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WCRE THIRD QUARTER 2019 REPORT

SOLID FUNDAMENTALS WITH MODEST GAINS IN SOUTHERN NEW JERSEY & PHILLY CRE MARKETS

Favorable Economic Conditions Expected to Continue into 2020

SOLID FUNDAMENTALS, BUT MODEST GAINS IN SOUTHERN NEW JERSEY & PHILLY CRE MARKETS

Commercial real estate brokerage WCRE reported in its analysis of the third quarter of 2019 that the Southern New Jersey and Southeastern Pennsylvania markets continued to show modest gains, continued investments, and overall solid fundamentals. Sales volume and prospecting activity held steady, leasing was up in Camden County, and especially in Cherry Hill, but dipped for the region overall. Gross leasing absorption was positive but trending lower quarter over quarter.

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“We are in a continuing period of a strong economy with low unemployment. This has supported a long streak of slow, steady growth supported by strong fundamentals,” said Jason Wolf, founder and managing principal of WCRE. “Although a given indicator might fluctuate one quarter to the next, commercial real estate in this region remains strong, and there is reason to stay optimistic.”

There were approximately 266,867 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was a decrease of seven percent compared to the previous quarter. The sales market increased, with about 1.67 million square feet on the market or under agreement. However, completed sales slowed to approximately 329,769 square feet trading hands, less than half the previous quarter, which had been notably active.

New leasing activity accounted for approximately 36 percent of all deals for the three counties surveyed. Overall, gross leasing absorption for the third quarter was in the range 70,000 square feet, down from 150,000 in the second quarter.

Other office market highlights from the report:

Overall vacancy in the market is now approximately 11.50 percent, which is a slight uptick 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 dropped slightly to 11.1 percent for the quarter, back to where it stood in the first quarter.

Burlington County’s vacancy stood at 11.9 percent, increasing 40 basis points. Burlington’s vacancy rate 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 third quarter in Pennsylvania include:

The vacancy rate in Philadelphia’s office market dropped slightly to 8.6 percent, the second consecutive quarter to post a decrease of two tenths of a 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. The third quarter saw vacancy rates virtually unchanged, at 5.0 percent, while net absorption was constrained by a shrinking volume of available space. Rent growth of 6.0 percent has far exceeded long-term 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 4.7 percent, while net absorption was negative 562,000 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 6.9 percent from 5.7 percent in Q2. While average rents increased in the range of $17.05/sf NNN.
  • Retail vacancy in Burlington County ticked up very slightly, to 7.6 percent, with average rents in the range of $12.68/sf NNN.
  • Retail vacancy in Gloucester County dropped to 7.4 percent, with average rents in the range of $13.41/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 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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ANNOUNCING THE FORMATION OF WCRE CAPITAL ADVISORS

After seven plus successful years providing commercial real estate sales, leasing, and property management expertise to South Jersey and Philadelphia, Wolf Commercial Real Estate (WCRE) is excited to announce the launch of its new debt and equity platform, WCRE Capital Advisors at www.WCRECapitalAdvisors.com.

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Founders Jason Wolf and Andrew Beauchemin will be bringing over 30 years of industry experience to the team, providing advisory services on debt and equity financing for commercial real estate transactions. Beauchemin and Wolf will leverage their long-standing relationships with banks, CMBS, LifeCo, agency, mezzanine, and equity lenders across the region to custom tailor financing structures to each individual borrower’s needs.

“We are always looking for ways to improve our level of service for our clients. Adding a financing team is a natural progression for us, considering the size and scope of our regional client portfolio,” said Wolf.

WCRE Capital Advisors will build on Jason Wolf’s foundation, including integrity, responsiveness, a passion for the community, and consistent communication with clients even after their transaction is complete. The team will think like investors, owners, and tenants, leveraging WCRE’s extensive experience in the area to structure Strategic Financing Solutions for their clients.

“It’s an exciting time to be partnering with Wolf,” says Beauchemin, “he has always had a great reputation in the South Jersey market, and with WCRE’s recent expansion into Philadelphia and Pennsylvania, there is a lot of opportunity to both build on existing, and create new successful relationships.”

Andrew Beauchemin brings experience from the ownership side, having spent the early years of his career managing commercial office buildings with owner, operator, and developer, Monday Properties, in Washington, DC. He managed day-to-day operations, capital projects and construction, and financial performance. He successfully renewed LEED Gold and Silver certifications and assisted the ownership during a $888MM refinance of the portfolio in 2016. Moving to Philadelphia in 2017, Andrew served as a Business Development Originator at Rittenhouse Capital Advisors, where he originated and underwrote commercial and multifamily debt and equity. Born and raised in South Jersey, he expands the reach of WCRE’s already deep roots in the South Jersey and Philadelphia markets.

Jason Wolf began his commercial real estate career at Colliers International in 1995, and has frequently earned recognition for his achievements, including winning several prestigious company and industry awards and rising from an associate to company shareholder. Over the years he has served clients from Fortune 500 companies, public utilities, small businesses, and home-grown companies that have expanded into strong community names. He founded WCRE in order to combine the market knowledge and national resources of a large firm with the personal attention and commitment to client relationships that have been essential to his success.

About WCRE Capital Advisors

WCRE Capital Advisors offers financing solutions for your next acquisition, refinance, or construction project. Our Advisors leverage their relationships with Banks, Insurance Companies, CMBS, Credit Unions, Fannie & Freddie, Mezzanine Funds, and Private Institutions to bring you creative financing structures at the best rates. Learn more at www.WCRECapitalAdvisors.com, on Facebook, Instagram and Twitter @wcrecapital, and LinkedIn @WCRECapitalAdvisors

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 at www.WolfCRE.com, on Instagram and Twitter @WCRE1, and on Facebook and LinkedIn at Wolf Commercial Real Estate, LLC.

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WCRE SECOND QUARTER 2019 REPORT

SOLID FUNDAMENTALS, STEADY GAINS IN SOUTHERN NEW JERSEY & PHILLY CRE MARKETS

Quarterly Performance a Continuation of Success

WCRE SECOND QUARTER 2019 REPORTCommercial real estate brokerage WCRE reported in its analysis of the second quarter of 2019 that the Southern New Jersey and Southeastern Pennsylvania markets continued to show modest gains and overall solid fundamentals. Sales volume and prospecting activity were up over the first quarter totals, while leasing dipped for the overall region, but was up in Camden County, and Cherry Hill in particular. Gross leasing absorption was lower, but still positive.

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“For several years in a row we have seen mostly slow, steady growth supported by strong fundamentals,” said Jason Wolf, founder and managing principal of WCRE. “Commercial real estate has performed very reliably, and although leasing volumes were down this quarter, there is a pipeline of approximately 450,000 square feet of pending deals expected to close in the near term.”

There were approximately 286,707 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was a decrease of 23 percent over the previous quarter. The sales market stayed active, with about 1.18 million square feet on the market or under agreement. Sales were busy, with approximately 739,714 square feet trading hands. This is nearly four times the square footage sold during the first quarter.

New leasing activity accounted for approximately 75 percent of all deals for the three counties surveyed. Overall, gross leasing absorption for the first quarter was in the range 150,000 square feet, compared to 411,000 in the first quarter.

Other office market highlights from the report:

  • The city of Camden welcomed TRIAD1828 Centre, a newly constructed 394,164 square foot office tower on the waterfront. The Michaels Organization, Conner Strong & Buckelew, and NFI are all relocating their headquarters to the tower.
  • Overall vacancy in the market is now approximately 11.40 percent, which is 20 basis points better than the previous quarter.
  • 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 up slightly to 11.3 percent for the quarter. It stood at 11.1 percent in the first quarter.
  • Burlington County’s vacancy dropped to 11.5 percent , improving 60 basis points. Burlington’s vacancy rate 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 first quarter in Pennsylvania include:

  • The vacancy rate in Philadelphia’s office market ticked down to 8.8 percent, from 9 percent in the previous quarter. 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. The second quarter saw a further decrease in vacancy rates, to 4.9 percent, while net absorption was constrained by a shrinking volume of available space. There are 25 industrial properties under construction which will bring an additional 5.27 million square feet to the market.
  • Philadelphia retail is treading water to avoid a major spike in vacancy. The vacancy rate inched down to 4.2 percent, while net absorption was positive at 1.4 million square feet over the last twelve months. This includes two straight quarters in negative territory.

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 5.7 percent, with average rents in the range of $16.32/sf NNN.
  • Retail vacancy in Burlington County dropped half a point, to 7.4 percent, with average rents in the range of $12.75/sf NNN.
  • Retail vacancy in Gloucester County dropped to 7.9 percent, with average rents in the range of $15.95/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 wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at southjerseyofficespace.com, southjerseyindustrialspace.com, southjerseymedicalspace.com, southjerseyretailspace.com, phillyofficespace.com, phillyindustrialspace.com, phillymedicalspace.com and phillyretailspace.com.

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Benefits of Stamped Asphalt on Commercial Properties

Stamped asphalt crosswalks and entrances can instantly enhance the appearance of your commercial or residential property. The stamping process is achieved by re-heating new or existing asphalt with an infrared process and using a steel cable template to imprint a pattern in the asphalt. A plate compactor is then used to press the pattern into the asphalt. After stamping, a polymer modified color coating is applied to the surface. A variety of patterns and colors are available. Commonly seen in South Jersey are both traditional brick and diagonal herringbone patterns, which are typically painted in a vibrant red color. This feature is a cost-effective way to increase the curb appeal of any property.

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The Benefits of Stamped Asphalt Include:

• Aesthetics – Choose a pattern and color that complement your space. With numerous patterns and colors available, stamped asphalt crosswalks or entrances can provide an immediate upgrade to your property.

• Fast Installation – A crosswalk can typically be installed in just a few hours, which means minimum disruption to tenants, clients and residents. The area can be re-opened to traffic in a relatively short amount of time.

• Lower Installation Costs – Initial installation is less expensive than traditional brick or stone pavers. While traditional pavers are installed individually, the stamping process happens much more quickly, making it less labor-intensive.

• Lower Overall Maintenance Costs – stamped asphalt can last for years and is easily re-coated. The surface also resists changes in temperature better than pavers, which are prone to shifting during freeze-thaw cycles. There is also no need to remove vegetation that typically grows through the cracks of traditional brick.

• Safer Alternative – The paint adds a skid-resistant texture to the surface of the asphalt, so it is not slick when wet.

• Extend Asphalt Life – When exposed to the elements, asphalt dries out and cracks. The color coating applied after stamping protects the asphalt from harmful UV rays.

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Is It Time to Refresh or Expand Your Space?

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

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

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

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

OPTION #1: Refresh Your Space

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

OPTION #2: Expand Your Space

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

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

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

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

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

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

About Argosy Management Group, LLC

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

For more information, contact: 

 

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WCRE FIRST QUARTER 2019 REPORT

MODEST GAINS CONTINUE IN SOUTHERN NEW JERSEY & PHILLY CRE MARKETS

Another Solid Quarterly Performance Despite Ongoing Political Uncertainty

Commercial real estate brokerage WCRE reported in its analysis of the first quarter of 2019 that the Southern New Jersey and Southeastern Pennsylvania markets continued to show overall solid fundamentals, buoyed by new investments from outside the region and economic inflows to support local expansions. Leasing, net absorption, and prospecting activity all were up in the first quarter, while sales dipped slightly.

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“We’ve been in this cycle for several years at this point, with steady growth supported by strong fundamentals,” said Jason Wolf, founder and managing principal of WCRE. “The financial markets and political climate have been somewhat less predictable, but commercial real estate has performed very reliably, and we believe will continue to do so.”

There were approximately 373,362 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was an increase of 10 percent over the previous quarter. The sales market stayed active, too, with about 1.59 million square feet on the market or under agreement. Sales were active, with $24.7 million totaling approximately 186,000 square feet.

New leasing activity accounted for approximately 50 percent of all deals for the three counties surveyed. Overall, gross leasing absorption for the first quarter was in the range 411,000 square feet, an increase of 30 percent over the fourth quarter.

Other office market highlights from the report:

  • Overall vacancy in the market is now approximately 11.60 percent, which is 65 basis points higher the previous quarter.
  • 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 stayed near this range throughout 2018 and have remained there into 2019.
  • Vacancy in Camden County dropped to 11.1 percent for the quarter, which is an improvement of 40 basis points compared to the fourth quarter.
  • Burlington County’s vacancy jumped to 12.1 percent after two straight quarters at 10.4 percent. Burlington was impacted by 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 first quarter in Pennsylvania include:

  • The vacancy rate in Philadelphia’s office market moved to 9 percent, up from 7.8 percent at the end of the year. The market’s vacancy rate is at a 17-year low and below that of other major market. Despite this cooling off, demand for office space remains strong, and vacancy in Philadelphia is still below other major cities.
  • Net office space absorption in Philadelphia was 1.1 square feet for the quarter.
  • The industrial sector in Philadelphia remains very strong, though there may be signs of slowing down a bit. The first quarter saw a further decrease in vacancy rates, to 5.1 percent, but net absorption was off, at 4.7 million square feet.
  • Philadelphia retail is treading water to avoid a major spike in vacancy. The vacancy rate ticked down two tenths of a point, to 4.3 percent, while net absorption was positive at 161,406 square feet after two straight quarters in negative territory.

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 5.8 percent, with average rents in the range of $16.25/sf NNN.
  • Retail vacancy in Burlington County increased to 7.9 percent, with average rents in the range of $13.10/sf NNN.
  • Retail vacancy in Gloucester County stood at 8.1 percent, with average rents in the range of $13.75/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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Federal Opportunity Zones in Southern New Jersey

Federal Opportunity Zones in Southern New Jersey

On October 19, the U.S. Treasury Department issued proposed regulations for the federal Opportunity Zone tax incentive program created under the 2017 Tax Cuts and Job Act.

These regulations were highly anticipated by the real estate development and fund creation communities, which have been eagerly awaiting clarity from Treasury since the creation of the Opportunity Zone program earlier this year.

The program could become the most impactful federal incentive for equity capital investment in low-income and distressed communities ever. It offers significant capital gains tax benefits for taxpayers who invest in projects and businesses in low-income areas, allowing investors to delay, reduce and potentially eliminate capital gains taxes on appreciated assets or business located in and on Qualified Opportunity Zone investments.

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Qualified Opportunity Zones are census tracts located in all 50 states in a low-income community. A detailed interactive map by state identifying the applicable opportunity zones is available at https://eig.org/opportunityzones.

As Forbes magazine indicated, there is likely $6 trillion of capital gains in the U.S. that represent potential available investment capital that could use this program to drive investment into applicable Qualified Opportunity Zone businesses or real estate. The program is not limited to any specific product type nor does it mandate any job creation requirements as part of the investment in a Qualified Opportunity Zone. Thus, the program is applicable to any type of investor with capital gains from the sale of personal property or real property and to developers/owners of all property types including multi-family rental, retail, hotels, industrial, commercial, office, industries, self-storage, assisted-living, affordable housing, etc.

GENERAL OVERVIEW:

Under the Opportunity Zone program, individuals and other entities can delay paying federal income tax on capital gains until as late as December 31, 2026 – provided those gains are invested in Qualified Opportunity Funds investing 90 percent of their assets in businesses or tangible property located in a Qualified Opportunity Zone. In addition, the gains on investments in Qualified Opportunity Funds can be federal income tax-free if the investment is held for at least 10 years. These tax benefits could reduce the cost of capital for these projects, making them more viable, especially when paired with other development incentives like the New Markets Tax Credit or Low-Income Housing Tax Credit.

Specifically, appreciation on investments within Qualified Opportunity Funds that are held for at least 10 years are excluded from gross income. Thus, the longer one has an investment within a Qualified Opportunity Fund within an Opportunity Zone, the more one can reduce its capital gain – either by 10 percent or 15 percent, and if one stays in the zone for 10 years or more and the property or qualified business appreciated in value, the appreciation is not subject to capital gains tax at the federal level. The regulations as proposed give the investor/owner until December 31, 2047 to sell the business or property in order to take advantage of the no capital gains to be paid on the sale of appreciated assets rules.

Additionally, owners of low tax basis properties can sell their properties and defer the capital gains to the extent the gains are invested in a Qualified Opportunity Zone, which will likely attract investor capital that is looking to defer capital gains, thereby making the Qualified Opportunity Zones potentially more valuable than non-Qualified Opportunity Zone properties.

DEADLINES:

While the benefits of the program can be advantageous, investors and developers seeking to capitalize on the Opportunity Zone program need to move quickly in order to take full advantage of the tax benefit as demand increases and the time period diminishes.

In other words, as the program only lasts until 2026, the seven-year ability to reduce capital gains by 15 percent will disappear if investments are not made by 2019 and the five-year ability to reduce capital gains by 10 percent will disappear if not made by 2021. Therefore, if one is interested in maximizing the value of the program and its value to investors, investors and developers need to move quickly to commence development and acquisitions in order to maximize the time periods available to invest their capital gains inside the program windows provided within the program.

Additionally, in order to defer short- and long-term capital gains realized on the sale of property, the capital gain portion of the sale or disposition has to be reinvested within 180 days in a Qualified Opportunity Fund.

Also important to note that gains are required to be recognized on the earlier of a disposal of the Qualified Opportunity Fund investment or by December 31, 2026, and are reduced over time.

The basis of the Qualified Opportunity Zone investment increases by 10 percent of the deferred gain if the investment is held for five years from the date of reinvestment and by 15 percent of the deferred gain if the investment is held for seven years from the date of reinvestment. In other words, the gain on which capital gains is paid is reduced to 85 percent of the original gain.

While the recently announced regulations provided clarity on specific time period for self-certification as an Qualified Opportunity Zone fund, for what constitutes a Qualified Opportunity Zone business and for what structures now qualify as Qualified Opportunity Zone Funds (i.e., limited partnerships, C-corporations, limited liability companies, REITs, RICs, etc.), investors need to be aware that certain rules regarding related parties and original use property still need to be clarified by Treasury in additional regulations.

OPPORTUNITY ZONES IN SOUTHERN NEW JERSEY:

In Southern New Jersey, the program will drive investment from all types of developers and investors seeking to place their capital gains into funds and seeking to place applicable businesses into Qualified Zones in order to potentially defer and reduce applicable capital gains. Developers will seek to purchase land in order to build with their own capital and/or equity from Opportunity Zone investment vehicles in order to utilize cheaper sources of capital and drive development returns.

Atypical real estate investors who are looking to defer and reduce capital gains may not be looking for typical real estate like returns due to the fact that they will be able to defer and reduce their capital gains via the Opportunity Zone program which will likely create a healthy dynamic for capital flows. Sectors such as multifamily, warehouse, self-storage, grocery anchor retail, and assisted living will see substantial interest from investors and developers.

In Camden County, areas such as Cinnaminson, Pennsauken, Deptford, Camden, Pine Hill, Glassboro and Lindenwold will likely be hot spots for focused/targeted Opportunity Zone investment. In Atlantic County, parts of Atlantic City, Pleasantville, the Atlantic City International Airport, Somers Point and in Cumberland County a large swath of Vineland has been designated as an Opportunity Zone and will likely see interest for focused/targeted Opportunity Zone investment.

As Confucius once said, it is good to live in interesting times. Not a day goes by without an article or post online regarding Opportunity Zones and the ability to utilize them for development and capital gains deferral.

Now is the time to optimize your capital gains deferrals and reductions if you have them vis-à-vis the sale of personal property or real property. Interested investors are already focusing on deploying capital in New Jersey and elsewhere in substantially improving various asset classes and in creating funds to deploy in investing in various asset classes.

Brad Molotsky is a real estate attorney and partner in Duane Morris’ New Jersey and Philadelphia offices. He advises clients on commercial leasing (including a specialty in cannabis leasing), acquisitions, opportunity zone fund creation and fund deployment, financing, public private partnerships and real estate joint ventures. He can be reached at BAMolotsky@duanemorris.com.

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WCRE 2018 FOURTH QUARTER REPORT

MODERATE GROWTH CONTINUES IN SOUTHERN NEW JERSEY & PHILLY CRE MARKETS

Another Solid Quarterly Performance Amid Political and Financial Uncertainty

WCRE 2019 FOURTH QUARTER REPORTCommercial real estate brokerage WCRE reported in its analysis of the fourth quarter of 2018 that the Southern New Jersey and Southeastern Pennsylvania markets continued to show overall solid fundamentals, buoyed by new investments from outside the region and economic inflows to support local expansions. Leasing, sales, net absorption, and prospecting activity all were up in the fourth quarter.

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“Although the financial markets were highly unpredictable, commercial real estate performed the way it has for most of the past several years – with steady growth supported by strong fundamentals,”

– Jason Wolf, founder and managing principal of WCRE.

There were approximately 336,466 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was an increase of 18.3 percent over the previous quarter. The sales market stayed active, too, with about 1.4 million square feet on the market or under agreement. Sales were active, with $28.5 million totaling approximately 316,476 square feet.

New leasing activity accounted for approximately 36 percent of all deals for the three counties surveyed. Overall, gross leasing absorption for the fourth quarter was in the range 286,215 square feet.

Other office market highlights from the report:

  • Overall vacancy in the market is now approximately 10.95 percent, which is an improvement of 35 basis points over the previous quarter.
  • 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 stayed near this range throughout 2018.
  • Vacancy in Camden County increased to 11.5 percent for the quarter, which is an improvement of nearly a point compared to the third quarter.
  • Burlington County vacancy stayed at 10.4 percent, unchanged.

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 was 7.8 percent. This is a slight improvement over the previous quarter. Demand for office space continues to be strong.
  • Net office space absorption in Philadelphia was 1,224,697 square feet for the quarter.
  • The industrial sector is as strong as ever in Philadelphia. The fourth quarter saw a small decrease in vacancy rates, to 5.3 percent, but a jump of about 1 million square feet in net absorption quarter over quarter, to 7.1 million square feet.
  • Philadelphia retail was the lone true weak spot in Q4. The vacancy rate ticked up two tenths of a point, to 4.5 percent, while net absorption was negative for the second straight quarter, at -611,261 square feet.

WCRE also reports on the Southern New Jersey retail market. The fourth quarter saw the contrast of a spending surge that propelled holiday sales to their best season in six years and at the same time, consumer confidence inching downward as the year drew to a close. The job market has stayed remarkably strong, with low unemployment supporting consumer spending and reverberating through other indicators. Other highlights from the retail section of the report include:

  • Retail vacancy in Camden County stood at 7.0 percent, with average rents in the range of $16.19/sf NNN.
  • Retail vacancy in Burlington County stood at 6.7 percent, with average rents in the range of $13.11/sf NNN.
  • Retail vacancy in Gloucester County stood at 8.6 percent, with average rents in the range of $13.76/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 2018 THIRD QUARTER REPORT

SUMMER SLOWDOWN SLIGHTLY COOLS SOUTHERN NEW JERSEY & PHILLY COMMERCIAL REAL ESTATE MARKETS

Activity and Prospecting Both Take a Dip

October 11, 2018 – Marlton, NJ – Commercial real estate brokerage WCRE reported in its latest quarterly analysis that the Southern New Jersey market took an expected pause in the third quarter of 2018. Leasing and sales dropped off somewhat from their earlier pace, but the market still shows overall solid fundamentals, continued new investments from outside of the region, and economic inflows to support local expansion.

“A lot of the positive trends we’ve been tracking for several quarters are still in place, so there are reasons to stay bullish,” said Jason Wolf, founder and managing principal of WCRE. “But activity did cool off noticeably, at least in part due to summer.”

There were approximately 274,931 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was down about 10.5 percent compared to the previous quarter. The sales market stayed active, with about 1.43 million square feet on the market or under agreement. This metric was essentially unchanged.

New leasing activity accounted for approximately 32 percent of all deals. Overall, gross leasing absorption for the quarter was in the range of approximately 194,282 square feet.

Download Printable Report (PDF) >>>

Other office market highlights from the report:

  • Overall vacancy in the market is now approximately 11.3 percent, which is nearly one point higher than the previous quarter.
  • 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 stayed near this range for most of 2018.
  • Vacancy in Camden County increased to 12.3 percent for the quarter.
  • Burlington County vacancy was up more than a full point to 10.4 percent, after falling during the first half of the 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 inched up to 8.1 percent in the third quarter. It stood at 7.9 percent in Q2 2018. Demand for office space continues to be strong, and the office vacancy rate is a full point below the national average.
  • Net office space absorption in Philadelphia was down compared to Q2, but still positive, at 443,032 square feet for the quarter.
  • The industrial sector is as strong as ever in Philadelphia. The third quarter saw a further decrease in vacancy rates, to 5.4 percent, net absorption in the range of 6.1 million square feet, and average rents at $5.36 per square foot. All of these figures were improvements over the previous quarter.
  • Philadelphia retail was largely flat in Q3. The vacancy rate ticked up a tenth of a point, to 4.4 percent, while net absorption was negative after three consecutive quarters of very positive absorption. Net absorption was -273,875 square feet. This number was impacted by large stores such as Sears and Bon-Ton shuttering locations.

WCRE also reports on the Southern New Jersey retail market. The third quarter saw consumer confidence inch upward in September after dramatic improvement in August. It is in the range of 18-year highs. The job market is remarkably strong, supporting consumer spending and reverberating through other indicators.

Other highlights from the retail section of the report include:

  • Retail vacancy in Camden County stood at 7.4 percent, with average rents in the range of $15.38/sf NNN.
  • Retail vacancy in Burlington County stood at 8.2 percent, with average rents in the range of $13.84/sf NNN.
  • Retail vacancy in Gloucester County stood at 7.6 percent, with average rents in the range of $14.77/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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Cost Segregation Misconceptions Prevent Tax Savings

Cost Segregation MisconceptionsProperty owners misconceptions about cost segregation are leaving money on the table. In 2001, an IRS ruling allowing taxpayers to “catch up” on prior years’ depreciation deductions was a significant upgrade to the benefit of cost segregation studies. Yet, as we approach midyear 2018, it’s estimated that 9 out of 10 commercial real estate owners don’t take advantage of this exceptional savings tool on a regular basis.

This inaction can easily be traced to misconceptions that persist in today’s marketplace. They are preventing the capture of large tax savings and increases in cash flow for commercial property owners and investors.

Download Printable PDF>>>

Cost Segregation Misconception #1:

The real property (building) depreciable value should be at least $10 million. The size of any tax savings that results from a cost segregation study is tied directly to the value of the property. However, a building does not need to be worth several million dollars to benefit. Because the realized savings are generally 7-10% of the value, even a $500,000 property could generate a savings of $35,000-$50,000, a large sum for many small business owners. Multiply that by larger property values and the savings will quickly exceed six figures. Commercial properties valued at $500k-$5 million have been the most underserved due to this
most common misconception.

Cost Segregation Misconception #2:

Cost segregation studies are just too expensive to see any real return. For the $500,000 property, the net cost of a study would be in the $3500-$4500 range. This provides a return of 8-12 times the investment. What owner wouldn’t be pleased to get their money back several times over? There are few business investments that can generate that level of return, especially on an immediate basis, in a single tax year.

Cost Segregation Misconception #3:

A cost segregation study should be done within the first 3 years of ownership, or the opportunity is lost. This was addressed in the 2001 IRS ruling that created the single most awesome feature of cost segregation – “catch up” depreciation. In a given tax year, a study allows the taxpayer to deduct all of the depreciation they could have taken since Day One of acquisition, minus the depreciation that was taken. Accumulated over all the years of ownership, this difference, and the resulting tax savings, can be quite substantial.

To understand how this all comes together, let’s look at a real-life example:

Owners of a medical services business were making plans for retirement. This included the sale of their office building which they had acquired 12 years earlier. At that time, it had a depreciable real property value of about $1,340,000. A cost segregation study was never performed during their years of ownership.

The tax advisor for a potential buyer suggested a study be completed now to “unlock” the tax savings benefit they had been sitting on. They were then able to deduct $303,000 in additional “catch up” depreciation, leading to a tax savings of $121,300. This was a very surprising and welcome boost to their retirement fund, extra money they didn’t know they had. Cost segregation companies will typically provide a free, no-obligation analysis for any commercial property. Owners are then positioned to weigh the study’s cost against the possible huge financial return without wasting time or money.

About John Ottino:

John is a Consultant serving the Greater Philadelphia/South Jersey region for Fuller CSS. FullerCSS, cost segregation specialists, with on-staff engineers and accountants, has completed hundreds of tax-savings studies for real estate investors and commercial property owners.

john ottino

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WCRE 2018 SECOND QUARTER REPORT

SOUTHERN NEW JERSEY & PHILLY CRE MARKETS SEE MODERATE GAINS WHILE WAITING FOR ANTICIPATED BENEFITS FROM TAX REFORM LAW

July 11, 2018 – Marlton, NJ – Commercial real estate brokerage WCRE reported in its latest quarterly analysis that the Southern New Jersey market remains in good shape, making moderate gains and showing strong fundamentals. The firm believes the market may be poised for strong growth as benefits of the new tax law begin to materialize.

“Our market continues to show quiet strength and may take off as consumers and businesses feel the effects of lower tax rates,” said Jason Wolf, founder and managing principal of WCRE. “We expect the new law to be a net positive for overall economic growth in 2018 and be especially beneficial to the commercial real estate industry.”

There were approximately 303,656 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was a gain of about 10 percent over the previous quarter. Leasing picked up, and the sales market stayed active, with about 1.46 million square feet on the market or under agreement and an additional 317,961 square feet trading hands.

Download Printable PDF >>>

New leasing activity accounted for approximately 61.4 percent of all deals. Overall, net absorption for the quarter was in the range of approximately 253,000 square feet.

Other office market highlights from the report:

● Overall vacancy in the market is now approximately 10.4 percent, which is nearly one point better than the previous quarter.
● 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 stayed near this range for most of 2018, though they are trending a bit higher.
● Vacancy in Camden County improved dramatically, to 11.6 percent for the quarter.
● Burlington County vacancy was at 9.2 percent, which was also lower than 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:

● Philadelphia’s office market vacancy rate was unchanged during Q2 2018. Though positive absorption was 547,339 square feet, a 20 percent improvement over the first quarter. Vacancy rates for Class A properties stood at 10.5 percent, while Class C properties had vacancy of 5.5 percent.
● Average asking rent across all office property classes in the Philadelphia market was $22.72/SF in the second quarter. Within the CBD it was $29.64/SF.
● There are about 3.8 million square feet of office space currently under construction in Philadelphia. During the second quarter 590,632 new square feet became available via completed new construction.
● Philadelphia’s retail market is moving in the right direction. Average asking rents have jumped the past few quarters, net positive absorption was 909,884 square feet, and retail vacancy rates ticked down to 4.4 percent.
● Industrial vacancy in Southeastern Pennsylvania was down to 5.6 percent. The market saw positive net absorption of more than 6.6 million square feet.

WCRE also reports on the Southern New Jersey and Philadelphia retail market. The second quarter saw a drop in consumer confidence as well as a generally positive outlook for consumer spending, buoyed by a strong job market.

Other highlights from the retail section of the report include:

● Retail vacancy in Camden County stood at 7.7 percent, with average rents in the range of $13.75/sf NNN.
● Retail vacancy in Burlington County stood at 9.8 percent, with average rents in the range of $14.59/sf NNN.
● Retail vacancy in Gloucester County stood at 7.4 percent, with average rents in the range of $14.74/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 Instrumental in Bringing Kingsway Learning Center & Services to Voorhees, New Jersey Via Multi-Phase Project

Kingsway Lerning CenterMay 17, 2018 – Marlton, NJ – WCRE is proud to have played a key role in helping the Kingsway Learning Center & Services consolidate its Moorestown and Haddonfield campuses into a new site in Voorhees. The school leased the 73,000 square foot building at 1000 Voorhees Drive with plans to relocate its pre-school, elementary, and secondary programs for its 175 students to a single site starting with the 2018-2019 school year.

Previously WCRE exclusively represented the buyer of 1000 Voorhees Drive during its acquisition of the property. Then the firm’s educational and institutional client services group secured Kingsway as the tenant. Both phases of this transaction add to WCRE’s growing number of assignments of educational and institutional properties in the Philadelphia and Southern New Jersey region. This highly specialized sector is an area of strength and growth for WCRE.

“The Kingsway team is very pleased with the way WCRE handled this project, and we’re grateful for their help in establishing our new home, “said Phil Rodriguez, Chief Operating Officer at Kingsway.

WCRE’s Vice President & Principal, Chris Henderson noted the complexity involved in matching the parties according to their needs. “This showcases our ability to work with multiple parties to structure a long-term investment and development transaction that will provide excellent outcomes for everyone involved,” Henderson said.

Download Printable PDF >>>

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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