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Real Estate Bisnow
January 16, 2012 
New Center City Offices

Attend the High-Speed Rail Summit, February 11-13 in Washington, DC. The conference will feature top executives from real estate developer Stonebridge & Associates, USDOT, FRA, and Amtrak. Transit Oriented Development will be a hot topic. Registration includes networking events, reception, tours, and luncheons. Register today and save here.

Major space users in Center City are itching for more SF but being met by low vacancy. That’s a formula for new office development, a real possibility in 2013, according to Newmark Grubb Knight Frank executive managing director Wayne Fisher.
Wayne says Center City’s trophy office buildings, mostly towers over 40 stories, benefited the most from last year’s uptick in leasing. The trophies didn’t have high vacancies going into the downturn, and aggressive rents attracted tenants who might have otherwise stuck with their previous digs. Deals could be had for around $30/SF, down from 2000s highs around $35 to $40/SF. Now trophy space is extremely tight, and rents will go up this year.
There are only eight full floors of available space among trophy assets, Wayne adds—about 160k SF all together. Liberty Property Trust has plans for a roughly 400k SF office building, and a few law firms are kicking that tire, Wayne says. In Philly, new construction comes in at roughly a $45 to $50/SF proposition, but the higher cost would be partly offset by operating and layout efficiencies, LEED status, and other new-building advantages.
US Rail (Summit) MPHI
Newmark Grubb Knight Frank says office leasing volume in Center City totaled about 2.8M SF in 2012, a 40% increase over 2011, driven by a handful of large renewals and new leases. The company predicts net absorption of 150k SF by the end of 2013. Vacancy, which ended 2012 at about 14.1% overall, is projected to drop to 13.7% by the end of 2013. Despite this modest improvement, rental rates will remain flat, with the exception of trophy assets, where direct vacancy was a healthy 5.1% at the end of 2012.
Chima (flames) MPHI

Better Value in Philly?
The economy might be getting better (slowly), but there’s still opportunity in distressed situations in overlooked markets, Time Equities director of acquisition Aaron Medeiros tells us. “Cap rates in New York and other core markets have become so compressed that we’re finding much better value in places like suburban Philadelphia,” he says. “Rents appear to have bottomed, and we’re starting to hear tenants talking about growing rather than shrinking.”
Bisnow (PropManage)
New York-based Time Equities recently bought Northbrook Corporate Center at 900 and 1210 Northbrook Dr in Trevose for $11.4M. The investment, Aaron explains, fits into Time’s push to acquire discounted loans, REOs, and borrower recapitalization in Northeast markets. The property will also be a part of the company’s Art in Buildings program, which will put a rotating art gallery of work by local and national artists in the building. Pictured: an exhibit last summer at Time’s 125 Maiden Lane in NYC’s Financial District. It was later used as the ball that drops on Times Square. (Not really, but who can tell from so far away?)

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Tuesday, Jan. 29, 7am-10am. Bisnow's Philadelphia 2013 Economic & Real Estate Forecast. Join some of the most influential business and CRE leaders as they discuss the dramatic decisions that the region will face in the upcoming year. Register here.
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Real Prop Solutions
Post Bros. (Rittenhouse)
Chima (steak/flames) PHI
NewAcre (Distressed) PHI
Arent Fox (REI) PHI
Bisnow (Writer2)
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