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ISSUE HIGHLIGHTS Volume 37, Issue 9 September 2025 FALL PREVIEW
CRE finance firm PCCP provides senior construction loan BlueGate secures $162 Million in construction financing for Hoboken Urby
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OBOKEN, NJ — BlueGate Part- ners , on behalf of
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Urby and Ironstate Holdings (together, the “Spon- sor”), has se- cured $162 million in construction financing for
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DELAWARE
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Mark DeLillo
the development of Hobo- ken Urby, a transformative mixed-use residential proj- ect in Hoboken. Commer- cial real estate finance firm PCCP provided the senior construction loan. The 418,332 s/f, 16-story development will feature 307 market-rate apartments and 38 affordable units, comple- mented by 17,425 s/f of retail space – including a signature café – and a 152-space park- ing garage. Residents will benefit from Urby’s distinc - tive lifestyle programming and best-in-class amenities, including extensive fitness fa - cilities, communal vegetable
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respected private real estate developers in the Northeast. Together, the companies em- ploy over 200 professionals across offices in Hoboken and NYC, with a portfolio of 17,000 residential units. Iron- state alone is one of Hoboken’s most prolific developers, with nine assets totaling 1,847 units under management and an additional 1,697 units in Downtown Jersey City. “Hoboken Urby will redefine Hoboken Urby rendering
the residential experience in Hoboken, blending innovative design, high-quality finishes, and state-of-the-art amenities with unmatched connectivity to Manhattan,” said Mark DeLillo , managing partner at BlueGate Partners. The BlueGate execution team included Mark DeLillo, Marc Schulder, Lee Spie- gelman, Felipe Marin, Eli Zaoutis, and Jeremy Silber . MAREJ
gardens, vibrant gathering spaces, and thoughtfully de- signed work-from-home areas. Located just blocks from Hoboken Terminal, the prop- erty will provide direct access to PATH service, reaching World Trade Center in 11 minutes and 33rd St. in 16 minutes, along with NJ Tran- sit commuter rail and ferry service to Manhattan. Urby and Ironstate rank among the most active and
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CONFERENCES 6th Annual New Jersey Retail & Mixed-Use Conference October 7, 2025 Sheraton Edison, NJ 11th Annual New Jersey Office & Industrial Conference November 6, 2025 Sheraton Edison, NJ For speaking & sponsorship info., please contact: Lea at 781-740-2900 or lea@marejournal.com
CBRE Capital Markets arranges financing for 200 unit apartment community in Monmouth County, NJ
MONMOUTH COUNTY, NJ — CBRE Capital Mar- kets’ Debt & Structured Fi- nance team has arranged $40 million in permanent financ - ing for a newly constructed apartment community in Mon- mouth County. The property features 200 units and is one
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Monmouth County
MF1 on behalf of the borrower. “We’re proud to have supported our client in obtaining financing for one of Monmouth County’s most impressive new residential communities,” said Pizzolato.
“Despite current challenges in the interest rate environment, demand from the debt capital markets remains strong for well- located multifamily assets backed by strong sponsors.” MAREJ
of the premier new multifam- ily developments in the region. The CBRE Debt & Struc- tured Finance team of Mat- thew Pizzolato and Josh Stein facilitated the loan from
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M id A tlantic Real Estate Journal Marcus & Millichap Research Brief: If Interest Rates Ease, Will Cap Rates Follow? I f interest rates fall, will a drop in cap rates not be far behind? Many investors believe that capitalization rates on com- mercial real estate transac- tions are linked to interest rates. If the Federal Reserve lowers the overnight lending rate, and other interest rates such as the 10-year Treasury yield also decrease, these in- vestors expect cap rates will contract to some degree. While it is broadly true that both the 10-year yield and the average cap rate have trended lower over the past three decades, empirical analysis shows this relationship is limited. • Between October 2001 and June 2025, movements in the 10-Year Treasury yield were only 40 percent correlated with movements in the aver- age apartment cap rate. • There are multiple in - stances when changes in the Treasury yield did not line up with shifts in cap rates. • In 1994 and 1996, Trea - sury rates spiked, but cap rates trended lower. Later, from 2002 through 2006, the 10-year yield was rising slow- ly, while cap rates steadily fell. • Then, from 2006 until 2008, Treasury yields dropped
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fast as cap rates went up. Alternative influence on cap rates more apparent. There is a different metric that is more correlated with cap rates but from an inverse perspective — transaction velocity. The correlation between changes in the number of trades and movements in cap rates since 2001 was 78 percent. • There was a clear trend from 2002 through 2006 where transaction flow was climbing and cap rates went down. • Then, in 2007 and extending until the end of 2010, the count of trades fell and cap rates rose. • This inverse relationship is also demonstrated in the spike of sales activity that took place in 2021 and 2022, which coincided with a decline in cap rates.
• After that cycle, when trading fell in 2023 and 2024, cap rates went up. Are interest rates instead linked to sales? Overall, there is only a 30 percent correlation between interest rate move- ments and transaction veloc- ity, even after accounting for the time it takes to conclude a trade. The most recent mon- etary policy tightening cycle is a clear exception, however. Given higher interest rates in 2023 and 2024 directly constrained sales, if interest rates were to drop in the near future, it could encourage more transactions, especially given supporting factors: • Capital has accumulated on the sidelines, sitting at over $200 billion just among continued on page 6
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Contact: NEIL A. STEIN • nstein@kaplaw.com 910 Harvest Drive, Blue Bell, PA 19422-0765 • 610-941-2469 • kaplaw.com Other Offices: • Cherry Hill, NJ 856-675-1550 • Philadelphia, PA 215-567-3120 Kaplin Stewart Attorneys at Law
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M id A tlantic Real Estate Journal —September 2025 — 3
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Carlo L. Batts, MAI Rittenhouse Appraisals
Dana Berlin Spencer Savings Bank
Andrew Koller WCRE | CORFAC International
Stephen Pouppirt Clemens Construction Company
Caroline Shelly HF Planners LLC
Adam Zweibel Hudson Atlantic Realty
Inside: ADAPTIVE REUSE Stephen Pouppirt, Clemens Construction Company........................................................page 8 APPRAISAL Carlo L. Batts, MAI, Rittenhouse Appraisals and The Reduxx Group.............................page 7 DATA-DRIVEN WORKSPACES Caroline Shelly, HF Planners LLC.....................................................................................page 5 LENDING Dana Berlin, Spencer Savings Bank...................................................................................page 4 MARKET OUTLOOK Andrew Koller, WCRE | CORFAC International...........................................................page 6 TAX INCENTIVES Adam Zweibel, Hudson Atlantic Realty.............................................................................page 9
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L ending
Expanding lending solutions across New Jersey Spencer Savings Bank now offering loans up to $25 Million on commercial properties
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pencer Savings Bank is proud to announce the continued expansion
including medical office, retail, warehouse, multifamily, and mixed-use properties. What sets Spencer Commer - cial Real Estate Lending apart are our competitive terms and streamlined lending process. We are a true relationship bank — and we mean it. Many of our commercial real estate cus- tomers continue to grow their relationship with Spencer, a testament to the trust and success we’ve built together. From start to finish, we focus on long-term partnerships, not just transactions. Our banking solutions are
comprehensive. In addition to in-person service through our local branch network, we offer a full suite of online and mo- bile banking tools to meet the evolving needs of our business clients. Spencer’s Commercial and Industrial (C&I) lending program is also gaining strong traction. We provide owner- occupied commercial mortgages and lines of credit secured by business assets, supporting the financial growth of busi - nesses across the communities we serve. Recent loan closings high- light our diverse portfolio and
ability to execute on a wide range of property types. No- table transactions include: • A $9,240,000 acquisition loan for a 58,000 s/f. Class A, multi-tenant medical office building in Morris County, NJ • A $9,525,000 acquisition loan for a 56-unit multifamily property in Essex County, NJ • A $4,950,000 refinance of a 59,000 s/f. warehouse/flex office property in Cumberland County, NJ • A $7,200,000 ground- up construction loan for an 18-unit apartment building with two retail spaces, also
in Morris County At Spencer Savings Bank, we remain deeply committed to supporting the communities we serve. Whether you’re expand- ing your real estate portfolio or growing your business, we invite you to experience the Spencer difference — where strong rela- tionships drive smart lending. Dana Berlin serves as the Senior Vice President and director of Commercial Real Estate Lending at Spencer Savings Bank. MAREJ Spencer Savings Bank strengthens New Jersey team ELMWOOD PARK, NJ — Spencer Savings Bank an- nounced the addition of four new lenders in the commercial bank- ing lending division – Carlos Carvajal, Eric Wong, Robert Ross and Joseph Arnone . Carlos Carvajal joins the team as VP, CRE Lending Client Manager. Carvajal is a seasoned banking professional with almost 30 years of com - mercial banking experience in the financial services indus - try. Prior to joining Spencer, he held the title of VP, CRE Lending Portfolio Manager at a multinational bank. Eric Wong joins the team as VP, Commercial and Industrial Lending Relationship Manager. Wong has more than 35 years of experience in commercial bank- ing. Prior to joining Spencer, he held various leadership posi- tions at national, regional and community banks. Most recently he held the position of senior VP and Senior Relationship Man- ager at a community bank. Joseph Arnone joins the team as VP, Commercial And In - dustrial Lending Relationship Manager. Arnone has almost 20 years of experience in busi - ness banking. Most recently he was a Senior Business Banking Relationship Manager and VP at a national bank. Robert Ross joins the team as VP, Commercial And Industrial Lending Relationship Manager. Ross has a strong background with over 20 years of experience in commercial banking helping businesses grow. He has held a variety of senior leadership roles in the financial services industry at various national, regional and community banks. Most recently, he was a VP, senior relationship manager at a national bank. MAREJ
of its Lend- ing Products Division. We are now ac- tively provid- ing ground- up construc- tion loans for multifamily and mixed-
use properties throughout New Jersey, with loan amounts up to $25 million. In addition, our permanent loan offerings cover a broad range of asset classes Dana Berlin
COMMERCIAL REAL ESTATE LENDING Secure Your Next Deal with Spencer! From application to closing, we take relationship banking to the next level. We offer ground-up construction loans for multi-family projects. Our lending also includes medical office, retail, warehouse and mixed-use properties. SPEAK WITH A LENDING SPECIALIST TODAY! +>> Dana Berlin SVP, Director of CRE Lending • (201) 703-3807 I {; DBerlin@spencersavings.com
om
♦)) SPENCER SAVINGS BANK SLA
Member FDIC LENDER
20A —January 21 - February 17, 2022 — 2022 Forecast — M id A tlAntic Real Estate Journal
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2022 F orecast
D ata -D riven W orkspaces
By Caroline Shelly, HF Planners Workplace wellness in an ever-changing work environmen
By Caroline Shelly, HF Planners LLC Designing the In-Between: How AI & Data Are Transforming Collaboration Hubs
provide granular data on how every zone is used, right down to which pantry nook is most popular after 2 p.m. Facilities managers can see heatmaps of traffic flow, identify underuti - lized corners, and make evi- dence-based decisions about where to invest in upgrades or reconfigurations. PREDICTIVE SPACE PLANNING Advanced AI models forecast how seasonal changes, hybrid schedules, or company growth will affect demand for different types of spaces. For example, if your office sees a spike in in- every zone is used, right down popular after 2 p.m. Facilities traffic flow, identify underuti - s we look back on 2021, it is clear that the pandemic, which started in 2020, is still making a huge im - pact on the well-being of employees within the workplace. Astute busi - ness owners and facility man - agers are realizing that they must modify the workplace to ensure a safe and healthy en - vironment. Not only should the A Caroline Shelly
person collaboration on Tues- days and Thursdays, predictive tools can recommend flexing more lobby or outdoor space on those days. EMPLOYEE SENTIMENT ANALYSIS Natural language processing (NLP) tools sift through feed - back from pulse surveys, Slack channels, and help desk tickets to highlight what employees want; be it more quiet pods, better lighting in stairwells, or additional outdoor power out- lets. This real-time feedback ensures that upgrades align with evolving needs. person collaboration on Tues- days and Thursdays, predictive tools can recommend flexing more lobby or outdoor space on those days. Natural language processing (NLP) tools sift through feed- back from pulse surveys, Slack channels, and help desk tickets want; be it more quiet pods, better lighting in stairwells, or additional outdoor power out- physical space be addressed, but also the mental health of employees needs to be taken into consideration. The im - pact of virtual meetings, lack of in-person connection, and increased use of technology have accelerated the burnout amongst employees. While assisting corporations on creat - ing a Workplace Strategy, HF Planners, LLC has uncovered the following needs within corporations that should be dealt with in order to have a successful workplace wellness program; 1. Create a corporate
essential in buildings with seasonal weather swings. Tech Readiness: Ubiqui - tous charging, wireless pre- sentation screens, and robust Wi-Fi are a necessity, even in stairwells and outdoor patios. Acoustic Comfort: Sound masking and zoning are critical in open lobbies and corridors to prevent noise spillovers. Tech Readiness: Ubiqui- tous charging, wireless pre- sentation screens, and robust Wi-Fi are a necessity, even in stairwells and outdoor patios. Acoustic Comfort: Sound masking and zoning are critical in open lobbies and corridors to prevent noise spillovers. A hybrid workplace acknowl - edges that remote working can be successful, but also realizes that face-to-face communica - tion is essential to the success of the business. A Forbes, Inc. article from April 2020, asked: “Is ‘Management by Walking Around’ Still Possible When Everything Is Digital and Brand & Culture Align- ment: Art, color, and design elements that reflect your company’s identity make these hubs inviting and on-brand. Inclusivity: Spaces should continued on page 6 Brand & Culture Align- ment: Art, color, and design elements that reflect your company’s identity make these hubs inviting and on-brand. Inclusivity: Spaces should continued on page 6 essential in buildings with seasonal weather swings. voice their concerns. Regular communications, via emails, town halls, and accessibility to the communications, via a general server, are crucial. 2. Identify individual de- partmental needs for Hy- brid Working Policies.
R th m u w m p th d a w ti s v o in c in a fo tu p w it H ic la “o lu s a a in in k p w d to R t a e w b a m r t W r a a th c to u fo fl a n s A c in d a
WELLNESS & SUSTAINABILITY INTEGRATION WELLNESS & SUSTAINABILITY INTEGRATION AI isn’t just about efficien - cy; it’s also helping facilities managers monitor air qual- ity, optimize daylight, and integrate biophilic design like living walls or indoor gardens in in-between spaces to boost employee wellness and meet sustainability targets. What Makes a Collabora- tion Hub Succeed? Adaptability: Modular fur- niture and movable partitions allow spaces to flex for differ - ent group sizes and activities— The key to success is having buy-in from the executive level down. New workplace strate - gies must be communicated and reinforced to all employ - ees to ensure their safety and health is top priority. Devel - opment and deployment of a company-wide survey will help gather pertinent information as well as let employees know that they have the ability to AI isn’t just about efficien - cy; it’s also helping facilities managers monitor air qual - ity, optimize daylight, and integrate biophilic design like living walls or indoor gardens in in-between spaces to boost employee wellness and meet sustainability targets. What Makes a Collabora- tion Hub Succeed? Adaptability: Modular fur- niture and movable partitions allow spaces to flex for differ - ent group sizes and activities— wellness program that ad- dresses employee engage- ment, use of technology, in-person protocols, clean- ing practices, and a flexible working environment.
When plan- ning space re- quirements, we know that maximizing every square foot is essen- tial, especial- ly as hybrid work, RTO W When plan- ning space re- quirements, we know that every square foot is essen- tial, especial- ly as hybrid
hy You Need to Rethink “In-Be- tween” Spaces
Caroline Shelly Caroline Shelly
and employee expectations reshape office life. The question isn’t just “How do I fit more desks?” but rather: How do I create dynamic, data-driven collaboration hubs that truly support today’s workforce? What Counts as an “In- Between” Space in 2025? In today’s agile office, in- between spaces are so much more than hallways or leftover corners. They are the connec- tive tissue of the workplace; zones where innovation, ca- sual connection, and real pro- ductivity happen. And the definition is expanding: Pantry Spaces: Modern office pantries are morphing into social kitchens, complete with touchless coffee sta- tions, healthy snack bars, and flexible seating that encourages both quick chats and necessary breaks. Lobbies: No longer just for waiting, lobbies now double as informal meeting lounges, with integrated digital direc- tories, visitor management kiosks, and comfortable, tech- enabled seating. Stairwells: Forward-think- ing companies are activating stairwells with art installa- tions, daylighting, and even “pause points” with benches or whiteboards—turning transit zones into moments for spontaneous collaboration. Outdoor Spaces: Rooftop terraces, courtyards, and even sidewalk patios are being winterized and tech-equipped to extend usable space year- round, supporting everything from walking meetings to wellness breaks. Corridors and Walkways: These are being widened, fur- nished with soft seating, and acoustically zoned to allow for impromptu huddles without disturbing nearby workstations. How AI & Data Are Powering Smarter Collaboration Hubs REAL-TIME UTILIZATION INSIGHTS AI-driven occupancy sen- sors and Wi-Fi analytics now reshape office life. The question isn’t just “How do I fit more desks?” but rather: How do I create dynamic, data-driven collaboration hubs that truly support today’s workforce? In today’s agile office, in- more than hallways or leftover corners. They are the connec - sual connection, and real pro- And the definition is expanding:
Finding Your Way Back to the Office When your team is returning to the office, signage and wayfinding is key when establishing new protocols. The team at HF Planners, LLC can help implement proper signage for your office to alleviate any confusion employees may have and improve the chance that new protocols will be followed.
3322 US22-W, Suite 1005 • Branchburg, NJ 08876 908.393.9984 • www.hfplanners.com Facility Planning • Facility Design • Facility Management
c c
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M arket O utlook
By Andrew Koller, WCRE | CORFAC International Philadelphia CRE Market Balances Recovery, Shifts, and Future Growth
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completion are set to intro- duce state-of-the-art life sci- ence facilities, and large-scale commitments from users such as Chubb are reshaping the market landscape. After a period of record expansion, the multifamily sector is expected to moderate as the pipeline of new proj - ects winds down. Occupancy remains strong and should strengthen further as sup- ply growth slows. Demand for housing will benefit from the delivery of Chubb’s new headquarters, major lease activity in University City,
and the addition of life science campuses. Notably, suburban submarkets—including South Jersey and the Main Line— have experienced the most pronounced rent growth. Industrial fundamentals remain solid, with rents con- tinuing to climb amid a slow- down in new deliveries. The Bellwether District project is progressing steadily and will be a key driver of future supply. At the same time, sublease availability in South Jersey has inched higher, creating new opportunities for tenants evaluating the
broader Philadelphia region. Philadelphia’s retail market continues to thrive as cre- ative and immersive concepts complement the progress of the traditional retail sector. Entertainment-driven retail is at the forefront, with ex- periential venues such as F1 Arcade and Flight Club mak - ing their debut in Center City and testing consumer demand. Suburban markets are also active, highlighted by Alo’s opening at Cherry Hill Mall in New Jersey and Vuori’s de- but at King of Prussia Mall in Pennsylvania. The restaurant
he Philadelphia office market showed signs of recovery through
sector is poised to play a ma- jor role in the retail economy, with Center City District data projecting 25 newly opened or soon-to-open restaurants across the city. In totality there should be excitement surrounding the Philadelphia commercial real estate market. Office leasing is up as em - ployers continue to enforce return to office commitments, Multifamily is poised to make up the ground lost in net ab- sorption given the upcoming drop off in deliveries, and emerging retail plays to shift- ing consumer demand. Andrew Koller is a Re- search Analyst & Advisor with WCRE | CORFAC International. MAREJ
early 2025, though activ- ity still trails the five-year average. Fi- nancing chal- lenges and upcoming loan maturi- ties continue
to limit landlord flexibility, constraining their ability to finalize new leases or retain top-tier tenants. Meanwhile, major developments nearing Andrew Koller
By Marcus & Millichap
We see deals from your perspective.
continued from page 5 accommodate neurodiverse needs, offering both high- energy and restorative zones. The most impactful work often happens between sched- uled meetings—in the pantry, the stairwell, or a sunlit cor- ner of the lobby. With AI and data-driven insights, facili- ties managers can transform these overlooked zones into vi- brant collaboration hubs that drive productivity, culture, and employee satisfaction. Caroline Shelly is founder & principal of HF Planners LLC. MAREJ By HF Planners Cap rates may ease regard - less. Even if treasury yields do not shift down in the com- ing months, these additional factors are likely to encour- age some added level of sales activity. The relatively high inverse correlation between trade velocity and cap rates suggests that cap rates are poised to ease some. Even so, it will take time for this to occur, which may create short-term windows of opportunity for investors. MAREJ closed-end funds as of March of this year. • Meanwhile, the volume of debt coming due in the near future is elevated at nearly $960 billion for 2025. • Recent tax reforms reduce some of the upfront costs of completing a commercial prop- erty investment sale. continued from page 2
Our global network of 75 commercial real estate offices is the clear choice.
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A ppraisal By Carlo L. Batts, MAI, Rittenhouse Appraisals and The Reduxx Group The New World Industrial Revolution Reshaping Commercial Real Estate
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feel unprecedented revenue pressure. They’ll need to look for new income sources to pay for essential services, and property taxes represent their most reliable revenue stream. The question isn’t whether property taxes will increase, but who will bear the bur- den. Residential property tax increases face immediate political backlash from voters. Commercial property owners, however, represent a much smaller, less politically orga- nized constituency. I predict that we will see a systematic shift toward com-
mercial properties carrying a disproportionate share of the local tax burden. While Pennsylvania’s uniformity clause requires equal tax rates for all property types, municipalities have other tools – reassessment timing, appeals processes, and valua- tion methodologies – that can shift tax burdens. Preparing for the New Reality This transformation is both an opportunity and challenge. Urban centers reinventing themselves as social hubs will create new asset classes
and investment opportuni- ties. Properties adapting to flexible configurations will outperform those clinging to single-purpose designs. For property owners this means reviewing your port- folio’s current performance and its adaptability to these new facts. Properties able to weather this transition will see significant appreciation. Those that don’t may face declining values alongside increasing tax burdens. State and local government restructuring is inevitable as federal funding streams shrink.
e’re witnessing a New World Indus- trial Revolution –
continued on page 32 The New World Industrial Revolution is reshaping how Americans work, live, and socialize, putting commercial real estate at the center of unprecedented transforma- tion. Property owners who recognize these trends early and position their assets ac- cordingly will thrive. Others Smart property owners are already engaging with munici- pal planning processes, aware that today’s land use and tax policy decisions will determine tomorrow’s property values. The Bottom Line
and smart p r o p e r t y owners need to prepare for what’s on the horizon. The pan- demic econ- omy is over, but what’s
Carlo L. Batts
taking its place is something completely different. We’re not simply returning to the old normal – we’re building an en- tirely new economic ecosystem. Cities and counties are essen - tially blank pages, needing to redefine their economies to fit into this transformed world. As a commercial real es- tate professional who has witnessed markets evolve for decades, I believe we’re expe- riencing what I call a “New World Industrial Revolution.” Just as the original Industrial Revolution radically changed how and where people worked, today’s convergence of post- pandemic realities, AI, and changing work cultures is now propelling similar shifts in our built environment. A New Urban Landscape Takes Shape The office market transfor - mation happening is just the beginning. Urban cores aren’t dying, but we see them being reinvigorated as vibrant hubs filled with fresh retail concepts and experiential venues de- signed for people to interact. Meanwhile, the housing cri- sis pushes us to rethink resi- dential development as costs and affordability continue to drift further apart. Access and job creation are evolving as artificial intel- ligence reshapes industries. Even as work-from-home cul- ture persists, we’re seeing that people still crave in-person interaction and teamwork, but not five days a week in the same location. The Hidden Tax Implications of Federal Policy While industry professionals have focused on the One Big Beautiful Bill’s benefits like 100% bonus depreciation and enhanced tax deductions fa- voring commercial real estate, they’re missing a critical, sub- sequent effect that could alter property ownership economics. As the OBBB reduces federal funding to states and munici- palities, local governments will
Reduce Your Commercial Real Estate Tax Burden
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A daptive R euse
By Stephen Pouppirt, Clemens Construction Company Redefining Market Street: Clemens Construction Leads the Way in Office-to-Residential Conversions
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that challenge for years. The recently completed transformation of 1701 Mar - ket Street—now reintroduced as 17 Market West—stands as a testament to Clemens’ lead - ership in this sector. Working with Alterra Property Group, Clemens successfully converted a 500,000 s/f, 18-story mid-cen - tury office building into a 299- unit luxury residential tower in the heart of Philadelphia’s Market West district. Originally built in 1957, the structure was reimagined while retaining the character of its In- diana limestone façade. Larger
operable windows were cut into the historic exterior, sup- ported by hundreds of custom steel brackets—a technically demanding process executed with precision and safety at the forefront. Perforated copper- colored screening at the podium levels, vertical façade columns, and a striking rooftop sky frame elevated the building’s presence while signaling its new residential identity. Inside, the building under- went a complete gut renovation. Floors six through eighteen now house thoughtfully de- signed one- and two-bedroom
apartments featuring large closets, hybrid work nooks, and high-end finishes. Resi - dents enjoy expansive city views and abundant natural light—benefits of floorplates that once posed a program- ming challenge but were re- configured into a market- ready strength. Amenities rival those of newly built luxury towers. The roof- top offers a saltwater infinity pool, cedar trellis seating areas, outdoor kitchen, and dog run. Indoor spaces include a fitness center, sauna, pickleball and basketball courts, golf simulator,
cross the Mid-Atlantic, developers are looking at aging office tow-
and club room. The welcoming lobby features custom white oak millwork, limestone tile, and finely crafted details that echo the elegance of train travel. Beyond finishes and ame - nities, the project’s success hinged on strategic construc- tion management. Demolition began in January 2024, and by May 2025 leasing had already started—months ahead of sub- stantial completion. By repur - posing major systems such as elevator cores, stairwells, and the central cooling tower, Cle - mens cut at least a year from the construction timeline and saved millions compared to ground-up development. This project also demon - strates Clemens’ commitment to sustainability. Reusing structural systems and mate- rials reduced embodied carbon, while operable windows and modern MEP upgrades im- prove energy efficiency. Direct connection to Philadelphia’s transit concourse makes car- free living convenient, further reinforcing the project’s urban sustainability goals. Complex projects like 17 Market West are never with- out challenges. Tight urban logistics, phased occupancy, and structural modifications required careful coordina - tion across trades. Clemens deployed swing scaffolds, con- struction hoists, BIM model - ing, and detailed sequencing to keep the project on schedule and safe. Weekly planning ses- sions and close collaboration with Alterra, the design team, and trade partners ensured alignment from start to finish. For Clemens Construction, the success of 17 Market West is part of a broader story. As office-to-residential conver- sions become a defining trend in urban real estate, Clemens’ unique experience—built over decades of complex renovations and adaptive reuse—makes the firm an ideal partner for devel - opers seeking to unlock value in underutilized office assets. From historic façade modifi - cations to modern amenity in- tegration, Clemens has proven its ability to turn vision into reality. For developers consider- ing conversions in Philadelphia and across the Mid-Atlantic, the message is clear: Clemens Construction is ready to deliver. Stephen Pouppirt is president of Clemens Construction Co. in Philadelphia, PA . MAREJ
ers through a new lens: as opportuni- ties to create much-need- ed residen- tial housing. Conversions of this scale demand a
Stephen Pouppirt
builder with deep expertise in adaptive reuse, technical problem-solving, and collabor- ative project delivery. Clemens Construction has been meeting
TELL US ABOUT YOUR NEXT PROJECT Paul Horning Vice President Preconstruction
215-567-5757 x 246 | 215-510-4545 phorning@clemensconstruction.com
Headquartered in Philadelphia, PA since 1979, Clemens Construction is a full-service general and carpentry contractor specializing in high-quality logistically complex projects. Our diverse portfolio spans multifamily, hospitality, historic restoration, education, healthcare, life sciences, corporate, retail, and public sectors. We approach every project with the belief that every detail matters, every partnership deserves respect, and every job is an opportunity to build smarter, safer, and better for our clients and the communities we serve.
www.clemensconstruction.com · 215-567-5757 · 1435 Walnut Street, Philadelphia, PA 19102
M id A tlantic Real Estate Journal — Fall Preview — 9
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T ax I ncentives
By Adam Zweibel, Hudson Atlantic Realty The Big Beautiful Tax Advantages in CRE: Empowering High-Income Investors & Developers
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s we approach 2026, it’s not surprising that the Northeast com-
Opportunity Zones (OZs), another cornerstone from the 2017 Tax Cuts and Jobs Act, have been supercharged and made permanent by OBBBA, with current designations sun- setting at the end of 2026 and states able to redesignate every 10 years. These designated lowincome census tracts—now with expanded rural incentives and a lowered income thresh- old to 70% of median family income—offer developers and investors enhanced benefits. Key perks include temporary deferral of capital gains taxes on amounts reinvested into Qualified Opportunity Funds
(QOFs) until 2026 or later, a 10% to 30% basis step-up for holdings of five to seven years (enhanced for rural invest- ments), and complete exclusion of post-investment gains after a 10-year hold. For developers, this translates to subsidized capital for revitalizing retail centers, multifamily housing, or medical properties in OZs across the Northeast, such as urban pockets in Newark or Elizabeth. High-income individuals can roll over gains from stock sales into OZ projects, offsetting up to millions in taxes while support- ing community development. These incentives are poised
to create surging demand for Northeast CRE by attracting a wave of high-income buy- ers and developers seeking tax-optimized returns. With lower effective costs and de- ferred liabilities, more capital will flow into acquisitions and developments, intensifying competition for prime proper- ties in high-density markets like New York City and New Jersey suburbs. This could drive up property values, spur new multifamily and mixed-use projects in OZs, and accelerate rural revitalization in upstate New York or Pennsylvania, ultimately boosting inventory
turnover and economic vitality in the region. Beyond these headliners, CRE offers additional tax gems for high earners. The perma- nent 20% Qualified Business Income (QBI) deduction for pass-through entities like LLCs reduces taxable income on rental profits. Interest expense deductions remain robust, al- lowing leverage without full tax hits. Non-mortgage expenses— property taxes, management fees, and repairs—are fully de- ductible against rental income, often creating passive losses that real estate professionals continued on page 34
mercial real estate (CRE) landscape— from bustling urban cen- ters in New York and New Jersey to revitaliz- ing markets
Adam Zweibel
in Pennsylvania and beyond— is buzzing with renewed op- timism, thanks to a suite of tax incentives revitalized by the One Big Beautiful Bill Act (OBBBA) of 2025. For high-income individuals and developers, these “big beauti - ful” advantages offer powerful tools to offset income, defer taxes, and accelerate wealth building. From the reinstate- ment of 100% bonus deprecia- tion to enhanced Opportunity Zones, CRE investments are more attractive than ever, enabling savvy players to minimize tax liabilities while fueling economic growth in underserved areas. At the forefront is the trium- phant return of 100% bonus depreciation, made perma- nent under OBBBA for quali - fied property placed in service after January 19, 2025. This provision allows high-income earners to immediately de- duct the full cost of eligible assets, such as building im- provements, equipment, and certain interior fixtures in commercial properties. For instance, a physician or executive earning over $500,000 annually could pur - chase a multifamily building in New Jersey, conduct a cost segregation study to identify depreciable components, and offset a substantial portion of their ordinary income in the acquisition year. Unlike standard depreciation over 39 years for non-residential real estate, bonus deprecia- tion supercharges cash flow by front-loading deductions. Paired with Section 179 expens - ing—now inflated to $2.5 mil - lion with a $4 million phase-out threshold—this creates a tax shield that can reduce effective rates dramatically. Develop- ers benefit too, as it lowers the after-tax cost of new construc- tions or renovations in sectors like industrial warehouses or mixed-use projects, making am - bitious ventures more feasible amid rising interest rates.
10 — September 2025 — 1031 Exchange — Financial — M id A tlantic Real Estate Journal
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1031 Exchange By Michael W. Hurwitz, CPA, MST, Withum Tax Planning with Internal Revenue Code Section 1031
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deferred exchange un- der Internal Revenue Code (“IRC”) Section
foreign property is allowable. • Use of a Qualified Inter - mediary (“QI”) is necessary. The taxpayer must not receive the proceeds from the sale. Instead, a QI holds the funds and facilitates the exchange. • The taxpayer must iden - tify potential replacement properties within 45 days of transferring the relinquished property. This identification must be in writing and deliv- ered to a QI. There are three rules a taxpayer can use to satisfy this requirement. The taxpayer may identify up to three properties regardless of value (the Three-Property Rule), any number of proper - ties as long as their combined value does not exceed 200% of the relinquished property’s value (the 200% Rule), or more than three properties, even if their total value exceeds 200% of the relinquished property; however, the taxpayer must acquire at least 95% of the total value of the identified properties to qualify. • The replacement property must be received within 180 days of the transfer (the Ex- change Period) or by the due date of the taxpayer’s return (including extensions), which - ever is earlier. In competitive markets or when timing constraints arise, taxpayers may need to ac- quire the replacement prop - erty before disposing of the relinquished property. This structure is known as a reverse exchange, and it is governed by Internal Revenue Procedure 2000-37. Because the tax - payer cannot hold title to both properties simultaneously and still qualify under IRC Section 1031, the transaction must be structured using an Exchange Accommodation Titleholder (EAT) as opposed to a QI. The EAT temporarily holds title to either the relinquished or replacement property in a “qualified parking arrange - ment” until the exchange is completed. Reverse exchanges are more complex and typically more expensive than standard deferred exchanges, but they offer critical flexibility for in - vestors navigating tight time- lines or financing constraints. Crucial elements of a reverse exchange include: • EAT Ownership: The EAT takes legal title to one of the properties and enters into a Qualified Exchange Accommodation Agreement
with the taxpayer. • 180-Day Completion Win - dow: The taxpayer must com- plete the exchange within 180 days of the EAT acquiring the parked property. • Identification and ex - change periods still apply, and the transaction must be carefully documented to meet IRS standards. Compliance with IRC Sec - tion 1031 allows a taxpayer to defer recognition of gain until the replacement property is ultimately sold in a taxable transaction. This deferral can span decades and allows for continued reinvestment of un- taxed equity. If the taxpayer receives non-like-kind proper- ty (e.g., cash, mortgage relief, non-real estate assets), this is considered “boot” (derived from an Old English word meaning something given in addition) and may trigger partial gain recognition. A gain is recognized to the extent of boot received. To avoid boot, taxpayers should reinvest the full sale proceeds into the re- placement property. Any cash taken out or debt not replaced may trigger partial taxation. The tax basis of the replace- ment property is generally the same as the relinquished property, adjusted for boot and other factors. This “carryover basis” affects future depre- ciation and gain calculations. Choosing replacement proper - ties with high depreciation po- tential can further enhance tax efficiency. Properties that allow for accelerated depreciation can offset future income and reduce taxable gains, making them es- pecially attractive in a deferred exchange strategy. Exchanges between related parties are subject to addi - tional scrutiny and may be disqualified if either party disposes of the property with- in two years. For long-term planning, taxpayers may also consider leveraging the “buy- borrow-die” strategy. By con - tinuing to exchange properties and borrowing against their equity, investors can access liquidity without triggering taxable events. Upon death, heirs receive a step-up in basis, potentially eliminating deferred taxes altogether. Key strategic actions and considerations for real estate professionals and tax advisors include ensuring clients under- stand the strict timelines and documentation requirements,
coordinate with QI’s and/or EAT’s early in the transaction process, evaluate whether a reverse exchange structure is appropriate based on market conditions and financing needs, and consider the long-term implications of basis carry- over, depreciation recapture, and future exit strategies. By mastering the intricacies of
IRC Section 1031 exchanges, professionals can help clients preserve equity, enhance port - folio flexibility, and defer sub - stantial tax liabilities thereby transforming a routine trans- action into a powerful wealth- building opportunity. Michael W. Hurwitz, CPA, MST is a partner at Withum. MAREJ
1031 offers real estate investors a strategic method to defer rec- ognition of capital gains taxes when disposing of
Cushman sells Sicklerville, NJ Dollar General to 1031 buyer
Michael W. Hurwitz
investment or business-use property. This powerful tax deferral mechanism allows for continued reinvestment of equity and portfolio growth without immediate tax con- sequences. The Tax Cuts and Jobs Act of 2017 significantly narrowed the scope of IRC Section 1031 by limiting its application to real property only. As a result, exchanges involving personal property, such as equipment, artwork, or vehicles, no longer qualify. For professionals advising clients in real estate transac- tions, understanding the me- chanics and tax implications of both deferred and reverse exchanges under IRC Section 1031 is essential. The code provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for in- vestment if such property is exchanged solely for property of like kind. This provision en- ables taxpayers to defer capital gains tax that would otherwise be triggered upon the sale of ap- preciated real estate. Deferred exchanges allow a taxpayer to sell a relinquished property and acquire replacement property later, provided specific timing and procedural requirements are met. Listed below are sev- eral key requirements that must be satisfied when entering a deferred exchange: • Like-Kind Property re - fers to the nature and char- acter of the property, not its grade or quality. Both relinquished and replace - ment properties must be of like kind; for real estate, this is broadly interpreted (e.g., an apartment building may be exchanged for raw farmland or a commercial of- fice building exchanged for a retail strip mall). Important exclusions to this apply to personal residences, prop- erty held primarily for resale (inventory), and foreign real estate, although foreign for
Sicklerville, NJ Dollar General
SICKLERVILLE,NJ — Cushman & Wakefield has arranged the sale of a subur- ban retail asset in Sicklerville. Located at 1601 Williamstown Erial Rd., the 11,528 s/f build - ing sold to VanRock Proper- ties for $1.675 million. The property is 100% leased to Dollar General through 2029. Cushman & Wakefield’s An- drew Schwartz, Jordan So- bel, Andre Balthazard, Dan Bottiglieri and Andy Merin marketed the property on be- half of the seller, Erial-Jarvis
LLC , and procured the buyer. “The deal generated signifi - cant market interest, with an offer being accepted within two weeks of marketing launch, which speaks to the demand for stabilized retail assets in the suburban New Jersey market,” said Sobel. “The buyer is a 1031 exchange purchaser, highlight- ing the property’s appeal to investors seeking tax-deferred investment opportunities. We are pleased to have delivered an expedited, successful result for our client.” MAREJ s/f shopping center at 433 NC Hgwy. 49 South in Asheboro, NC • College Lakes, a 43,041 s/f shopping center at 929 McAr - thur Rd. in Fayetteville, NC • Kris Krossing, a 49,800 s/f shopping center at 3320 4th Ave. in Conway, SC All three centers are anchored by Food Lion, a leading super- market brand serving the South- eastern and Mid-Atlantic US. “This full-cycle event exem - plifies the strength of Capital Square’s investment strategy and the enduring appeal of 1031 exchange and DST pro - grams,” said Whitson Huff- man , co-chief executive officer and chief investment officer of Capital Square. MAREJ
Capital Square closes grocery DST sale RICHMOND, VA — Capital Square announced the suc- cessful sale of CSRA Grocery Portfolio I, DST. The fund included a portfolio of three grocery-anchored shopping centers in North Carolina and South Carolina. Investors in the Capital Square-sponsored Dela - ware statutory trust realized a 184% total return from their 1031 exchange investment.* Since 2018, Capital Square has completed 34 full-cycle DST programs, producing an aver- age total return of 166.79% and an average internal rate of re- turn of 12.14% for investors.** CSRA Grocery Portfolio I included the following assets: • West Point Village, a 48,246
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