For the team at Jackson Cross Partners, this year’s Martin Luther King holiday was more special than those in years past. Instead of taking the day off, JCP decided to make a difference for the youth and families of the Greater Norristown community by participating in the Greater Norristown PAL’s Martin Luther King day of service.

About Greater Norristown PAL

The Greater Norristown Police Athletic League (PAL) is a non-profit, volunteer organization serving the youth and families of the Greater Norristown community with recreational, educational, and cultural programs addressing citizenship, self-esteem, avoidance of substance abuse, and respect for law and order.

A Hard Day’s Work is Good for the Soul

Our day of service began in the morning. The JCP team was divided into groups and assigned specific tasks for the day. We organized the PAL library by sorting thru approximately 5,000 to 6,000 books and categorizing them appropriately. We helped organize and sort thru the storage rooms containing old computers, sports equipment and other items that have been donated over the course of the year. And, we spackled, sanded and painted many of the classrooms and hallways. It was hard work, but the JCP team had a great time making a difference for the kids and families at the Greater Norristown PAL!

By: Ann Bailey, CCIM

2011 has proven to be a stellar year for our regional multi-housing. Occupancies and rents are up. Looking at apartments on a national level, the following presents a brief, macro snapshot:

• Most Desirable Asset Class
• Positive Market Fundamentals
• Rent & Occupancies Increase Nationally
• 1.5M New Rental Household Formations 2011
• Decline in Rate of Home Ownership

National statistics indicate an alltime low vacancy rate of 5.6% with rising rents. Some economists forecast that each 1% decline in home ownership rates represent the movement of one million households to rentals. No surprise that apartments continue to be a sought-after asset class. We see this trend continuing on through 2012.

The Philadelphia MSA (exclusive of the CBD) is progressing up with both modest rent increases and modest rises in occupancy. We continue to be in a somewhat supply constrained suburban market, with only approximately 3-4 new projects slated to come on line in 2012.

The Center City Philadelphia market (commonly referred to as “downtown”) is the proverbial “hole-in-the donut”. Rent growth and occupancy has been outstanding. Newer Class “A” product is commanding rents of $2.50-$2.75/SF. Class “B” is generally in the $1.50-$1.75/SF range. Demand remains high fueled by a 24/7 vibrant retail and entertainment market. Looking forward to 2012, there are approximately 3-4 newer Class “A” apartment projects planned for the “west of Broad Street” area. The impact of these new projects will depend a great deal on timing, although it appears that the current market is healthy enough to absorb approximately another 1,000 +/- units.

On the capital markets front lending rates continue to be historically low. There are many more sources for either acquisition or refiancing, although Freddie Mac and Fannie Mae continue to be preferred. We are now seeing some regional banks and life companies coming back to the market. There are signifi cant amounts of “homeless capital” (a term which refers to the large amounts of money looking to be placed—especially in multi-housing) and this has provided alternative fi nancing choices.

On the 2011 sale side, there were approximately 48 transactions (over 50+ Units) which closed in the Philadelphia MSA. This represents a 32% increase over 2010. While a few of these sales represented “small portfolio” type acquisitions of distressed real estate, the majority were market driven sales which represented strong investor interest in apartments. We see 2012 shaping up to be robust and that spring leasing will continue with upward trends in rents and occupancy.

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This year Jackson Cross Partners wanted to do something special during the holiday season so we decided to partner with Pathways PA and agreed to adopt 2 families for the holidays. Our goal was simple – bring some joy to a couple of families this year! 

The response from the JCP family was tremendous! It was inspiring watching the gifts being put under the JCP tree every day — everything from toys to household items!

We hope that our sponsored families have a wonderful holiday season full of joy and laughter.

Wilmington, DE (December 14, 2011) – “Last year at this time, as we looked ahead, we indicated that we thought it would be at least the end of the second quarter of 2012 before we saw a substantive increase in leasing activity,” said Pete Davisson of Jackson Cross Partners at their annual Real Estate Forecast Meeting at the Hotel DuPont in Wilmington, Delaware. “Unfortunately, like so many other things relating to the economy the date of the strengthening in office leasing has continued to slip.

“Leasing activity during 2011 has been modest. While the demand from small business has held up well the Wilmington-New Castle County office market, the demand for new office space by medium sized firms has been weak, and the demand by larger firms was moderate.

“To put some specific numbers on the activity, fully 71% of the leases signed were for under 4,000 square feet. In the market for leases greater than 20,000 square feet, there were only five leases signed during the year. Only 19% of all leases were in the middle segment of the

market, leases for between 5,000 and 20,000 square feet. And to make the situation even worse there were no leases above 12,000 square feet in that range,” noted Davisson.

“Total leasing activity in the Wilmington-New Castle County office market totaled 569,000 square feet. The larger portion of that total was outside the Central Business District. At the current leasing rate we have a five year supply of available office space.

“Thank goodness there was only one new office building delivered this year or the situation would have been worse. The national vacancy rate for all classes of office space is 12.5%. Our overall vacancy rate is 21.2%, virtually the same as it was 12 months ago.

“Absorption, the net increase or decrease in occupied space, is the true indicator of the health of a market. On that score we aren’t doing badly. Absorption was negative for the year by slightly less than 59,000 square feet, but that was impacted by the addition of the one new 164,000 square foot office building. So, overall, while we did not get healthier, we didn’t really lose much ground”.

“Rental rates were steady during the year, with full service Class A rates in the CBD averaging $26.68 per square foot and Class A rates in the suburbs at $23.46. These numbers are very close to the 10 year average, and unchanged during the last 12 months.

“We have seen a number of positives during 2011. Bloom Energy purchased 50 acres at the University of Delaware’s Science and Technology Park. Johnson Controls purchased 34 acres in

Middletown and recently Amazon.com purchased 76 acres in Middletown for a 1.25 million square foot distribution center,” said Davisson.

The industrial side of the Delaware market has also seen modest activity. The vacancy rate in industrial buildings currently stands at approximately 10.5% and the average quoted rental rate is $4.04 per square foot, triple net. Nationally the average quoted rental rate is just more than $5.00 per square foot. As we compare markets the industrial market is faring slightly better than the office component.

Among the most noteworthy industrial transactions in Delaware in 2011 were: a 56,000 square foot lease at 405 East Marsh Lane in Newport to the Tile Market of Delaware; a 60,000 square foot lease by Goodwill of Delaware at Centerpoint Corporate Center; a 60,000 square foot lease by DYK Automotive in Pencader Corporate Center; a 62,000 square foot lease by the State of Delaware at 220 Lisa Drive in New Castle; and, the sale of an 83,600 square foot building at Pencader Corporate Center in Newark to Tek3.

“In the retail market vacancies are at a 20 year high, standing near 11%. The lack of new construction is keeping the number from going higher. On the retail side we have seen big box retail stores, and shopping centers, being converted to office space, medical services and museums.

“In the residential market in Delaware prices have declined in all three counties. In New Castle County the decline has been 13% since 2010. The National Associates of REALTORS says home sales are down because of weak consumer confidence and tight lending criteria.

“The big question is — What can we expect to see in 2012? We believe, along with most economists that we follow, that there will not be a double dip recession. We believe that we have seen the bottom and that it is behind us. However, we believe that most people will continue to bide their time and wait until they are sure that we are well on the way to recovery.

“We expect business leaders will continue to put off their real estate decisions for another 12 months, treading water rather than diving in. With that in mind we believe that mid-year 2012 improvements will slide into 2013, after the election, after year end accounting, and the 2013 New Year’s Eve Party. I am hopeful that the first quarter of 2013 will see improvements for us all and certainly for the real estate picture in Delaware”.

Jackson Cross Partners is a Commercial Real Estate company, focusing on a consultative approach to client service. The Jackson Cross team brings extensive experience in Corporate Real Estate, Brokerage, Development and Finance to the property life cycle. With offices in Philadelphia and King of Prussia, Pennsylvania; Wilmington, Delaware; and, Swedesboro, New Jersey, Jackson Cross provides market coverage throughout the Delaware Valley as well as access to markets throughout the world through its membership in the Society of Industrial and Office Realtors (SIOR).

Jackson Cross Partners is a NorthMarq Capital affiliated company. Through a joint venture with Fameco, Jackson Cross Partners provides Property Management and Retail brokerage services.

King of Prussia, PA (November 2011) – Jackson Cross Partners, LLC today announced the sale of two prime multi-family buildings. Lofts at Liberty, located at 1600 Chestnut Street in center city Philadelphia, contains 54 units plus street level retail. The second property, located at 3717-3719 Chestnut Street in the heart of the University City district, has 29 units in 24,498 square feet, with some off-street rear parking.

“The sale of these two properties is an illustration of the current strong demand for multi-family properties,” said Ann Bailey of Jackson Cross Partners. “Multi-family properties are currently popular commodities because they offer stable investments with growth potential for their buyers. With rental rates rising and the current unstable condition of the single family housing market, the multi-family market is strong. Many private capital investors have become disillusioned with the “bungee cord” stock market and are turning to real estate as a more sensible investment strategy. Investing in multi-family product is a secure and sensible form of capitalizing on current market conditions,” concluded Bailey.

The center city building was owned by Beneficial Partners, LP and sold to Pearl Properties. The property, located in CBD at 1600 Chestnut Street is directly across from Liberty Place. The building was built in 1954 and underwent major renovations in 2002. Situated in a prime center-city location it offers excellent long-term leasing opportunities. At the time of sale, the property was 100% leased.

The University City building was owned by 3719 Chestnut Corporation and sold to the Cathedral Church of the Savior. The property is fully occupied and is a desirable long-term investment for the buyer because of its location adjacent to the University of Pennsylvania and Drexel University and the strong collegiate occupancy that offers.

Ann Bailey, CCIM of Jackson Cross Partners represented Beneficial Partners, LPO and 3719 Chestnut Corporation in the transactions.

Jackson Cross Partners is a Commercial Real Estate company, focusing on a consultative approach to client service. The Jackson Cross team brings extensive experience in Corporate Real Estate, Brokerage, Development and Finance to the property life cycle. Jackson Cross provides market coverage throughout the Delaware Valley as well as access to markets throughout the world through its affiliation with ONCOR International.

“PathWays PA Inc., a Philadelphia nonprofit social-services agency that serves low-income women, children, and families, appointed Cate Sennett to its board. Sennett is an attorney and partner-in-charge of advisory services at Jackson Cross Partners L.L.C.”

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By: Ann Bailey, CCIM

Year End 2010 ended on a resounding positive for the Philadelphia regional apartment market with approximately 25 transactions during the year. On an even better note, 2011 shows a continuation of that robust market with approximately 14 transactions closed in the first quarter alone. However, this number included the closing of the six properties in the “Philly Gardens” portfolio to one buyer.

The increase in sales activity and properties currently under contract does confirm that, indeed, there is increasing buyer confidence in the region generally, particularly in apartments. There is still some limited distress occurring within the region. Within the next six months, it is likely that some “short sale” or foreclosure activity will take place resulting in a small number of sales from lenders and/or agencies. Demand, however, is outpacing supply resulting in a strong sellers’ market, with cap rates gradually easing down slightly.

The spring/summer rental market is shaping up to be one of the best in recent years. Many owners have indicated increased leasing activity resulting in higher projected occupancy. This has also translated into modest rent increases—something all owners have been looking forward to. This is certainly a welcome event since operating expenses have been rising in many categories, especially in utilities and contracted services—and let’s not forget the dent in budgets due to another challenging winter of snow and ice. Much of our regional apartment housing stock is over twenty years old and this, too, has resulted in the need for upgrades and capital improvements to remain competitive.

The good news is that there is an abundance of activity. “Green Shoots” are not only coming up on the grounds of your beautifully landscaped communities. We are seeing new construction planned both in the downtown area and several suburban locations.

For more information, contact Ann Bailey at abailey@jacksoncross.com