Sunday, February 14, 2016

Archive: March, 2008

POSTED: Monday, March 31, 2008, 2:28 PM
  Class A office rents offered by Center City landlords dipped 4 cents during the first quarter, to $27.24 per square foot at March 31, CB Richard Ellis said in a report.
  The winter’s pause in what had been a rising market follows a recent seasonal pattern. Rates also dipped in the first quarter of 2006 and the second quarter of 2005 before rising later in both years, said Michael L. Compton, research manager at the firm’s Phialdelphia office.
  CBRE blamed the drop, not on “the continuing downward spiral of the national economy,” which it said hasn’t hit Philadelphia, but on a “significant” fall in University City asking rents after Cira Center became fully leased. Cira had been asking up to $45 a square foot, Compton said.
  By contrast, rents have been rising in the city’s old financial and publishing district, near Independence Hall, Compton said. Higher rents and occupancy have been reported for the Curtis and Public Ledger buildings by developer Joseph Grasso, whose firm, Walnut Street Capital, is a partner with Citigroup Properties in both buildings.
  Class A office vacancy totalled 8.99 percent in downtown Philadelphia, from 9.01 percent in the previous quarter, Compton said. If vacancies stay below 10 percent, CBRE predicts rents will rise and net new office construction will be more attractive. New office towers have been scarce downtown since the 1980s, except for the Comcast and Cira towers.
  Vacancies are higher in the suburbs, including northern Delaware, where the DuPont Co. and Bank of America have been emptying space in central Wilmington. Also, “for the first time in a few years, there are currently no new office buildings under construction” in South Jersey, the report said.
  Vacancies in the Pennsylvania suburbs “will linger around 13 percent until recently-built speculative projects like 1000 Continental Drive and 211 South Gulph Road” in King of Prussia “find tenants to fill their large vacancies”, the report added. (The Gulph Road property is a rehab, not newly-built.)
  O’Neill Properties spokeswoman Rosemarie Console said her firm was negotiating leases with two companies that could fill the 102,000 square feet O'Neill owns at 211 S. Gulph. Agents at landlord rep GVA Smith Mack and the owner, an affiliate of BPG Properties, had no immediate comment on propsects for 1000 Continental. UPDATE: "We're in active negotiation" with several large tenants for 1000 Continental, said BPG Vice President of Leasing Neil Gallagher.
POSTED: Monday, March 31, 2008, 9:57 AM
  Oil refineries are expensive, dirty eyesores, and a central element of modern industrial society. It's hard to build new ones. The Delaware River refineries, in Paulsboro, South Philadelphia, Westville, Marcus Hook and Delaware City, are all more than 50 years old. That's part of the reason gasoline is so expensive.

  Hyperion Resources Inc., of Dallas, wants to build $10 billion, 400,000-barrel-a-day refinery near Elk Point, S. Dak. to turn Canadian crude into fuel for the thirsty U.S. gasoline market.

  John J. Curry, who grew up in Elk Point, moved to Philadelphia to attend Penn, and now runs Harvest Equities in Center City, figured his old neighbors could use a little professional help figuring out what a refinery would do to surrounding Union County (pop. 13,000), beyond the 4,000 construction jobs and 1,800 permanent jobs Hyperion expects.
  Curry hired William F. Connor, president of project manager Remington Group, of Wayne, and Lisa L. Thomas, vice president of land planners Glackin Thomas Panzak, of Paoli, to review Hyperion's plan.

POSTED: Monday, March 31, 2008, 9:53 AM

   TD Bank Financial Group (NYSE: TD) formally completes its takeover of Cherry Hill's own Commerce Bancorp today.
   Canadian giant TD (short for Toronto Dominion) hasn't yet said who from the former Commerce and TD Banknorth (U.S. retail banking) management teams will do what in the merged retail banking operation, but TD's Bharat Masrani will be in overall command as president and CEO.
   Commerce may be the fastest-growing part of the amalgamation, but TD Banknorth is a lot larger. More details will come out before the planned April 21 conference call with investors, says Commerce spokesman David Flaherty. 

   Details on the April 21 call: 9 a.m. Eastern time: check TD's website at, or call 1-416-915-5762 or 1-800-594-3790 -- listen only, they're not taking questions from civilians.

POSTED: Thursday, March 27, 2008, 2:15 PM
  Developer David Grasso says he's still looking for financing for the proposed 1.2 million square foot, 46-story, multi-use tower he announced in October 2006 for his site at 16th and Vine Sts. in Center City. Construction was supposed to happen last year.
  Grasso says he's still under contract to put a Whole Foods supermarket on the first floor, a Best Buys electronics store on the second, and an Intercontinental Hotel upstairs, along with 150-200 rental units.
  The Pennsylvania State Employees' Retirement System, through adviser Grosvenor Properties Ltd., is still on tap to provide equity financing, he adds.
  But... Grasso is still trying to find lenders to finance the rest of the project.
  "Even the best deals are hard to get done now," he told a packed audience at the RealShare commercial property conference in Center City today.
  Echoing builder Carl Dranoff's comments in a separate session, Grasso also carped about Center City's labor and construction material costs, which haven't dropped along with the market.
  Grasso sounded guarded compared to his more bullish brother, Joseph, who's been trying to scare up interest in a 1,500 foot tower proposal for two blocks away, at 18th and Arch. The Grasso's don't work together.
  Given the economics, said David Grasso, "I don't think there will be too much construction, especially of high rises, in Philadelphia" over the next couple of years.   
POSTED: Thursday, March 27, 2008, 11:19 AM

  Builders, brokers and financiers testified on the slowdown in commercial real estate market at the RealShare conference in Center City this morning.
  "I like this market. We're back to fundamentals," Bill Glazer, president of Keystone Property Group. "Less than one year ago, everyone in the market was complaining bitterly that there was nothing to buy. The complaint today is that there's no money to buy with" as speculative financing dries up.
   Moderator Ken Balin, ceo of AMC Delancey Group Inc., asked the early morning panel, "Are the brokers in our region going on food stamps?"
  Earnings are down by half at publicly-traded commercial property brokers, noted Ward Fitzpatrick, senior managing principal at Exeter Property Group.
  Citing his late mentor, Liberty Property Trust founder Willard Rouse, he advised brokers to "do the deals that are nearest the cash register. Book those fees" before the customers get cold feet.
  Nationally, "supply and demand is out of balance," Fitzgerald added. "A lot of vacant buildings have been put up on the backs of pension funds." 
  But if building has slowed, Fitzgerald isn't predicting a property price collapse, either. Thanks to the Federal Reserve, interest rates are down, which takes pressure off indebted building owners, he said.
  Looking for bargains? Try the depressed Jersey Shore vacation home market, suggested Temple economist William Dunkelberg.
  The local market's "confused," with vacancies low but sales way down, said David Fahey, president of Binswanger's commercial division.
  "We have been hurt by economic conditions," but not as badly as other cities that overbuilt, said Robert Walters, senior managing director at CB Richard Ellis.

POSTED: Thursday, March 27, 2008, 4:22 PM

  Sale prices for mid-sized businesses dropped to 6 times earnings (before income tax, depreciation and amortization) during the second half of last year, from 6.5 times during the first six months, Philadelphia deal professionals Andrew Greenberg (managing partner at Fairmount Partners) and Graeme Frazier (president, Private Capital Research LLC) said in a report today.
   Besides their day jobs, Frazier and Greenberg crunch data through their side business, GF Data Resources, which tracks private equity-backed mergers and acquisitions valued at $10 to $250 million.
  "Larger transactions have taken much more of a hit" since "the sub-prime cirsis emerged in early July and triggered econmic uncertainty and tighter credit," Greenberg said in a statement.  "Lenders were financing quality transactions, but beginning to extract better pricing after years of thin margins." Money's still available for "quality deals," with media and publishing getting some of the best prices; business services are among the lowest.
   UPDATE 3/31: M&A paydays down as deals dry up. Bloomberg has the story at


POSTED: Tuesday, March 25, 2008, 2:12 PM

  Whoever wins November's presidential vote, health insurers and the contractors who sell them information technology expect to win big new contracts and revenues, says Ned Moore, chief executive officer at Portico Systems, a Blue Bell software company that helps health plans manage costs.
  That’s because the three main candidates – Republican McCain and Democrats Clinton and Obama – all say they support programs to insure more Americans.  “No matter who gets elected, you’re going to see some kind of legislation addressing that problem of 45 million people who don’t have coverage,” says Moore. 
  “We’re seeing a pretty clear acceptance by the market that something is going to happen with some kind of federal or hybrid state-federal program that will create products to get these people healthcare coverage,” he added. “That’s bipartisan,” and a big change from previous elections. “Five years ago we weren’t so sure the government should be controlling that much money. Those discussions have gone by the wayside after five years of healthcare spending increases and drops in company contribution levels. The idea is ‘We’re paying to care for the uninsured anyway. Let’s get the cost under control.’”
  Cost control sounds like a threat to many healthcare workers, but it's music to the ears of data crunchers whose services figure to be in demand.

  That’s not to say the three candidates are interchangeable. “The Clinton plan is really requiring people to sign up for insurance, while the Obama plan is trying to make it affordable so more people will go get it, and to go after the 15 percent administrative costs, which are so much higher than costs in retail, for example. But they are very similar in how they will deal with patients,  quality of care, transparency around cost," Moore added.
  Both Democrats "are describing Federally-funded products. By contrast, McCain is talking about how to get insurance to the uninsured, maybe thorugh tax credits, pay for performance, non-reimbursement for non-events. It’s different how you fund it, but it still means a major investment in technology, in proposing plans and provider investments in information technology that shows consumers anrd reporting agencies what their cost structure is, and how it relates to premiums. And that’s a pretty big opportunity for us.”
POSTED: Tuesday, March 25, 2008, 2:08 PM
   In his letter last week ending plans to redevelop the Pennsauken-Pettys Island waterfront, Cherokee Pennsauken LLC President James Dausch wrote, "We have discusssed market conditiosn with several residential develoeprs...The response overwhelmingly indicated that the housing slowdown is worsening...It is currently difficult to obtain private financing for construction and development."
  He recommended the town consider "alternative land use plans and developers."
About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at, 215.854.5194, @PhillyJoeD. Read his blog posts at and his Inquirer columns at Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph N. at or 215 854 5194.

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