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Follows recent agreement to sell Infomart Dallas for $800M to Equinix ASBReal Estate Investments sells three remaining data centers to IPI Partners
ISSUE HIGHLIGHTS Volume 30, Issue 8 April 27 - May 10, 2018
W $800 million agreement to sell Infomart D a l l a s t o Equinix, ASB Real Estate Investments ( ASB ) an - n o un c e d a s e p a r a t e
mid-year 2018. Robert Bellinger , ASB Real Estate Investments’ presi- dent and CEO, said: “Our data center investments proved extremely timely and profit- able for our fund clients. As the market for data centers has expanded and investor demand has increased, we strategically decided to capture a singular disposition opportunity to lock- in gains and have been able to negotiate two significant transactions contemporane- ously. Going forward, we will retain a stake in the data center sector for the next three years through the Equinix debt securities and will have the opportunity to rebalance and further strengthen our diversi- fied real estate portfolio.” ASBwas advised by DHCap- ital , as its financial advisor, and DLA Piper LLP, as legal advisor on the transaction. n largest retail development in downtown Philadelphia, encompassing 840,000 s/f of shopping, food and entertain- ment destinations including an eight-screen AMC The- atre, Century 21, and the largest H&M in Philadelphia. The property also provides direct access to SEPTA’s Jef- ferson Station, and is within walking distance to Reading Terminal Market and the Pennsylvania Convention Center. Confirmed East Market retail tenants include an Iron Hill Brewery & Restau- rant, City Fitness, Columbia Sportswear, T.J. Maxx/Home Goods, and Federal Donuts. The mixed-use project will also include 175,000 s/f of of- fice space, and 322 residential units. Thor Equities owns proper- ties in major cities through- out the United States includ- ing New York, Washington, D.C., Miami, Chicago, Hous- ton, San Francisco and Los Angeles, as well as in Europe, Canada and Latin America. n
a s h i n g t o n , DC — Following on its announced
SPO TLIGHTS
Spring Preview 5-21A
Robert Bellinger
transaction, the completed all- cash sale of its three remaining data centers and their opera- tions to an affiliate of IPI Data Center Partners Management, LLC (IPI Partners). The three assets total 665,000 s/f of space and are located in San Jose, CA; Hillsboro, OR; and Ashburn, VA. ASB agreed to the sale on behalf of its Allegiance Fund , a $7.4 billion core real estate investment vehicle. An early institutional investor
Infomart Dallas
in data center properties, ASB purchased Infomart Dallas in 2005, expanding its capacity to 110 carriers with major tenants. The company added to its data center portfolio in three separate acquisitions: Infomart Silicon Valley in 2008; Infomart Port- land, located in Hillsboro, OR, in 2011; and Infomart Ashburn, located in Ashburn, VA, in 2014. Last month ASB announced
a definitive agreement to sell Infomart Dallas, the 1.6 mil- lion s/f data center and office complex, to Equinix, the global interconnection and data cen- ter company, for $800 million. The transaction consideration will consist of cash and debt securities, which will be paid out to the Allegiance Fund over a 36-month period following closing, which is expected by
Section C
MAREJ Events May 29, 2018 Delaware CRE Forecast Conference
Thor Equities acquires first property in Philadelphia totaling 214,000 s/f for $41.8M
May 30, 2018 PA Multifamily Conference
Philadelphia, PA — Thor Equities , a global leader in urban real estate de-
June 7, 2018 NJ Land Development Conference For speaking and sponsorship information, please contact: Lea at 781-740-2900 or lea.christman@marejournal.com
velopment, leasing and m a n a g e - men t , ha s closed on the acquisition of a three- story office c o nd omi n - ium at 907
Joseph Sitt
Directory
Upcoming Spotlights Central New Jersey PA’s Projects & Building Services NJAA Expo& Conference Spring Preview.................................................5-21A Business Card/Billboard Directory.......................27A Owners, Developers & Managers............... Section B Shopping Centers featuring ICSC ReCon...... Section C
907 Market St.
Market St. in Philadelphia for $41.8 million. The 214,000 s/f property is fully leased to Health Part- ners Plans, a not-for-profit health maintenance orga- nization serving more than 280,000 members in South- eastern Pennsylvania. “907 Market St. is a high quality asset located in the heart of Market East, the fastest growing neighborhood in Philadelphia’s burgeoning
City Center district,” said Joseph Sitt , CEO of Thor Equities. Retail, residential and of- fice development projects in Market East include Fashion District Philadelphia located directly below the property, as well as East Market and the Lits Brothers Building. Scheduled to open in the fourth quarter of 2018, Fash- ion District Philadelphia (for- merly The Gallery) will be the
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Collaborative culture of experienced Investment Real Estate Professionals
COLLABORATIVE CULTURE + RELATIONSHIP FOCUSED + DEFINED EXPERTISE
Horvath & Tremblay is one of the most active and successful Investment Real Estate Brokerage firms in the United States specializing in the sale of single tenant net-lease assets and retail shopping centers. We have experience successfully structuring sale lease-back programs, portfolio dispositions, and 1031 exchanges. We have a dedicated buy side desk that provides real time inventory and market data to each individual client placing capital or fulfilling a 1031 exchange requirement. The firm is dedicated to being the best source of information and expertise in the marketplace for private investors, developers, institutions, and industry professionals.
www . Ho r v a t hT r emb l a y . com
Main: 781-776-4000 | Fax: 781-823-0245 | info@horvathtremblay.com
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O wners , D evelopers & M anagers By Casey Murphy, NCIDQ, HF Planners Workplace Acoustics: Think outside the box
New Warehouse Construction at the Award-Winning Haines Center
A
s open office space be- comes more common, functional acoustics
of sound attenuation that a facility manager can control, or at the very least keep in mind, while managing a new project-- Absorption, Isolation, Masking and Space Planning. When discussing sound at- tenuation, we will reference two ratings systems- Sound Trans- mission Class (STC) and Noise Reduction Coefficient (NRC). STC is used in the following applications: wall, ceiling, and window assemblies to define how much a given assembly is able to temper sound. NRC is used to designate an indi- vidual material’s ability absorb sound into itself. The simpli- fied version is that in general the higher the STC and NRC ratings will lead to a quieter office space. Absorption of sound will allow the reduction of noise through finish selections by in- creasing the NRC of materials throughout a space. With the increase of concrete and hard surface flooring, ample areas of carpeted flooring will help aid in sound absorption. For ceilings, while the basic solu- tion includes a dropped acous- tical ceiling in standard 2x2 grid, manufacturers are also
offering “Baffles”, “Clouds” or “Blades” to maintain the open look while providing a foil to the purely open ceiling. Overall, HF Planners recommends material choices for ceiling, walls, floors and panels that include Fi- berglass, Mineral Wool, Wool, Nylon, or Felt. The Isolation portion of noise abatement technique relates to the hard construction of your space. Space Planners should isolate high-noise areas by employing walls that contain airspace, gypsum board, and sound batten insulation. The best practice, if possible, would be to build new partitions, to the deck of your space with sound batten fill and double gypsum board sheathing. Done properly, this can help a 5 ½” partitions reach an STC rating of 56 (United States Gypsum Company). When full height partitions are not an option, such as in interior retrofits with existing partitions, HF Plan- ners often details a “sounds blanket” of R13 insulation installed for 24” in each direc- tion past the existing partition to raise the STC rating of your existing partitions. continued on page 22B
are becoming less so. With the removal of traditional framed walls, ceilings and s o f t p a n e l s y s t e m s - - bench style work stations
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and open ceilings become more popular, designers are finding a need to think outside the stan- dard box. Sound generated by densely packed employees has no place to go, and is bounced all over the space, creating Noise. Noise is detrimental to a productive workforce, in the form of decreased productivity and focus with increased stress (LoBosco). Often this problem is not addressed until after a new design has been constructed and the workforce has moved in. Whether this is an over- sight, or scope is reduced due to costs or aesthetics, the key is to combat the issue before it becomes an employee com- plaint and adds additional costs to the project. HF Planners takes a broad look at methods
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M id A tlantic R eal E state J ournal
Marks 2ndmulti-million dollar transaction completed with the Blumenberg’s in less than 6 mos. Lee & Associates team of Marchisio, Bartolomeo &Maffey represent purchasers in Springfield, NJ S
DrewMaffey represented the purchasers, Tuli Blumenberg and Duvi Blumenberg. The building hosts a solid tenant roster, and is occupied by SAS Graphics/2XL Imaging and Ring Container. “This was a smooth transaction” said Marchisio. Tuli Blumenberg and Duvi Blumenberg were a pleasure to work with as the purchaser. They performed admirably, and delivered on time. The Fadem Rd. transac- tion marks the second multi- million dollar transaction we have completed with the Blumenberg’s in less than six months”, added Marchisio.
pringfield, NJ — The New Jersey office of Lee & Associates announce the sale of 50-52 Fa- dem Rd. in Springfield, a mod- ern, 207,000 s/f industrial fa- cility on 10+ acres. Attributes include ceiling heights ranging from 22 to 32 feet, multiple loading docks and executive office space. Situated just off Route 22 in Springfield, the facility has direct, toll free ac- cess to Port Newark/Elizabeth. The team of Rick Marchi- sio, Crista Bartolomeo and Bussel Realty brokers sale of 1076 Route 1 in Avenel, NewJersey Avenel, NJ — Bussel Realty Corp. (BRC) an- nounced its sold 1076 Rte. 1 in Avenel, a 10,125 s/f showroom and industrial property. David Blitt , senior vice president of BRC, and Jeffrey Goldfinger , vice president of BRC, represented the owner, Hillbat Holding Company. Daunno Realty represented the buyer, Preferred Party Rentals. The property sold for $800,000. 1076 Rte. 1 is a 10,125 s/f showroom and industrial building located directly off Route 1 in Avenel. The prop- erty features 16’ ceilings, four grade level loading doors, and 156-feet of frontage on Rte. 1. The property site has parking on the front and sides of the building. ReadyCap Comm’l. grows bridge lending team NEW YORK, NY — Rea- dyCap Commercial, LLC has hired new team members in Chicago and New York to expand the Bridge Lending team. Mark Blaha joins the Bridge Lending Team as a di- rector of originations to cover the Chicago and Midwest regions. ReadyCap has also added Fernando Mendez as an associate director and J o- ram Coxworth as a produc- tion analyst, to the New York City office. 1076 Rte. 1
50-52 Fadem Rd. aerial
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GH-MAREJ Q1 Sales Ad 0418 FP.indd 1
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M id A tlantic R eal E state J ournal S pring P review
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Robert Dann Max Spann Real Estate & Auction Company
Richard Gacek Gacek Design Group
Ian Grusd Ten-X Commercial
Marc Duval HFF
Steve Kettelberger Blue Rock Construction Inc.
Chuck Hurchalla Evolution Energy Partners
Dee Kelley, Esq. Stark & Stark
Matthew Leonelli Sheldon Gross Realty, Inc.
Jeffrey L. Silberman, Esquire Kaplin Stewart
Michael Sylvester EWMA
Tom Onder, Esq. Stark & Stark
Bill Smith Smith Phillips
Inside:
1031 Exchange Exchange Solutions ......................................................... 6A Attorney Jeffrey L. Silberman, Esquire, Kaplin Stewart..................7A Auctioneer Robert Dann.....................................................................8A Energy Management Chuck Hurchalla, Evolution Energy Partners...................9A Environmental/Remediaiton Michael Sylvester, EWMA..............................................10A Financing NorthMarq Capital.......................................................... 11A Industrial Construction Steve Kettelberger, Blue Rock Construction Inc............12A Industrial NJ Marc Duval, HFF............................................................13A
Interior Design Richard Gacek, Gacek Design Group............................14A Medical/Retail Tom Onder, Esq. and Dee Kelley, Esq., Stark & Stark...15A Mortgage Real Property Capital.....................................................16A New Jersey Broker Matthew Leonelli, Sheldon Gross Realty, Inc.. ..............17A Parking Technology Bill Smith, Smith Phillips. ...............................................20A Real Estate Investment & Management Bergman Real Estate Group..........................................19A Technology Ian Grusd, Ten-X Commercial........................................18A
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1031 E xchange
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• 20 YEARS EXPERIENCE • COMPETITIVE FEES • CERTIFIED EXCHANGE SPECIALIST® ON STAFF • 24/7 TELEPHONE ASSISTANCE • NATIONALLY RECOGNIZED • DEFINITIVE ANSWERS TO YOUR EXCHANGE TRANSACTION • BONDED AND INSURED • SEGREGATED QUALIFIED ESCROW ACCOUNTS After all, you are a discerning customer TRUST THE PROFESSIONALS 3 6 ’ I 516-771-2400 FREEPORT, NY 11520 Members of the Federation of Exchange Accommodators. Bonded and Insured EXCHANGE SOLUTIONS www.exchange-solutions.com Kim Rincones Sr. Exchange Coordinator Diane Schaefer, CES President Kim Rincones Sr. Exchange Coordinator Kim Rincones Sr. Exchange Coordi ator Diane Schaefer, CES President Diane Schaefer, CES ® President ®
Melissa Beck Exchange Coordinator
Melissa Beck Exch nge Coordinator
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By Jeffrey L. Silberman, Esquire, Kaplin Stewart “The Reports of My Death are Greatly Exaggerated…” A ttorney
S
everal quotes come to mind when summing up the current state
locations to complement their online presence. Shopping center owners and developers also play a part in propping up the in- dustry. Many tenants that were formerly taboo for shop- ping centers are nowwelcome participants. Health clubs, entertainments uses, medi- cal uses, car dealers, movie theaters, and a host of other users are now commonplace in shopping centers, whereas these uses were formerly last resorts. More traditional “retailers” have contributed to this turn around by agree-
ing to be flexible and waiving prohibited use restrictions that would otherwise block these uses. In this regard, it is important for the lawyer to make sure that the lease gives the landlord as much leeway as possible to allow space in the shopping center to accommodate these new users. Lastly, municipal planning appears to be playing a part in keeping retail alive. With the economy revving back up, the residential market is much improved. Home buy- ers like convenience and mu-
nicipalities have an affinity for mixed-use development. Many of the new residen- tial projects we see involve multi-family on top of retail, or houses and townhouses coupled with a retail/com- mercial component. Munici- palities seem to like increas- ing the tax base while not over-crowding the schools. Retail is certainly in a transition, but do not bury the shopping center quite yet. The participants in the business are creative, smart and have a will to survive, so use whatever saying you
want, but the conclusion should be that although video killed the radio star (sorry, couldn’t help myself), online has not yet squashed the shopping center. Jeffrey L. Silberman, Esquire, is a principal at Kaplin Stewart and a member of the Real Es- tate Transactions Depart- ment. Silberman concen- trates his areas of expertise in real estate transactions, particularly commercial and retail leasing, acquisitions and dispositions of real prop- erty and financing.
of the retail business – “ bend but don’t break”, “down but n o t o u t ” a n d “ T h e Reports of My Dea th are Greatly
Jeffrey Silberman
Exaggerated”. Despite the widely held panic that Ama- zon and its online comrades have sounded the death knell for the traditional shopping center, the current reality is that retail is very much alive, albeit different and evolving. I have spoken to dozens of brokers and developers, and I personally represent many of the retail developers in our area, and everyone is busy. From my perspective – and you can find countless viewpoints by simply doing a quick Google search – there are several reasons that re- tail is weathering the online storm. One big reason shopping centers have not folded the tent is that some products simply do not sell online. Although Amazon recently purchased Whole Foods and other supermarkets that sell all types of groceries online, it seems that the American consumer is not yet comfort- able with buying food on the internet (at least not fresh food, such as meats and produce). This could, of course, change as online retailers hone their skills, but for now, grocers are still anchoring shopping centers, particularly as many shop- pers seek healthier alterna- tives. Also, although apparel is readily available online, the consumer still needs to try on clothes, so all types of clothing stores, particularly discounters, are filling empty shopping center space. Another explanation for the resiliency of the retail sector is that retailers are learning to adapt. This does not come without some pain, as retailers are shrinking their footprint and getting more selective, but tenants are learning that shopping can be an experience, which attracts customers to the store. In addition, some purely online retailers are opening brick and mortar
Trust Kaplin Stewart for a hands on approach • Land Use & Zoning • Construction • Real Estate Transaction • Business, Corporate Planning & Litigation
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Real Estate Journal
A uctioneer Auctions are the perfect forum tomatch varied buyers with properties in need of repurposing
Auctions bring out the entrepreneurs
A
s Sears and Toys R Us close their stores and their properties go up
for properties that have laid dormant for five, ten and even fifteen years. As the highest and best use for properties changes and the construction costs remain high, buyers are looking to re-purpose old retail stores into warehouse, distribution and multi-family. As an auctioneer at Max Spann Real Estate we have sold every type of real es- tate. Ten years ago we were sold dozens of bank branches. Banks had tried to sell them, but no other banks were open- ing branches, all of them were closing. Most of the buildings, like other bank branches were
well-built brick, on busy high- ways and in good shape. As they gave the properties to us to sell and we found ourselves finding a new breed of buyers. New entrepreneurs were con- verting them into restaurants, financial services, doctor and lawyer’s offices. We found out from exit interviews with these buyers, and not to our surprise, that many of themwe not in the market looking for a building and certainly not a bank branch. The only reason they looked further at the ad- vertisement and didn’t throw it in the garbage was because it said the word “Auction” on it.
They came to the open house, usually found a solid building and decided to repurpose it. We also found that not only did the word “Auction” put people not currently looking for property but it put people that were not currently look- ing in this geographic market into a place they would not have normally been shopping. A good example of this is that many of our buyers in our condominium sales were not in the currently in market look- ing for a Jersey Shore condo, but because they saw the word auction they drove down to Atlantic City, discovered the
views, the open-air pool, the fun restaurants close by and thus started the engagement process. Some of these people, had never vacationed in At- lantic City. They and their families for generations had vacationed in Ocean City, Seaside and Wildwood, they never thought about buying any place else. The similarities we see to- day are striking, for a recent Auction sale of seven dorms in eastern New Mexico. The bank had dropped the price, put new roofs on the property and put a ton of money in and could not find a buyer. We put the word “Auction” on it and had interest from California to Florida and Canada. The high bidder, from Brooklyn, would have never looked into buying dorms in Roswell, New Mexico. This also played out recently with a Mall Sale in Willing- boro, New Jersey. Prospects showed up wanting to contin- ue and expand retail, convert to Multi-family and of course the hottest use was for some type of warehouse and distri- bution center. It may wind up being all of those things. We also found that it is this unique buyer, the person that has a different idea for the property that has not over analyzed the situation, cal- culated the square foot price compared to every sale for the past three years and basi- cally talked themselves out of the property. It is this unique buyer, that has a passionate entrepreneurial spirit, a new idea, a hard work ethic and a will to succeed that end ends up buying the property. So as this market continues to evolve, I don’t expect to see too many more condominium projects to come to market and the banks have sold off most of their old branches. I do see retail malls, office buildings of all sizes and shapes that will be available to the new inves- tors. Especially the plethora of buildings in and around cities that are starting to rise as newer generations move back. It will be exciting to see how these out of the box thinkers reshape them into new vibrant millennial ready investments. Robert Dann is COO for Max Spann Real Estate & Auction Company. Dann is a Licensed Auctioneer and Broker in multiple states fromFlorida to Vermont.
for auction, owners are looking for to sell once p r o f i t a b l e ma l l s and finding few takers. Sell- ers are look- ing for out of
Robert Dann
the box thinkers to repurpose outdated and obsolete real es- tate buildings. In recent years we have seen an increase in the number of sellers turn- ing to the auction method
Buying or Selling? Call Max Spann for Accelerated Marketing Services & The Auction Advantage Visit Maxspann.com for more information on these and many more upcoming sales including: Office and Retail in NJ, Lots and Land in PA, and Redevelopment in the Mid Atlantic Region
Phone: (888) 735-9191 www.maxspann.com
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E nergy M anagement
By Chuck Hurchalla, Evolution Energy Partners Two essential steps to protect your Portfolio’s Energy Spend
U
tility expenses are the second largest ex- pense category across
equivalent energy audit at no cost or obligation to you. In addition, they should: have expertise regarding the best energy efficiency measures for your industry, be able to self-perform the installation of their solutions, and garner the maximum available utility rebates and other federal and state incentives. Spring is an optimal time to conduct an energy audit of your building – why wait to find out there’s an issue – an audit will highlight potential areas of concern to be addressed before continued on page 22A
Conduct an energy ef- ficiency audit. The heat and humidity of summer means there will be increased demand on your building’s systems. Engaging an experienced en- ergy engineering partner to conduct a thorough energy au- dit – including lighting, HVAC, mechanical and refrigeration loads – provides you with de- tailed recommendations and costs to permanently reduce your energy consumption and related operating costs. The right energy engineering partner will be able to provide a detailed ASHRAE Level 2
all building types in the commercial sector. En- ergy prices peak during the summer months and the majority of buildings
Chuck Hurchalla
experience their highest energy consumption at the same time. The chart to the right shows the monthly electricity usage of a 1,450,000 s/f mixed-use high- rise commercial property. The electrical consumption trend- line is typical of most building types. Lowest usage is seen in March with 1,120,000 kWh and highest usage is in August at 2,028,000 kWh - an over 80% increase compared to March. The combination of volatile prices and increased usage can wreak havoc on your summer energy spend if you are not pre- pared. Spring is a great time to plan out a comprehensive en- ergy strategy that protects you from the unavoidable spikes in costs during the summer. It’s also a great time to develop a long-term plan that will offer savings for years to come. To get your building sum- mer-ready: Take advantage of fa- vorable energy markets. Shopping for your building’s energy supply is a smart way to identify savings opportunities over your utility. With growing numbers of suppliers, it may become difficult to get an equal comparison of their pricing terms and contract language. Using an energy partner will allow you to receive the best pricing options on your energy supply – providing equal com- parison for multiple suppliers. A good energy partner will also watch the markets and provide recommendations on when markets pose the great- est benefit to your bottom line. Spring energy markets pro- vide an opportunity for you to lock-in energy supply savings before the heat of summer ar- rives. It is also a time to plan for the long-term – as you can shop now for future years dur- ing the typically lower costs of spring. A superior supply plan is looking for opportuni- ties three to five years out. It’s never too early to buy ahead, even if you signed a contract within the past six months.
Monthly electricity usage of a 1,450,000 s/f mixed-use high-rise commercial property
DON’T WAIT UNTIL IT’S TOO LATE, LET US HELP YOU DEVELOP AN ENERGY PLAN TO GET YOUR PORTFOLIO SUMMER-READY.
ENERGY PROCUREMENT Let us take the work out of evaluating the pricing, contract terms, and language of multiple suppliers. - Electricity & natural gas - Straightforward procurement process - Price transparency - Some of the lowest fees in industry - Provide market insights to time purchases effectively ENERGY AUDIT & ENGINEERING Do you have a property that is using more energy than needed?We can help with a comprehensive audit that will provide long-term savings. - Complimentary energy audits - Initiatives focus on positive cash flow - Recommend & implement solutions - No up-front capital required on projects - Permanently reduce energy consumption & spend
Our leadership team has over 80 years experience in the energy industry and are recognized as experts in their field. Throughout their careers, they have helped hundreds of clients save millions on their energy spend. For more information, please contact:
CHUCK HURCHALLA President 610-329-8288 CHurchalla@evolutionep.com
VANESSA STRAUSSER VP, Procurement 484-560-2574 VStrausser@evolutionep.com
ROB HOLDSWORTH VP, Engineering 908-500-1643 RHoldsworth@evolutionep.com
ANDY BAKEY VP, Business Development 609-217-3407 ABakey@evolutionep.com
www.EvolutionEP.com
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E nvironmental /R emediaiton
he commercial and industrial real estate market in New Jersey By Michael Sylvester, EWMA SECUR-IT ® programcombines business, insurance, and technical elements to manage risk &meet overall project goals T
day responsibility of managing environmentally distressed properties to the private sec- tor by utilizing environmental professionals that are licensed by the State. This has sped up the remediation process of contaminated properties in New Jersey considerably and has allowed developers to redevelop thousands of brown- fields into useful and valuable properties. EWMA’s SECUR-IT ® Guar- anteed Fixed-Price Remedia- tion program combines busi- ness, insurance, and technical elements to manage risk and
be developed into residential, commercial and industrial buildings is being driven by two trends: the desire people have to live near urban areas and the need for warehouse space to fulfill the demand generated by internet-based businesses. This year has already prov- en to be one of the best times for developers to pursue re- development of brownfield properties. Brownfield rede- velopment is a key compo- nent in building strong local economies in New Jersey, as it returns unusable properties
back to uses that benefit the community. There is a great amount of support on both the local and State level for re- development of these proper- ties that have environmental legacies. An important component of the renewed interest in redeveloping environmentally distressed properties is New Jersey’s Licensed Site Reme- diation Professional (LSRP) program, which is a product of the Site Remediation Reform Act (SRRA) that was enacted in 2009. The LSRP program is designed to shift the day-to-
meet overall project goals. The program has played a key role in providing the cer- tainty needed by lenders and investors to provide funding to remediate and redevelop environmentally distressed properties. The SECUR-IT ® program often plays a criti- cal role during the sale of environmentally distressed properties, as both the sell- ers and buyers can rely upon the fixed cost provided by SECUR-IT ® and the fact that the cleanup is under contract to be completed. In some circumstances, SE- CUR-IT ® has proven to be the only way to get all the parties to the table to move forward with a real estate transaction that involves an environ- mentally distressed property, since it provides predictable timing, budgeting, and accu- rate estimation of return on investment calculations. The main benefit of the SECUR- IT ® program is the cap on remediation costs and limited environmental liability that it provides, which are needed by developers to ensure that their remediation costs are understood and fixed. Developers have many tools they can utilize to take advantage of the numerous opportunities to redevelop environmentally distressed properties within New Jersey, which have a great amount of value that can be unlocked once they are cleaned up and redeveloped. In addition to the LSRP program that has sped up site remediation and the SECUR-IT ® Guaranteed Fixed-Price Remediation pro- gram that provides certainty in an uncertain world, the New Jersey Economic Development Authority (NJEDA) offers several programs to assist de- velopers seeking to redevelop environmentally distressed properties within the State. Michael Sylvester is ex- ecutive vice president of EWMA. Sylvester is respon- sible for managing the day to day business operations. In addition, he is also responsible for the overall management of EWMA corporate business planning and development efforts. Sylvester has over twenty-seven years of public/ private sector experience in the environmental industry and is recognized on both National and State levels as a leader in Brownfields.
i s hea l thy a n d c u r - rently grow- ing. Due to the lack of developable land and the strong econ- omy in the state, devel-
Michael Sylvester
opers are now looking to devel- op brownfield properties that are usually passed over due to environmental concerns. The need for brownfield sites to
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Real Estate Journal — Spring Preview —April 27 - May 10, 2018 — 11A
M id A tlantic
F inancing
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12A —April 27 - May 10, 2018 — Spring Preview — M id A tlantic
Real Estate Journal
By Steve Kettelberger, Blue Rock Construction Inc. Industrial Development: Power of Teamwork I ndustrial C onstruction
B
ehind every project at Blue Rock Construc- tion Inc. you’ll find a
With a continued emphasis on teamwork throughout the development process, and the support of knowledgeable de- velopment and construction professionals with the same philosophy, Blue Rock can con- tinually deliver projects that exceed our clients’ expectations. A few Blue Rock examples that feature success through teamwork include: • Veroni USA Inc, Logan Township, NJ Building Veroni’s first project in the United States, a 46,800 s/f slicing and refrigerated distribution facility, created unique challenges. Veroni is
a cured-meat specialist from Italy with a rich family history dating back to 1925. Blue Rock teamed with de- veloper Dermody Properties to deliver this facility. The inter- action with Italian engineers and vendors created cultural and language barriers, as well as the need to address U.S. code compliance and safety issues. The building stands as Ve- roni’s U.S. headquarters that supports its business plan of providing the freshest Italian cured meats throughout North America. • Crown Cork & Seal,
was quickly delivered. Covering 12 acres under roof, the facility has the capability to produce 7,000 cans per minute. • Urban Outfitters In- ternet Fulfillment Center, Gap, PA Urban Outfitters utilized in-house expertise to assemble a team of dedicated profession- als to develop and construct a one-million-square foot IFC building, its largest in the country. Blue Rock worked closely with Urban’s Chief Develop- ment Officer Dave Ziel, NewS- tudio Architecture, Bala Engi- neers, Advanced Geo Services, various specialty consultants, and over 40 team-oriented subcontractors. The state-of-the-art facility features a complex automa- tion system and advanced infrastructure, including one of the country’s largest rooftop solar arrays. The facility also features nearly eight miles of hi-tech conveying systems. • Matrix/Amazon, Staten Island, NY Work is underway for Blue Rock to construct a 2.4 million s/f logistics facility for Matrix Development Group in Staten Island that will serve as Ama- zon’s first distribution center in the state of New York. The interaction with devel- oper and tenant is extremely intense to meet the demands of an aggressive schedule. A de- tailed tour of Building MDW7 in Monee, IL, combined with an all-day coordination meeting with key personnel from Ma- trix, Amazon, and Blue Rock, was extremely beneficial. Blue Rock discussed the logistics and schedule while Matrix offered valuable expertise on the nu- ances of permitting and code requirements in Staten Island. It was a prime example of teamwork at its best. For Blue Rock, the success of our projects are examples of how the power of teamwork creates cross-sector collabora- tions with partners who share the same goals. This collabo- ration in different areas of expertise allows the blending of talent to ensure a successful project. Simply stated, teamwork makes it happen. Steve Kettelberger is president of Blue Rock Construction, recognized as a leader in the construc- tion of large, technically sophisticated commercial and industrial buildings.
Nichols, NY Crown Holdings Inc. utilized extensive in-house engineer- ing experience to develop and construct their first manufac- turing facility in the United States in more than 20 years. Blue Rock partnered with architect Margulies Hoelzli and worked closely with the Crown engineering staff to meticulously coordinate and implement detailed require- ments for the 525,000 s/f, state- of-the-art facility. Blue Rock was fortunate to team with a construction-experi- enced owner. When any input was needed by the owner, it
teamwork ap- proach. I n d e e d , good teams a r e a t t he heart of ev- ery successful project. A t B l u e Ro c k , t h e
Steve Kettelberger
collective impact of support- ive partners with a strong teamwork approach allows us to meet the demands of ever- changing technology and speed- to-market challenges.
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Real Estate Journal — Spring Preview —April 27 - May 10, 2018 — 13A
M id A tlantic
I ndustrial NJ
By Marc Duval, HFF 2018 Industrial Real Estate Trends
I
impressive year-over-year rent growth (~7.0% nationally), historically low vacancies (~5.0% nationally), and posi- tive economic fundamentals including strong absorption and limited development. Surplus capital and increasing demand has driven pricing for Class A distribution space in core locations to the 3.75% to 4.5% cap rate range. We expect north of $200 per square foot for Class A distribution space in core locations to become the new normal. Funding Deficits Largest Among Investors With dry powder at all-time
highs, increasing industrial allocations, and foreign invest- ment up approximately 30% in the segment, we expect to see record pricing and significant activity in 2018. Institutional industrial allocations will be surpassing retail allocations over the next year, as inves- tors increasingly meet their retail targets with industrial product. This is possible due to the amount of cross-over in e-commerce between retail and industrial property types. Insurance companies and sov- ereign wealth funds have 200 – 300 basis point funding defi- cits relative to their targets
which results in large inbound queues among fund managers. It is clear the under allocation has been amplifying demand for industrial product. Expanding Market and Product Types Due to increasing demand and competition between debt providers, investors are more willing to expand to secondary markets and unique product types, including those with higher levels of office fit-out, class B and C product, short- term single tenant opportuni- ties, and cold storage, in return for higher yields. class B, light industrial product is seeing a
continued on page 22A Capital Deployment via Large Development Sites Despite the demand for industrial product over the past three years, development has remained limited due to the lack of entitled land sites, increasing construction costs, significant amount of institu- tional interest at a 25% to 30% premium to replacement costs. In addition, as many investors have noted, no industrial asset is too small in northern New Jersey as the urbanization trend makes smaller, but well- located buildings useful as last-mile distribution centers.
ndustrial has been the most sought-after proper- ty type for the real estate
investment community over the past three years and all indi- cations point to that con- t i nu i ng i n 2018. His- torically, in-
Marc Duval
dustrial property demand has been a function of economic growth. However, the recent growth of e-commerce, 15% annually, and the need for “one-day delivery” has fueled a secular shift in industrial use and tenants. Forecasters predict for every $1 billion in additional e-commerce sales, another 1.25 million s/f of distribution space is required. This means that at least an- other 85 million s/f of addition- al distribution space will be demanded in 2018. Therefore, despite GDP growth hovering around 2% annually for the past seven years, industrial real estate will continue to outperform due to e-commerce driving the market. Transaction Volumes/ Sizes Continue to Rise According to Real Capital Analytics, total industrial volume has increased from a low of $10.3 billion in 2009 to a high of $78 billion in 2015. After a drop in volume in 2016, 2017 had the second highest transaction volume in history at $72.2 billion, a 20% year-over-year increase. The Northeast alone accounted for over $8 billion of that activity. In the Northeast, we have seen year-over-year growth of 7% attributable to a com- bination of single-asset sales and larger portfolio transac- tions including the sale of The Hampshire Companies’ 1.25 million square foot northern New Jersey portfolio as well as Duke’s purchase of a 3.4 million square foot portfolio of which 2.3 million s/f are in northern New Jersey. There is a significant amount of capital demand for large Class A port- folios, and the scarcity of op- portunities is creating pricing premiums of 7.0% to 12.0%. The capital markets are will- ing to pay these premiums for core industrial product with size. Industrial Pricing Remains Strong Investors have flocked to the industrial sector because of its
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© 2018 Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, “HFF”), HFF Securities L.P. and HFF Securities Limited (collectively, “HFFS”) are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 26 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform including debt placement, investment advisory, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF.
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14A —April 27 - May 10, 2018 — Spring Preview — M id A tlantic
Real Estate Journal
I nterior A rchitecture By Richard Gacek, Gacek Design Group Design is Transforming
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transforming and here are trends that we believe are worth exploring: WELLNESS: Consumers to- day are focused on health and wellbeing. This growing trend has impacted, for example, the amount of square footage allotted to fitness spaces. We see transformation from the typical treadmill/weight lifting center to a wellness experience that highlights the mind, body, and spirit. However, wellness is no longer a place just for the fitness zone. Build environ- ments are now valued by how they support overall health.
The WELL Building Stan- dard is gaining popularity by measuring the performance of building features that impact health and wellbeing through air, water, nourishment, light, fitness, comfort, and mind. It is third-party certified by the Green Business Certification Incorporation (GBCI), which administers the LEED cer- tification programs. Healthy homes improve sleep, support healthy eating, improve air quality, and optimize our cog- nitive and emotional health. With improved studies, more data and better adoption,
continued on page 22A SMART TECHNOLOGY: In the housing industry, tech- nology is no longer just an ap- pliance, it has become a major part of the design. Smart tech- nology enriches the experience and research tells us that free or reliable Wifi ranks as the highest preferred feature. Other tech on the radar is as follows: smart thermostats, keyless front entry, high tech door locks, built-in USB charg- ing ports, in-unit motion- detection cameras, and motion sensor lighting. Advanced digital capabilities such as online leasing forms, as well as credit card processing are also on the rise. PERSONALIZATION: As WELL certification will sup- port design transformation. ADAPTABLE SPACES: When it comes to adaptable spaces, Renters by Choice even have designers looking at apartment layouts dif- ferently. With Boomers at a downsizing life stage, they need room to entertain, ac- commodate guests, work at home, and pursue their hob- bies. Millennials like what’s new and cool, and will give up apartment space if it means access to hot neighborhoods and conveniences. Adaptable living is the new norm where the apartment’s “physical components” meet the needs of many different households. Imagine an apartment where flexible spaces are created by opening and closing walls – Or using lightweight panels that can snap in and out of place to expand or minimize walls. How about an exterior window that is flexible enough to open and transform to a balcony? SOCIAL CONNECTIVITY: The digital age has con- nected us in so many amaz- ing ways, although has pro- vided less opportunities for in-person interaction. With information at overload capac- ity, it has become more and more difficult to engage and retain the attention of your target audience. Because of this, spaces and experiences that are authentic and specific to your target audience will capture attention and will resonate. The latest research on lifestyle preferences shows the importance of providing social spaces that are flexible, can be used for live-work, and also appeal to the lifestyle of Renters of Choice to build a sense of community.
acek Design Group is laser focused on the transformation we see
challenging to determine the right housing/amenities that resonate with the lifestyles of both target markets. How do you accomplish this? There are many white papers, research, and point of views on how to appeal to this group that we call Renters by Choice . They do have a number of charac- teristics in common. The one thing we know for sure is that this new target market has forced many developers to think outside the box, and to concentrate on making a con- nection with their audience in differing ways. Design is
i n De s i gn , particularly as it relates to our clients in the hous- ing industry. The shifts in demographic trends have positively im-
Richard Gacek
pacted multifamily housing with Millennials continuing to play a prominent role in rent- ing. And as Baby Boomers en- ter the rental market, it can be
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