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.