- DC
1,315 units span 7 New Jersey and 3 Pennsylvania Counties Gebroe-Hammer sets newbenchmark for year- end saleswith $231M inDecember transactions
ISSUE HIGHLIGHTS Volume 30, Issue 1 January 12 - 25, 2018
2018 FORECAST N 7-21A
greater in 2018 thanks to the new tax law, which lowers the deductibility of residential prop- erty taxes and mortgage inter- est. Current renters who were considering home purchases will remain in place and keep occupancy rates AND rents at very healthy levels in the fore- seeable future. Unfortunately, however, this will create an even greater imbalance of the supply/ demand dynamic in an already undersupplied marketplace.” In NJ’s Northern and Central metros alone, Gebroe-Hammer recorded more than $81 mil- lion in sales involving seven small-to-mid-sized apartment buildings and garden-style complexes. The 300+ units spanned Bergen, Essex, Union, Monmouth and Middlesex coun- ties. In Southwest Jersey, the Gebroe-Hammer team orches- trated two sales encompassing more than 200 total units. “The more things change, the more they remain the same in NJ. Institutional investors have made tremendous inroads That steadfast commitment to the borrower’s success has cemented their status in the financing industry as one of the largest hard money lenders in the United States, surpassing $3 billion in closed loans. “The reason for our success is simple,” said Kevin Wolfer , CEO of Kennedy Funding Financial, the direct private lender based in Englewood Cliffs. “When traditional lend- ing institutions tell borrowers no, we find a way to tell them ‘yes’. We’ve bucked the rigid models which have denied so many the opportunity to suc- ceed.” The firm built its lending business on providing creative solutions for funding difficult properties and challenging scenarios. According to Wolfer, a bank or other traditional lending institution has rigid criteria regarding the borrower and the type of deal which can disqualify less-than-perfect ap- plications almost immediately, even if the opportunity they want to fund has the markings
with strategic acquisitions that have mostly focused on ‘tro- phy’ buildings while long-time, multi-generation private own- ers have held on to their class B properties, making few, if any, modernization upgrades to retain historically stabilized oc- cupancies and rents,” said Ura- nowitz. “Both recognize that the tides have been gradually changing, with the latter en- tertaining the idea of shedding their long-held assets in lieu of implementing substantial capi- tal improvements. As a result, there is a renewed emphasis on value-add acquisitions posing significant rent appreciation – some as high as $200 to $300 per unit, per month on turn- overs – to yield a fairly rapid return-on-investment.” This trend extends across the Delaware River to the ever- strengthening Greater Philadel- phia metro, where Gebroe-Ham- mer finalized sales encompassing over 775 multi-family units and 5,500 s/f of commercial space last month. The properties spanned of success. “Borrowers who need money fast, or who have a great op- portunity and simply cannot find the funding available from traditional sources are no lon- ger cut off from consideration for a hard money loan. They may be straddled with a problem property, faced with a bad credit history or bankrupt- cy, or may have a partnership that has gone sour,”Wolfer said. “If an opportunity can stand on its own legs, it doesn’t matter if the borrower has a blemish on his or her record.” Kennedy Funding Financial’s loans range from $1 million to more than $50 million and have a loan-to-value up to 75%. Kennedy specializes in bridge loans for commercial property for all purposes -- land acquisi- tion, development, workouts, foreclosures and bankruptcies. According to Wolfer, much of Kennedy Funding Financial’s growth can be attributed to their “creative” approach to lending and searching for solu- tions for borrowers which other
the counties of Philadelphia, Delaware and Northampton, in the growing Lehigh Valley submarket. The December sales come on the heels of another first for Gebroe-Hammer Associates in 2017: the closing of four sepa- rate sales that exceeded $100 million each. These included two North Jersey multi-family sales in one week totaling $230 million and 1,002 units: Ce- dar Wright Gardens in Lodi (Bergen County) and Nob Hill Apartments in Roseland (Es- sex County). A third in North Jersey included a portfolio sale with properties located throughout Hudson County. In addition, the firm also facilitated Philadelphia-based Post Brothers’ entry into the NJ market by arranging the $166 million sale of the Hud- son Waterfront’s Duchess in North Bergen. The transaction marked the official closing of a development agreement for the land parcel brokered by Gebroe-Hammer in 2014. n “We are willing to go the dis- tance for our clients, and that shows in our results,” Wolfer said. Fast turnaround is essential for many borrowers, and Ken- nedy Funding Financial has spent years refining their abil- ity to quickly close on the hard money loans they provide. Clos- ings take place within weeks instead of months, and in some cases, it can occur as soon as five days after application. “We can do this because we know just how time-sensitive hard money loans can be,” Wolfer said. “Our in-house management, coupled with appraisers and attorneys with round-the-clock availability, ensure that our sole focus is to secure a hard money loan for our clients as quickly as possible.” Kennedy Funding Financial can also point to its expertise in lending overseas as a contribu- tor to its success. A notoriously continued on page 18A
EW JERSEY/PENN- SYLVANIA — Ge- broe-Hammer Asso-
ciates , one of the region’s leadingmulti- family invest- ment broker- a g e f i rms , has set a new benchma r k for year-end sales, closing
COLLIERS INT’L. REPS. DERMODY PROPERTIES IN 401,008 S/F LEASE
Ken Uranowitz
over $231 million in transac- tions in December alone. The firm’s market specialists ar- ranged a total of 14 sales in- volving 1,315 apartment-rental units spanning seven New Jersey and three Northeastern Pennsylvania counties. “Multi-family properties con- tinue to be in extreme demand and deal velocity remains ac- celerative, setting the stage for a robust 2018,” said Ken Uranowitz , president and a multi-family brokerage veteran who has been with the firm, now marking its 43rd year, since its inception. “Demand will be even
2B
SAVILLS STUDLEY REPRESENTS JEFFERSON IN 237,000 S/F TRANSACTION
Kennedy Funding Financial reaches $3B loanmilestone ENGLEWOOD CLIFFS, NJ — For the past 30 years, the principals at Kennedy financial institutions simply can’t offer.
F u n d i n g Financ i a l have turned hundreds of commercial real estate loan applica- tions into ap- provals.
3C
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Kevin Wolfer
Directory
Financial Digest:................................................ 3-5A DelMarVa.......................................................23-24A New Jersey................................................. Section B Pennsylvania.............................................. Section C
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Mid Atlantic R eal E state J ournal Publisher, Conference Producer ......................................Linda Christman AVP, Conference Producer . .................................................Lea Christman Associate Publisher ................................................................Steve Kelley Associate Publisher .................................................................. Kim Brunet Senior Editor/Graphic Artist ................................................ Karen Vachon Office Manager ..................................................................... Miriam Buttrick Contributing Columnists ........ Revathi Greenwood; Rachel Greenleaf and Kristen Burgers, Hirschler Fleischer; Ronald Diskin, Ronald DiskinAssociates Corp. Mid Atlantic R eal E state J ournal — Published Semi-Monthly Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 350 Lincoln St., Suite 1105 Hingham, MA 02043 USPS #22-358 | Vol. 30, Issue 1 Subscription rates: $99 - one year, $148 - two years, $4 - single copy
CRE Implications of Tax Reform in The Great Tax Race C Revathi Greenwood ushman & Wakefield announced today the release of The Great Tax Race, a research report on the impact of proposed tax reform legislation on the U.S. commercial real estate sector. Cushman & Wakefield anticipates that a version of tax legislation reform has an 80% chance of enactment by year-end 2017 with immedi- ate implications for financial reporting. The final ver- sion hinges on negotiations between the U.S. House of Representatives and Senate. Some proponents claim that proposed tax cuts will lift real, annual GDP growth closer to 3% from the approxi- mately 2% that has prevailed during the current expan- sion. However, most of their analyses do not consider the likely effects of tax reform on a higher-than-expected tra- jectory for interest rates or the impact of higher levels of debt that deficit-financed tax cuts will entail. When these are factored in, estimates of the GDP growth boost range from 3 to 9 basis points per year over the next decade. “While tax reform may have a modest impact on real GDP growth, overall, commercial real estate is a winner, though some sub- sectors fare better than oth- ers,” said Revathi Green- wood, Cushman &Wakefield Head of Americas Research. “Negotiations between the House and Senate will have a significant impact on pass- through entities’ passive investments, more so under the House version, which provides substantial benefits for in vestors. Multifamily looks to be a winner – at the ex- pense of single-family resi- dential – especially in states and municipalities with high state and local taxes. The retail and industrial sectors should see modest benefits, while the office sector will see minimal impact.” How tax reform legislation affects different aspects of commercial real estate: • Investment and capital markets: The majority of
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direct U.S. CRE investment, 61%, is held by pass-through entities – only 9% is held by corporations. Another 29% is held via direct or indirect tax-exempt entities. Passive investors in pass-through entities are likely to ben- efit substantially from lower rates under the House plan, but their eligibility for tax deductions is limited under the Senate proposal by wage provisions. REITs and pub- licly-traded partnerships, however, would be eligible for the full deduction without regard to the wage limita- tion. Should the Senate pro- posal be enacted, expect to see a shift over time towards REITs, as well as conversions to corporate structures. • Office: Corporations will be big beneficiaries, likely seeing a net tax cut of $400 billion over 10 years. But it’s anticipated that the tax cut will be preferentially used to return capital to sharehold- ers or reduce debt, rather than to increase corporate spending. There may be a modest pick-up in M&A ac- tivity leading to real estate consolidations. As currently constructed, the legislation likely will mitigate inversion and relocation risk for mul- tinationals, which may boost office demand in the U.S. • Retail: The retail sector pays the highest effective corporate tax rate of any sector of the U.S. economy and indeed the world—at or close to the maximum 35%. This is thought to under- mine retail’s international competitiveness as well. A lower corporate rate might encourage foreign retailers to invest more in their U.S. operations, larger corpora- tions and consumers with larger tax savings to spend more and retailers to in- vest additional capital in their own businesses and employees— all favorable
outcomes for the industry. Furthermore, about 98% of retailers are small busi- nesses with 50 employees or less who would directly ben- efit from special provisions for small businesses such as higher eligibility limits for cash accounting, favorable pass-through provisions and higher expensing provisions. • Industrial: We expect similar, modest positive im- pact on eCommerce, perhaps industrial’s key driver. Apart from benefitting from the corporate tax rate reduction, eCommerce also benefits from full expensing that is geared towards industrial business/capital goods/man- ufacturing. “Passage of tax reform legislation will prompt re- structuring and short-term market flux as investors adapt to a new regime,” said David Bitner, Cushman & Wakefield Head of Capital Markets Research. “A lot of the structuring around CRE transactions is dictated by the need to minimize taxes. Sweeping changes in the tax code could be the cause of material value leakage, and players in the industry are likely to respond by chang- ing their behaviors and tax structures to minimize tax exposure. Disclaimer: This press re- lease and the report ref- erenced is not intended to provide tax advice. Any tax information provided in this document is not intended or written to be relied upon for tax planning purposes. You should seek advice based on your particular circum- stances from an independent tax advisor. Cushman & Wakefield is a global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and inves- tors optimize the value of their real estate. n
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F inancial D igest
Real Estate Journal — January 12 - 25, 2018 — 3A
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Greystone refinances Philadelphia multifamily complex for $20 million GreystoneBassuk arranges $30Mconstruction loan for BLDG’s Boutique East Village Rental project N EW YORK , NY — Richard Bas - s u k , C E O , a n d loans were originated by Ja- son Yuen of Greystone’s New York office.
parcels developed over time, Greystone applied a similar fi- nancing strategy in providing a separate loan for each par- cel,” said Yuen. “This enabled West Village Group to take advantage of the favorable terms offered by Freddie Mac and its Small Balance Loan program.” “The financing of West Vil- lage is another example of the speed, pricing and certainty of execution Freddie Mac’s Small Balance Loan Pro- gram provides,” said Stephen Johnson , vice president, Small Balance Loan Business at Freddie Mac Multifamily. “Most importantly, it under- scores the program’s flexibil- ity. We’re committed to work- ing with our lender partners to deliver a product that meets their client’s needs – and their bottom line.” n FSRs summar i z e De - motech’s opinion of the fi- nancial stability of an in- surer regardless of general economic conditions or the phase of the underwriting cycle. FSRs utilize statutory financial data based on insur- ance accounting principles prescribed or permitted by the National Association of Insurance Commissioners (NAIC). As well, a Financial Stability Rating summarizes Demotech’s opinion as to the insurer’s ability to insulate itself from the business cycle that exists in the general economy as well as the un- derwriting cycle that exists in the insurance industry. Thus, an FSR summarizes Demotech’s opinion as to the relative ability of an insurer to survive a downturn in general economic conditions as well as a downturn in the underwriting cycle. n Title is on target to becoming one of the largest national providers of title insurance, largely due to the financial strength of our parent Am- Trust Financial.”
Drew Fletcher , president, of Greystone Bassuk , an- nounced the closing of a $30 million construction loan with Bank Hapoalim USA on behalf of an affiliate of BLDG Management Company, Inc. (BLDG) for the develop- ment of a 45-unit luxury rental apartment building located at 11 Ave. C in the East Village. Greystone Bassuk managing director, Matt Klauer , also assisted in the debt placement for the transaction. The project is located on a thru-block, irregular site bounded by East Houston St., Ave. C and East 2nd St. in a highly desirable and un- derserved section of the East Village. Once complete, the project will be a 10-story, best- in-class apartment building with 55,000 gross s/f and 4,100 s/f of prime St. level retail. Catering to today’s millennial renter, the project will offer a boutique living experience with a lifestyle-focused set of amenities. The residen- tial units will have generous layouts with high-end condo- quality finishes, and several of the apartments will also have private outdoor space, a CENTERVILLE, UT — Meridian Capital Group, America’s most active deal- maker, arranged $24.5 million in acquisition financing for the purchase of a multifamily property in Centerville, UT. The 10-year Fannie Mae loan, provided by Capital One Multifamily Finance , features a rate of 4.38% and five years of interest-only pay- ments. This transaction was negotiated by Meridian vice presidents, David Walkin and Sam Walkin , who are both based in the company’s Iselin, NJ office. The Park at Legacy Trails, located at 305 North 1300 West in Centerville, UT, is a
Consisting of three separate parcels, West Village is a newly-constructed multifam- ily complex comprising 3-, 4- and 5-bedroom units. All units are “townhome style” duplexes with upgraded finishes. The community offers a range of amenities for residents includ- ing parking, roof decks for some units, and a community courtyard. The property, owned by West Village Group , was financed with three separate Freddie Mac Small Balance Loans, all carrying 10-year terms and Interest-only for three years with 30-year amortization schedules. “Based on the borrower’s ac- quisition strategy of creating a community from contiguous New York, NY — Am- Trust Title Insurance Company (AmTrust Title) , a wholly-owned subsidiary of AmTrust Financial Ser- vices Inc. announced its Financial Stability Rating (FSR) has been upgraded to A’ (A Prime), Unsurpassed by Demotech, Inc. This level of FSR is assigned to insurers who possess un- surpassed financial stability related to maintaining posi- tive surplus as regards policy- holders, liquidity of invested assets, an acceptable level of financial leverage, reasonable loss and loss adjustment ex- pense reserves (L&LAE) and realistic pricing. “We are delighted with this upgraded rating by De- motech,” said Jason Gor- don , president of AmTrust Title Company, who added that AmTrust Title is now operating nationally in 38 states. According to Steven Napol- itano , senior executive vice president of AmTrust Title, “This is exciting news and a milestone for us. AmTrust
11 Ave. C
three-story luxury apartment building that consists of 162 units ranging in size from one bedroom to three bed- rooms. With scenic views of the Rocky Mountains, private balconies, spacious walk-in closets, in-unit laundry, up- dated appliances, and com- munity amenities including a gym, basketball court, and swimming pool, the Park at Legacy Trails offers a lifestyle of comfort and convenience. The property is ideally lo- cated away from the hustle and bustle of the city, while remaining a short drive from shopping, dining, and schools in Centerville. The property is also just 20 minutes from “BLDG has been one of New York City’s preeminent multi- family owners for generations, and over the past several years they have made a strategic shift into ground-up develop- ment,” said Fletcher. “We had the great pleasure of advising BLDG on their first solo con- struction financing in 2015, and we are thrilled to have represented them once again on this exciting project as they continue to grow their develop- ment portfolio.” ”One of our objectives with this financing was to identify unique offering in the neigh- borhood.
the heart of Salt Lake City, Utah’s capital and a popular destination for hiking, skiing, fishing, and more. “On a deal where there was no affordability component and no green discount, Merid- ian was still able to negotiate a 10-year fixed-rate deal, with five years of interest-only pay- ments, at a tight spread,” said Walkin. “The greatest hurdle in this transaction was that the deal was still in lease- up, but we supplied a well- articulated leasing plan and area comparables, which in combination with the strength of the sponsor, justified the proceeds level that our client sought.” n new capital relationships to help support our expanding development pipeline,” said Lloyd Goldman , president of BLDG. “Greystone Bassuk’s extensive capital markets knowledge and deep network of senior level relationships allowed us to achieve the best possible execution for our Proj- ect – and in the process, we also obtained a valuable new financing partner with Bank Hapoalim.” Greystone provided $20.13 million in Freddie Mac fi- nancing for West Village, an 86-unit apartment community inWest Philadelphia, PA. The
Amtrust Title upgraded to A’ financial stability rating by Demotech
Meridian Capital Group organizes $24.5M in acquisition financing
4A — January 12 - 25, 2018 — Financial Digest — M id A tlantic
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F inancial D igest By Rachel Greenleaf and Kristen Burgers, Hirschler Fleischer The New “Rs” of Bankruptcy: Retail, Restructuring and… Richmond? I n the evolving world of e-commerce, it’s not sur- prising that many promi-
flexibility that they need to get to a successful result. As one example, upon the presenta- tion of appropriate evidence, the court has approved con- troversial third-party releases and plan injunctions. The Richmond courts also provide debtors with signifi- cant breathing room. In the Circuit City bankruptcy case, for example, the court issued a seminal decision interpreting provisions of the Bankruptcy Code to provide for the pay- ment of post-bankruptcy rent on the effective date of a plan of reorganization – not sooner. This frees up substantial li- quidity during the pendency of a Chapter 11 case (funds that can be used for ongoing operating needs) and for a large retailer, it provides suf- ficient time to determine the viability of a location and/or to re-negotiate a longer term- arrangement with a landlord – a significant advantage that might not be available in other jurisdictions. The retail shake-up is not over yet. If the trend contin- ues, look for the next major retailer to file bankruptcy in Richmond. Rachel A. Greenleaf and Kristen E. Burgers are at- torneys in the Bankruptcy, Restructuring and Credi- tors’ Rights practice at Hirschler Fleischer (Rich- mond, VA). n RED names Brooks to lead the growth & product diversification strategies COLUMBUS , OH — Trent Brooks has been named president of RED Mortgage Capital, LLC , the Mortgage banking arm of comprehensive capital pro- vider RED Capital Group LLC . Brooks joined RED on De- cember 11th as president of RED Mortgage Capital, LLC and national head of pro- duction. With more than 30 years of executive leadership experience in the Multifam- ily housing industry, he has long-term relationships with Fannie Mae, Freddie Mac and FHA in his support of Afford- able, Workforce, Convention- al, Green and Small Balance Housing finance programs. n
retail bankruptcy filings of all time were filed in Richmond: Toys “R” Us, Circuit City and Heilig-Mey- ers. You ma y
that may be one possible ex- planation, there is another: The Richmond bankruptcy court’s practicality and astute understanding of Chapter 11 practice. Time is money, especially in bankruptcy. As a practi- cal matter, the longer a case lingers in bankruptcy, the higher the professional fees and the lower the chances of a successful reorganization. In Richmond, large bankruptcy cases typically move along at the pace requested by the par- ties, including any expedited hearings that may be neces-
sary. As an example, in Toys “R” Us, the court approved a nearly $3 billion debtor in possession financing facility on less than 24 hours’ notice. Not only does Richmond of- fer the ability to move a case quickly, but it also offers all constituents a level of certain- ty not necessarily available in other jurisdictions. Based on a wealth of case law and deci- sional history, the Richmond bankruptcy court operates on one basic premise: If the parties operate within the con- fines of the Bankruptcy Code, the court will allow them the
nent retail- e r s h a v e t u r n e d t o out-of-court workouts and bankruptcy t o r ema i n afloat. What may come as a surpr i se ,
b e a s k i n g y o u r s e l f , “Why Rich- mond?” Some h a v e s u g - gested that the trend is
Rachel Greenleaf Kristen Burgers
however, is where retailers are choosing to file: Richmond, Virginia. Though many may have assumed Delaware or New York, three of the largest
based largely on a perception that its bankruptcy court is more willing to approve hefty professional fees than other jurisdictions. While
Preliminary Program
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F inancial D igest By Ronald Diskin, Ronald Diskin Associates Corp. Mortgage Value vs. Insurance Replacement Cost
O ne of the biggest ques- tions insureds have regarding Property
For insurance purposes, you should insure your property to 100% of its replacement cost. This will ensure the ability to rebuild the entire building (of like kind and quality not including code changes which can be insured with Building Ordinance coverage), the way it is now, in the event of a total loss. One thing to remember, you're not insuring the land so leave this out of the replace- ment cost valuation of the property. Ronald Diskin is presi- dent & CEO of Ronald Dis- kin Associates Corp. n
building. Market value is the price paid for your building. Replacement cost is the price or cost it will take to rebuild your building in the same spot, same size and same quality of construction, at today's costs. Insurance companies use the replacement cost valuation. These can be two completely different numbers. For example, a building purchased in a depressed city neighborhood, may have a market value of $1.2 million. The exact building, located in a nice suburb, may have a market price of $1.6 million;
however, the cost to rebuild the property after a loss would be the same in either location. The insurance company is looking to insure the building for the full replacement value, not the current market value. Here is another different ex- ample. If an 18 unit I 2 story I brick building I 12,000 s/f had a replacement cost of $1.5 mil- lion and you had a mortgage of $1 million and used the mort- gage value I market value as a basis for building insurance, the following would happen: • If there was a total claim and the insured went to re-
build, they would have an out of pocket expense of $500,000 as they policy would pay only $1 million. • If there was a partial claim, $100,000, the insurance carrier could pay based on a co- insurance penalty, $66,000, as the building was not insured to the correct replacement cost value. ($1 million mortgage vs. $1.5 million Replacement Cost = 66% of replacement cost value) As you can see the property owner did not insure the build- ing correctly and could suffer a major financial loss.
insurance re- volves around the amount of insurance to place on their prop- erty. When purchas ing a building, the mortgage
Ronald Diskin
company requires the prop- erty owner to obtain insurance prior to closing. Most building owners as- sume the amount of building coverage will be equal to the amount they paid for their property. This is incorrect in some cases. There are different methods to determine the value of a Amtrust Title adds senior underwriter Samuel Shiel Esq. NEW YORK, NY — Am- Trust Title Insurance Company (AmTrust Ti- tle) announced that Samuel Shiel, Esq. , a seasoned attor- ney with more than 25 years in title insurance, real estate and the regulation of finan- cial institutions, has joined AmTrust Title as midwest underwriting counsel. Based in Chicago, Shiel is working closely with James Casson , vice president/agen- cy manager for the Midwest, to handle legal and under- writing matters for agents and offices in the region as AmTrust Title continues a steady national expansion. “We have rapidly assembled a talented, very experienced team of underwriters in the Midwest,” said Jason Gordon, president of AmTrust. “Sam is an accomplished lawyer whose knowledge and long career in the title industry will perfectly dovetail with the backgrounds of our exist- ing team. We are happy to welcome him aboard.” Just prior to joining Am- Trust Title, Shiel was se- nior underwriting counsel for Palatine, Illinois-based Proper Title LLC, where among other things, he pro- vided title and escrow staff support and training. Before that, he worked for Dallas, Texas-based Title Resources Guaranty Company as vice president & Midwest Under- writing Counsel. n
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INSURANCE COVERAGE FOR INVESTMENT PROPERTIES RISK IS A GIVEN IN BUSINESS TODAY. HOW MUCH YOU MANAGE RISK IS NOT. You may be insured, but is your insurance really covering your needs? Purchasing insurance is a major business expense and probably one of the most misunderstood products you purchase. If not properly covered, you can suffer severe financial losses. COMPREHENSIVE COVERAGE AGGRESSIVE PRICING
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RONALD DISKIN (973) 599-9600 X44311 CELL: (201) 213-6590 ron.diskin@ioausa.com
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C ommercial R eal E state O rganizations ’ E vents C alendar
JANUARY 16 – AAGP Event: Real Estate Economic Forecast Luncheon Time: 11:30 AM – 1:30 PM Location: Sheraton Philadelphia Downtown Address: 201 S. 17th St. Liberty Ballroom Philadelphia, PA 19103 Cost: Members: Early Bird-$65; Regular-$72; Same Day-$79 Non-Members: EB-$85; Same Day-$79 URL: https://paaeast.wliinc1.com/events/Real- Estate-Economic-Forecast-Luncheon-244/details JANUARY 16 – DVGBC Event: Ventilation Systems for High Performance Buildings Workshop Time: 8:00 AM – 4:00 PM Location: DVGBC Address: 2401 Walnut Street, Suite 103, Philadelphia, PA 19103 Cost: $50 Members $100 Non-Members URL: https://www.dvgbc.org/event/ventilation-sys- tems-high-performance-buildings-workshop JANUARY 17 – AAGP Event: CAM 2018 (Certified Apartment Manager) Designation Time: 9:00 AM – Mar 6 5:00 PM Location: PAA – East Address: One Bala Plaza Suite 515 Bala Cynwyd, PA 19004 Cost: Member: $75-$1,018 Non-Member: $105- $1,425 URL: https://paaeast.wliinc1.com/events/CAM- 2018-Certified-Apartment-Manager-Designation- Course-221/details JANUARY 17 – AAGP Event: CAS 2018-Certified Apartment Supplier Designation Program Time: 9:00 AM – Mar 15 4:00AM Location: PAA – East Address: One Bala Plaza Suite 515 Bala Cynwyd, PA 19004 Cost: Member: $571 Non-Member: $803 URL: https://paaeast.wliinc1.com/events/CAS- 2018Certified-Apartment-Supplier-Designation- Program-224/details JANUARY 25 – AAGP Event: Real Estate Rules and Regulations Time: 1:00 PM- 4:30 PM Location: PAA – East Address: One Bala Plaza Suite 515 Bala Cynwyd, PA 19004 Cost: Member: $69-76 Non-Member: $97-$107 URL: https://paaeast.wliinc1.com/events/Real- Estate-Rules-and-Regulations-246/details
FEBRUARY 5/9 – CCIMPA Event: CI 102: Market Analysis for Commercial Investment Real Estate Time: Feb 5 @8:00 AM – Feb 9 @5:30 PM
FEBRUARY 22/23 – IREM NJ Event: 2018 Tri-State Conference & Expo Time: Feb 22 @8:00 AM – Feb 23 @1:00 PM Location: Borgata Hotel Casino & Spa Address: One Borgata Way Atlantic City, NJ 08401 php?id=23&ts=1499369761 FEBRUARY 28/31 – BOMA Event: Winter Business Meeting & National Issues Conference Time: TBD Location: Hyatt RegencyCapitol HillWashington, DC Cost: TBD URL: http://www.boma.org/events/Pages/Winter- Business-Meeting-and-National-Issues-Confer- ence.aspx MARCH 26/30 – DVGBC Event: Certified Passive House Designer/Consultant Training Time: March 26 @9:00 AM – March 30 @5:00 PM Location: DVGBC Address: 2401 Walnut Street, Suite 103, Philadelphia, PA 19103 Cost: $1,750 - $2,250 Members URL: https://www.dvgbc.org/event/certified-pas- sive-house-designerconsultant-training-0 MAY 4 – DVGBC Event: 2018 Sustainability Symposium Time: 8:00 AM – 4:30 AM Location: Penn State at the Navy Yard Address: 4960 South 12th Street, Philadelphia, PA 19112 Cost: $0 URL: https://www.dvgbc.org/event/2018-sustain- ability-symposium MAY 17 – DVSGA Event: PAST EVENT: Phillip Langdon. Author of Cost: $119 Special Room Rate URL: http://irem1.org/meetinginfo. URL: https://www.delawarevalleysmartgrowth.org/ events/coming-in-may-phillip-langdon-author-of- within-walking-distance/ JUNE 4/7 – CCIMPA Event: CI 101: Financial Analysis for Commercial Real Estate Time: June 4 @8:30 AM – June 7 @5:00 PM Location: TBD Address: TBD Cost: $0 URL: panjdeccim.com/event/ci-101/2018-06-04/ JULY 9/13 – CCIMPA Event: CI 104: Investment Analysis for Commercial Investment Real Estate Time: July 9 @8:00 AM – July13 @ 5:30 PM Cost: $0 URL: panjdeccim.com/event/ci-104/ “Within Walking Distance” Time: 5:00 PM – 7:30 PM Location: The Continental Midtown (rooftop lounge) Address: 1801 Chestnut Street, Philadelphia, PA 19103 Cost: $0
Location: TBD Address: TBD Cost: $0
URL: https://ccim.personifycloud.com/Per- sonifyEbusiness/Default.aspx?TablD=1563&_ ga=2.249686790.1629303952.1508768905- 818129396.1508768905 FEBRUARY 6 – AAGP Event: Risk Management for Property Managers Time: 9:00 AM – 5:00 PM Location: PAA – East Address: One Bala Plaza Room 513 Bala Cynwyd, PA 19004 Cost: $99-$154 URL: https://paaeast.wliinc1.com/events/Risk- Management-for-Property-Managers-218/details FEBRUARY 7 – AAGP Event: Amenities: Taking Your Property to the Next Level Time: 1:00 PM – 3:00PM Location: One Bala Plaza Address: One Bala Plaza Room 513 Bala Cyn- wyd, PA 19004 Cost: Member: $75 Non-Member: $105 URL: https://paaeast.wliinc1.com/events/Ameni- ties-Taking-Your-Property-to-the-Next-Level-247/ details FEBRUARY 13 – AAGP Event: Basic Appliance Maintenance and Repair Feb. 13-14, 2018 Time: Feb 13 9:00 AM – Feb 14 4:00PM Location: PAA – East Address: One Bala Plaza Suite 515 Bala Cynwyd, PA 19004 Cost: $200-$339 URL: https://paaeast.wliinc1.com/events/ Basic-Appliance-Maintenance-and-Repair-
Feb-1314-2018-253/details FEBRUARY 15 – AAGP Event: Legal Responsibilities in Property Management Time: 9:00 AM – 12:30 PM Location: PAA – East Address: One Bala Plaza Suite 515 Bala Cynwyd, PA 19004 Cost: Member: $69 Non-Member: $97
URL: https://paaeast.wliinc1.com/events/Legal-Re- sponsibilities-in-Property-Management-226/details FEBRUARY 21 – AAGP Event: Fair Housing and Beyond-2/21/18 Time: 10:00 AM – 3:00 PM Location: The Towers at Wyncote Address: 8440 Limekiln Pike Wyncote, PA 19095 Cost: $99-$129 URL: https://paaeast.wliinc1.com/events/Fair- Housing-and-Beyond22118-248/details
FEBRUARY 5/7 – NAIOP Event: Chapter Leadership and Legislative Retreat 2018 Time: TBD Location: Washington, DC Address: TBD Cost: $0 URL: http://www.naiop.org/cllr18
R eal E state J ournal ’ s
M id A tlantic
2018 F orecast
Mid Atlantic Real Estate Journal — January 12 - 25, 2018 — 7A
www.marejournal.com
Daniel J. Caldwell Stout & Caldwell, LLC
Greg Brown NAI DiLeo-Bram
Steve Cassidy Denholtz & Associates
Stuart Berger Sax LLP
Robert Holland The Kislak Company, Inc.
Glen n Ebersole
Matthew Hodson M&T Realty Capital Corporation
William Hanson, SIOR NAI James E. Hanson
David Zimmel Zimmel Associates
Scott R. Saunders Asset Preservation
David Moreno AKF
Neil Stein Kaplin Stewart Meloff Reiter & Stein
John D. Meadows Bernardon
8A — January 12 - 25, 2018 — 2018 Forecast — M id A tlantic
Real Estate Journal
www.marejournal.com
2018 F orecast By David Moreno, AKF 2018 Trends and Predictions
E very new year presents opportunities to reflect on successes, establish
buildings more efficient, and in 2018 we’ve only just arrived at the edge of what’s possible. Smart Buildings and the Internet of Things The Internet of Things holds tremendous potential for owners, developers and managers, as well as employ- ers, universities and health systems. This technology uti- lizes data to integrate nearly all aspects of buildings – from corporate headquarters to college campuses – including parking, security, lighting and energy usage. The prom- ising impact on the culture,
performance and wellness of building occupants cannot be overstated. Sustainability Buildings were once viewed as inefficient boxes that soak up energy – and many still do – but there’s reason for op- timism. Owners, developers and managers are recogniz- ing the environmental and economic value of modern day sustainability efforts, and data collection and artificial intelligence now represent the next frontier. AKF maintains a front row view to the possibilities
of 21st Century technology. We’ve achieved carbon neu- trality, embraced a Living Building challenge, and have established the viability of Net Zero Energy. The key to our success is a holistic approach designed around concerns of users and how and when they work. We understand the purpose of the energy used in buildings is to make occupants happy and productive. As new data and intelligence helps drive energy costs down, the focus on wellness will begin to take center stage.
Wellness Over the past decade there has been a focus on providing quality air, water, light, and comfort in buildings. As the building industry continues to evolve, owners, users, and designers are placing more at- tention on the health and hap- piness of building occupants. The WELL Building Standard and Fitwel are two certifica- tions that optimize the built en- vironment to improve human health. We anticipate further growth in this movement. Resiliency Anything can happen. To- day, our clients are more aware of this than ever before. AKF intelligently plans facil- ity infrastructure to withstand any number of threats, be they natural, accidental or intentional. Commissioning As technology advances and systems and codes become increasingly complex, com- missioning has never been more vital to success and performance of buildings. This important tool ensures complicated systems run cohe- sively, offers a pillar of safety, and should never be treated as a simple “check-the-box” exercise. AKF Commission- ing’s reputation is built on its unparalleled expertise and meticulous approach. The year ahead Trends come and go, but solid engineering principles remain. At AKF, we call it Engineering Leadership: the ability to listen to our clients, inform them of their options, and discover ways to meet their needs today and tomor- row. It’s recognition that the best way to do something isn’t always the most obvious, and true ingenuity requires dedi- cation and understanding. AKF, an award-winning global MEP design firm, also offers a full spectrum of inte- grated services to bring better solutions to clients and cater to unique project needs. AKF is headquartered in New York City, with offices across the United States and Mexico, including Philadelphia, PA, Hamilton, NJ and Baltimore, MD. David Moreno, Partner in Charge of AKF’s Phila- delphia office, is a frequent contributor to the industry, speaking at conferences, moderating panels, and writing for trade journals. n
goals, and an- ticipate com- ing trends. At AKF, we believe there h a s n e v e r been a more exciting time for our pro- fession.
David Moreno
Technology is impacting how we live, work and play, and en- gineering is providing the back- bone for these advancements. Cities are getting smarter,
Photo: © Tom Crane
Global Engineering &
Integrated Services
akfgroup.com
Real Estate Journal — 2018 Forecast — January 12 - 25, 2018 — 9A
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M id A tlantic
2018 F orecast By David Zimmel, CEO, Zimmel Associates Industrial investment progresses in 2018; Office to remain consistent with 2017 B arring any unforeseen events, and as long as interest rates stay close to look for in 2018. Obviously not every office building can be used for this, but it is viable for certain projects.
The industrial sector is cap- turing increased investor atten- tion. For the first time in many years rents are high enough to support the cost of building from the ground up. Prior to 2017, industrial investors were better off buying older build- ings and fixing them up. This is no longer the case. Now both rehabbing and new construction have appeal. Investors are open to being creative. A lot of builders are looking for office buildings to tear down and rebuild as ware- house space because it's the best use at this point. This is a trend
ley. There is new construction off of Exit 6 of the New Jersey Turnpike near Pennsylvania and also off of Exit 7. The de- velopment trend is going south and west. The office space market has improved a little bit. A lot of deals are being made and this will continue in 2018, but I do not think it will impact absorp- tion rates much. Excluding solid locations such as Metro Park or the Jersey City Waterfront, I think office is going to continue to be challenged over the next couple of years. The office market was already
overbuilt when the financial cri- sis hit in 2008, and it has never fully recovered, but with the improved economy some ten- ants will pay premium prices for space in highly desirable locations. Vacancy rates in overbuilt areas such as Parsippany and Somerset are still in the 20 to 25% range. Companies have more people working fromhome and they don't need as much office space. Rents for class A space are about $25 to $40 a s/f depending upon the location. In premium continued on page 18A
to where they are now, New Jersey’s office and industri- al real estate marke t s i n 2018 should be somewhat s i m i l a r t o 2017. I think
For instance, I recently sold a two-story 63,000 s/f office building in Bridgewater, NJ, to a buyer who is re-purposing it for self-storage. Onyx Equities recently bought an office build- ing in the Meadowlands and they're constructing a distribu- tion building in its place. Pennsylvania has benefited because there's not enough in- dustrial space available in New Jersey. Some companies have opted to go to the Lehigh Val-
David Zimmel
it's going to be another robust year for the industrial sector, but not as record breaking. The office market will be active, yet overall absorption rates will stay about the same. Industrial rents are the high- est I have ever seen in my 35 plus years of serving this mar- ketplace. We are getting users who are paying numbers they normally wouldn't pay. We see continued business expansion from tenants who want more space. Strong segments are third party logistics, pharma- ceuticals, research, lab and assembly. Rents for industrial space in Somerset, Middlesex, Essex, Union and Monmouth counties generally range between $6.75 to $8.50 a s/f, depending on building location, size, age and features. Three to four years ago the average rents for these markets were $4.75 to $5.50 a s/f, so the increase is quite marked. In certain Northern Jersey locations such as the Meadowlands, Central Bergen County and Newark, I'm hear- ing numbers in the $10.00 to $12.00 a s/f range for warehouse and distribution space. Rents may increase slightly in 2018, but not much. At some point businesses will not be able to afford them. Vacancy rates for our industrial exclusives, many of which are off of Exits 8 and 10 of the New Jersey Turnpike, are in the zero to 3 percent range. Our tenants re- new quickly to ensure they have the space. It all comes down to supply and demand. Although we see new big box construction, and reports say there is more than 7 million s/f of new or proposed industrial construction statewide, there is still not enough spec build- ing of divisible industrial and flex buildings for businesses that need anywhere from 5,000 to 50,000 s/f. I see this trend continuing because of limited land availability and the length of time necessary to go through the approval process.
Industrial Opportunities
For Lease: 102,000 Sq. Ft. Whse./Distribution Bldg. Located off of Routes 287, 78 and 22 | Easy Access to NJ Tpke. Exit 10
Available Immediately 24 ft. Ceilings 8 Tailboard Loading Docks 1 Ground Level Door
2500 Sq. Ft. Office Competitive Rent Wet Sprinkler Gas Heat
3 Finderne Ave., Bridgewater, NJ
For Sale or Lease: 50,000 Sq. Ft. Whse./Distribution Bldg. Located Off of Rte. 22, Close to Routes 78, 287 and NJ Tpke.
Expandable to 80,000 Sq. Ft. Freestanding Bldg. on 10 Acres 5,000 Sq. Ft. Office 3 Tailboard Loading Docks 1 Drive-in Door 24 ft. and 16 ft. Ceilings Dry Sprinkler
106 Meister Ave., Branchburg, NJ
www.zimmel.com
ZIMMEL ASSOCIATES CORPORATE R EAL ES TATE S ERV ICES 1090 King Georges Post Road, Suite 808, Edison, NJ 08837 (732) 661-9200 • Fax: (732) 661-9617 • www.zimmel.com
10A — January 12 - 25, 2018 — 2018 Forecast — M id A tlantic
Real Estate Journal
www.marejournal.com
2018 F orecast
espite concerns about the “death of retail,” the number of retail By John D. Meadows, RA, Bernardon How to build a shopper’s paradise: Retail design trends for 2018 and beyond D façade designs have helped to emulate and enhance the streetscape experience.
models, for example, in adapt- ing existing buildings to add drive-through windows and customized signage designs. As more retail develop- ers attempt to compete with so-called “destination” or “lifestyle” centers, architects have been endeavoring to create more fun shopping ex- periences - even in traditional strip-mall settings. Restau- rant tenants are demanding outdoor dining space or store- fronts that open to simulate the outdoor dining experience. Other features such as attrac- tive hardscaping and varied
and fountains are essential, as are public transportation stops and providing a variety of dining options. Centraliz- ing restaurants and eateries will create next-generation food courts, and we can expect to see more dining venues within retail establishments and pop-up cafes. Convenience and tech- nology – Convenience is the premium target, and technol- ogy such as drone landing zones, Amazon lockers, and Uber and Lyft parking spots may appear within cutting edge developments to meet the challenge. Continually improving customer data can help retailers make person- alized recommendations for shoppers, such as in “smart” dressing rooms, which employ technology to suggest comple- mentary items or to help find alternate sizes. Additionally, as technology becomes more integrated into our daily lives, we’ll see more connections be- tween digital and brick-and- mortar shopping experiences. Making better use of space – In the future, we can expect to see retailers collaborate and share space more effectively, whether on a smaller scale, such as Topshop or J. Crew pop-up shops, or on a larger scale, with multiple retailers shar- ing the same warehousing and loading space. Market- places with a variety of small online or local retailers may make an appearance in tradi- tional shopping centers. Also, with the boundaries between work, home, and play blur- ring, future retail design will more purposefully incorporate residential, transportation, workplace, and healthcare spaces. With the retailing land- scape changing so rapidly, retail designers need to be proactive in incorporating cre- ative features that will lure tenants and consumers. In 2018, the savvy retailer that supplies a more customized, meaningful, and convenient retail experience is sure to thrive. John D. Meadows is a registered architect with over 20 years of experi- ence in commercial and retail design. He is a proj- ect manager at Bernardon, a regional architecture, interior design, and land- scape architecture firm. n
appreciation for the recent and up-and-coming trends in the retail real estate market can help developers and owners get ahead of the competition to reposition existing shopping centers and build exciting new retail developments. The last few years have seen greater differentiation in storefront design, with façade colors, signage, and awning colors that help to reinforce the national identity of high-profile tenants. We have also seen more accom- modations to keep up with tenants’ evolving business
s t o r e s has increased by 180% o v e r the last 40 years while our country’s popu l a t i on has only in- creased by 40%. Well-
As we move into 2018, these trends will surely continue, but we can also expect to see groundbreaking new ideas permeate the retail market. Elevating the customer experience – Ferris wheels, carousels, and sculpture gar- dens may sound extravagant, but future retail centers will need to incorporate entertain- ment-focused architectural features that delight and engage consumers. Outdoor public spaces with sculptures
John Meadows
located, amenity-rich retail centers are doing better than ever. While demand for tradi- tional, big box retail space may slow in the coming years, an
DREAM. DESIGN. SUCCEED.
Philadelphia, PA West Chester, PA Wilmington, DE www.bernardon.com
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