Here is a roundup of the latest leases, sales and other transactions in the Northeast middle markets.
This week by the numbers
If the commercial real estate markets in Boston and Philadelphia are any indication of what’s to come in Sunday’s big game, fans should brace for a gridiron matchup of epic proportions—one that will pit the New England Patriots and Philadelphia Eagles in a battle of the titans, the likes of which has yet to be seen in this century.
Football experts are predicting the New England Patriots will walk away with the win in Minneapolis’ U.S. Bank Stadium, in what could be the team’s sixth NFL championship. But the commercial real estate experts at Jones Lang LaSalle say they evaluate more than just athletic prowess, instead pitting CRE fundamentals head-to-head to predict a winner.
While history tends to favor commercial real estate vacancy rates in the Big Game, JLL’s research experts say both Philadelphia and Boston are experiencing such strong market activity that they both bring nearly equal firepower to the game.
Since the firm started making predictions in 2011, JLL Research has accurately forecast the winner nearly 70 percent of the time, based on real estate market data. But this year, the firm’s statisticians are stumped as the numbers reveal both cities have left it all on the field in their respective commercial real estate markets.
Boston’s vacancy rate is just 13.5 percent, which is marginally higher than Philadelphia’s 10.9 percent vacancy rate. But to get a true picture of the city’s real estate health, they compared more than just the running game and broke it down further based on tenant demand and investor opportunity.
In Boston, as economic conditions locally continued to improve, the office market benefited from significant tenant demand, bolstered by the innovation economy. Technology companies from near and far remained bullish on the Boston market especially, with many relocating and expanding to this talent-filled market. Just look to coworking provider WeWork, which opened its sixth location in Boston at the end of 2017. And it’s not just the tech industry that’s seeking an urban address and stripping availability, which is resulting in a more competitive leasing environment in Boston.
“Boston is a highly attractive place for businesses to grow thanks to our highly skilled workforce,” says Jim Tierney, JLL’s New England market director. “Not only do we have the most talented football team, we are home to the most talented people in the country. Investors are recognizing the explosive growth in Boston and our economy is flourishing because of it.”
While the Philadelphia market may have been trailing the likes of Boston all season, the CBD office market closed that gap at end of 2017 with strong leasing and sales momentum. Following several quarters of stagnant leasing activity, four large deals totaling more than 527,000 square feet were completed in the fourth quarter alone, bringing the yearly leasing total to just over two million square feet.
“Philadelphia is splitting the uprights in both sports and commercial real estate,” says Mike Morrone, JLL’s Philadelphia market director. “The city continues to prove as a top destination for corporations looking to capitalize on Philadelphia’s deep talent pipeline of those who are drawn to the city’s low cost of living and exceptional quality of life. We’ve solidified our position as a major business hub of the Northeast region – a veritable powerhouse that attracts and inspires.”
So while research fundamentals indicate these two teams will be battling it out until the very end, one expert who’s well-versed in both ground leases and the gridiron predicts this will come down to a matter of familiarity with the big game.
JLL’s Americas executive chairman and Hall of Fame Quarterback Roger Staubach says that while both cities have compiled solid stats, “The Eagles will be a real test for New England, but the Patriots just seem to have the experience. They make the big plays when they have to, especially Tom Brady who is as good as it gets. There’s no doubt it’ll be a tough game with New England’s offense versus Philadelphia’s defense but I think the Patriots will ultimately prevail.”
Deal Tracker Daily
BOSTON, MA—KeyBank Real Estate Capital has secured a $10.7 million Freddie Mac, first mortgage loan for 601 Albany Street, Boston, MA. The 40-unit, midrise property was built in 2009 and includes one ground-floor commercial unit and a ground-floor parking garage. The property is subject to an Affordable Housing Agreement, which reserves five units for households earning 80 percent or less area median income. Chris Black of Key’s National Multifamily Accounts Group arranged the non-recourse financing with a 10-year, interest only term. The loan was used to refinance existing debt.
GREAT NECK, NY—Cushman & Wakefield announced today that the firm has arranged the sale of 25 Cuttermill Road, a prime retail strip in Great Neck Plaza, New York. The final closing price was $4.8 million, or approximately $427 per square foot. A Cushman & Wakefield brokerage team consisting of Director Benjamin Efraimov and Senior Associate Kevin Schmitz represented the seller, 25 Cuttermill Road Realty Corp, in the transaction. The site was purchased by Nassimi Realty.
WALTHAM, MA—Cushman & Wakefield announced today that Digital Guardian and ServiceNow have both signed sublease agreements for a combined total of 77,000 square feet at 275 Wyman Street in Waltham, MA. The site currently serves as a North American office for Cimpress, the world leader in mass customization, and its well-known brand Vistaprint. Digital Guardian was represented in its 44,000-square-foot sublease by Keith Gurtler of Avison Young, while ServiceNow was represented in its 33,000-square-foot sublease by Jim Abarta and Bill Lynch of Colliers International. Cimpress was represented in both transactions by Brian Hines, Michael O’Leary and Kevin McNamara of Cushman & Wakefield. 275 Wyman Street is an award winning, five-story building constructed in 2015 and totaling 300,000 square feet of Class A office space. The building is owned by Hobbs Brook Management, was designed by Margulies Perruzzi Architects and was built by Commodore Builders.
VOORHEES, NJ—Vantage Real Estate Services represented the Juliano Developers, a South Jersey real estate development and investment group, in the purchase of a property at 324 Burnt Mills Road in Voorhees, NJ. The property is zoned for commercial use and the building located on the property will be demolished, allowing Juliano Developers to utilize the property as it was intended. This ideal location has more than 212 feet of frontage on Burnt Mills Road and is positioned next to a Sears Outlet and near the Voorhees Town Center, the redeveloped Echelon Mall.
NEW YORK, NY—RKF arranged a 3,400-square-foot lease for the Thierry W. Despont Gallery. The artist/architect’s retail gallery is open to the public. RKF Senior Director Andrew Stern represented both Despont and landlord Bexin Management in the transaction. The gallery will occupy 1,700 square feet on the ground level and 1,700 square feet on the lower level. Situated on the south block between Hudson and Greenwich Streets, 175 Franklin Street is a mixed-use property built in 1890. It is located on a historic cobblestone street and is close to public transportation and the Hudson River waterfront.
PHILADELPHIA, PA—MSC Retail has developed Franklin’s Table Food Hall, a 10,000 square foot food hall with seven Philadelphia food operators, on the main campus of the University of Pennsylvania. The food hall is located just off the corner of 34th and Walnut Streets in University City and is slated to open in mid-March 2018. The +/-170 seat food hall features seven kiosks and will be open seven days-per-week for breakfast, lunch and dinner.
ISELIN, NJ—Uber and Mack-Cali Realty Corporation unveiled a new commuter ridesharing partnership that caters to the modern office worker’s desire to live a car-free, transit-oriented lifestyle. Beginning on February 1, Mack-Cali is paying for its tenants’ Uber rides up to $15 to and from four office complexes in Metropark, Iselin, NJ, during commuting hours, as part of a three-month pilot program.
NEW YORK, NY—Gregg Delany joined real estate investment bank Eyzenberg & Company as a senior director. A highly experienced industry veteran who has closed more than $26 billion in banking and institutional investment transactions, Delany will originate, structure and place debt and equity for commercial real estate owners and investors across the US. Throughout his career as a lender and advisor, Delany has arranged fixed, floating, bridge and construction mortgages, and lines of credit—ranging from $3 million to $1.5 billion—for all commercial property types. On the equity front, he has closed $3 billion worth of placements, including capital raises for acquisitions, dispositions, new developments, joint ventures, commingled funds and separate accounts.
MORRISTOWN, NJ—Jon F. Hanson, founder and chairman of The Hampshire Companies, has been named to the New Jersey Hall of Fame. Hanson, along with 15 fellow inductees, will be inducted into the Hall of Fame at a ceremony at the historic Convention Hall in Asbury Park, NJ, on May 6, 2018. In addition to his role at Hampshire, Hanson currently serves as director of Yankee Global Enterprises, and chairman emeritus of HealthSouth Corporation and the National Football Foundation and College Football Hall of Fame.