Wells Fargo Monthly Economic Outlook - April (Video)

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Andrew Benioff Interview with Jim Smith, Campus Apartments (Part I & II)

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 Part II

Interview Brad Molotsky, general counsel for Brandywine Realty Trust (Video)

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Developers buy last Bethlehem Steel tract

An investment group has purchased an 88-acre tract of the former Bethlehem Steel plant for $3.6 million with plans to build warehouses on the property.

The land, a remote tract that had been part of Steel's coke works slag pile, is the last to be sold off by ArcelorMittal, which acquired Steel's assets in 2003 under the name Mittal Steel.

The investment group is led by John Tallarico of Bethlehem and Scott Hummel of Philadelphia. Tallarico said the property likely would support four 400,000-square-foot warehouses, small versions of the big-box warehouses being built in the adjacent Majestic Bethlehem and Lehigh Valley Industrial Park VII business parks.

"It's a great location near Interstate 78 and the improvements to Route 412," Tallarico said. "That area is really starting to blossom."

Earlier this year, city planners approved plans for a 677,000-square-foot warehouse at LVIP VII and a 1.7 million square-foot building at Majestic. Last year, Liberty Property Trust built a 1.2 million-square-foot warehouse in LVIP VII and also has plans for an 800,000-square-foot one.

Tallarico said the land opened up recently when Majestic, owned by California billionaire Ed Roski Jr.'s company, extended the Northampton County-built Commerce Center Boulevard deeper into the former plant.

The 88 acres is just south of the Majestic site and faces the Crayola distribution center that opened at Majestic earlier this year.

Tallarico said that back part would require some environmental remediation but the front part is "shovel-ready."

Neither Majestic nor LVIP VII is fully built out yet.

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Liberty Leases 151,677 Square Feet Of Space In The Route 202 Corridor During First Quarter

Liberty Property Trust Leases 151,677 Square Feet Of Space In The Route 202 Corridor During First Quarter

New leases, renewals and expansions span six suburban office parks across the region.

Liberty Property Trust today announced that it welcomed six new customers and completed four renewals and three expansions during a busy first quarter of 2013.

"It was an extremely active first quarter - a tremendous way to start off 2013," said Tom Sklow, vice president and city manager, Liberty Property Trust. "Our suburban Philadelphia office parks experienced a surge of interest, especially at Great Valley Corporate Center as a result of the opening of the new four-way Route 29 Interchange on the Pennsylvania Turnpike, where commute times have been cut by as much as 25 minutes."

The largest new lease of the quarter was at Chesterbrook Corporate Center in Wayne. Crothall Services Group, leased 39,674 square feet at 1500 - 1550 Liberty Ridge Drive. 

The largest renewal was at Stoneridge Office Park in Exton, where Kidde Fenwal, Inc. renewed its lease of 12,376 square feet at 180 Sheree Boulevard. The company has been a Liberty customer since 2006.

Eleven more leases, listed by office park, are reported as follows.

Great Valley Corporate Center, Malvern

• The Sherman-Williams Company signed a new lease for 15,529 square feet to relocate to the newly-renovated 7 Great Valley Parkway. The company, which has been a Liberty customer since 1991. The top floor of the building, which offers 20,000 square feet of space, remains available for lease.
• Sanofi US Services Inc., which has been a Liberty customer since 2007 in this location, renewed its lease of 11,600 square feet at 75 Great Valley Parkway. 
• Tela Bio Inc. signed a new lease for 11,460 square feet of space at 1 Great Valley Parkway. 
• Total Facility, Inc. renewed its lease of 9,917 square feet of space at 420 Lapp Road, where the company has been a customer since 2003. 
• North American Benefits Company leased 9,261 square feet at 20 Valley Stream Parkway. 
• Novocure, Inc. has signed a new lease for 3,469 square feet of space at 2 W. Liberty Boulevard.

Renaissance Park in King of Prussia

• Iceutica Operations, LLC, which has been a Liberty customer since 2011, has expanded at 3602 Horizon Drive, adding 6,262 square feet to its facility. 
• At 2100 Renaissance Boulevard, S.R. Snodgrass, A.C. signed a new lease for 3,471 square feet. 

Brandywine Business Center in Radnor

• Suburban Medical Laboratory, Inc. signed a new lease for 13,603 square feet at 620 Brandywine Parkway.

Chesterbrook Corporate Center, Wayne

• Moksha 8 Pharmaceuticals Inc. renewed its lease of 7,141 square feet at 1550 Liberty Ridge Drive. 

Devon Park Drive, Devon

• U.S. Investment Corporation expanded its lease by 7,914 square feet at 1170 Devon Park Drive. The company leases an additional 162,500 square feet of space at that location and has been a Liberty customer since 2008.

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Philadelphia's Office Vacancy Increases to 11.7%

The Philadelphia Office market ended the first quarter 2013 with a vacancy rate of 11.7%. 

The vacancy rate was up over the previous quarter, with net absorption totaling negative 285,641 square feet in the first quarter. That compares to negative 454,307 square feet in the fourth quarter 2012. Vacant sublease space increased in the quarter, ending the quarter at 1,326,929 square feet. 

Tenants moving into large blocks of space in 2013 include: GlaxoSmithKline moving into 205,000 square feet at 5 Crescent Dr; Auxilium Pharmaceuticals, Inc. moving into 74,516 square feet at Chesterbrook; and Healthcare Solutions moving into 57,055 square feet at Valley Forge Corp Center. 

Rental rates ended the first quarter at $20.87, a decrease over the previous quarter. 

A total of two buildings delivered to the market in the quarter totaling 505,170 square feet. 

This trend is compared to the U.S. National Office vacancy rate, which decreased to 11.8% from the previous quarter, with net absorption positive 14.57 million square feet in the first quarter. Average rental rates decreased to $21.36, and 168 buildings delivered to the market totaling more than 5.9 million square feet. 
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Will Co-Working Erode Demand for Office Space?

by Beth Mattson-Teig

Co-working—the latest trend in workplace strategies—could be the catalyst that shakes up the staid office market.

The tradition of “one worker, one desk” may soon be a thing of the past. Companies across industries are eliminating offices, private work stations and cubicles in favor of team-oriented and shared workspaces.

“I think there is going to be a dramatic shift in how we use space."

Despite employees’ ability to work from anywhere, companies, especially knowledge-based companies, are refocusing on the importance of collaboration to foster ideas and innovation. Yahoo brought the issue front and center when it announced earlier this year that it would call its remote workers back to its company offices. Other tech companies, such as Google and Apple, have thrived on the mantra that “innovation doesn’t happen in isolation,” says Richard Kadzis, a vice president at CoreNet Global, an Atlanta-based association for corporate real estate professionals.

Businesses across industries are opting for office space that allows for greater interaction among workers. For example, management consulting firm Accenture completely revamped its offices in Minneapolis last year, replacing cubicles with a flexible floor plan that includes shared workspaces. It also increased its number of meeting rooms and added a café, all to increase collaboration between its employees. In the process, the firm downsized its Minneapolis office from about 70,000 sq. ft. to 41,000 sq. ft.

Such examples raise questions as to whether this new trend has staying power, and if so, how it will impact office tenants’ real estate decisions. Industry data shows that the physical footprint for office workers is shrinking. The amount of dedicated space per office worker has dropped from about 225 sq. ft. in 2010 to 176 sq. ft. in 2012, according to CoreNet Global.

“We have seen a trend toward what companies call a smaller, but smarter workplace,” says Kadzis.

In addition, a 2012 CoreNet Global survey of corporate real estate executives shows that companies are continuing to push for greater space efficiency. Overall, 40 percent of survey respondents said they expect the amount of dedicated space per office worker to be 100 sq. ft. or less in five years, while 29 percent expect the amount of space per worker to be less than 150 sq. ft.

Morphing office space

The shrinking office footprint supports two key trends. First, companies are striving to use real estate more efficiently to get an immediate bottom line impact. Second, it also reflects the shift in how companies are utilizing space differently to accommodate changing work patterns.

Certainly, companies have been testing alternative workplace strategies for years. Concepts such as hoteling, hot desks and home-based workers have been used for more than two decades. Yet to date, those trends have hardly revolutionized the office industry. What is different now is that advances in technology with mobile devices and cloud computing are enabling more flexibility in how and where people work. People no longer need to be tethered to their desks, notes Zlocki.

Shifting demographics also are accelerating change as companies work to accommodate a younger generation of workers. Gen Y, or the new Millennials as this group of teens, 20- and 30-somethings is often called, is a more tech-savvy, socially-centered workforce that has grown up with the concept of using technology to solve problems. Gen Y is not just driving the co-working trend, but they are also fueling a shift to a distributed work day. Unlike the traditional nine-to-five worker, younger professionals are distributing their work over the whole day, from perhaps 7 a.m. to 10 p.m. and more of that work is being done outside the office. The more flexible work schedule and telecommuting means that the number of people in an office varies more than if everyone was on the same schedule. This facilitates the sharing of space. Those trends are all influencing the continued evolution in the way people work, and ultimately the shift in demand for the type and amount of work space companies require, Zlocki adds. Those changes are creating a “triple bottom line effect,” where companies have the opportunity to use their real estate more efficiently, as well as improving the work culture and the work environment, he adds.

Staying connected

Co-working is creating demand for alternative workplaces―both in corporate settings and at third-party facilities. For example, workers can use apps such as Liquid Space to find a drop-in location. “You might not be working with anyone from your company, but you will be with like-minded people who also want to be with other people and talk about what they’re doing,” says Kadzis.

Small businesses and entrepreneurs are finding ways to connect with other workers at collaborative business centers such as Mission 50 Workspaces in Hoboken, N.J. Founder Gregg Dell’Aquila launched the collaborative business center about 15 months ago as a pilot program. The 3,000-sq.-ft. center offers a mix of open work stations and common area space along with private “phone booths.” Mission 50 currently has some 160 members who check in at different times to use the shared workspaces. The project has been so successful that Mission 50 is looking for additional space to open one or two new locations this year.

In addition, co-working is impacting how office space is configured.  For example, individual workstations might have room for a bump-out where workers can have space for a one-on-one meeting, or the configuration might shift with four desks set up with a two-top or a four-top meeting space. Between different work groups, there is more focus on creating break-out spaces or cafés, or more informal areas that can be used as meeting spaces. In addition, companies are adding more conference rooms of varying sizes, ranging from large team rooms to “huddle rooms” that can accommodate smaller groups to allow more meetings to take place within an office. “Collaborative work environments are where the work spaces of today and tomorrow are headed, but with a cautionary note,” says Kadzis.

Companies still need to strike a balance and not build too much collaborative space. It is still important to have dedicated space where people can have privacy to make phone calls or be able to concentrate on “heads-down” tasks without the distraction of other workers, he adds.

Full story: http://ht.ly/jWyQC

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