Pennsylvania

Walgreens Boots Alliance, Rite Aid to Sell 865 Rite Aid Stores to Fred’s Pharmacy for $950M

by Nellie Day December 21, 2016

DEERFIELD, ILL. AND CAMP HILL, PA. — Walgreens Boots Alliance (NASDAQ: WBA) and Rite Aid Corp. (NYSE: RAD) have agreed to sell 865 Rite Aid stores and some assets related to store operations to Fred’s (NASDAQ: FRED) for $950 million in an all-cash transaction. The agreement came about due to concerns by the Federal Trade Commission (FTC) in its review of Walgreens Boots Alliance’s proposed acquisition of Rite Aid, which was announced in October 2015. That transaction is scheduled to close in early 2017. The 865-store sale would make Fred’s one of the largest drugstore chains in the United States, with a significant presence in the South and on the East and West coasts. If the sale is approved, Fred’s will continue to employ all store associates and certain field and regional associates related to the operations. The stores will also continue to operate under the Rite Aid banner. Fred’s has also agreed to purchase additional Rite Aid stores if the FTC mandates additional divestments for the proposed merger. BofA Merrill Lynch acted as Walgreens Boots Alliance’s financial adviser. Sidley Austin LLP acted as legal counsel on transaction legal matters and Weil, Gotshal & Manges LLP acted as its legal …

December 21, 2016

Market Reports Northeast Northeast Market Reports Office Pennsylvania

The Lehigh Valley Office Sector Welcomes New Tenants and New Developments

by Jaime Lackey July 13, 2016

The Lehigh Valley has seen no shortage of success stories in recent months when it comes to the region’s office sector. The third-largest metropolitan area in Pennsylvania, the Lehigh Valley is located 60 miles north of Philadelphia and 90 miles west of New York City. The region consists of 62 municipalities within Lehigh and Northampton counties, including the cities of Allentown, Bethlehem, and Easton. Last year, Guardian Life Insurance, one of the nation’s largest mutual life providers, announced it would establish a three-story corporate office building in Hanover Township, Northampton County. That 281,680-square-foot facility is expected to be completed by late 2016 and will house 1,500 employees. In March, Paychex Inc., a provider of payroll, human resources, retirement, and insurance services, announced it will undertake a $1.3 million expansion of its facility in South Whitehall Township, Lehigh County. That project will nearly double the company’s square footage and will create 100 new jobs. Many economic factors have contributed to the growth in Lehigh Valley’s office sector. These include its central location, well-developed transportation infrastructure, availability of suitable office space, high relative broadband rank, access to markets, and strong workforce. All these factors led Atlanta-based Garner Economics to identify high-value business …

July 13, 2016

Industrial Market Reports Northeast Northeast Market Reports Pennsylvania

Lehigh Valley’s Industrial Sector Sees Increasing Rents and Spec Construction

by Jaime Lackey July 7, 2016

With increasing rental rates, strong investor demand for core product and record levels of speculative construction, spirits are high in the Lehigh Valley with regard to industrial real estate opportunities. The record volume of product deliveries the past two years underscores the strong industrial demand in the Lehigh Valley. Vacancy has dropped from 15.9 percent in the first quarter of 2009 to a record-low 4.9 percent at the end of 2015, according to CoStar. The average net industrial rental rate jumped 11.1 percent during the past 18 months, an even more impressive figure when compared against the 10-year average of 1.65 percent rental rate growth in Lehigh Valley for modern distribution buildings. After many years of flat rental growth, year-end 2015 industrial leases were completed in the $4.75- to $4.95-per-square-foot range in the Allentown-Bethlehem-Easton, Pennsylvania MSA. In 2016, expect a modest increase in rental rates as the delivery of new construction across the northeastern Pennsylvania region will slow growth and push vacancy rates higher. Leasing activity has been broadly distributed along the regional I-78 and I-81/I-80 corridors. Within the valley, industrial growth has occurred primarily along the main interchanges of I-78, U.S. 22 and Route 33. In the past 12 …

July 7, 2016

Market Reports Northeast Northeast Market Reports Pennsylvania

Lehigh Valley Retail Development is Up, and Class A Values Top Pre-Recession Highs

by Jaime Lackey June 8, 2016

The Lehigh Valley has experienced significant residential growth over the last 20 years, and retail development is now catching up. High-growth suburban townships have seen significant retail development. Mixed-use projects that include retail are planned or underway in downtown Allentown, Bethlehem and Easton. New pad site and outparcel development has continued to be strong throughout the entire valley. The Hamilton Boulevard/Route 222 corridor in Lower Macungie has been the most active area for new construction. The 560,000-square-foot Hamilton Crossings in Lower Macungie is scheduled to open shortly and will feature Target along with the valley’s first Costco, Nordstrom Rack and Whole Foods. Trexler Business Center, a new project anchored by Movie Tavern, is also in the works. These developments will keep local residents shopping in this area versus traveling to the Macarthur Road corridor, Cedar Crest Boulevard or the Promenade Shops. The 140,000-square-foot retail component at Madison Farms in Bethlehem Township is nearing full completion and the 270,000-square-foot Westgate Mall is in the middle of a major renovation. New projects are in the planning stages along Route 309 in North Whitehall Township, Macarthur Road in Whitehall Township, Airport Road in East Allentown, Eighth Avenue in Bethlehem, Route 33 in Bethlehem …

June 8, 2016

Industrial Northeast Pennsylvania Top Stories

GE Opens First Phase of $400M Advanced Manufacturing Works Plant in South Carolina

by Nellie Day April 25, 2016

GREENVILLE, S.C. — GE (NYSE:GE) has opened the 125,000-square-foot Advanced Manufacturing Works (AMW) plant in Greenville. AMW is GE Power’s first advanced manufacturing facility. The facility will serve as an incubator for the development of advanced manufacturing processes and rapid prototyping of new parts for GE’s energy businesses. These include power, renewable energy, oil and gas, and energy connections. GE has invested $73 million in the facility to date and will invest another $327 million across the GE Power Greenville campus over the next several years. The new facility created approximately 80 engineering and manufacturing jobs, according to GE. The company broke ground on the facility in mid-2014. “This facility will ignite the digital industrial revolution for our company and the industry,” says Steve Bolze, GE Power’s president and CEO. “We’re building a skilled workforce and culture that’s devoted to delivering breakthrough innovations that deliver better, faster outcomes for our customers and unlock new productivity and growth.” GE entered the Greenville market more than 40 years ago with a 340,000-square-foot property. That site has now grown close to 1.7 million square feet of factories, offices and laboratories focused on manufacturing advanced products for worldwide distribution. GE has more than 3,200 …

April 25, 2016

Industrial Market Reports Northeast Northeast Market Reports Pennsylvania

Industrial Demand and Development in the Philadelphia region

by Jaime Lackey March 9, 2016

Metro Philadelphia’s industrial market saw strong demand, developer confidence and declining vacancy rates in 2015. Asking rents averaged $4.43 per square foot for the region, a 4 percent increase from 2014. The overall vacancy has decreased to 7.7 percent as demand kept pace with 5.7 million square feet of completed spec development. The only submarket that is posting greater than 10 percent vacancy is New Castle County, Delaware; however, New Castle’s vacancy rate was trending downward at the end of 2015. We continue to see healthy demand for industrial space in 2016. There could be some impact from global uncertainties, but these will be offset by continued on-shoring of manufacturing requirements and last-mile delivery expansion. Companies seeking between 25,000 to 80,000 square feet have seen limited availability in most submarkets, particularly for purchase. Due to strong demand and reduced availability for modern, net-leased, single-tenant buildings, some investors must consider lesser-quality assets and/or secondary locations. Sale prices and rents have increased. It is not unusual for modern bulk facilities with long-term leases in place to trade in the $90-per-square-foot range. In one recent deal, a private investor paid more than $78 per square foot for the leaseback transaction of an 85-year-old …

March 9, 2016

Market Reports Multifamily Northeast Northeast Market Reports Pennsylvania

Philadelphia’s Apartment Market Remains Bright

by Jaime Lackey November 18, 2015

Philadelphia’s apartment market remains bright as increasing employment fosters stable economic growth, which in turn is bolstering apartment operations. Employers in the metro, which is known as the center of economic activity in Pennsylvania, will increase hiring 1.2 percent this year, adding 35,000 jobs. In 2014, new jobs increased 1.6 percent and the unemployment rate decreased 130 basis points. Total employment is on the upswing, recovering nearly all of the jobs lost during the recession. The favorable employment conditions are supporting demand for apartments and swiftly improving performance throughout the metro, prompting developers to start new multifamily projects. Builders in Philadelphia are focusing their attention in Center City, which includes the central business district and central neighborhoods of Philadelphia, where nearly 25 percent of this year’s deliveries will be placed into service. Developers are on track to complete 3,600 units in 2015, increasing total apartment inventory 1.4 percent. Last year 2,400 rentals were delivered. Part of the reason that demand is especially strong in Philadelphia can be attributed to the increasing popularity of living in the urban core among young professionals and baby boomers. The lack of developable in-fill locations in the area is prompting developers to convert office buildings …

November 18, 2015

Center City Philadelphia to Receive Dual-Branded W, Element Hotel

by Nellie Day June 22, 2015

PHILADELPHIA — Chestlen Development and Vine Street Matthews have announced plans to bring a dual-branded W and Element property to Center City Philadelphia. Starwood Hotels & Resorts Worldwide will operate the 755-room hotel. The Element Philadelphia will feature 460 rooms and a 6,392-square-foot sky lobby. It will include a separate arrival lobby on Chestnut Street with elevator access to the main second-floor lobby, which will contain a 1,400-square-foot breakfast and lounge area, a 1,600-square-foot fitness center and 560 square feet of branded meeting space. The W Philadelphia will feature 295 rooms, a 2,900-square-foot spa, a 3,505 square-foot outdoor pool and deck, a 1,590-square-foot pool bar and a 2,974 square-foot garden area. The 51-story project will also include about 1,731 square feet of street-level retail and three levels of below-grade structured parking. It will be situated directly across from Philadelphia City Hall. The nearby Pennsylvania Convention Center is undergoing a $786 million expansion. Construction began on the project earlier this month. It is slated for completion in the first quarter of 2018. The development will be built by Tutor Perini Corp. Cope Linder Architects is the project designer. Vine Street Matthews is a joint venture between Matthews Southwest and Vine Street …

June 22, 2015

Market Reports Multifamily Northeast Northeast Market Reports Pennsylvania

Debt and Equity Options Fuel Greater Philadelphia’s Multifamily Market

by Jaime Lackey February 11, 2015

How long will the scorching hot multifamily market hold up? The transactional markets continue to be bolstered by low interest rates, as well as an insatiable appetite from both private and institutional equity. I don’t believe the multifamily market will cool off in 2015. Our HFF multifamily team in Philadelphia will soon be shattering price per unit records in both the suburbs and in Center City Philadelphia. Interestingly enough, half of our transactions will be purchased by new buyers, meaning buyers new to our market, new start-up companies, or established funds that are new to the multifamily arena. As is typically the case, attractive debt and abundant equity are fueling the fire. With respect to multifamily debt, it has been encouraging to see some true competition back in the market. We enter 2015 with an extremely robust debt environment wherein the agencies are being forced to compete with regional banks, life companies and CMBS options. Back in October, HFF brokered the sale of Yardley Crossing in Bucks County. This 196-unit, Class B asset, built in the early 1970s, was priced slightly below a 6 percent cap rate and roughly $170,000 per unit, but still commanded 25 tours and 15 offers. …

February 11, 2015

Market Reports Northeast Northeast Market Reports Office Pennsylvania

Philadelphia: What’s Thriving in the City & What’s Driving the Suburbs?

by Jaime Lackey October 1, 2014

Accessibility, amenities and coworking spaces are driving the suburban and urban real estate markets in Philadelphia. While suburban office tenants prefer to have access to transit and amenities, Center City office tenants seek experiences and collaboration with new coworkers. Suburban Perspective The Philadelphia suburban market consists of 59.4 million square feet comprising 13 distinct submarkets. The majority of this inventory consists of dated commodity office space, mostly built prior to 1990. With an overall vacancy rate of 20.8 percent and average asking rents of $24.90 per square foot, the Philadelphia suburban market has been less dynamic than its Center City counterpart. Although many older properties suffer from functional obsolescence, well-maintained assets with access to major roadways/public transit and amenities outperform the market average. For example, the Radnor, Conshohocken and Bala Cynwyd submarkets remain the three strongest submarkets in the region. Vacancy rates in these markets range from 2 to 14 percent, with average asking rents ranging from $30.75 to $37.00 per square foot. All three of these submarkets have immediate access to major roadways, public transit and amenities. Suburban office developers have taken note of the strong fundamentals in these areas as well as Center City Philadelphia. They have created …

October 1, 2014

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