MDH Partners Inks 351 KSF Lease at Central Florida Facility – What is a Ground Lease?

MDH Partners has signed a 350,899-square-foot lease at Ocala Logistics Center, an industrial building in Ocala, Fla. BroadRange Logistics will occupy the whole facility. Avison Young Principal and Managing Director Clay Witherspoon represented the owner, while Strategic Real Estate Partners Principal John Gosnell worked on behalf of the tenant.

MDH acquired the 27.9-acre development site for Ocala Logistics Center in January 2022 and broke ground on the project a few months later. In March 2022, the developer took out a $20 million construction loan from BMO Bank, CommercialEdge data shows.

Completed this February, the cross-dock distribution center features 36-foot clear heights, a 180-foot truck court, a 60-foot speed bay and 96 trailer stalls. The property also features 100 dock-high loading doors, six dock levelers, four drive-in doors and 196 car parking spaces.

Located at the corner of NW 35th St. and NW 27th Ave., the property is 81 miles from downtown Orlando, Fla., and 98 miles from downtown Tampa, Fla. Orlando International Airport is within 89 miles, while the Port of Tampa is roughly 99 miles southwest.

The Ocala submarket has more than 23 million square feet in its industrial inventory. Notable properties in the area include IP Capital Partners and Torchlight Investors’ 1.9 million-square-foot warehouse. The duo purchased the facility in 2021 from Reich Brothers for $126.5 million.

Earlier this year, the joint venture between Stonemont Financial Group and US Capital Development has completed Topline Logistics Center, a 465,540-square foot speculative industrial building. That warehouse is less than 2 miles from Ocala Logistics Center.

The post MDH Partners Inks 351 KSF Lease at Central Florida Facility appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreBrokerage, Industrial, News, Southeast, Avison Young, MDH Partners, Strategic Real Estate Commercial Property ExecutiveA logistics company will occupy the entire industrial building.
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SITE Centers Sells Orange County Shopping Center – What is a Ground Lease?

SITE Centers Corp. has sold Buena Park Place, a 208,572-square-foot grocery-anchored shopping center in Buena Park, Calif. The Orange County asset was fully leased at the time of sale.

JLL Capital Markets brokered the transaction; Managing Directors Bryan Ley, Gleb Lvovich and Geoff Tranchina, together with Senior Director Dan Tyner and Director Tim Kuruzar, led the Investment Sales Advisory team which worked on behalf of the seller.

Completed in 1961, Buena Park Place underwent a cosmetic renovation in 2016. Anchored by ALDI and shadow-anchored by Carl’s Jr. and Starbucks, the retail center has a diverse mix of local and national tenants such as Kohl’s, PetSmart, ULTA, Planet Fitness, Michael’s, Dollar Tree, Chick-Fil-A, Blaze Pizza, Panda Express and ONO Hawaiian BBQ.

Located at 8191-8371 La Palma Ave., Buena Park Place ranks in the top 6 percent of shopping centers nationwide with 3.9 million annual visitors. The property is close to the intersection of Interstate 5 and CA-91 Freeway, which provide easy access to Los Angeles and Santa Ana, Calif.

Buena Park Place is in an area where the daily traffic count reaches approximately 263,800 vehicles. The retail center serves around 626,520 individuals within a 5-mile radius, with the average household income exceeding $103,000.

SITE Centers has recently sold Melbourne Shopping Center, a 211,006-square-foot Publix-anchored retail center in Melbourne, Fla. JLL Capital Markets represented the seller, procured the buyer and arranged the acquisition financing.

The post SITE Centers Sells Orange County Shopping Center appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreInvestment, News, Orange County, Retail, West, JLL, Site Centers Corp. Commercial Property ExecutiveALDI anchors the 208,572-square-foot property.
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Coalition Space Enters Denver With Downtown Location – What is a Ground Lease?

New York-based flexible office provider Coalition Space will open a new coworking location spanning 16,000 square feet in downtown Denver. The firm signed an agreement with landlord Westport Capital Partners for the space at 1660 Lincoln St., slated to open in January 2024.

The location will be on the building’s 20th floor and will comprise flexible desks, dedicated desks and private offices, along with conference rooms. Amenities at the dog-friendly location will include a fitness center, coffee shop, arcade and an equipped kitchen.

Completed in 1972, the building spans 274,582 square feet across 31 stories. The owner acquired it in 2018 for $67.2 million, according to CommercialEdge data. In 2021, the property became subject to a $53.5 million three-year bridge loan from Franklin BSP Realty Trust, the same source shows. Tenants at the tower include Unico, Mill Creek Residential and CIG.

Located in the metro’s downtown, 1660 Lincoln St. is close to the Metropolitan State University of Denver and St Joseph Hospital. It is also within walking distance of the 16th Street Mall.

As of November, Denver’s vacancy rate reached 21 percent, representing a 2.3 percent year-over-year increase and above the national figure of 18.2 percent, according to a recent CommercialEdge report. The average listing rate in the metro was $30 per square foot, marking a 1.3 percent increase over 12 months and below the national average of $38, the same source shows.

The post Coalition Space Enters Denver With Downtown Location appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreBrokerage, Coworking, Denver, News, Office, West, Westport Capital Partners LLC Commercial Property ExecutiveThe coworking firm signed a 16,000-square-foot lease with landlord Westport Capital Partners.
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The Story Behind Brooklyn’s Domino Sugar Factory Makeover – What is a Ground Lease?

After recently undergoing an extensive adaptive reuse process, The Domino Sugar Factory building in Williamsburg is now part of a bustling zone on Brooklyn’s waterfront. The 150-year-old plant closed down in 2004, but three years later, the New York Landmark Preservation Commission designated three components of the property as a landmark site, a classification that would mark a turning point in its history. In 2012, Two Trees Management acquired the factory for $185 million, and immediately embarked on a complex redevelopment process to harmoniously blend the building’s past with its future. 

The new owner tapped architectural firm Practice for Architecture and Urbanism to reimagine the former factory and transform it into an office complex. The redevelopment resulted in a façade that pays tribute to the old structure, while inside a glass building was added within the walls of the factory, complete with amenities fit for contemporary use. In late September, The Refinery at Domino officially opened as a 15-story office building that offers communal workspaces, a private club, an event space in a 27,000-square-foot glass dome penthouse, conference rooms and an indoor vertical garden.

In an interview with Commercial Property Executive, PAU Managing Principal Ruchika Modi revealed details about the challenges the architectural team faced in the process of transforming the historic building into an iconic 21st century hallmark.

READ ALSO: Enhancing Work Environments Through Creative Offices

How did this project take shape? When did the idea of transforming the factory into an office building first spark? 

Modi: In 2012, PAU’s founder and creative director Vishaan Chakrabarti designed Domino Park’s master plan, which envisioned the Domino Sugar Refinery as the plan’s focal point. When Vishaan started PAU in 2015, inviting me to join, I took on the role of Studio Director, helping shape the firm’s diverse portfolio of projects, and overseeing all aspects of the design process. PAU was founded with the ethos that urban architecture and design should connect communities, offering a sense of place and pluralism to consider solutions to omnipresent issues. This ethos is reflected in the way Domino bridges the past, present, and future, as well as the locals, and commercial communities of the surrounding area.

Through conversations with local community stakeholders and residents, we identified bittersweet feelings many felt toward the Domino Sugar Refinery, which was seen by some as symbolic of labor strife and New York’s inequitable industrial past, and now, urban development. The connection between the site’s history and the Williamsburg community allowed us to better understand our role in preserving the historic site while adapting it to cater to the needs of the current population at large. With the resulting plan, we created 425,000 square feet of state-of-the-art office space, with a ground floor that seamlessly connects the neighborhood to the waterfront park and will eventually include food and beverage retailers as well.

Were there any changes you had to make throughout the years and how are they reflected in the completed project?

Modi: The idea to create a biophilic environment within the 12-to-15-feet gap of space between the original brick façade and the new glass building, filling the gap with luscious greenery, including pin oaks that will reach up to 70 feet, as well as a plethora of hanging plants, vines and succulents, was an aspect of the design that was developed during construction, led by landscape architect Field Operations and a local horticultural society. Another significant improvement to the original design was the removal of all gas-fired equipment to make the building all electric-powered—a critical move that aligns with the city’s ambitious sustainability goals.

What were some of the methods you used to bridge the gap between the building’s original features and the need to create a contemporary space?

Modi: The structure was built to consolidate three functions inside three conjoined buildings—the filtering, panning and finishing of sugar—that required the use of enormous equipment housed in cavernous, multistory spaces purposefully obscured by the repetitive punched arch windows in the masonry. Although these windows were misaligned across the four facades, together they give the entire structure a singular, monumental appearance, crowned by the muscular smokestack on the west elevation built out of radial brick.

Rather than navigating the misaligned floors and windowsills across the combined masonry shell, PAU adopted a different approach: nesting a brand-new building into the existing envelope, with a 10- to 12-foot gap between the new and the old. By pulling back from the original walls, ideal and standardized floor heights can be achieved, creating best-in-class office space that is designed to meet the needs of new tenants.

The array of historic windows, uninterrupted by interior partitions, reveal expansive views of Manhattan while allowing the extant structure to be appreciated in an unobstructed form. The light and airy perimeter provides a unique experience and enhances natural light penetration into the core. Rising above and in celebration of the historic structure will be a new glass barrel vault, echoing the American Round Arch Style and singular muscular form in which the original refinery was rendered.

What were some of the challenges you faced during the redesign of this adaptive reuse project and how did you overcome them?

Modi: The biggest challenge in designing the building within a building where the floors do not touch the historic façade was to devise a way to brace the latter in the most unobtrusive and elegant manner while addressing issues of thermal break and weather-tight detailing at the curtain wall. Steel braces tie the ring beams that hold up the masonry façade back to the new building’s superstructure. Along with Silman, our structural engineers, we designed a thermally broken, steel knife-plate thin enough to penetrate it with bent plate connections to the ring beam at the brick wall. This created a tricky curtainwall detail that was resolved through an invention by Focchi, the curtain wall fabricator, of a custom ingenious gasket that would allow the knife-plate to penetrate through the curtainwall, without altering its uniform grid and appearance while at the same time maintaining a watertight seam. 

Moreover, the construction process was like building a ship in a bottle but where the bottle needs to be carefully braced during construction or else it will collapse. The temporary bracing of the masonry façade was a construction project in and of itself with its own set of construction documents produced by Silman. We couldn’t demolish the historic structure, which was holding up the façade without first bracing the walls but in a way that wouldn’t interfere with the new permanent structure to follow. Steel towers were erected abutting the exterior of the walls on all four sides, which braced them during the construction of the new building. The historic structure was then dismantled piece by piece.

The new structure was then erected following which the temporary towers were removed. It was a careful choreography where the design and exact location of the existing, the temporary, and the permanent structural elements all had to be coordinated in a way that there were no conflicts and that construction workers would have access to all the parts through the dense network of steel being sequentially installed and dismantled.

What is the one thing that sets the Refinery at Domino apart as an adaptive reuse project in the current context where there is less demand for office space? 

Modi: Despite devising this design ahead of the pandemic, The Refinery envisions the future of office work, offering tenants an alternative to pre-pandemic office life with luscious greenery, waterfront views, and, perhaps most importantly, a unique sense of rootedness in history, place and community that many of New York City’s skyscrapers lack.

PAU’s portfolio also includes the ongoing work for Penn Station, a transit hub that is set to be redesigned for the 21st century. Is tackling landmark spaces something that the company has a particular interest in?

Modi: We have built a practice that attempts to address the pressing issues of our era, a practice decidedly focused on social impact through the tangible improvement of cities. PAU designs lasting architecture and innovative urbanism that connects people to pluralism, place, and planet, a big part of which is revitalizing historic buildings and landmarks that have fallen into a state of dysfunction or disrepair.

Penn Station, a civic landmark, has long facilitated the flow of commuters, residents, and visitors in and out of Manhattan. However, with increased ridership, it has not received the same care and attention required to improve and enhance travelers’ experiences. Our proposed design for Penn Station, in collaboration with HOK and ASTM, will provide travelers and New York City residents alike with a greatly enhanced commuter experience in our post-pandemic world. Our proposal returns a sense of civic grandeur to the station by circumscribing Madison Square Garden in a new podium that fills out the street walls of the block. The plan envisions two main train halls—a soaring Eighth Avenue entrance and a light-filled Midblock hall—that together will restore the civic gravitas that has been absent since the 1963 demolition of McKim, Mead & White’s original edifice.

Can you provide a glimpse into some of the PAU’s other upcoming projects and plans?

Modi: In October, we broke ground on the expansion of the Rock and Roll Hall of Fame in Cleveland, originally designed by I.M. Pei. Similar to the Domino Sugar Refinery project, this expansion will connect the museum to the nearby waterfront and expand the Rock Hall’s public spaces. Last spring, the FAA selected PAU’s adaptable, sustainable design for a new generation of air traffic control towers. Though unintentional, to have a hand in reshaping two of I.M. Pei’s iconic U.S. designs preserves the sense of rootedness in history we try to imbue each of our build with.

How do you envision the future of the adaptive reuse trend going forward?

Modi: If the 20th century was about tabula rasa and reinventing places from whole cloth, we believe that the 21st century is about a sense of palimpsest—writing upon layers of history in a way that preserves and builds on the character, culture and communities that have historically defined a place. Add to that, with the health of the planet as a critical imperative, adaptive reuse can and should be our first resort, where possible, to minimize embodied carbon. However, this approach isn’t always the most budget-friendly in terms of first costs. A ‘stick and carrot’ strategy by policy makers would go a long way to ensure that the needs of a few don’t overshadow the priorities of society at large. 

The post The Story Behind Brooklyn’s Domino Sugar Factory Makeover appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreDevelopment, Executive Insights, New York, Northeast, Office, #BehindtheProject, #CPETalks, Practice for Architecture and Urbanism, Two Trees Management Commercial Property ExecutivePAU Studio’s Ruchika Modi reveals what it took for a 150-year-old landmark to become a modern office space.
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What Drives Manufacturing’s Revival? – What is a Ground Lease?

The manufacturing resurgence in the U.S. over about the past three years is perhaps remarkable for its diversity. It arises from multiple causes and is strongest in multiple states across the nation, according to a new manufacturing report from Savills.

It also rests on a diverse handful of high-tech industries that have generated two-thirds of new manufacturing jobs, primarily electric vehicles and their batteries, semiconductors, clean energy and biomanufacturing.

This inaugural report tallies some powerful numbers from America’s manufacturing expansion. For example, between January 2021 and October 2023, in excess of 845,000 new manufacturing jobs were announced, which was more than double the figure from the preceding three years. Just eight states in the Midwest and Sun Belt created nearly half (47 percent) of new manufacturing jobs: Arizona, Georgia, Michigan, North Carolina, Tennessee, Ohio, South Carolina and Texas.

Twenty hot metros in those eight states account for more than 6.0 billion square feet of industrial property, or about 37 percent of the nation’s inventory. And there’s an additional 282 million square feet currently under development.

That’s a snapshot of the “how much” and the “where.” The “why” consists of diverse factors that include transportation and other infrastructure, pools of skilled labor, public incentives and adequate availability of land.

READ ALSO: EV Boom Reshapes US Industrial Landscape

To zero in on one factor that Savills highlights, the report states: “This revival is propelled by a significant injection of public incentives, including federal allocations from the Inflation Reduction Act, the CHIPS and Science Act and the Bipartisan Infrastructure Law, which supported $628 billion in capital investments in manufacturing since the start of 2021.”

Data dashboards

The report includes interactive dashboards with data and commentary on the drivers of site selection in each of the eight leading states, exploring what specifically is attracting manufacturers. In Arizona, for example, the availability of land and skilled labor have overcome concerns about water supplies to pull in more than $20 billion in commitments from semiconductor makers like Intel and Taiwan Semiconductor.

In Georgia, there’s a very different story. Driven by reshoring initiatives and foreign direct investment that have created nearly 60,000 new jobs, the state is seeing oversize projects in the electric vehicle and battery sectors. Extensive transportation infrastructure, including rail systems and ports, has also been important in the Peach State.

The post What Drives Manufacturing’s Revival? appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreDevelopment, Featured, Industrial, National, News, Intel, Savills Commercial Property ExecutiveA diverse handful of high-tech industries are behind this growth, particularly in Midwest and Sun Belt states, the latest Savills report finds.
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Fidelis, Transwestern Eye Austin-Area Industrial Campus – What is a Ground Lease?

A joint venture between Fidelis Industrial and Transwestern Investment Group—acting on behalf of a separately managed account—has acquired 56 acres in Georgetown, Texas, for the development of Berry Creek Business Park, an industrial campus that is expected to measure 520,571 square feet.

The property is zoned for light industrial manufacturing and distribution use. Groundbreaking of the three-building project is scheduled for January, with completion expected in the fourth quarter of next year.

READ ALSO: Top 5 Markets for Industrial Transactions

Northmarq’s Vice President Harry Hopson and Managing Director Warren Hitchcock arranged the joint venture. TIG’s Managing Directors Carter Thurmond and Witt Westbrook, together with Vice President Nash Frisbie, will spearhead the leasing efforts.

Berry Creek Business Park, up close

Upon delivery, Berry Creek will comprise three industrial facilities ranging from 126,722 to 253,164 square feet. Building 1 and Building 2 will have rear-load capabilities and feature 32-foot clear heights and a total of four ramps, 60 dock-high loading doors, 382 parking spaces and 23 trailer stalls. Building 3 will be a cross-dock facility that is expected to feature 36-foot clear heights, 256 parking spaces and four ramps, as well as 40 dock doors. Amenities are to include a food truck pavilion, a fitness-focused walking trail and outdoor stations.

The business park will rise at 1761 N. Interstate 35 Frontage Road, at the junction of Interstate 35 and Highway 130. Downtown Austin is some 27 miles away, while Austin-Bergstrom International Airport is within 32 miles. The location is also less than 1 mile away from a 435,714-square-foot industrial development that was recently acquired by ZT Systems.

Austin’s growing industrial pipeline

More than 18.4 million square feet of industrial space were underway in Austin as of December, according to CommercialEdge information. The metro also has more than 40.4 million square feet pertaining to planned and prospective projects.

One of the more significant developments is Hines’ 683,344-square foot industrial campus in Northeast Austin. The four-building property is slated for completion by the end of 2024.

In August, Greystar Real Estate Partners started construction on the second and last phase of a five-building industrial development in San Marcos, Texas. At full buildout next year, the park will encompass almost 500,000 square feet.

The post Fidelis, Transwestern Eye Austin-Area Industrial Campus appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreAustin, Development, Industrial, News, Southwest, Fidelis Realty Partners, Northmarq Commercial Property ExecutiveConstruction of the three-building project is expected to start next month.
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How Incentives Boost Office Conversions – What is a Ground Lease?

A growing number of cities, states and now the federal government are looking more closely at converting unused or obsolete office space. Which should not come as a surprise: The national office vacancy rate reaching 18.2 percent in November, up 190 basis points year-over-year, according to CommercialEdge. Some major cities face even higher vacancies.

Coupled with a national housing shortage and an affordability crisis, most of the incentives aim office-to-residential conversions. But there are other potential uses being considered including educational, both K-12 and university-level, and student housing; hotels; data centers; industrial; lab and life science space.

“I think the real challenge is going to be whether or not the private developers and local governments can really partner together to make that work financially,” said Ashley Dunn, principal & director of workplace at Dyer Brown & Associates in Boston. “People don’t recognize the complexities involved.”

“There’s some uncertainty around whether putting that kind of cash into a property to convert it to residential is financially viable,” she added.

READ ALSO: Office Conversions Surge

While there have been fewer office-to-residential conversions in Boston to date, Dunn said there has been “a huge uptick” over the past two to four years in Boston from office to lab space. That has slowed more recently due to the economic climate.

Despite the complexities involved, Michael Underhill, chief investment officer at Capital Innovations LLC, an alternative investment management firm in Waukesha, Wis., said about 15 percent of commercial office buildings in the 105 largest U.S. cities are suitable for residential conversion, offering the potential to add 171,470 units, or almost half of 2022’s yield of units in multifamily buildings.

A recent CBRE study stated 118 office-conversion projects—nearly half of them to multifamily—are expected to be completed in major U.S. cities this year. Between 2016 and 2022, the annual average was 41. The study found 60 million square feet of conversions is planned or underway, comprising 1.4 percent of total U.S. office inventory, up from 1.2 percent in the second quarter of 2022.

Since 2016, nearly 20,000 housing units have been created through office-to-residential conversions and the projects planned or underway are expected to add 21,000 units. To date, 48 percent of the conversion projects underway or planned are office-to-multifamily; 19 percent are office-to-life-science and 18 percent are office-to-mixed-use, according to CBRE.

READ ALSO: Are Suburban Office-to-Industrial Conversions Feasible?

“I think this issue is significant enough to get the attention of the policymakers,” said Charles Bloszies, principal at Office of Charles Bloszies, FAIA, in San Francisco. “Economically these projects just won’t happen without some incentives. And policymakers are seeing that and reacting.”

Some cities, such as Boston and Washington, D.C., are offering tax abatements. The Downtown Office to Residential Conversion pilot program in Boston will reduce taxes by up to 75 percent for up to 25 years for office properties converted into apartments. In D.C., the city is offering a 20-year tax abatement to developers who build more than 10 housing units.

In October, San Francisco Mayor London Breed announced a tax incentive proposal would be on the March 2024 ballot. It would waive the city’s transfer tax, which can be up to 6 percent on transactions exceeding $25 million, on buildings that have converted from non-residential use, including office, to residential use.

Seattle has selected several office conversion proposals and is drafting legislation, incentives and other programs that will aid the projects.

READ ALSO: 2023 Top Commercial Development Firms

Chicago is creating a tax-increment financing district as part of its LaSalle Street Reimagined program that would add housing to an area that is currently 85 percent office space. More than 1,000 apartments, with at least 30 percent of them affordable, would be developed.

“We’re seeing tax abatement programs in Philadelphia, where if you’ve got a conversion, you’ve got a 10-year tax abatement on that property, which is great,” said Kelly Farrell, global leader of Gensler’s residential practice & managing director in the firm’s Los Angeles office.

Other incentives offered by municipalities include cash grants for projects that meet certain criteria or waived permit fees or development charges.

Changing zoning to make it easier to develop residential housing in commercial zones, streamlining the process for developers, including creating dedicated teams to review and process applications for conversion projects are also part of the tools cities are utilizing.

In August, New York City Mayor Eric Adams laid out the administration’s plan that launched an Office Conversion Accelerator to expedite the conversion projects and speed up the process to create 20,000 new housing units by repurposing millions of square feet of empty office space. The city is also seeking to rezone Midtown South from only manufacturing and office space to allow housing to foster a 24/7 live-work community.

Peter Bafitis, managing principal at RKTB Architects in New York City, notes that tax incentives such as 421-a, which encourages developers to build affordable housing, have a sunset horizon and the New York State Legislature had not acted on a new version.

“This kind of major conversion in a large swath of the city is going to be difficult, if not impossible without state approval,” Bafitis said. “Hopefully in 2024 we’ll see the passage of some of those necessary things that are going to be required both on the state and city to facilitate this and incentives have to be part of the package. If we’re lucky, things might begin in 2025 or 2026 and last for another 10 to 15 years if Lower Manhattan is any guide.”

He noted in the 1990s, when the city was seeking to bring more housing to Lower Manhattan, the former 421-g tax incentive program provided tax exemption and abatement for the conversion of commercial buildings, or portions of buildings, into multifamily residences. It expired in 2006.

“What they were trying to do was deal with the vacant and obsolete offices in Lower Manhattan but to also create a 24-hour neighborhood in a place in the city where that had simply never existed before. It really was a major kind of social transformation, and you know what, it worked,” he told Commercial Property Executive.

State and federal actions

In California, the state legislature has appropriated $400 million in incentives for conversions, with $105 million earmarked for affordable housing. The legislature is considering the Office to Housing Conversion Act, that would facilitate and speed office conversions and require 10 percent of the new housing to be set aside for affordable units.

Steven Paynter, a principal at Gensler in its Toronto office and Building Transformation & Adaptive Reuse leader, said he has not seen other state programs yet but there will start to be some because the federal Department of Energy lending program announced in October by the Biden-Harris administration has to be administered through state-level entities.

The DOE program was among other initiatives spread across more than 20 federal programs stemming from six federal agencies, that can be used to support conversions included in the Commercial to Residential Federal Resources Guidebook.

The programs include low-interest loans, loan guarantees, grants and tax incentives. Some may be used together with federal programs as well as state and local offerings to increase the economic viability of conversion projects.

“You can coordinate with the Inflation Reduction Act,” said Gensler’s Farrell. “You can start to take credits for multifamily dwellings and whether that’s looking at Energy Star or DOE Zero energy provisions, you can start to take those into your conversion as well. There are provisions for renewables, solar, wind energy storage for those buildings and alternative fuel.”

Some of the federal funding programs include:

The Department of Transit has more than $35 billion in lending capacity available through two programs—the Transportation Infrastructure Finance and Innovation Act and Railroad Rehabilitation & Improvement Financing—for transit-oriented projects at below-market interest rates.
HUD is updating information on how Community Development Block Grant funds can be used to boost housing supply, including the acquisition, rehabilitation and conversion of commercial properties to residential and mixed-use developments. States and localities also can access up to five times their annual CDBD allocation in low-cost loan guarantees. It also has an $85 million Pathways to Removing Obstacles to Housing program that can be tapped.
The General Services Administration will expand on its Good Neighbor Program to promote the sale of surplus federal properties that buyers could potentially redevelop for residential use.

Historic tax credits

“The White House guidelines also involve things like taking advantage of historic tax credits for building habilitations and we think that’s going to be a great tool, especially in this economic environment,” said Farrell. “You can really put this stack together that can make conversion possible.”

Michael Liu, senior partner & design principal at the Architectural Team Inc. in the Boston area, said the historic tax credits get certified through the National Park Service.

“The developer is entitled to 20 percent tax credit for the cost of the renovation which is the historic build,” he said. “The National Park Service has to be persuaded the building has historic significance. … I don’t think there is the same kind of affection for buildings of this era than they would be for buildings from the 1930s.”

The building should be at least 50 or 60 years old to qualify for the historic tax credits. That could eliminate some of the newer-era office towers, but those built earlier, in the 1960s or 1970s, might qualify.

Bloszies’ company, an architecture and structural design firm focused primarily on San Francisco, released a study and map detailing the feasibility of several buildings in and near the downtown core that might be candidates for office-to-residential conversion. In the firm’s study, Bloszies noted the most ideal candidates in San Francisco for conversion are older buildings with high ceilings and large operable windows.

He said that in California, owners of historic buildings can also apply for The Mills Act, which is administered and implemented by local governments for restoration and preservation of qualified historic buildings.

Lessons from Calgary

Even before the COVID-19 pandemic hit, Calgary, Canada, had faced a rising office vacancy rate due to a downturn in 2014 in the oil and gas industry. By 2020, Calgary had peaked at a 34 percent vacancy rate in its downtown and the city took action to address the 12 million square feet of vacant office space.

City officials began meeting with a local economic development group for ideas to encourage building owners to do something different with their properties. Calgary worked with Gensler, which created an algorithm tool to determine which underperforming assets could be candidates for conversion.

Paynter said the city decided early on they needed to remove 50 percent of the current vacancy or about 6 million square feet of office space.

“Using our algorithm and by working with the local developer groups, we were able to determine the market could support about 3 million square feet of conversions. To meet the goals, they would have to incentivize the work to the tune of about $75 per square foot and remove any policy hurdlers and red tape,” he said. “The city moved very quickly to do this, securing funding by ‘investing in themselves’ and proving that short-term incentives would have a positive tax flow benefit down the line.”

The city has invested $153 million in incentive funding to date, said Natalie Marchut, manager at Strategy & Development for the City of Calgary’s Downtown Strategy. The federal government has launched the Housing Accelerator Fund to help municipalities deliver residential units across the country.

Marchut said the city also removed a development permit for certain applications, saving 4 to 6 months in the review process.

“It also saves a ton of money because development permits are very expensive and it also provides the certainty of approval, which I think is the biggest win for the development community,” she said, pointing out that that is the only time a project can be appealed.

The city also created a dedicated staff to deal with the conversion applications to help streamline the process.

Since the program launched in September 2021, 13 conversions have been approved and a total of 17 for 2,300 units have been proposed. One conversion has changed a property to hotel use and Marchut said the city is also eyeing student housing and other uses, including arts and cultural, for the downtown buildings. The first property, The Cornerstone at 909 Fifth Ave. S.W., will open in January.

Paynter said Calgary and the tools the city is using can be a model for other municipalities.

“Almost all cities in North America face the exact same issue right now,” he said. “We’ve applied our model in over a dozen U.S. cities already, most prominently San Francisco.”

The post How Incentives Boost Office Conversions appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreDevelopment, Featured, National, News, Office, Capital Innovations, CBRE, Gensler, The Architectural Team Inc. Commercial Property ExecutiveWhile the public sector works on eliminating hurdles, such projects are becoming increasingly diverse.
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Triangle Equities Lands $50M for Queens Multistory Industrial Project – What is a Ground Lease?

Triangle Equities, a New York-based owner, operator and developer of commercial, mixed-use and residential real estate, has secured $50 million in predevelopment financing for the construction of a 425,000-square-foot multistory logistics facility in the College Point section of Queens, N.Y. JLL arranged the loan.

Centennial Bank provided the first mortgage financing that replaces existing debt and funds the predevelopment and design of the facility at 30-02 Whitestone Expressway. The property had become subject to a $44 million loan provided by Flushing Bank in 2015, according to CommercialEdge information.

READ ALSO: Is CRE Lending Bottoming Out?

The multistory building will rise on a 9.8-acre lot located in one of the most well-connected distribution sites in New York City, providing easy access to the Grand Central Parkway, Whitestone Bridge and the surrounding boroughs of Manhattan, Bronx and Brooklyn, as well as Long Island and Westchester County. The property is also close to LaGuardia Airport and John F. Kennedy International Airport.

The JLL Capital Markets team which worked on behalf of the borrower was led by Geoff Goldstein, Rob Hinckley and Tyler Peck. Goldstein said, in a prepared statement, the financing presented the bank with the opportunity to lend against an as-of-right industrial development site with access to all major roadways in the area.

Also in Queens, earlier this year Triangle Equities and Goldman Sachs Asset Management’s Urban Investment Group obtained a $136 million recapitalization of a two-story industrial condominium project in Jamaica, N.Y. The same JLL brokers were instrumental in that financing deal as well.

Growth of multistory industrial facilities

Multistory warehouses are an emerging industrial subset that originated in Asia and Europe and has been growing in the U.S. as developers try to find locations to serve the expanding last-mile logistics market. The trend started in Seattle, but New York City now has at least five multistory warehouse properties and five under construction as of October.

In May, Innovo Property Group and Affinius Capital completed a $334 million recapitalization of a 1 million-square-foot, multistory industrial building in the Bronx that came online in 2022. Bank OZK provided a $250 million senior mortgage and PIMCO loaned $84 million in mezzanine financing.

Also in New York City, IPG topped out its latest multistory industrial project in Queens’ Long Island City neighborhood. Construction is slated for completion in 2024.

The post Triangle Equities Lands $50M for Queens Multistory Industrial Project appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreDevelopment, Finance, Industrial, New York, News, Northeast, Centennial Bank, Geoff Goldstein, JLL, Triangle Equities Commercial Property ExecutiveCentennial Bank provided the first mortgage financing.
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Arcadia Cold Opens Reno-Area Facility – What is a Ground Lease?

Arcadia Cold Storage & Logistics has opened its Reno Cold Storage and Logistics Facility, a 250,000-square-foot property in Sparks, Nev., marking the first large-scale cold storage facility in the Reno market. Ti Cold designed and constructed the building.

The property includes 37,000 pallet positions and has a freezing capacity of -10 degrees F to 38 degrees F. In addition, it features five fully convertible rooms ranging between 33,430 and 49,755 square feet, a 39,970-square-foot cold dock, 33 dock-high loading doors, 92 parking spaces and office space. The facility also provides ground power support to ensure net-zero emissions.

Located at 1900 Peru Drive, the distribution center provides easy access to Interstate 80. Downtown Reno is some 22 miles away, while Reno-Tahoe International Airport is less than 24 miles southwest.

The Reno Cold Storage and Logistics Facility marks Arcadia’s fifth opening since October. Other recently completed projects include a 293,265-square-foot facility in Phoenix, a 305,858-square-foot Atlanta warehouse and a 295,245-square-foot property in Fort Worth, Texas.

In April, Arcadia broke ground on its 216,297-square-foot cold storage project in Jacksonville, Fla. The $86.5 million property is slated for completion in early 2024.

The post Arcadia Cold Opens Reno-Area Facility appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreDevelopment, Industrial, News, West, Arcadia Cold Storage & Logistics Commercial Property ExecutiveThis is the first large-scale cold storage property in the market.
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Big Sky Medical Gets Rezoning Approval for Dallas MOB – What is a Ground Lease?

Big Sky Medical has received the approval from the Dallas City Council for the rezoning of the roughly 145,000-square-foot Pyramids South Tower, which can now include medical tenants within the property. The adjacent Pyramids North Tower was rezoned to medical use in 2005 and is currently occupied by Baylor Scott & White and Dallas Plastic Surgery Institute.

Big Sky Medical acquired the two-building property near dowtown Dallas last year in October for an estimated $55 million from Healthcare Realty. The asset was described at that time as the largest medical office property to change hands in the U.S. since 2018. The purchase was made through Big Sky’s partnership with Bahrain-based GFH Financial Group.

The Pyramid Towers encompass a total of nearly 300,000 square feet and are set to become one of the largest medical complexes in North Texas. Pyramids South Tower is a six-story Class A building which was completed in 1998 and features three passenger elevators, controlled access and offers 730 car parking spaces. Managing Director Russ Johnson and Senior Vice President Chris Wright with JLL will handle the leasing services at the property.

Located at 9101 N. Central Expressway, Pyramid Towers are less than 10 miles from downtown Dallas. Medical facilities in the surrounding area include Texas Health Presbyterian Hospital Dallas, SMU Health Center and First Baptist Medical Center, among others.

Big Sky Medical recently made another purchase in the Dallas-Fort Worth market. The company acquired Richardson Medical Center I, a 118,472-square-foot medical office building in Richardson. The property’s repurposing to medical office use began this year.

The post Big Sky Medical Gets Rezoning Approval for Dallas MOB appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreDallas, Medical Office, News, Southwest, Big Sky Medical, GFH Financial Group, Healthcare Realty Trust Inc. Commercial Property ExecutiveThe company acquired the two-building property in 2022 for $55 million.
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Getting in the Heads of Office Tenants – What is a Ground Lease?

Much of the news around office space can make the situation appear rather bleak. This isn’t quite the reality, however. For brokers, there are also positive aspects to today’s market.

Across the nation, for example, high-quality office assets are getting leased at lighting speed. Companies are searching for the best, most highly-equipped office product available and competing at high rental prices for a secured lease.

“In the midst of a transformative bifurcation between traditional and cutting-edge offices, we are seeing a shift toward community magnets, those assets that are enticing tenants with amenitized and experiential spaces,” Jonathan Pearce, head, investments, office and life sciences, United States for Ivanhoé Cambridge, told Commercial Property Executive.

READ ALSO: How Lifestyle Offices are Redefining Work-Life Balance

As of October, the national average full-service equivalent listing rate was $37.77, a 0.4 percent decrease over the year, CommercialEdge data shows. Further, the vacancy rate is up 150 basis points on a year-over-year basis to 17.8 percent. These numbers don’t tell the full story for every asset type, though.

“The newly constructed AAA office assets are definitely a bright spot,” said Rob Kane, executive vice president, Lincoln Property Co.

While some Class A buildings may be the most attractive in terms of amenity and physical space appeal, many tenants are finding that Class A offices don’t have the most compelling economic value, according to Adam Henick, co-founder, Current Real Estate Advisors. Therefore, another plus for brokers is the availability of more economically viable spaces as well.

“One of the ironies over the past couple of years is that we’re seeing some of the highest vacancy numbers that we’ve seen, but you’re also seeing some of the highest rents price per square foot that tenants have ever paid,” Henick said. “It’s a tale of two markets.”

What tenants want

In an effort to get employees to return to in-office work, companies are seeking out the best bang for their buck. Therefore, Kane noted that the flight to quality trend remains as strong as it has been for the past several years.

“I expect demand for the highest quality office space in virtually all major markets to remain healthy for the foreseeable future despite the macroeconomic headwinds impacting commercial real estate more broadly,” Kane said.

But, while a nice kitchen space, coffee area, meeting room and perhaps even a fitness center are all encouraging features, a growing number of employers are taking it a step further—incorporating sustainability, for example—to enhance the overall experience, Pearce explained.

“State-of-the-art amenities are nothing new for the Class A office world, but a captivating evolution is underway, where cutting-edge amenities that seamlessly blend sophisticated hospitality features and advanced technology while also spearheading environmental, social and governance initiatives are redefining the work experience and positively impacting the communities they serve,” Pearce said.

Amenities aside, one thing that is becoming increasingly difficult is mapping out how companies are utilizing their office space to maximize efficiency.

“Space planning has become a more challenging task than it perhaps used to be because companies are trying to plan for how many days a week different sections of their workforce are using the office,” Henick said. “Is everyone going to have a dedicated desk? Are they going to employ a hot desking concept?”

Layouts are becoming far more specific to varying business types, Henick observed. For example, venture capital companies are increasing their square-footage space in office buildings for more event spaces and additional rooms to invite portfolio companies to come and work out of. Financial service companies and law firms are following a similar trend.

On the other hand, many tech companies are rightsizing and downsizing their footprints. Therefore, many of these tenants value flexibility in a lease agreement rather than the size or bells and whistles.

“In the past, square footage may have been one of the leading inputs, whereas now I think that square footage is an output that comes from a prioritization and functionality,” Henick said.

Brokerage strategies

Disruption to the office market means disruption to the office brokerage space. With national leasing volume down by some 40 percent since before COVID-19, according to an Avison Young, even industry veterans are needing to reevaluate traditional strategies.

“Connecting with both the tenants’ and the end users’ needs and viewing the office as a destination rather than an obligation is paramount when looking at how to shift strategies and stay up with the latest office trends,” Pearce said.

Another key is being flexible and having access to as much data as possible to enhance the effectiveness of leasing strategies.

Kane’s advice to brokers in this environment is to wait to prescribe any client solution until a proper diagnosis of the need or problem can be made.

“Brokers tend to get bogged down with asking rents, comps, tenants in the market, etc.,” Kane said. “While these are important factors and you can’t lose sight of them, it’s imperative that you understand your client’s enterprise-wide challenges and goals and are actively solving them.”

In light of high interest rates and a volatile economic environment, office brokers now have to factor in landlord-facing complications as well.

“It’s highly typical when we’re negotiating a lease transaction that the landlord is super focused on the credit of the tenant…,” Henick said. “Now more than ever, we’re seeing increasing questions from the tenants on what is the nature of the credit on the landlord side.”

The post Getting in the Heads of Office Tenants appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreBrokerage, Brokers Corner, National, News, Office, Property Management, Current Real Estate Advisors, Ivanhoe Cambridge, Lincoln Property Co. Commercial Property ExecutiveExperts explain how to shift brokerage strategies to stay current with today’s office environment.
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Designing for Deconstruction to Help the Environment – What is a Ground Lease?

In the ongoing effort to maximize the use of materials in the built environment and minimize carbon impacts, the movement toward designing buildings for eventual reuse of parts and materials is gaining new impetus with advancements in technology and industry innovation.

At Forell Elsesser, we are adding Deconstruction Drawings to our plans to show the project sponsor, architects, builders, and future interested parties how our buildings can come apart to reuse components. Buildings inherently should not come apart, but only through design and proper planning can the reuse be possible.

This trend for building reuse and reducing waste isn’t entirely new, and individual cities and other jurisdictions are even mandating such considerations. But the commercial real estate industry also needs to take a greater leadership role in envisioning such processes and making it easier to put into effect.

The City of San Francisco is eyeing the reduction of construction waste through improved processes in both advanced design and demolition or deconstruction. It already has a zero waste target for construction and a current ordinance to reduce debris sent to landfill or incineration by 50 percent by 2030.

Another Bay Area city, Palo Alto, already requires that project sponsors pursue reuse and de-construction strategies driven by the landfill-diverted waste exceeding 40 percentfrom the construction industry alone. Its 2018 regulation, which is driving some of the most pro-active deconstruction in the country, is aptly sub-titled, “Effective July 1, 2020, demolition will no longer be allowed.”

Clearly, if such efforts in the U.S. and worldwide are to be successful, we in the design and construction industries must do our part. Designing our buildings for parts-reuse is a better step towards a future where construction components have an equal or greater value even after their first use.

Think ‘building blocks’

Most designers and engineers have a story about playing with building blocks as kids and how it helped shape their interest in building and creating things. This statement is true for me, but I also learned some lessons later in life.

Walking through a store recently reminded me of how different these building-block toy and entertainment offerings are compared to when I was a kid. The things you can create now out of the box can be amazingly detailed and intriguing.

Today, you can buy the Eiffel Tower, a Bonsai tree, the Concorde passenger jet, or even Hogwarts. There is something special about constructing piece by piece to see something come together. If you have kids, inevitably, you’ve experienced heartbreak as the masterpiece is deconstructed and reassembled, sometimes devolving into a Frankenstein monster as all that hard work and time investment is gone. However, the second or third life can be quite interesting as creativity sets in to evolve to something yet again, such as a Star Wars spacecraft mixed with the Batmobile, for example.

The incredible thing about this transformation is that there’s no change to the components’ form and function when reused.

When can we build actual buildings that way?

In current commercial real estate practice, demolition of buildings creates a significant portion of construction waste, with little material able to be reused. Additionally, even more energy and materials are needed to replace an old building with a new one, no matter how sustainable or “green” the design is. Construction today has many single-use parts that have one function and one use.

At best, some portions of building parts can be recycled, like structural steel components or lumber that can be repurposed in new buildings or concrete rubble from tearing down a structure that is put to use as base rock or construction fill.

For the most part however, demolished construction is essentially waste.

Changing construction debris back into valuable materials can be energy-intensive, too. This type of recycling is considered a down-cycle. Building blocks that kids use are a perfect example of materials that have no downcycle, or up-cycle, for that matter, because they can be reused indefinitely.

This interchangeability is an ideal goal, though I’m not suggesting building components can be as flexible to reuse as LEGOs. While they are the poster-child example of zero down-cycle, a creative demonstration in the U.K. using 3 million of the little bricks has proven to be a building that nobody wants.

A new approach from inception

But we are making progress in rethinking design and construction for reuse on the larger scale.

A key, initial step for improving building design is to consider our material choices and how we design buildings to go together and come apart, that is, designing for deconstruction.

Chemical adhesives, embedded parts, weldments, and binders connect building components but are not designed to come apart—by intent of design. Creating a deconstruction potential for a component requires a mind shift. Good design is bringing pieces together as well as being able to remove and separate them when the time comes for reuse. Further, the parts should be configured so that reuse is possible as a building block for future construction, enabling a higher reuse potential and economic value.

That’s why our firm and others are beginning to add Deconstruction Drawings to our plans that show a builder or an eventual de-constructor how buildings can come apart for reuse of components. Essentially a bill of materials with essential material data will allow future material “scavengers” and entrepreneurs an insight into how the building materials can be upcycled.

Some day, we envision project sponsors, architects, contractors, cities, and everyone involved in a buiding’s life cycle will hold a more commonplace view of construction components having an equal or greater value after the first use.

For that, I for one would owe a great big thank you to my childhood LEGOs.

Geoff Bomba is a principal and director of Engineering Operations at San Francisco-based Forell Elsesser Structural Engineers. 

The post Designing for Deconstruction to Help the Environment appeared first on Commercial Property Executive.

In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreViewpoint Commercial Property ExecutiveMost construction today is a collection of single-use parts, observes Geoff Bomba of Forell Elsesser.
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