Stories from our Region – May 28, 2020

 

Fast-growing biotech firm takes King of Prussia space, plans 100 new jobs

WuXi Biologics has leased 33,000 square feet at the Discovery Labs in King of Prussia and expects to add 100 jobs by the end of this year.

 

Philadelphia biotech firm expands gene therapy partnership with Penn

Passage Bio, which went public earlier this year in a $248 million IPO, said Thursday it has expanded its gene therapy partnership with the University of Pennsylvania.

 

Esports leagues use hiatus to fine-tune events model

While there were positive signs to build on, including several event sellouts, executives around the league say they plan to use the time before in-person events would be held again to evaluate possible changes to the model.

 

7-building industrial portfolio in South Jersey hot spots sells for $43 million

A seven-building portfolio spread across some of South Jersey’s hot spots for industrial properties sold for $43 million, a deal that closed despite challenges posed by the COVID-19 pandemic.

 

Delaware legislators offer bill aimed at getting Maryland commuter trains to Newark

Rep. Osienski and Sen. Hansen filed legislation that would authorize the Delaware Department of Transportation to work with other agencies to improve the regional rail network.

 

Newmark Knight Frank (NKF) research sees long-standing office trends disrupted once reboarding begins

NKF findings show that businesses are not going to immediately return to normal operations and they will be expected to continue social distancing based on the CDC guidelines for a phased reopening.

Stories from our Region – April 30, 2020

 

Camden paper company sees sales soar by more than 50% during COVID-19 crisis

With this increase in demand, Royal Paper Company’s owner Rashaan Hornsby is taking extra steps to ensure the company remains homegrown, hiring directly from the city of Camden.

 

Two Delaware-based biotech institutions receive money to support coronavirus treatment research

Incyte is looking at the potential to repurpose its cancer drug, Jakafi, to treat coronavirus patients while the nearby National Institute for Innovation in Manufacturing Biopharmaceuticals is working to speed up testing capabilities for pandemics.

 

An increase in demand is driving HealthVerity to increase staff by 60% this year

A spike in inquiries during the pandemic from potential clients is driving the Philadelphia-based company to hire for sales and engineering positions to support an expansion in its services.

 

American Water begins to upgrade roughly 2,800 ft. of Camden water main

The $1.1 million upgrade that began earlier this month will advance water service reliability and increase water flow for the community.

 

Qlik begins a global effort to understand COVID-19 and prevent future pandemics

The King of Prussia-based company is gathering data from various sources to help organizations better understand the spread of COVID-19.

 

Inovio is urgently focused on developing a COVID-19 vaccine

The biotechnology company launched Phase 1 of its human clinical trial of up to 40 healthy volunteers in the U.S.

Listen to S3 Ep03: Working From Home with Delegate Solutions

Listen to our recent Growing Greater podcast episode with Emily Morgan, Founder and CEO of Delegate Solutions, a company that provides virtual assistant services, specifically for entrepreneurs, and doing it with an eye toward empowering those leaders to focus more on what they do best, grow their businesses.

Working remotely from our home offices, it’s now the “new normal”, but for Emily, she has built her successful business around this “virtual office” model and she has been doing it for more than 12 years. In this episode, gain some insights from Emily into the benefits of working remotely.

Catch up on previous episodes of Growing Greater to hear engaging stories of economic development, innovation, health care, and more from industry leaders. We encourage you to subscribe, share, and rate Growing Greater in your favorite podcast app.

Growing Greater podcast

Listen to S3 Ep02: COVID-19 Immigration Impact with Green and Spiegel LLC

Listen to our Growing Greater podcast episode with Jonathan Grode, the U.S. Practice Director at Green and Spiegel LLC, an immigration law firm with operations across North America with their U.S. headquarters right here Philadelphia.

As the global pandemic of COVID-19 continues to evolve each day, the problems that immigrants face increases as borders close, layoffs hit the workforce, and contaminate becomes the main focus for many countries. In this episode, Jonathan shares how we can go from containment to reconstruction.

Catch up on previous episodes of Growing Greater to hear engaging stories of economic development, innovation, health care, and more from industry leaders. We encourage you to subscribe, share, and rate Growing Greater in your favorite podcast app.

COVID-19 Impact on Real Estate Markets

COMMENTATOR: Adam Mullen, Market Leader for the Greater Philadelphia Region, CBRE

While the full impact of the global health emergency that is COVID-19 continues to unfold, the effects of this pandemic across the commercial real estate community is being felt in notable ways.  Some commercial asset classes will fare better than expected, while others will be significantly impacted in the short-term.

Industry opportunities and challenges are taking root now, and not surprisingly, hospitality and most retail are taking a hit, while the industrial sector is expected to maintain and perhaps even grow.  Here is an early snapshot based on what we know today.

INDUSTRY-SPECIFIC OUTLOOK

Office leasing will slow in the short term, vacancy will rise, and demand will increase for agile workplace offerings. The greatest impact will come in markets with a high concentration of oil & gas and travel & leisure jobs. There is less new office construction in this cycle, which will aid the sector’s recovery.

The economic slowdown will negatively affect most retail, especially retailers and centers already struggling to compete with e-commerce. There is resilience and strength in grocery-anchored and pharmacy-anchored centers. The eventual removal of social-distancing requirements might cause a surge in pent-up demand.

Industrial & Logistics will see a short-term slowdown in leasing, but rents will hold steady. The sector will be a net beneficiary due to strong e-commerce growth and retailers diversifying their supply chains.

Strong demand endures for multifamily assets. Pressure will emerge for most property types due to job losses and resulting economic hardship.

Hotel revenue will decline by an average of 37 percent for 2020, with a recovery beginning in 2021. The impact will be greatest in gateway cities with substantial tourism and convention business. Some hotels may be converted to uses as medical and quarantine facilities.

Overall, transaction volumes for commercial real estate are declining, bidding pools are smaller, and sellers are delaying bringing assets to market.  Repricing asks have increased as have deals that have fallen out of contract.

Looking Ahead

The economic fallout across the country and in most regions of the world is and will continue to be significant, balanced by what is expected to be a strong recovery in the U.S. A global recession has likely already started, and the U.S. also is expected to endure a recession, with GDP declines in the first and second quarter. CBRE sees the U.S. economy stabilizing in the third quarter, starting to recover in the fourth, and growing at stronger rates in 2021 due to pent-up demand.

We also foresee unemployment rising to above 6 percent from 3.5 percent by mid-year, registering a loss of as much as 8 million jobs.  However, the federal stimulus package of $2 trillion or more and the associated liquidity support will prevent worst-case economic scenarios from happening and will help underpin the recovery.

While debt financing remains available, it is constrained and will remain so until stimulus programs are approved, implemented and begin to gain traction.  Government-sponsored entities (Fannie and Freddie), banks and life-insurance lenders generally have ample capital with minimum interest-rate floors or higher spreads. CMBS and debt funds are under duress; some have exited while others are repricing.

Based on the length and success of the containment activities, this outlook may change and we at CBRE continue to stay focused on the overall impact of COVID-19 on the economy and the commercial real estate industry.

CBRE is the world’s largest commercial real estate services and investment firm. Based in Philadelphia, Adam Mullen leads CBRE’s Greater Philadelphia Market. [email protected]

UPS Opening a Facility on a Keystone Opportunity Zone

The United Parcel Service (UPS) announced in February that it will build a million-square-foot warehouse facility in northeast Philadelphia. The new facility is expected to employ 1,000 and will hire 352 full-time workers by 2022.

The 138-acre site is one of the largest industrial properties in the city and is known as the former Budd Co. property. The location is also a city and state Keystone Opportunity Zone. Pennsylvania Governor Tom Wolf shared plans to provide approximately $9 million in public training and incentive funds to UPS.

This expansion is a part of a large development project to expand facilities in Philadelphia County and three other Pennsylvania counties, including a “super hub” in Harrisburg.

The overall expansion will create more than 1,700 full-time jobs and be valuable in market accessibility for businesses in the region.

The digital convenience retailer, GoPuff, has also chosen to expand operations throughout Greater Philadelphia. In late 2018, GoPuff opened a $4 million 30,000-square-foot headquarters in Philadelphia and added 10 new warehouses throughout Pennsylvania.

Coatesville, PA Aircraft Plant is Building Presidential Helicopters

Six VH-92A Presidential Helicopters will be built in Coatesville, PA as a part of a $470 million Presidential Helicopter Replacement Program.

The project was awarded to Sikorsky Aircraft Corporation, a Lockheed Martin company. Sikorsky is headquartered in Connecticut and has plants throughout the East coast.

Sikorsky entered into a contract with the U.S. Navy to build the helicopters and is expected to complete all six by the end of 2022.

This project is a major win for the local economy with early 36 percent of the project will be completed at the Coatesville plant. The helicopters will be sent to other locations throughout the country and the project will be completed in Stratford, Connecticut.

Last summer, Eastern Air Lines relocated its headquarters from North Carolina to an approximately 18,000 square-foot space in Wayne, Pennsylvania. The region continues to be chosen as the premier location for major projects and companies looking to relocate.

Young Entrepreneurs Are More Likely to Start a Business in Greater Philadelphia

Philadelphia ranked the third U.S. city for a low cost of living, an abundance of highly-skilled talent, and young entrepreneurs. Last year, Philadelphia ranked 11th on this list, a sign of major growth for our region.

LendingTree found that the average age of entrepreneurs in Philadelphia is slightly younger than 38 years old. Whereas other major U.S. cities, such as Boston (#10), New York City (#16), and Los Angeles (#40), attract entrepreneurs slightly older at 39 to 40 years old.

The study found that younger entrepreneurs are attracted to cities with a lower cost of living.

“Older entrepreneurs may have higher returns, but younger founders are willing to try new things,” said Derek Miller, a research analyst at LendingTree. “That can lead to breakthroughs and culturally defining businesses.”

In Philadelphia, the cost of living is approximately $2,700 cheaper than San Francesco, CA (#38), the Silicon Valley capital.

“There’s always a risk for an entrepreneur,” said Miller. “But when the cost of living isn’t as high, many young people are willing to take that risk.”

The world-class universities and colleges in Greater Philadelphia also create a rich talent pool of young entrepreneurs.

Last month, Drexel University announced a partnership with DXC Technology to open a new AI studio on Drexel’s campus. The partnership is expected to attract and retain top talent to the Greater Philadelphia region.

Greater Philadelphia Named the “Cradle of Cures”

Earlier this month, Amicus Therapeutics opened its new $25 million Global Research and Gene Therapy Center in West Philadelphia’s uCity Square neighborhood.

The new 75,000-square-foot facility occupies the top three floors of 3675 Market Street and features an open-space design with state-of-the-art labs and offices.

“Philadelphia is a magnet for talent in gene therapy and an engine for innovation,” said John F. Crowley, Chairman and CEO of Amicus. “This new global research center located in the ‘cradle of liberty’ will become part of the ‘cradle of cures’ as we move many gene therapy programs forward toward patients in need.”

In the next few years, Amicus expects to grow its staff to over 200 researchers.

Amicus partnered with the University of Pennsylvania in 2019 to gain exclusive global rights to develop possible treatments for 50 rare diseases in collaboration with Penn’s Next Generation Gene Therapy Technologies from the Wilson Lab. This partnership with Penn combined with its expansion in uCity Square allows Amicus to grow its research capabilities.

Amicus continues to focus on discovering, developing, and delivering medicines for people living with rare metabolic diseases. During 2019 BIO, Amicus’ President and COO, Bradley Campbell, said the company chose to operate in Philadelphia because of the innovation, entrepreneurship, and universities here.

Listen to S3 Ep01: Here Comes the Boom with REC Philly

Listen to our recent Growing Greater podcast episode with the Co-Founders of REC Philly, Will Toms and Dave Silver.

In this episode, Will and Dave explain how they came up with the idea to build this “gym for creatives” and how they see REC growing in the future.

Catch up on previous episodes of Growing Greater to hear engaging stories of economic development, innovation, health care, and more from industry leaders. We encourage you to subscribe, share, and rate Growing Greater in your favorite podcast app.

Photo credit to REC Philly