Tuesday, June 30, 2015

Apartment conversion for empty S. Jersey offices?

Private owners displacing REITs, with 20% office vacancy

Apartment conversion for empty S. Jersey offices?

0 comments

At least one South Jersey developer is eyeing Camden County's vacant office buildings for conversion to residential apartments, says Jason Wolf of Wolf Commercial Real Estate.

With distant Voorhees, aging Pennsauken and west-side Cherry Hill property "home to a large share" of South Jersey's "close to 20 percent" vacant offices, owners would welcome alternate uses, and apartments "are becoming a new development trend" in the current market, Wolf told me.

Office prospects are less bad in Burlington County, in newer Moorestown, Marlton and Mount Laurel developments. 

Brandywine Realty Trust's sale of One, Two and Five Greentree and the Lake Center to Marlton-based Tequesta, and Liberty Property Trust's sale of properties in the Marlton Executive Park, the Atriums and 2000 Crawford Place, Mount Laurel, to Lower Gwynned, PA-based Somerset Properties mark a cutback by the big Philadelphia real estate investment trusts from even the relatively healthy Burlco market."They're not pulling out. They're selling off non-core assets," said Wolf.

(Brandywine is converting Philadelphia and suburban PA office sites to apartments, in a sign of the times.)

Wolf says rents in the last 3-5 years have been lower than building operating costs of around $9/sq ft net of taxes, insurance and similar costs. He said new private owners are more willing to demand $10-14/sq ft (net-net-net), enabling them to help pay for new-tenant fit-ups and renovations and attract new investment. New owners, with hopes of a recovering economy, "are driving rents higher," Wolf maintains. "No more giving away the house."

Those rents are modestly below what Center City Philadelphia office landlords charge, and a fraction of midtown Manhattan and high-end Boston and Washington DC rents.

A modest recovery by real estate lenders PHH and Freedom Mortgage and title insurance holding company TRG (a unit of Coldwell Banker owner Realogy), continuing hospital expansion by Cooper, Lourdes, Virtua and Rothman in the affluent eastern suburbs and UMDNJ down at the former Newcomb Hospital site in Vineland accounts for most new South Jersey construction.

The Brown family's NFI'plans to lure Subaru of America to a 500,000 sq ft building it hopes to build in Florence Township bucks the North Jersey trend in which warehouses are moving west to Pennsylvania. 

0 comments
We encourage respectful comments but reserve the right to delete anything that doesn't contribute to an engaging dialogue.
Help us moderate this thread by flagging comments that violate our guidelines.

Comment policy:

Philly.com comments are intended to be civil, friendly conversations. Please treat other participants with respect and in a way that you would want to be treated. You are responsible for what you say. And please, stay on topic. If you see an objectionable post, please report it to us using the "Report Abuse" option.

Please note that comments are monitored by Philly.com staff. We reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable. Personal attacks, especially on other participants, are not permitted. We reserve the right to permanently block any user who violates these terms and conditions.

Additionally comments that are long, have multiple paragraph breaks, include code, or include hyperlinks may not be posted.

Read 0 comments
 
comments powered by Disqus
About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
Also on Philly.com:
letter icon Newsletter