X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

PHILADELPHIA-Welcome to the Philly 411, our monthly column on real estate happenings in the Metro area supplied with intel from David Jacobs, a director at Llenrock Group, a local commercial real estate investment-banking firm.

Banking

Industry rumors have it that Bank of America, not surprisingly, is looking to close a number of branches in the Northeast, with Philadelphia area branches on the chopping block. No specific details as to which locations are under review have been disclosed, but we’ll keep our ear to the street, and you posted.

On another note, we all know that residential suburban land development projects are not what a developer wants to include in their current inventory these days. Yet, while most lenders are being patient in their approach at how to deal with developers and subsequent workouts, Wachovia is bucking the trend. In March, Wachovia sued local developer THP (The Hendricks Properties) for almost $20 million. Now, two developments of The Heritage Group have filed for bankruptcy due to pressure from Wachovia calling residential loans. This aggressive action by Wachovia is most likely due to its merger with Wells Fargo, who likely gave them the ultimatum and a very short time frame to clean their books and get out from under as many non-performing residential loans as possible.

Center City

Esprit is planning on opening along Philadelphia’s most famous Walnut Street shopping corridor. Barney’s New York COOP has opened its doors earlier this month as a ground-floor tenant of the new luxury high-rise 10 Rittenhouse. Rumor has it that Apple is looking to locate in Center City Philadelphia, also more than likely to land somewhere along Walnut Street.

On the condo front, the Residences at the Ritz have sold out. The Symphony House, a Carl Dranoff development which had been panned in the Philadelphia Inquirer for its unique design, is 95% sold out. The Murano is about 70% sold.1706 Rittenhouse, with full floor units featuring an automated, human-free valet, is only about 50% sold. 10 Rittenhouse has slowly but steadily been gaining traction at the high end of the market. They sit at roughly 70% of units sold. The Residences at Two Liberty are resorting to celebrity appeal to attract high end buyers. Big names like former mayoral candidate Tom Knox, Phillies ace Cole Hamels, and Bon Jovi drummer Richie Sambora have bought units. Two Liberty is giving Hamels his unit for free for a year in exchange for publicity. He recently held a high-end event, which I attended, called “Welcome Home Cole” to both celebrate his cover on Philadelphia Style magazine as well as attract Philadelphia high society to some of the sample units in the building. The units are currently about 75% sold. The Waldorf-Astoria, located at 1441 Chestnut Street, just opened its sales office.

Suburbs

The 2.4-million-square-foot, former Worthington Steel development site in Malvern, PA, that uber-Philadelphia developer Brian O’Neill is turning into a massive mixed-use development anchored by Wegmans just received even MORE state financing, this time to the tune of $35 million dollars. If you want to know how to better extract tax dollars from your government entity of choice, Mr. O’Neill should be on your rolodex.

Grubb & Ellis is leaving their existing suburban office space at Executive Terrace in King of Prussia for a higher rent alternative down the road, in the midst of a recession. The landlord of their existing space, BPG Properties, is also the landlord at their new digs, 1000 Continental Blvd., a spec building whose pricing and timing has not been conducive to market conditions since completion in 2007. It is assumed that G&E will be meeting the demands of BPG for rent of over $30 per square foot. Grubb accommodated a request of an existing tenant in their old headquarters at Executive Terrace, and stands to earn leasing commissions for leaving their space, in addition to remaining in the good graces of BPG, who they sold Executive Terrance to earlier this decade.

Gaming

Ira Lubert, namesake of Philadelphia based real estate-private equity firm Lubert-Adler is among investors who have recently secured a gaming license for slot machines in King of Prussia at the convention center. In other casino news, SugarHouse is scaling back its long-proposed, and long-battled casino development plans along the Delaware River in the Fishtown section of Philadelphia. Whether it will ultimately appease angry residents is yet to be seen. Speculation is still whirling around the rumor that Philadelphia-based retail REIT, PREIT, which owns the Gallery at Market East downtown, could potentially house a Foxwoods casino, which had planned to be located in South Philadelphia along Columbus Boulevard.

New Trends

I cannot say this trend is exclusive to Philadelphia, but there have been an increasing number of disputes between area brokers and landlords over commissions. Landlords are trying to cut costs in any way they can, and brokers are often seen as expendable. While we have not heard of any pending litigation as of yet, this rumor is troubling considering the economy we are in. There are many landlords who have increased brokers incentives to bring tenants to their properties, yet they are attempting with more frequency to try and cut brokers’ renewal commissions. Tenant retention is paramount to survival in this market, and so reneging on pre-established commission rates seems to be nothing short of desperate measures mixed with bad business practice.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt. APARTMENTS SPRING 2021Event

Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.