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Darrow, Martin &O’Connell along with Progress Capital’s Domenico negotiate transaction Red Mortgage Capital closes $60M SBL Portfolio in Union City, NJ
ISSUE HIGHLIGHTS Volume 31, Issue 10 May 24 - June 13, 2019
U
NION CITY, NJ — RED Mortgage Cap- ital , the lending arm
SPOTLIGHTS
o f O R I X Real Estate C a p i t a l , LLC , a n - nounced the closing of a $60 million, 18 property portfolio in Union City
INDUSTRIAL & DISTRIBUTION CENTERS
5-24A
John Darrow
CONTRIBUTING COLUMNIST
through the Freddie Mac OptigoSMSmall Balance Loan program. The financing was for the acquisition of the multifamily properties, which include 481 units of affordable housing in one of the country’s most densely populated areas. The properties range from eight to 67 units. JohnDarrow, JimMartin and Harris O’Connell with RED’s SBL Team negotiated the portfolio transaction along with Brad Domenico of Progress Capital . The Union City transaction is one of RED’s largest SBL portfolio financings to date and one of a growing number of portfolios financed by RED in the small balance space. In
for loans ranging from $1 mil- lion to $7.5 million secured by multifamily properties across the nation. It brings liquid- ity and stability to a market sector that was previously geographically fractured and often constrained by sponsor or market exposure limits. In the case of the Union City transaction, RED’s SBL team orchestrated the simultaneous closing of 18 individual loans, allowing for better pricing and reduced closing costs. Union City, Palisade Ave.
the past 12 months, RED has closed 11 small balance loan portfolios totaling more than $200 million in loan proceeds across 75 properties. “RED’s ability to provide competitive terms and cer- tainty of execution on such a large portfolio could not have happened without RED’s high- ly-efficient, well-engineered approach to Small Balance lending,” said Domenico. The Freddie Mac Optigo SBL program is a competitive option
“Our team continually seeks to improve the cus- tomer experience, leverag- ing technology and decades of industry expertise to pro- vide our clients a seamless execution on every trans- action in this high volume space,” said John Darrow of RED. “This focus on cus- tomer experience has al- lowed RED to establish itself as a preeminent capital pro- vider in the small balance space.” fans a best-in-class venue to call home and be proud of. Beyond competitive gaming, it’s a stunning facility that will host a wide array of events.” “It is a tremendous honor for The Cordish Companies to grow its partnership with Comcast Spectacor and bring a state-of-the-art, world-class esports and entertainment venue to the heart of the Phila- delphia Sports Complex,” said Blake Cordish , principal of The Cordish Companies. Designed by Populous , an architecture firm with deep experience in the fast- growing esports space, Fusion Arena will boast 60,000 s/f of new construction, featuring a stunning and futuristic design throughout. Construction is set to begin this summer.
Raymond Willer HF Planners, LLC
2A
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PHILADELPHIA, PA — Comcast Spectacor and The Cordish Companies an- nounced plans for a $50 mil- lion, next-generation esports
Directory Industrial & Distribution Centers......................5-24A Billboard Directory..............................................25A Business Card Directory. .....................................27A Organization Events Calendar..............................28A Owners, Developers & Managers............... Section B
Fusion Arena rendering
Fusion Arena will also host a variety of live entertainment programming and experi- ences. “We’re thrilled to introduce a venue like no other as we move forward with the next phase of development within the Philadelphia Sports Complex,” said Dave Scott, Chairman and CEO, Comcast Spectacor. “Fusion Arena gives esports
and entertainment venue in the heart of the Philadelphia Sports Complex. Adjacent to Xfinity Live!, the venue will seat up to 3,500 guests. Its pri- mary tenant, the Philadelphia Fusion esports franchise, is one of 20 international teams competing in the Overwatch League. In addition to serving as a premiere destination for competitive gaming events,
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M id A tlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Publisher ........................................................Joe Christman Section Publisher ............................................. Steve Kelley Section Publisher ............................................... Kim Brunet Editor/Graphic Artist..... .................................Karen Vachon Office Manager ...............................................Kerrin Devine Contributing Columnist ...Raymond Willer, HF Planners, LLC Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly Periodicals postage paid at Hingham, 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. 31, Issue 8 Subscription rates: 1 year $99.00, 2 years $148.50, 3 years $247.50 & $4.00 single issue - plus postage REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Phone: 781-740-2900 | Fax: 781-740-2929 www.marej.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
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Raymond Willer
Emergency Preparedness: Implementing a Plan in Your Office Space N o environment is com- pletely safe! An unfor- tunate statement that today has never been truer. Active shooter incidents are on the rise, increasing 500% since 2000. In fact, workplace homicides reached their high- est rate in six years in 2016.* There is currently no way to predict where an active shooter event may happen. Statisti- cally, the three most common places they occur are business- es (45%), schools (25%), and government facilities (10%). However, studies have shown that they tend to focus on soft targets. Soft targets are loca- tions in which there is little to no security, open and easy access into the location, and dense groups of people.** An- other fact often overlooked is that 100% of Active Shooter Incidents are preplanned and at least one third of them are extensively planned. There is no such thing as a spontane- ous active shooter. Post-event investigations have been able to uncover the degree of plan-
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ning involved by the shooters and some of them include up to a year of preplanning, surveil- lance, weapon preparations and internet research of other active shooters and police response times. The average response time of law enforce- ment to active shooter events is approximately 3 minutes (much faster than the average for standard 911 calls). This leaves the targeted organiza- tion, on average, 3 minutes to fend for itself. The average ac- tive shooter incident lasts only five minutes, which often ends before the police arrive.*** What an organization does during those 180 seconds is crucial, but more importantly,
what it does in the preceding weeks, months and years mat- ters even more. What types of actions can those in an office environment take to make a significant impact on how its members survive the attack? Prepare, Prepare, Prepare! Today’s open office environ- ment poses significant chal- lenges in comparison to older designed environments where closed door offices existed rather than all glass walled offices surrounded by a wide array of open areas. The typi- cal mantra of Run, Hide, Fight in an active shooter incident takes on a different meaning in today’s office environment. The continued on page 4A
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M id A tlantic R eal E state J ournal 2 multifamilies in Berlin Borough & Salisbury Borough, PA USDA selects Warner Real Estate & Auction Co. to sell apts. through online auction B ERLIN BOROUGH & SALISBURY, PA — Warner Realtors &
Auction Co. h a s f o u n d s u c c e s s i n the past with selling U.S. Department o f Agr i cul - ture (USDA) f o r e c l o s e d p r o p e r t i e s
100 Berlin Manor
Rich Warner
throughout NJ using online only auctions. They have now been selected by the U.S. Department of Agriculture (USDA) to conduct an online only auction event for two multi-family properties in PA. The auction consists of a 34- unit senior apartment building in Berlin Borough and a 32- unit senior apartment building in Salisbury Borough. Warner Real Estate & Auction Co. will be selling both multi-family senior apartment buildings through an online auction, with starting bids of $100,000, beginning at 8:00am (EDT) on 05/30/2019 and ending at 10:15am (EDT) on 06/05/2019. Photos, property details and terms of sale can be found on the auction website Warner- Realtors.com. • Online Only Auction: 34- Unit Senior Apartment Build- ing at 100 Berlin Manor, Ber- lin Borough. • Online Only Auction: 32- Unit Senior Apartment Build- ing at 70 Grant St, Salisbury. According to Rich Warner , president and founder of War- ner Real Estate and Auction Co., “This is a golden oppor- tunity for buyers to purchase USDA foreclosed multi-family properties at auction and bid their price. Both properties are currently rent-restricted and subsidized senior apartments. However, the properties will be sold ‘out of program’ so there is an incredible opportu- nity to create value with mar- ket rents. Best of all, the entire auction process will take place online, so it couldn’t be more convenient for buyers.” Closing will be on or before 30 days from the conclusion of the online auction, at 10:15am (EDT) on 06/05/2019. Proper- ties are being sold in “AS IS” condition with no contingen- cies. The property inspections are Wednesday, May 29th from 12 noon to 1:00pm. De- tailed property information packages, property descrip- tions, video tours, are avail- able online at WarnerRealtors. com.
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M id A tlantic R eal E state J ournal
Three SVNAdvisors on track for advanced designation
By Jessica T. Zolotorofe, Ansell Grimm & Aaron Seven lease provisions for a landlord to watch out for
best plan starts at entryways with controlling access to the office/building. This ensures that everyone entering the building has a legitimate need to be there. While it will not prevent a current member of an organization from attacking his or her own organization, it will slow or prevent an outsid- er attack. Video surveillance is another key ingredient in that it can provide situational awareness and enables you to not only observe activity throughout the facility in real time, but also offers the ability to record activity for forensic purposes and review. Mass No- tification Systems (MNS) en- able communication with large groups, it can be in the form of loudspeakers, telephone messaging, electronic mes- saging displays and wireless duress buttons to name a few. Gunshot detection systems can help identify and locate gun- shots almost immediately and can be integrated to alert law enforcement. Interior shelters in the open, glass walled areas of today’s office present a chal- lenge but with the advent of Micro-layered, tear resistant film and Impact Protection Attachment Systems (while they are not bullet proof), can provide the much-needed time to slow down the shooter until help arrives. It should be noted that an analysis of active shooter events showed there is no evidence that a previ- ous active shooter has ever FAIRFAX, VA — SVN | Miller Commercial Real Estate Advisors Andy Ball and Tonney Insley and asso- ciate Advisor Kelly Svehlak took the week long CCIM 101 Course: Financial Analysis for Commercial Investment Real Estate. CI 101 is a foun- dation class for real estate practitioners at a time when risk mitigation, pricing, and cycle assurance have become critical to investors. This course introduces the CCIM Cash Flow Model, a tool for ensuring your investment decisions are based on wise finance fundamentals. During the course, they learned how to use key financial concepts such as the Internal Rate of Return, Net Present Value, Cap Rate, Capital Accumula- tion, and the Annual Growth Rate of Capital to compare different types of commercial real estate investments. CCIM stands for Certi- fied Commercial Investment
o f t e n t ime s national ten- ants will not allow renego- tiation of any memorialized terms once the LOI i s signed. Thus, it is always W
many tenants, to notify each tenant that they are late in complying with their monthly, recurring obligations under the lease. A good compromise is of- fering a tenant written notice for the first monetary default, and thereafter, late fees can immediately be assessed and non-payment will constitute a default without further notice. (6) Confidentiality Often overlooked, a critical termof any lease agreement, es- pecially those for multi-tenant centers, is the confidentiality provision. Other than tenants’ agents, lawyers, accountants, and lenders, tenants should not be permitted to disclose any of the terms of their lease agree- ment. Particularly their rental rate and any concessions, such as free rent or allowances, should be kept confidential as to not cause other tenants within the center to attempt to renego- tiate their leases, which could cause a significant problem for a landlord. (7) “Go Dark” and Recapture Sometimes tenants will re- quest a “go dark” provision, which will allow them to cease operation at the premises so long as they continue to abide by their other obligations under the lease. This way, if a tenant’s business is not succeeding at the location, and it is not financially favorable to continue to pay the costs of conducting business, a tenant has the option of avoid- ing a default under the lease, while still closing its operation at the premises. Especially in a multi-tenant center, this can be detrimental to a landlord who relies on the tenant’s foot traffic, or who does not want a dark unit for years, which may render the center undesirable to other po- tential tenants. In the alterna- tive, it is a better scenario than the tenant defaulting and not paying the rent at all. A landlord should weigh the advantages of continuing to receive consistent rent with having a dark space in the center. These may not all be deal breakers, but they are a few provisions to keep an eye out for when opening negotiations. Leases are complex and each lease has unique terms and provisions, so Landlords should always get a lawyer involved early on in the process to en- sure that their interests are fully protected. Jessica T. Zolotorofe is an associate with Ansell Grimm & Aaron.
hile letters of in- tent are not bind- ing in many states,
ing assets once the lease is sur- rendered, so the landlord will have no recourse upon a de- fault by the new tenant. Plus, the original guarantor of the lease will probably want to be released. A good compromise is to agree to release the guaran- tor if a replacement guarantor is provided by the assignee who has equal or greater net worth to the current guarantor. This provides the landlord with the same bargain for which they initially benefitted. Additionally, as a condition to assignment of the lease, the tenant should have to pay all of landlord’s costs incurred in connection therewith, including legal fees to review the assign- ment, and other expenses, for example, an architect’s review of the assignee’s plans for reno- vation of the premises. (4) Termination Rights Also known as the “kick-out provision”, many national ten- ants require a right to termi- nate their leases if their sales do not meet a certain threshold after a specified period of time. Tenant lease forms often pro- vide that the tenant can termi- nate at any time after a certain time period, for example, the sixtieth month. It is very diffi- cult to sell or finance a property with a lease that can end at any time, even if there are seem- ingly many years left in the term. Thus, a landlord should require its tenants to exercise their termination right within a short window. To continue the above example, notice would have to be provided between the sixtieth and sixty-sixth months of the lease term. In the event that a tenant is going to have the right to ter- minate pursuant to the lease, a landlord should attempt to negotiate a termination fee, in addition to reimbursement of the then unamortized portion of (i) the broker's commission paid by Landlord in connection with the lease, and (ii) any al- lowance paid by the landlord to the tenant for build-out costs. (5) Monetary Defaults Tenants will often make the argument that monthly rent payments can get lost in the mail, or there can be a clerical error that causes a payment to be late, and thus they require written notice from landlord before any penalty can be imposed. However, landlords should argue that it should not be their responsibility, espe- cially a landlord that manages
breached an interior, standard commercial door (metal framed with solid wood core). If one is available such as a file room, copy room, bathroom or any room having a commercial grade locked door could work. Having multiple exit options readily accessible are by far the safest way to negate an active shooter event by leaving the area. These exit options should be easily identified using way finding signage or having emergency evacuation routes posted, and where pos- sible the use of metal filing cabinets lining these escape routes can give additional “cover” when fleeing an active shooter incident. Escape Drills should also be incorporated into all Emergency Prepared- ness plans similar to Fire Drills in order for response to an emergency to become as automatic as possible. As a last resort Fight , defend like your life depends on it, because it does. If you cannot deny ac- cess to the shooter, or avoid them by hiding or fleeing, use anything and everything to defend yourself. Raymond Willer is an account manager for HF Planners, LLC. *https://www.bls.gov/news. release/cfoi.nr0.htm **Source: FBI, a study of Active Shooter Incidents in the United States between 2000-2013 *** https://www.fbi.gov/ file-repository/active-shooter- study-2000-2013-1.pdf/view The group took the class in Fairfax, VA. “This class pro- vided valuable information that will help us in assisting clients to make informed in- vestment decisions. Having a better understanding of all aspects of the real estate cycle increases our ability to add value and provide the best advisory services possible”, said Kelly. Member. The CCIM desig- nees are recognized as lead- ing experts in commercial investment real estate. CCIM designees are able to help their clients minimize risk, enhance credibility, make informed decisions, and close more deals.
Jessica Zolotorofe'
advisable for landlords to have an attorney review before it is executed. That being said, the following is a guide for land- lords to follow when beginning negotiations with a tenant. (1) CAM caps Tenants will often require a cap on the annual increase of their common area expenses. Landlords should ensure that only “controllable” expenses are capped, which should exclude snow, ice, insurance, and tax increases. Additionally, it is not un- usual for a tenant which has many locations to only review common area maintenance charges when either the ten- ant is ready to renew the lease, when estoppels are requested, or periodically over numerous years. Leases should provide that the landlord must be notified of any dispute in the accounting of common area expenses within twelve months after receipt of landlord’s recon- ciliation report. This will pro- tect a landlord from having to potentially reimburse a tenant a large sum after many years of an inadvertent miscalculation in its maintenance charges. (2) Landlord’s Work If the lease contains a re- quirement for a landlord to complete certain work prior to delivering possession to the tenant, it is important for the lease to provide that the con- dition to delivery is only that landlord’s work be “substan- tially complete”, which should be defined to exclude minor punch-list items, construction on other parts of the shopping center which are not immedi- ately adjacent, and weather dependent items such as land- scaping, provided same do not materially interfere with Ten- ant’s ability to perform tenant’s work or to open for business. (3) Assignment of Lease If a tenant is permitted to assign the lease, the original tenant will typically remain li- able, but that entity will likely be dissolved or have no remain-
continued from page 2A Emergency Preparedness: . . .
Real Estate Journal — Industrial / Distribution Centers — May 24 - June 13, 2019 — 5A
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Mid Atlantic R eal E state J ournal ’ s A nnual S potlight I ndustrial R eal E state & D istribution C enters
Featuring:
Brian Banaszynski Transwestern Development Company
Amy Broadhurst SIOR
Steve Cole, SIOR NAI Mertz of PA
Barton Foreman, P.E. Providence Engineering
Mike Sauers Sauers Snow & Ice Management
David M. Winslow, Ph.D., PG GZA
Eric Kuhn Pillar Real Estate Advisors
Jordan Metz Bussel Realty Corp.
Eugene M. Gallagher, P.E. GZA
Inside: Jordan Metz, Bussel Realty Corp.........................................................................................................6A David M. Winslow, Ph.D., PG, Eugene M. Gallagher, P.E., GZA..................................................... 8-9A Keystruct Construction, Inc................................................................................................................10A Brian Banaszynski, Transwestern Development Company.............................................................11A Garden State Sealing..................................................................................................................... 12-13A NAI Co-Op.............................................................................................................................................14A Steve Cole, SIOR, NAI Mertz of PA.....................................................................................................14A Mike Sauers, Sauers Snow & Ice Management.................................................................................17A SIOR................................................................................................................................................ 18-19A Nappen & Associates. .........................................................................................................................20A Eric Kuhn, Pillar Real Estate Advisors...............................................................................................21A Barton Foreman, P.E., Providence Engineering................................................................................22A
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I ndustrial R eal E state & D istribution C enters By Jordan Metz, Bussel Realty Corp. Why is the NJ industrial real estate market still so hot? The Internet.
I nternet retail sales. That’s the difference keeping our current hot industrial mar-
all about warehousing and logistics. Here is what is important to note for the New Jersey indus- trial market: Every time in- ternet retail sales grow by ap- proximately 5%, our vacancy rate dips by approximately 2%. For every $1 billion spent on online shopping, users require one million s/f of ware- house space. Ecommerce rep- resented a growing share of the retail market in 2018, taking a 14.3% share of total retail sales last year, up from 12.9% in 2017. More signifi- cant is that ecommerce sales represented more than half,
or 51.9%, of all retail sales growth. This is the largest share of growth for purchases made online since 2008. Corre- spondingly, New Jersey indus- trial market sales prices have risen approximately 40 to 60%, depending on the submarket, in the last 3 years. There is a direct correlation between online sales growth and the need for industrial real estate. As ecommerce grows, so grows our industrial real estate market. That is why New Jersey submarkets near the ports are the hottest. There’s a common thread to most of my deals, that being location, location, location. These port-proximate facilities allow companies to receive containers from the second largest port in the country, Port Newark/ Elizabeth, truck them to their nearby warehouse, and then send their outbound deliver- ies to the consumer popula- tion centers of New York and Northern NJ, thus meeting our ever-growing consumer- economy appetite and demand for same and next day deliver- ies of whatever purchase we just made on our smartphones. This is a trend happening in every major core market in the nation. These last-mile locations’ ability to service the end consumer and simultane- ously limit their trucking costs puts them in a position to compete for a slice of the retail pie and to out-deliver their competition. Amazon, the architect of the current ecommerce logistics paradigm shift, recently announced a major investment into mak- ing “next day delivery” the new forum. Companies will pay a premium for a choice location. Many of these users are relocating from the NYC boroughs, which makes core port-proximate markets in New Jersey very attractive to employees and executives who don’t want to travel an hour to work on their morning and evening commutes. The port-proximate region of New Jersey has been and remains to be very strong in its fundamentals. With below 2% vacancy rates and properties being leased and purchased at a rapid pace, all signs bode well for industrial real estate in these markets. Unless we plan to no longer hack away continued on page7A
ket hitting l e a s e a n d s a l e p r i c e highs unseen in 40+ years. Technology is making the d i f f e r e n c e as it always does. Shop-
Jordan Metz
ping is easier than ever online and on your phone. Industrial real estate is the choice of every major retailer, and for the mul- titude of ancillary businesses in the ecommerce sector. It’s
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I ndustrial R eal E state & D istribution C enters By Eric Kuhn, Pillar Real Estate Advisors Mid size cold storage and “Last Mile” needs create high demand for facilities
tribution ma- chine contin- ues onward with “same day” delivery and an ever- increasing ar- senal of offer- ings featuring p e r i s h a b l e W
ith its sights set on world domination, the Amazonian dis-
to take a higher priority in the strategic planning of producers and distributors of perishable products. It is no longer enough to produce and have available a high-quality product. That same level of product must now be readily and continuously available in the both the local grocery store and for delivery to a consumer’s door in very short order. To that end, the need for secondary, “Last Mile” facilities is increasing at rates never seen. These locations are smaller footprint facilities than the that of the primary production and distribution lo- cations, which provide staging
for the strategic logistic needs of storage and distribution to a denser regional market. In con- trast to the larger production facilities being traditionally located in more rural settings, these smaller facilities need to be positioned closer to the pop- ulation they serve. This pres- ents as a challenge from a real estate perspective as available sites with the qualifications of conformant zoning, proximity to major thoroughfares, and in- frastructure can be rare. Often it is the repurposing of a former facility that allows for this ad- dition to a company’s strategic growth initiative. Company’s
looking to utilize flex and industrial buildings, which have NOT been previously used as cold storage and dis- tribution facilities, often face the challenge of reinventing the building’s infrastructure, which can take many months and cost hundreds of dollar psf; in contrast to available “in place” facilities, offering significant speed-to-market at fraction of new construction or full retrofit pricing. Look for this trend toward food production, storage and distribution companies need- ing mid-size facilities to in- crease, with delivery taking
the priority in consumers’ minds, and producers look to compete in an ever increasing “need it now” market. Interest in this product sector extends beyond the confines of US com- panies looking for strategic enhancements to their infra- structure. Increased demand by European companies look- ing to gain a foothold in the USmarket for their perishable product lines have many of these sites getting attention abroad as well. Eric Kuhn is managing partner of Pillar Real Estate Advisors in West Chester, PA.
Eric Kuhn
product lines which will have climbed to a larger percentage of overall sales in the time it takes to read this paragraph. This is just one of the Jenga pieces which sets the stage for a true uptick in demand for cold storage and distribution facilities. Reports from both the Dairy and Meat production sectors show a surplus of product. The 2018 reports from the USDA and US department of Agriculture are showing 2.5 BILLION pounds of meat and 1.39 BILLION pounds of cheese in storage. Even by Philadelphia standards, that’s a lot of cheesesteak on standby. Adding to this surplus are the recent tariffs placed on Meat and Dairy exports. Primary sources of this reduction in foreign consumer demand stem fromChina andMexico as their imposed tariffs make US products all but cost prohibi- tive. Some offset to this reduc- tion in foreign demand may result from the recent outbreak of a “swine flu” contamination of pork in China, mandating the loss of millions of animals and creating a shortfall for a country which has been tra- ditionally a large consumer of pork product. With consumer expectations being altered as to what is pos- sible from the service and deliv- ery industry, logistics continue continued from page 6A at our iPhones, impulsively purchasing and expecting those goods to be delivered to our doorstep within 24 hours, these trends in the industrial world will only continue to become more prevalent. With so few new product deliveries being absorbed as quickly as they can come online, expect pricing to remain strong. Jordan Metz is senior vice president of Bussel Realty Corp. in Central NJ. By Jordan Metz, Bussel Realty
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I ndustrial R eal E state & D istribution C enters By David M. Winslow, Ph.D., PG, Eugene M. Gallagher, P.E., GZA Geotechnical/environmental engineering approach to brownfields reduces redevelopment liability B rownfields present complicated liability concerns for develop-
projects are completed more quickly, more cost-effectively, and withmore effectively man- aged risk. Th i s a p -
services, water/flood hazard services, and construction management. We approach brownfields projects with sev- eral key environmental and geotechnical engineering con- siderations in mind from the outset, among them: Consider the entire lifecycle of the development plan Understand the implications of remedial excavations within planned building footprints and evaluate the compatibility of environmental remediation plans with the proposed build- ing foundation systems/loca- tions. Areas that will ultimate- ly need to provide structural
support should be prepared accordingly at the time of re- mediation. For example, during redevelopment of sites on which underground storage tanks (USTs) are removed, poor or uncompacted soils may be used as backfill. These soils are suit- able to reach environmental closure but may not have the compaction density necessary to support the foundations of buildings planned for the re- development; backfilling with appropriate soils at the time of the UST removal prevents the need to remove and replace poor soils later in the project timeline. The re-use of soils
on-site is also best evaluated considering the full scope of the development plan, including development feature locations and foundation/compaction issues for backfill. While re- use can significantly reduce off-site disposal volumes and costs during remediation, if the materials are not properly managed there may be com- plications during development that lead to costly redisposition of materials. Build remediation into the design Vapor intrusion is a potential environmental concern at many brownfield redevelopment sites and construction of a subslab depressurization system (SSDS) is an effective remedial solution. By integrating the SSDS into the future foundation design, the SSDS lateral piping and sumps will be appropriately configured to avoid conflict with the foundation structural components. This collaborative approach minimizes construc- tion delays and cost overruns later in the project. Design it once Consider constructability and regulatory requirements of engineered systems — such as support of excavation (SOE) infrastructure, dewatering, and groundwater cut-off sys- tems — and develop a design that works for both remedial excavation and construction of building foundations sys- tems. Although this requires close coordination between the architect, environmental engineer, geotechnical engi- neer, and others, the results are well-worth it. This com- prehensive design approach was especially beneficial on a recent, complex GZA brown- field redevelopment project with a shallowwater table and contaminated groundwater. A single dewatering system was designed and permitted to serve not only the needs of the remedial activities, but the construction of foundations that extended beneath the water table. When geotechnical engi- neers and environmental professionals work together from the onset of a project they can identify and address not only potential conflicts — and avoid them — but can also capitalize on opportu- nities to create efficiencies, bringing more certainty to an inherently uncertain process. continued on page 24A
ers, as below- ground envi- r o nme n t a l and soils en- gineering un- knowns can cause delays and add costs to a project. When multi-
p r o a c h t o b r own f i e l d r e d e v e l o p - m e n t h a s served c l i - ents of GZA GeoEnviron- mental, Inc.
David Winslow Eugene Gallagher
disciplinary professionals from a single specialty geotechnical/ environmental engineering firmwork together on complex soil and groundwater condi- tions, brownfield development
(GZA) and Melick-Tully & Associates, A Division of GZA, well. The firm offers five core services: geotechnical engi- neering, environmental ser- vices, ecological/permitting
Heller Industrial Parks Industrial Parks
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Real Estate Journal — Industrial / Distribution Centers — May 24 - June 13, 2019 — 9A
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M id A tlantic
I ndustrial R eal E state & D istribution C enters
BETTER TOGETHER. GZA GeoEnvironmental (GZA), now with Melick-Tully & Associates and Civil Dynamics as part of our firm, has brought together some of the region’s leading geotechnical, dam engineering and environmental consulting firms.
Geotechnical Engineering • Subsurface Investigations, Foundation Design, Construction Support, Instrumentation Environmental Services • Site Investigation, Remediation, Hazardous Materials, Compliance Ecological Services • Environmental Impact Studies, Wetland Delineation, Threatened & Endangered Species Surveys, Permitting Water, Flood Hazard and Dam Engineering • Marine/Waterfront Structures, Dams and Levees, Flood Hazard Mitigation
Together, our teams have bigger reach, stronger impact, and expanded services, while continuing to deliver the level of service and innovative solutions all of our clients have come to expect.
Construction Management • Demolition and Decommissioning, Construction Services
We’re better together—for you.
Known for excellence. Built on trust.
Please contact us if you have any questions about Melick-Tully, Civil Dynamics, or GZA — or the expanded services we can now provide.
www.gza.com Fairfield, South Bound Brook, and Hammonton, NJ; Philadelphia, PA; New York, NY; 26 additional offices
a division of GZA GeoEnvironmental, Inc.
a division of GZA GeoEnvironmental, Inc.
10A — May 24 - June 13, 2019 — Industrial / Distribution Centers — M id A tlantic
Real Estate Journal
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I ndustrial R eal E state & D istribution C enters Keystruct Construction leads design/build team in Shiremanstown, PA Former manufacturing & warehouse facility gains new life as distribution center W hen Quaker Oats closed their manu- facturing plant and
warehouse, including removal of the front and end walls, roof, roof steel, steel columns and se- lective interior demolition. Fol- lowing this demolition work, the existing structure was ready for interior renovations and a new building envelope. The more extensive demolition involved the 310,500 s/f multi-story of- fice and former manufacturing space, including all multi-story vertical structures, foundation walls, slabs, and footers. The complete removal of these areas made way for the construction of a completely new warehouse space. The location and layout of the
project site presented challeng- es during the demolition, and throughout the construction and renovation. The site is sur- rounded by Norfolk Southern railroad tracks, a town play- ground, a community garden, and a Purina mill facility. Be- cause of the proximity of these elements all the dust and debris from the demolition had to be contained to the construction site. A snow-making machine pumped water across the site while the buildings were be- ing taken down, thus knocking down the dust and containing it to the immediate area. As with any long-term con- struction project, winter weath- er conditions impacted the construction in early 2018. For- tunately, the project was able to stay on track by coordinating the work on the renovation of the interior spaces when the weather was uncooperative. Additional challenges arose while connecting to the existing building systems, requiring the superintendent to work closely with the individual subcontrac- tors to ensure the renovated and newly constructed portions of the building were tied-in suc- cessfully. With two entrances to the site and the adjacent railroad tracks, commuters had been in the habit of driving across the existing site to avoid delays resulting from nearby trains. Once construction started, one entrance was closed at all times to ensure public safety and keep unauthorized vehicles away from the site. Keystruct carefully managed the entrance closures and used effective com- munication with subcontractors and material delivery personnel to coordinate site access. The finished 485 Distri- bution Center is a 453,000 s/f modern, bulk warehouse, with multiple loading docks, and significant trailer stor- age and vehicle parking. The renovated portion features enlarged overhead doors with new concrete ramps to access the raised floor from the ex- terior, employee breakroom and kitchen, office spaces, and conference area. The finished space in the renovated portion is 244,000 s/f with 28’ clear height. The newly constructed warehouse space features a separate storefront entrance with distinctive stone features, and 209,000 s/f of space with 32’ clear height. Conveniently continued on page 24A
warehouse in Shiremanstown, PA, the 712,500 s/f building was left vacant for years, before a new owner brought a vision to repurpose the building for an updated use. Keystruct Con- struction led the Design/Build team and worked closely with the owner, Endurance Real Estate Group, to create a multi- tenant, modern distribution center from the old structure. During the initial pre-con- struction meetings, the Key- struct teamworked with Endur- ance representatives and SAA
485 Distribution Center
Architects to determine the best approach to create the tenant spaces. The original facility had been constructed in stages, be- ginning in 1995, leaving broken
transitions between the interior spaces, and a disordered exte- rior appearance. The initial work involved se- lective demolition of the existing
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® Built On Relationships
Since 1995, Keystruct Construction has been the contractor of choice in the Mid-Atlantic region, specializing in complex projects for the industrial, commercial, and healthcare industries. From general construction to full design-build services, Keystruct has built a solid reputation on their project effciencies, customer satisfaction, and overall safety.
After more than two decades of exceptional service and growth, Keystruct maintains a strong presence in the Pennsylvania and Maryland markets, while expanding its services throughout the Mid-Atlantic region. New 485 Distribution Center, 453,000 SF multi-tenant warehouse, featured above.
Pre-Construction ● Design Build General Construction New Construction ● Renovations and Additions Concrete Construction ● Steel Fabrication & Erection ● Carpentry Authorized Butler Builder ®
Keystruct Construction, Inc. (717) 764-1326 ● info@keystruct.com www.Keystruct.com
Real Estate Journal — Industrial / Distribution Centers — May 24 - June 13, 2019 — 11A
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M id A tlantic
I ndustrial R eal E state & D istribution C enters By Brian Banaszynski, Transwestern Development Company Development pipeline struggles to satisfy Northeast’s demand for industrial product D evelopers managed to deliver enough new space to move the
6 million s/f in the pipeline within New Jersey’s core mar- ket at the end of the first quar- ter, down from more than 14 million s/f under construction in 2017, and much of what’s coming is already leased. In New Jersey especially, developable sites are hard to come by, whether for bulk warehouse product or infill distribution centers. In some premier submarkets, land can cost more than building construction costs, which are also at an all-time high. That contrasts with land prices that were more often 20% to 30% of total development costs 15
years ago. Developers are exploring opportunities west and south of the primary market. With New Jersey’s greenfield op- portunities largely exhausted, most new projects entail envi- ronmental considerations. In some cases, the environmen- tal phase of development has stretched to 10 years or more. Coupled with rising costs for construction materials and labor, this adds a degree of self- governance to the development of new supply. Due to these challenges along New Jersey’s primary corridors, the geography has
expanded, with four million s/f planned outside the state’s core parameters. Developers have also looked farther west to Lehigh Valley, Pennsylva- nia, where the industrial foot- print has increased by more than 25% during the past five years, with an additional 5.5 million s/f under construction. Ongoing strong demand is good news for the industrial sector, not only in the North- east but across the primary U.S. markets. Transwestern believes this reflects not a temporary trend, but a change in consumer behavior that will drive absorption of indus-
trial space in the years ahead. That’s one reason tenants continue to sign leases despite rents that have reached the double digits in some submar- kets. And rather than opt for existing inventory in more remote submarkets, many choose to bide their time for yet-to-be-delivered projects that will provide access to New Jersey’s valuable population density and labor pool. Brian Banaszynski is Transwestern Develop- ment Company’s North- eastern U.S. development partner, based in Florham Park, NJ.
n e e d l e o n New Jersey’s i n d u s t r i a l vacancy up one-tenth of 1 percentage point in the first quarter. But at 3.8% v a c a n c y –
Brian Banaszynski
down from 4.1% a year earlier – some tenants are leasing space even before construction begins. Witness the quarter’s two largest leases, both in the Exit 8A submarket in Middlesex County, where e-commerce furniture company Wayfair signed a lease of 953,595 s/f and, upon delivery, will oc- cupy more than 3 million s/f in Cranbury. In the same development, Crate & Barrel agreed to lease 870,950 s/f, a likely consolidation of its exist- ing footprint. Both leases were in planned, unbuilt product. The growth of e-commerce is the principal driver behind current demand. The sector’s share of overall retail sales is about 9% today, and even conservative estimates expect that portion will increase to 20% over the next few years as more consumers shop online for groceries, household goods and other necessities in ad- dition to discretionary items. That suggests we remain in the early stages of a retail sales shift from exclusively brick-and-mortar stores to e-commerce as companies develop their omnichannel strategies. Additional space for warehousing and order fulfill- ment is anticipated because there are still major retailers without a Northeast presence. It’s little surprise, then, that industrial absorption amount- ed to 10.4 million s/f year over year in the first quarter. That marked the fifth consecutive quarter that 12-month, rolling occupancy growth exceeded 10 million s/f, a first-of-its-kind streak for New Jersey. For developers, the chal- lenge is to deliver supply that will answer industrial demand that shows no signs of weaken- ing in the near term. The first quarter’s pause in occupancy growth followed six years of positive quarterly absorption, and there is limited relief on the way for tenants. Construc- tion contracted to less than
12A — May 24 - June 13, 2019 — Industrial / Distribution Centers — M id A tlantic
Real Estate Journal
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I ndustrial R eal E state & D istribution C enters
Garden State Sealing Keep the Water Out
or long lasting strong concrete it is vitally im- portant to control how concrete is exposed to water. Portland cement concrete, the most commonly used build- ingmaterial is composed of four basic ingredients; Portland ce- ment, small aggregate(sand), large aggregate(stone) and water. While all are important in the initial mix and curing process, the introduction of water throughout the life of the concrete can have unde- sired effects on the concrete. The amount of water added to the initial concrete mix is F
cement ratio. This will result in a stronger denser concrete. Use a cure and seal com- pound. Curing compounds form a film on the concrete surface and maintain surface moisture throughout the cur- ing process. A cure and seal compound will aid in retaining moisture during the curing process and will also seal the concrete from future moisture penetration. Both of these options are low cost ways to ensure the viability of your concrete at the time of installation. After installation, inhibiting the reintroduction of water to the concrete is also important. Concrete sealers including silanes, siloxanes, epoxies and acrylics can be used to reduce moisture penetration. Limiting the penetration of water into the concrete sur- face can mitigate the effects of freeze thaw damage in winter months. Water may be necessary for life as we know it, but your concrete will last longer without it. Garden State Sealing is a comprehensive commercial and industrial paving com- pany serving property man- agers, owners and home owner associations. Newmark Knight Frank reps. seller in 180,000 s/f mixed- use transaction CHERRY HILL, NJ — Newmark Knight Frank (NKF) has announced that its Philadelphia Capital Mar- kets team has successfully completed the sale of 9 North Olney Ave. NKF’s Mike Mar- golis and Dave Dolan , in cooperation with Dave Ga- ronzik, Kenneth Zakin and David Noonan , represented the seller in the $13.58 million trade of the property located in Cherry Hill. The 183,000 s/f warehouse, office, distribution and lab space building was 100% occu- pied by a single tenant, Hikma Pharmaceuticals, at the time of sale. The property is a mission- critical site for the tenant, featuring a premier transit-ori- ented location in close proxim- ity to Exit 34 of I-295 and Exit 4 of the NJ Tpke. The site also provides easy access to Rtes. 73, 70 and 38, nearby regional malls, retail amenities, hotels and restaurants.
very important. For strong concrete a cement to water ratio of .4 is recommended. This means for every 100 pounds of cement in the mix, 40 pounds of water should be used. For sidewalks and residential driveways, .4 to .5 is sometimes used, but higher amounts of water can result in a more porous surface which can lead to problems later on. Concrete needs water to initiate the curing process, but this water needs to be controlled. We already know that adding too much water to the concrete will lead to
a weaker concrete. Concrete with too much water will likely not reach its design strength. Why is it important to con- trol the water? When concrete cures too fast, shrinkage cracks can oc- cur. These cracks while small and initially unnoticeable can become pathways for moisture intrusion later on down the road. The rate at which water evaporates from the concrete is important as well. If mix water evaporates too quickly, it can lead to DEF(delayed ettringite formation). Ettringite, which forms after the concrete has
cured, creates internal pres- sures on the concrete which can contribute to cracking. Whether its shrinkage crack- ing, micro cracking or a porous surface due to weakened con- crete, all of these conditions can contribute to the absorp- tion of water. What can be done to control the water? Use a low water to cement ratio. If workability is an is- sue, use a high range water reducer or super plasticizer. By utilizing a super plasti- cizer you can maintain both workability and a lowwater to
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