatory vaccine policies and programs, and the New Jersey law may provide the State with a means of requiring employees beyond the health care industry to get vaccinated.

The Third Circuit has addressed the issue of a religious objection to a mandatory vaccine program. In December 2017, the Third Circuit was faced with a hospital worker who was terminated for refusing to a get a flu shot in contradiction to his employer’s policy, on the basis of his religious beliefs. Fallon, the employee in Fallon v. Mercy Catholic Med. Ctr. Of S. Pa., 877 F.3d 487 (3d Cir. 2017), had previously had his religious exemption granted by the hospital, but in 2014 the employer’s standards had changed and that Fallon’s basis for his religious beliefs against vaccination were, the hospital said, no longer valid. Specifically, the hospital required a new level of proof to support claimed religious beliefs. The Third Circuit upheld the lower court’s dismissal of the employee’s lawsuit. The Court analyzed whether the employee’s beliefs were in fact religious and were in fact sincerely held. The Court analyzed:

(1) whether Fallon’s beliefs were, in the context of Fallon’s life, religious;

(2) whether Fallon’s beliefs occupied a place in Fallon’s life parallel to that filled by God in a traditionally religious person;

(3) whether Fallon’s beliefs addressed “fundamental and ultimate questions having to do with deep and imponderable matters”;

(4) whether Fallon’s beliefs were a “belief-system”; and

(5) whether there were any formal and external signs of Fallon’s beliefs.

The Court ultimately decided that Fallon’s beliefs, while sincerely held, were not religious and instead found that Fallon was worried about the health effects of the flu vaccine, disbelieved the science behind vaccines and wanted to avoid the vaccine. This case illustrates the employee-specific nature of exemption requests and that employers should analyze each employee’s situation independently. However, a deep dive into whether beliefs are truly religious should be reserved for the Courts. Rather, employers should mainly focus on whether the request for accommodation imposes an undue hardship on the employer. It also indicates that employers can require employees claiming religious beliefs to support those beliefs.

Based on the above, there is no law stopping employers who wish to require employees to be vaccinated from requiring its employees to receive a flu vaccine or potentially a COVID-19 vaccine through establishment and enactment of a mandatory vaccine policy and program. For employers seeking to enact such a policy and program they should start that process now and be mindful of the following concerns and best practices.

Practical Concerns and Best Practices for Employers Requiring Employees to be Vaccinated

Areas of Concern

In addition to the individual assessments described above, employers will also need to resolve questions including: is the vaccine effective? If multiple vaccines are brought to market which one should be mandated? Who should pay for the vaccinations? How widely available will the vaccination be? How long is it effective for?

Further, other complicating factors related to mandatory vaccines include: Unionized workforces. Applicable collective bargaining agreements may directly address mandatory vaccines or other health screenings, and nearly all agreements would dictate that implementation of such a policy either requires union consent or must be bargained for.

Age Discrimination

Given that older individuals are more susceptible to both COVID-19 and the flu, employers may think it best to exclude or treat these employees differently. However, even when done for altruistic reasons, such differing treatment is a violation of the ADEA and exposes employers to significant liability and costly litigation.

Workers Compensation and Employer Liability

There is the potential for liability where an employee mandates a vaccine and an employee has an adverse reaction to the vaccine including workers’ compensation claims if not lawsuits. While the federal government provides for such relief, the implementation of a mandatory vaccine policy may shift liability to the employer. Conversely, if an employer does not mandate vaccinations and infection arises there could also be attendant liability for the employer. This potential further solidifies that employers must carefully draft its policy and program and do so with the assistance of counsel.

Refusal to work

Federal law provides that employees who hold a reasonable belief of danger or death, and where such belief is based on fact, can refuse to attend work if the employer refuses to mitigate the danger. If an employer does not mandate a vaccine, its workforce may have grounds to refuse to work.

Best Practices

Start now. Employers should enact vaccination policies now regardless of whether the policy will mandate or simply encourage employees to take the vaccine. If vaccines are to be mandated, employers should also engage in the interactive process for any religion-based objections now to avoid this time-consuming process occurring when the vaccine is ready.

Cast a wide net

Employers should consider all aspects of a mandatory vaccine policy including which employees it will apply to, how to assess the effectiveness and safety of a COVID-19 vaccine, what to do if there is limited availability of COVID-19 vaccine, and what accommodations the employer is willing, and not willing to provide.

Be specific

Employers should ensure that their policies designate which protocols apply to which vaccines, flu, COVID-19, and others. Further, parameters for how vaccinations will occur, establishing proof of vaccination, the objection process, and alternative measures should be specifically spelled out to avoid ambiguity.

Open communication

Prior to any vaccine policy being rolled out, employers should review the policy and procedures with employees and answer as many questions as possible to avoid confusion and apprehension on the part of employees and management-level employees responsible for administering the policy.

Consider alternative measures

Some alternatives to vaccines, which can also be used as accommodations, include: masks or other PPE, moving non-vaccinated employees to either different workspaces, different locations or departments without altering terms and conditions of employment, and expanding remote work while ensuring teleworking policies are in good condition.

Stick to the law.

Employers must remember that currently only religious and medical reasons provide employees with an exception to mandatory vaccines. Ethical obligations, fear, or similar anti-vaccination beliefs have rarely been accepted as valid reasons for refusing to comply with an employer’s mandatory vaccination policy. Employers should only consider and evaluate objections based on religious and medical reasons, and avoid considering exemptions based on generalized fear or non-religious beliefs.
By acting now, employers will be ready when a new vaccine is announced, and will be able to navigate this new terrain by minimizing the impact on both employees and business continuity.

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.

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WCRE THIRD QUARTER 2020 REPORT

THE SOUTHERN NEW JERSEY & PHILLY CRE MARKETS HEAT UP QUICKER THAN EXPECTED AFTER PANDEMIC-FUELED CHALLENGES

Economic Recovery Lost Steam Through the Quarter, But Leasing Activity was Strong

WCRE THIRD QUARTER 2020 REPORTCommercial real estate brokerage WCRE reported in its analysis of the third quarter of 2020 that the Southern New Jersey and Southeastern Pennsylvania markets out-performed expectations tempered by the ongoing coronavirus pandemic. While the crisis reverberated through the economy and daily life, quarterly CRE indicators throughout the region showed resiliency and even some cause for muted optimism.

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“Uncertainty is high, of course, and will remain high unfortunately, but an economy that seemed to be recovering delivered some good news in our markets,” said Jason Wolf, founder and managing principal of WCRE. 

There were approximately 596,873 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was more than double the total for the previous quarter. The jump was driven by Lockheed Martin’s four renewals totaling approximately 320,000 square feet. Even without those transactions, Q3 leasing was about equal to the total for Q2. New tenant leases comprised approximately 93,544 square feet, or approximately 16% of all deals for the three counties surveyed.

Other office market highlights from the report:

  • Overall vacancy in the market is now approximately 12.95 percent, which is a jump from the previous quarter’s 11.5 percent.
  • Average rents for Class A & B product remain unchanged, as they continue to show strong support in the range of $10.00-$15.00/sf NNN or $20.00-$25.00/sf gross for the deals completed during the third quarter.
  • These averages have hovered near this range for more than a year.
  • Vacancy in Camden County increased to 14.9 percent for the quarter.
  • Burlington County’s vacancy increased to 11 percent after dropping more than a point during the first quarter.

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

  • The vacancy rate in Philadelphia’s office market rose more than half a point, to 9.1 percent, after having hovered near a 20-year low and below the vacancy rates of comparable major cities at the onset of the pandemic.
  • The industrial sector in Philadelphia led the market, as it generally does. During Q3 vacancy rates ticked down to 5.3 percent, a slight drop from the previous quarter. Although net absorption turned negative for flex and specialized space, it increased by 167,035 square feet for logistics space.
  • As vulnerable as retail CRE may be due to unprecedented job loss and businesses temporarily shuttering and/or reducing capacity, the vacancy rate held steady at 5.1 percent, representing a very small increase over Q2. Net absorption returned to positive territory at 284,752 square feet for the quarter, but is at negative 1.2 million square feet over the last twelve months. 

WCRE also reports on the Southern New Jersey retail market. Highlights from the retail section of the report include:

  • Retail vacancy in Camden County jumped to 9.7 percent from 5.4 percent in Q2. While average rents fell by nearly a third to the range of $11.68/sf NNN.
  • Retail vacancy in Burlington County held steady at 7.6 percent, with average rents increasing to the range of $13.82/sf NNN.
  • Retail vacancy in Gloucester County ticked up half a point to 12.9 from after posting a major increase in Q1, with average rents down in the range of $13.13/sf NNN.

The full WCRE Q3 Market report is available upon request.

About WCRE

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

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

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WCRE SECOND QUARTER 2020 REPORT

UNDER SEVERE CORONAVIRUS RESTRICTIONS, THE SOUTHERN NEW JERSEY & PHILLY CRE MARKETS STILL OUTPERFORMED EXPECTATIONS

Despite Widespread Lockdowns, Closures, and Uncertainty, the Market Showed Strength

Commercial real estate brokerage WCRE reported in its analysis of the second quarter of 2020 that the Southern New Jersey and Southeastern Pennsylvania markets held their own amid the most uncertain quarter in recent history. The coronavirus pandemic has upended every aspect of life and deeply impacted the economy. Still, quarterly CRE performance indicators showed some positive news, even as the effects of the crisis began taking hold. Vacancy rates across every property type remained low, and the sales market stayed active.

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“In the face of global calamity, and under severe but necessary restrictions, the CRE market in our area showed strong fundamentals and resiliency,” said Jason Wolf, founder and managing principal of WCRE. “The performance was a mixed bag, but we saw sufficient reasons for optimism.” 

There were approximately 277,716 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was a drop of 26% from the previous quarter. New tenant leases comprised approximately 129,569 square feet, or approximately 46.7% of all deals for the three counties surveyed. To help compare Q2 2020 vs. Q2 2019, there were approximately 286,707 square feet of new leases and renewals executed during the same time period a year ago,

Other office market highlights from the report:

● Overall vacancy in the market is now approximately 11.5 percent, which is a slight uptick from the previous quarter, but still not far off from a 20-year low.

● Average rents for Class A & B product remain unchanged, as they continue to show strong support in the range of $10.00-$15.00/sf NNN or $20.00-$25.00/sf gross for the deals completed during the quarter. These averages have hovered near this range for more than a year.

● Vacancy in Camden County increased a full point to 12.6 percent for the quarter.

● Burlington County’s vacancy further dropped to 10.4 percent after dropping more than a point during the first quarter.

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

● The vacancy rate in Philadelphia’s office market dropped slightly to 8.5 percent. The office vacancy rate is still near a 20-year low, and below that of comparable major cities. 

● The industrial sector in Philadelphia remains very strong. Q2 saw vacancy rates at 5.5 percent, only slightly higher than the previous quarter. Net absorption dropped about 20 percent, to 4.3 million SF, which was still strong. Rent growth jumped again, to 5.3 percent. Rent growth for the past few quarters has far exceeded the long-term average of 1.7 percent.

● Retail may be most at risk from the crisis. Rising wages and low unemployment had been fueling retail spending, buoying the CRE market. But with unprecedented job loss and many businesses temporarily shuttered by stay-home orders, retail will bear the brunt. The vacancy rate inched up to 5.0 percent, while net absorption was negative 546,300 square feet over the last twelve months. These figures may well become more dire in Q2, as the true economic effects of the pandemic take hold.

WCRE also reports on the Southern New Jersey retail market. Highlights from the retail section of the report include:

● Retail vacancy in Camden County dropped to 5.4 percent from 6.2 percent in Q1. While average rents fell slightly to the range of $17.20/sf NNN.

● Retail vacancy in Burlington County dropped to 7.6 percent, with average rents in the range of $12.14/sf NNN.

● Retail vacancy in Gloucester County ticked down to 12.4 from after posting a major increase in Q1, with average rents in the range of $14.21/sf NNN.

The full report is available upon request.

About WCRE

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

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

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WCRE Appointed Exclusive Agent to Market Florence L. Walther Elementary School Property 

Florence L. Walther Elementary SchoolWolf Commercial Real Estate (WCRE) is pleased to announce that it has been appointed exclusive agent to market for sale and lease the Florence L. Walther Elementary School, located at 56 Chestnut St. Lumberton, New Jersey.

This new listing opportunity adds to WCRE’s growing number of assignments of educational and institutional properties in the Philadelphia and Southern New Jersey region.

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The Florence L Walther consists of 2 buildings with a total 55,806 square feet and is situated on an approximate 4.07 Acre site offering an excellent location near heavily traveled Route I-295 and Route 38 in Lumberton, New Jersey.

The Florence L Walther School is planning to close at the end of June. This highly visible property has a campus-like atmosphere with the main building offering 53,406 square feet. Additionally, the Lumberton Extended Daycare building offers 2,400 square feet of space with a vast playground next to the site. The school has been well maintained and is available for immediate occupancy.

Mark Leung, School Business Administrator and Board Secretary for Lumberton School District said, “We had a need for commercial real estate professional services and put out a request for qualifications. WCRE’s response exhibited extensive experience working with schools, coupled with their breadth of knowledge of the local real estate market, made them the obvious choice.”

WCRE’s institutional specialist team of Chris Henderson and Phil Costa said,

“WCRE is proud to partner with Lumberton Township Board of Education as our latest institutional relationship in Southern New Jersey. We look forward to applying our WCRE 360 marketing approach to find a new user for this highly-desirable property.”

A marketing brochure is available upon request.

About WCRE

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

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

www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com, www.phillyretailspace.com.

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WCRE FIRST QUARTER 2020 REPORT

THE YEAR STARTED OFF ON A HIGH NOTE IN THE SOUTHERN NEW JERSEY & PHILLY CRE MARKETS, THEN COVID-19 CREATED CHAOS

Predictions for 2020 Had Been Bullish, But are Now a Great Unknown

Commercial real estate brokerage WCRE reported in its analysis of the first quarter of 2020 that the Southern New Jersey and Southeastern Pennsylvania markets continued their years-long strong performance at the outset of the new decade. But by March it was clear that, just as every other area of life would be disrupted by the Covid-19 pandemic, the CRE market would not be immune. The quarterly performance still showed positive news, but the effects of the crisis began taking hold during the last weeks of Q1, so the true impact hadn’t become fully apparent. Vacancy rates across every property type remain low, and, while rent increases have cooled somewhat, growth remained positive for the quarter. Even before the pandemic struck many feared there were signs that the decade-long expansion was nearing its end. But even as growth slowed down, the economy appeared to be moving forward at a fairly solid pace before the crisis.

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“Initially the assumption was that the worst of the coronavirus outbreak would directly impact the regions in Asia where it first was identified, and that the impact to the U.S. would come in the form of disruption of supply chains and slower economic growth abroad,”
said Jason Wolf, founder and managing principal of WCRE.

“While those shocks have happened, the rapid spread of the virus within the US and around the world has impacted the global economy, and those effects are still becoming apparent throughout our local and regional CRE markets.”

There were approximately 374,429 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was up more than 80 percent over the previous quarter. The sales market stayed active, with about 1.02 million square feet on the market or under agreement. Completed sales were up about ten percent over the previous quarter, at approximately 866,444 square feet trading hands.

New leasing activity accounted for approximately 47 percent of all deals for the three counties surveyed. Overall, gross leasing absorption for Q1 was in the range of 110,000 square feet, up about 25 percent over the fourth quarter.

Other office market highlights from the report:

● Overall vacancy in the market is now approximately 11.2 percent, which is significantly improved from the previous quarter, and still near a 20-year low.

● Average rents for Class A & B product continue to show strong support in the range of $10.00-$15.00/sf NNN or $20.00-$25.00/sf gross for the deals completed during the quarter. These averages have hovered near this range for more than a year.

● Vacancy in Camden County ticked down to 11.6 percent for the quarter, as prospecting activity improved.

● Burlington County’s vacancy dropped to 10.8 percent, more than a full point improvement over Q4.

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

● The vacancy rate in Philadelphia’s office market dropped slightly to 8.5 percent. The office vacancy rate is still near a 20-year low, and below that of comparable major cities.

● The industrial sector in Philadelphia remains very strong. Q1 saw vacancy rates at 5.5 percent, only slightly higher than the previous quarter. Net absorption dropped about 20 percent, to 4.3 million SF, which was still strong. Rent growth jumped again, to 5.3 percent. Rent growth for the past few quarters has far exceeded the long-term average of 1.7 percent.

● Retail may be most at risk from the crisis. Rising wages and low unemployment had been fueling retail spending, buoying the CRE market. But with unprecedented job loss and many businesses temporarily shuttered by stay-home orders, retail will bear the brunt. The vacancy rate inched up to 5.0 percent, while net absorption was negative 546,300 square feet over the last twelve months. These figures may well become more dire in Q2, as the true economic effects of the pandemic take hold.

WCRE also reports on the Southern New Jersey retail market. Highlights from the retail section of the report include:

● Retail vacancy in Camden County rose very slightly to 6.2 percent from 6.0 percent in Q4. While average rents rose to the range of $17.27/sf NNN.

● Retail vacancy in Burlington County ticked up a second consecutive quarter to 8.0 percent, with average rents in the range of $12.23/sf NNN.

● Retail vacancy in Gloucester County jumped a full point to 12.7 from 11.7 percent, with average rents in the range of $13.71/sf NNN.

The full report is available upon request.

About WCRE

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

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

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NJEDA COVID-19 Economic Relief Package

NJEDA initiatives aimed at stabilizing and revitalizing local small businesses, midsize businesses, and other early-stage companies.

NJEDA has developed an economic stability approach around three core principles

1. Get funding into the market as soon as possible
► Where possible, adjust existing NJEDA programs to address crisis needs
► Utilize multiple channels / partners to maximize marketing of programs and minimize processing capacity constraints

2. Leverage private, federal, and philanthropic capital where possible to scale impact

3. Provide a suite of compatible offerings to help address varied marketplace needs (e.g., grants, no-cost loans, low-cost loans, loans through intermediaries, technical assistance)

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WCRE FOURTH QUARTER 2019 REPORT

YEAR ENDS ON A HIGH NOTE IN SOUTHERN NEW JERSEY & PHILLY CRE MARKETS

Favorable Economic Conditions Expected to Continue into 2020

Commercial real estate brokerage WCRE reported in its analysis of the fourth quarter of 2019 that the Southern New Jersey and Southeastern Pennsylvania markets continued their years-long overall steady performance. Sales volume and prospecting activity held steady, and although leasing activity was down, vacancy rates remain low across the region for all property types. Gross leasing absorption was positive but trending lower quarter over quarter.

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“CRE performance was good by almost every measure as the year wound down,” said Jason Wolf, founder and managing principal of WCRE. “It seems like when one sector or part of the region underperforms, the rest of the market keeps moving in the right direction.”

There were approximately 204,077 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was down compared to the previous quarter. But the sales market stayed active, with about 1.5 million square feet on the market or under agreement. Completed sales more than doubled from the previous quarter, at approximately 781,130 square feet trading hands.

New leasing activity accounted for approximately 65 percent of all deals for the three counties surveyed. Overall, gross leasing absorption for the fourth quarter was in the range 85,000 square feet, up about 20 percent over the third quarter.

Other office market highlights from the report:

● Overall vacancy in the market is now approximately 12 percent, which is up half a point from the previous quarter. This is still near a 20-year low.

● Average rents for Class A & B product continue to show strong support in the range of $10.00-$15.00/sf NNN or $20.00-$25.00/sf gross for the deals completed during the quarter. These averages have hovered near this range for more than a year.

● Vacancy in Camden County rose to 12 percent for the quarter, due in part to the return of a few large blocks of space to the market.

● Burlington County’s vacancy also stood at 12 percent. Burlington’s vacancy rate also jumped earlier in the year due to several large blocks of space returning to the market.

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

● The vacancy rate in Philadelphia’s office market rose slightly to 8.7 percent. The office vacancy rate is still near a 20-year low, and below that of comparable major cities.

● The industrial sector in Philadelphia remains very strong. Q4 saw vacancy rates at 5.4 percent, while net absorption was at 5.4 million SF. Rent growth of 4.8 percent has far exceeded the longterm average of 1.7 percent.

● Philadelphia retail is so far avoiding a major spike in vacancy due to the shift toward e-commerce. Rising wages and low unemployment are fueling retail spending, buoying the CRE market. The vacancy rate inched up to 4.8 percent, while net absorption was negative 98,300 square feet over the last twelve months. This represents a positive swing of more than 450,00 SF for Q4.

WCRE also reports on the Southern New Jersey retail market. Highlights from the retail section of the report include:

● Retail vacancy in Camden County fell to 6 percent from 6.9 percent in Q3. While average rents stayed in the range of $17.00/sf NNN.

● Retail vacancy in Burlington County ticked up very slightly, to 7.7 percent, with average rents in the range of $12.52/sf NNN.

● Retail vacancy in Gloucester County jumped to 11.7 from 7.4 percent, with average rents in the range of $13.27/sf NNN.

The full report is available upon request.

About WCRE

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

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

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