2013 Greater Philadelphia Year-End Office Market Report and Outlook

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1 2013 Greater Philadelphia Year-End Office Market Report and Outlook

2 EXECUTIVE SUMMARY $ % $30.00 $25.00 $ % 15.00% $15.00 $10.00 $ % 5.00% $0.00 Market Street West Market Street East South Broad Street Independence Mall University City Radnor Main Line Conshohocken Malvern Exton West Chester Norristown Valley Forge Bala Cynwyd King of Prussia Fort Washington Springhouse Delaware County Lower Bucks County Horsham Willow Grove Plymouth Meeting Blue Bell 0.00% PHILADELPHIA 2013 Significant Lease Transactions Independence Blue Cross 800,694 SF 1901 Market Street Renewal FMC Corporation 253,000 SF Cira Centre South New PricewaterhouseCoopers 125,000 SF Two Commerce Square Renewal University of Pennsylvania 100,000 SF - Cira Centre South - New Franklin Square Capital Partners 80,050 SF 201 Rouse Blvd. Build-to-Suit Ewing Cole 77,602 SF 150 N. 6th Street - Renewal SUBURBAN PHILADELPHIA 2013 Significant Lease Transactions Honeywell International 80,000 SF 500 Virginia Drive, Fort Washington - Renewal Teva Pharmaceuticals 70,290 SF 425 Privet Road, Horsham Renewal URS 70,110 SF 625 W. Ridge Pike, Conshohocken - New Accenture 49,852 SF 1160 W. Swedesford Road, King of Prussia - New Major Tenants in the Market Philadelphia Housing Authority 300,000 SF Bank of New York Mellon 125,000 SF Hill International 70,000 SF Pond Lehocky Stern Giordano* - 60,000 SF EisnerAmper* - 50,000 SF * Represented by SSH Real Estate Major Tenants in the Market Saint Gobain 200,000 SF Rovi 70,000 SF emoney 70,000 SF MedRisk 60,000 to 80,000 SF Office Building Sales One and Two Commerce Square 1,890,000 SF, sold for $331 million or $175 per SF 1500 Spring Garden 1,080,550 SF, sold for $184.5 million or $170 per SF 100 Independence Mall West 390,000 SF, sold for $40.4 million or $103 per SF 1619 Walnut Street 39,305 SF, sold for $18 million or $456 per SF Office Building Sales Mack-Cali Portfolio 1,663,511 SF, sold for $233 million or $140 per SF 1005 Virginia Drive, Fort Washington 88,000 SF, sold for $13.4 million or $152 per SF Valley Square Office Park, Blue Bell 294,000 SF, sold for $8.5 million or $28 per SF 960 Harvest Drive, Blue Bell 129,430 SF, sold for $4.1 million or $32 per SF 1

3 PHILADELPHIA 2

4 OUTLOOK s Rents throughout the Philadelphia Central Business District have remained stable, with the exception of trophy buildings, which have seen increases. We expect Class B rates to continue to edge upward as supply continues to decrease. Vacancy Vacancy rates throughout the CBD have decreased during We expect office vacancy to continue to gradually decrease in Large Blocks of Space Tenants looking for over 50,000 square feet of contiguous space are faced with a relatively limited supply. There are only 11 spaces between 50,000 and 100,000 square feet currently available. Only 6 contiguous blocks of space greater than 100,000 square feet are available. BNY Mellon Center will see large blocks of space become available as FMC Corporation and Sunoco have announced they will be vacating the trophy asset in Investment Sales The Philadelphia investment sales market continues to see significant interest from investors. Investors are seeking both stabilized and valueadd office and multi-family opportunities. With the acquisition of One and Two Commerce Square, Brandywine Realty Trust has confirmed their status as the Center City s largest office landlord. In recent years, Brandywine has made a strategic decision to increase their market share in urban centers like Philadelphia. Although not up to pre-recession pricing, One and Two Commerce Square, as well as 1500 Spring Garden traded for over $175 and $170 per SF, respectively. In a value-add transaction, 100 Independence Mall sold to a partnership comprised of Keystone Property Group, Mack-Cali Realty Corp., and Parkway Corp. for $103 per SF. The partnership also committed to $20 million worth of capital investment to add a lower level parking garage, upgrade common areas, and fund tenant improvement and base building work associated with the 135,715 SF GSA lease. Investment sales volume of CBD office product totaled approximately 4.5 million square feet with prices ranging from $81 per SF to $175 per SF. Investor demand for multifamily product remained active in This was highlighted by the $120 million sale of The Granary to Lowe Enterprises of Los Angeles. This marked Lowe s first purchase in Philadelphia. The Granary totals 229 apartment units, 20,000 SF of street level retail and parking. At approximately $524,000 per unit including the retail and parking, the sale has set the market with the highest per unit price in Philadelphia to date. CENTRAL BUSINESS DISTRICT STATISTICS Class A Class B & C Total Square Feet 27,832,496 16,725,607 44,558,103 Buildings Mid-Year 2013 $28.65 $21.92 $25.96 Year-End 2013 $28.53 $22.04 $26.09 Mid-Year % 11.50% 11.05% Year-End % 10.90% 10.46% NEW OFFICE DEVELOPMENT BREAKING NEWS Liberty Property Trust and Comcast Corp. have announced plans to construct a 59-story, 1.5 million square foot tower at 18th and Arch Street. The building will consist of approximately 1.28 million square feet of office space. A 220-room Four Seasons Hotel will be located in the upper 14 stories of the building. Liberty has set the end of 2017 as its target completion date. The construction is expected to create over 20,000 temporary jobs. Comcast also plans on relocating permanent jobs form other locations. Other Developments New office development continues to be focused in University City and The Navy Yard. Construction is progressing on 3737 Market Street with delivery targeted for the second quarter of After the opening of 2.0 University Place, the developers have released plans to develop 3.0 University Place which will be 180,000 SF. Liberty Property Trust will begin construction shortly on an 80,050 square foot, build-to-suit project at the Navy Yard, for Franklin Square Capital Partners who will occupy the entire building. After signing a 253,000 SF lease with FMC Corporation, Brandywine Realty Trust announced they will be moving forward with FMC Tower at Cira Centre South, a 47-story 830,000 square foot, mixed-use building located at 30th and Walnut Streets. The tower will consist of 575,000 SF of office space, 10,000 SF of retail, and 260 apartment units. Along with FMC, the University of Pennsylvania will lease 100,000 SF. Completion is expected in the summer of The statistical analysis in this report has been conducted using information from CoStar, the largest and most comprehensive database of commercial real estate information and SSH s own propriety research. 3

5 MULTIFAMILY ACTIVITY SSH is currently tracking 22 new apartment projects in various stages of development. If all are completed, these projects could add over 4,400 new units over the next few years. Center City saw approximately 1,100 apartment units come to market in The 229 unit Granary was delivered in October and was immediately sold for $120 million. Upon the sale, approximately 50% of the apartments were leased with rents for 1-bedrooms starting at $1,795 and 2-bedrooms starting at $2,295. The apartment complex at 20th and Callowhill Streets is located in the Logan Square neighborhood. Development in Logan Square seems to be gaining momentum. In October, developer Neal Rodin received final approvals to construct Rodin Square, a 293 unit apartment building on the site of the Best Western Hotel at 21st and Hamilton Streets. Whole Foods will also relocate to the site occupying 55,000 SF. In addition to The Granary, Post Brothers has completed the Goldtex Apartments at 315 North 12 Street. The 163-unit building was 25% pre-leased. Several projects look to be nearing commencement: 2021 Chestnut, 1128 Chestnut, and 1919 Market Street could all be starting construction in the coming months. These projects total 473 apartment units. Construction continues on SouthStar Lofts, Dranoff Properties 85 unit project at Broad and South Streets, which is slated to open during the 2nd Quarter of Progress is also continuing on PMC s 234 unit project at 1900 Arch Street, which is expected to be completed during the 3rd Quarter of Despite the new inventory, the multifamily market is expected to remain relatively strong through 2014 and The Granary 4

6 Three Logan Square MARKET STREET WEST Class A Class B & C Total Square Feet 21,564,628 6,872,100 28,436,728 Buildings Mid-Year 2013 $29.04 $23.10 $27.65 Year-End 2013 $29.21 $22.19 $27.51 Mid-Year % 10.27% 11.88% Year-End % 9.62% 11.16% Mellon Bank Center Two major tenants, FMC Corporation and Sunoco Inc., will be leaving the Mellon Bank Center located at 1735 Market Street. Both tenants are expected to vacate in FMC will be relocating to Cira Centre South and Sunoco will be moving to a new 200,000 SF building in Newtown Square. Brandywine Realty Trust purchased One and Two Commerce Square for $331.8 million or $175 per square foot. In 2010, Brandywine Realty Trust had acquired a 25% limited partnership in the two buildings. Independence Blue Cross renewed its lease for the entire building at 1901 Market Street. The insurance company will remain there until Comcast took an additional 60,497 square feet at Three Logan Square. This latest expansion brings Comcast s occupancy near 200,000 SF at Three Logan Square. Axalta Coating Systems has relocated their global headquarters from Wilmington, DE to Market West. Axalta signed a 36,436 SF lease at Two Commerce Square. This will bring approximately 100 jobs to Center City. PricewaterhouseCoopers renewed their lease at Two Commerce Square. They signed a 125,000 SF lease to stay at the trophy tower. Grant Thornton consolidated and relocated within Two Commerce Square. The accounting firm has signed a 33,572 square foot lease. The Radian Group has signed a lease for 25,442 SF at Centre Square East. This lease brings the building near 100% occupancy. Five Below has expanded by approximately 24,000 SF at 1818 Market Street. This expansion brings their total space to approximately 60,000 SF. 5

7 325 Chestnut Street MARKET STREET EAST INDEPENDENCE MALL Class A Class B & C Total Class A Class B & C Total Square Feet 2,743,138 3,531,773 6,274,911 Buildings Square Feet 3,524,730 3,325,924 6,850,654 Buildings Mid-Year 2013 $27.03 $21.42 $23.02 Year-End 2013 $25.28 $21.76 $23.30 Mid-Year 2013 $27.18 $21.41 $24.47 Year-End 2013 $26.87 $21.38 $24.20 Mid-Year % 15.46% 11.74% Year-End % 17.10% 11.45% Mid-Year % 13.87% 10.15% Year-End % 13.48% 9.63% The Family Courts are scheduled to vacate approximately 160,000 SF of space at 34 South 11th Street and 1101 Chestnut Street when they relocate to their new 670,000 SF facility located at the northwest corner of 15th and Arch Streets in the summer of Chestnut retained two large non-profit tenants. Joseph J. Peter s Institute renewed for 16,936 SF and Mental Health Association of Southeastern Pennsylvania for 25,875 SF. Expect to see a significant development announcement for the Girard Square block. A partnership between Keystone Property Group, Mack-Cali Realty Group, and Parkway Corp. has purchased 100 building Independence Mall West for $115 per square foot. The partnership plans on upgrading the building s common areas, as well as adding a 110-stall parking garage. Ewing Cole has renewed its lease at 100 N. 6th Street for 77,602 SF. BDP International renewed their lease for 58,983 SF at Penn Mutual Towers. Publishing company, Taylor & Francis has signed a new lease at Penn Mutual Towers for 28,358 SF. They will be relocating from 325 Chestnut Street. Penn Mutual Towers Philadelphia Legal Assistance will be relocating to 15,989 SF at the Cast Iron Building at 718 Arch Street from 42 S. 15th Street in the Market West submarket. 6

8 Circa Centre South Rendering 3737 Market Street Rendering SOUTH BROAD STREET UNIVERSITY CITY All Classes Class A Class B & C Total Square Feet 2,995,810 Buildings 9 Square Feet 2,190, ,591 3,075,707 Buildings All Classes Mid-Year 2013 $22.04 Year-End 2013 $22.75 Mid-Year 2013 $37.96 $23.24 $32.47 Year-End 2013 $37.96 $25.61 $34.40 All Classes Mid-Year % Year-End % The 1199C Training & Upgrading Fund renewed its 32,617 SF lease at the Land Title Building, 100 S. Broad Street. The 27,000 SF Walgreens Pharmacy opened at the northeastern corner of Broad and Chestnut Streets at the end of July. Robinson Luggage has gone out of business leaving the storefront at the southeastern corner of Broad and Walnut Streets vacant. Leasing activity on this space is brisk. Mid-Year % 6.37% 5.59% Year-End % 4.05% 4.66% Brandywine Realty Trust is constructing two new towers at Cira Centre South. Evo at Cira Centre South will be a 33-story, 850-bed student housing complex. It is expected to open in the fall of A 47-story, 830,000 SF mixed-use tower will also be constructed. The FMC Tower at Cira Centre South will be the new headquarters of FMC Corporation. Global business accelerator, DreamIt Ventures, will grow to 17,500 SF when it relocates to 3401 Market Street. Dranoff Properties in partnership with SBE Entertainment Group, is planning to build a 47-story mixed-use luxury boutique hotel and condominium tower at the southwest corner of Broad and Spruce Streets. Post Brothers continues to work on the conversion of 260 South Broad Street. Nearly all of the office tenants have relocated. PMHCC, the buildings largest tenant will relocate to Centre Square in the spring of RJ Metrics has signed a lease to relocate from 1315 Walnut Street to the Widener Building. The ecommerce analytics firm is expanding to 12,875 SF from approximately 3,700 SF. Construction continues on 3737 Market Street at the Science Center. Completion is expected to occur in the second quarter of New development fueled by ed s and med s continues in University City with the ground breaking of 38Chestnut and Drexel University s Lancaster Hall. 38Chestnut will be a 25-story, 280 market-rate apartments, as well as, 30,000 SF of commercial space which will include new offices for the Philadelphia Episcopal Cathedral and Diocese, a childcare center and community center. Drexel University broke ground on Lancaster Hall, located at 3400 Lancaster Avenue. The 24-story tower will contain 1,351 student beds, 89 parking spaces, and 19,000 SF of retail space. 7

9 NAVY YARD Liberty Property Trust & Synterra Partners has broken ground on a new 80,050 SF built-to-suit office building for Franklin Square Capital Partners. Franklin Square will be moving their headquarters to the thriving Navy Yard from Cira Centre. The new building, which broke ground in October, will be a Class A, energy efficient building with LEED Gold Certification. Iroko Pharmaceuticals recently moved in to their new build-to-suit 56,412 SF office building at the Navy Yard. The project started in 2011, when Iroko, Liberty Property Trust and Synterra partnered to build Iroko s new global headquarters. Iroko has almost tripled the size of their workforce and is currently doing business in more than 48 countries. users. The Navy Yard is a 1,200 office campus with office, industrial, manufacturing and development space. It has become an economic engine for the City of Philadelphia. The new Courtyard Marriott Hotel opened in early January This is the first hotel to be constructed at the Navy Yard. Marc Vetri has announced a new restaurant at the Navy Yard. It will be called The Brig. The restaurant is expected to open in the Spring of Vetri, will be moving his offices to the Navy Yard as well. Mayor Nutter and Philadelphia Industrial Development Corporation (PIDC) have announced that employment at the Navy Yard has reached over 10,000 workers. This milestone for Navy Yard solidifies the South Philadelphia office campus as a destination for office 8

10 SUBURBAN PHILADELPHIA 9

11 335 Commerce OUTLOOK s The tight Class A market has resulted in a slight increase in Class A rents from Mid-Year. Rents for Class B buildings decreased slightly. Vacancy The overall vacancy rate in the suburban market has remained around 13.50%. Leasing Velocity Activity continues to increase gradually as the economy improves. Expect this trend to continue through Investment Sales From 2008 to 2012, it seemed that any suburban asset that changed hands was either a distressed sale or a fully-leased, diamond-studded trophy. However, that trend started to change in 2013 as investors started to show some appetite for leasing risk, and were willing to pay better-than-distressed pricing for assets in good locations. And by and large, the greatest supply of these assets came from several of the largest REITs operating in Philadelphia, as they continued their strategies of rotating out of non-core suburban office and into other asset classes. In the best sign of all for the suburban markets, demand for these assets came from local owner/operators who are still bullish on the long term prospects for the suburbs. Keystone Property Group of Bala Cynwyd purchased 1.6 million square feet of office space for approximatley $233 million from Mach-Cali Realty. These assets were located in multiple business parks in the Northern and Western suburbs. This equates to approximately $140 per SF. SUBURBAN PHILADELPHIA Overall Statistics 43,110,136 33,602,224 76,712,360 Buildings Mid-Year 2013 $24.26 $18.88 $21.97 Year-End 2013 $24.70 $18.68 $22.06 Mid-Year % 14.38% 13.46% Year-End % 13.57% 13.54% New Development Owners continue to redevelop older, vacant Class B buildings into Class A space. COPT is slated to begin the redevelopment of the former Merck building at 785 Jolly Road in Blue Bell. The Maryland based REIT will redevelop the building into 200,000 SF of Class A office space. A partnership between local company Somerset Properties and Greenfield Partners purchased a five building portfolio totaling just under 1 million SF from Liberty Property Trust. The buildings were all located in the Fort Washington submarket. Endurance Real Estate Group, another local owner of office and industrial properties purchased 960 Harvest Drive in Blue Bell for $32 per square foot. Endurance is planning significant renovations to the 129,430 SF portfolio. 10

12 RADNOR MAIN LINE 2,681,501 1,667,055 4,348,556 Buildings CONSHOHOCKEN 3,464, ,035 4,304,770 Buildings Mid-Year 2013 $30.41 $20.56 $26.58 Year-End 2013 $31.57 $20.50 $27.14 Mid-Year 2013 $28.65 $22.84 $27.49 Year-End 2013 $28.32 $23.55 $27.39 Mid-Year % 7.0% 6.1% Year-End % 6.5% 6.6% Mid-Year % 2.50% 8.26% Year-End % 2.70% 11.39% Freedom Pay signed a short-term renewal for 12,000 SF at 5 Radnor Corporate Center. 240 Radnor-Chester Road was sold for $26 million or $260 per square foot. The 100,462 SF building is fully occupied by Main Line Health. The building houses corporate offices and Home Care Network. CenterSquare Investment Management, formerly Urdang Capital Management, will relocate to 555 E. Lancaster Avenue. The real estate investment firm signed a 25,000 SF lease at the building. The Investment Fund for Foundations will relocate to 19,000 SF at 170 Radnor-Chester Road. The firm will move from the Conshohocken submarket. URS will be relocating to 625 W. Ridge Pike in Conshohocken. They will be occupying approximately 70,000 SF. Reimbursement Technologies has expanded by 10,000 SF at 1000 River Road. Law firm Heckscher, Teillon, Terrill & Sager will remain at 100 Four Falls after renewing for 13,717 SF. GMH Mortgage Services signed a new lease for 20,000 SF at 625 W. Ridge Pike. Keystone Property Group received approval from the Conshohocken Borough Council to proceed with a $200 million redevelopment plan in the Borough. The proposed plan includes an 18-story, 200-key hotel at Fayette and Elm Streets, an 8-story parking garage, and a new 16-story, 200,000 SF office building at the intersection of First Avenue and Fayette Street. 555 E. Lancaster Avenue 1000 River Road 11

13 100 Arrandale Drive 1 Country View Road Rendering MALVERN EXTON WEST CHESTER Endo Health Solutions has announced they will sublease 150,000 SF of its newly constructed 300,000 SF, two building complex. 7,527,321 4,850,793 12,378,114 Buildings Mid-Year 2013 $21.98 $19.94 $21.21 Year-End 2013 $22.34 $20.75 $21.72 Mid-Year % 18.20% 14.23% Year-End % 16.30% 13.20% 100 Arrandale Drive was acquired by American Service Corp. for $3.49 million or $100 per square foot. The 34,931 SF building was purchased from Brandywine Realty Trust. NuPathe will relocate from Conshohocken to 7 Great Valley Parkway in Malvern. The neuroscience company has leased 13,260 SF and will have the ability to expand to 21,000 SF. Factory Mutual Insurance has signed a 22,905 SF lease at 1 Country View Road at the Great Valley Corporate Center. The 32,240 SF building is currently being renovated by Liberty Property Trust. IMX Medical Management Services has purchased 1700 Paoli Pike in West Chester from Brandywine Realty Trust for $2.675 million or $88 per square foot. IMX will occupy the entire 30,406 SF building. 12

14 NORRISTOWN VALLEY FORGE BALA CYNWYD 2,445,571 1,966,795 4,412,366 Buildings ,255, ,156 2,917,620 Buildings Mid-Year 2013 $20.94 $16.96 $19.20 Year-End 2013 $21.67 $16.24 $19.25 Mid-Year 2013 $28.82 $27.27 $28.47 Year-End 2013 $28.78 $27.33 $28.45 Mid-Year % 6.80% 8.93% Year-End % 8.30% 9.24% Mid-Year % 11.40% 13.10% Year-End % 9.80% 11.89% Wentworth Property Management Corporation has renewed their lease for the entire 15,530 SF building at 901 S. Trooper Road in Norristown. 150 Monument Road was part of the 1.6 million square foot portfolio that Keystone Property Group purchased from Mack-Cali Realty. The Class A asset totals 125,783 SF and was purchased for approximately $167 per Square Foot. 901 S. Trooper Road 150 Monument Road 13

15 Crosspoint at Valley Forge KING OF PRUSSIA FORT WASHINGTON SPRINGHOUSE 8,195,857 4,155,946 12,351,803 Buildings ,258,726 2,745,691 4,004,417 Buildings Mid-Year 2013 $23.73 $18.96 $22.10 Year-End 2013 $25.44 $18.48 $23.10 Mid-Year 2013 $22.47 $18.63 $20.40 Year-End 2013 $23.60 $16.72 $18.88 Mid-Year % 19.60% 14.66% Year-End % 17.60% 14.48% Mid-Year % 21.50% 16.06% Year-End % 20.20% 18.41% MIM Hayden and The Davis Companies are nearing completion of the redevelopment of Crosspoint at Valley Forge. The 272,000 SF office complex located at 530 and 580 E. Swedesford Road is 1006 W. 9th Ave approximately 50% leased. The complex will become the new headquarters for Teleflex when it opens in the first quarter of The Philadelphia Group will relocate to 10,000 SF at 150 Swedesford Road. RedGo Development is planning to undertake exterior upgrades to the Continental Business Center in King of Prussia. The 5-building, 105,000 SF complex is located at 1006 W. 9th Avenue. A Maryland developer, JBG Rosenfeld, has purchased 20 acres Kulicke & Soffa s 88,000 SF headquarters building at 1005 Virginia Drive in Fort Washington was sold for $13.4 million. The building was purchased by an affiliate of American Realty Capital. In a joint venture partnership, Somerset Properties and Greenfield Partners have acquired 5 office buildings in Fort Washington totaling 996,874 SF from Liberty Property Trust. The buildings include: 1100 Virginia Drive 1250 Virginia Drive 275 Commerce Drive 335 Commerce Drive 420 Delaware Drive Intercontinental Development purchased 580, 1015, and 1035 Virginia Drive in Fort Washington. The three buildings total 95,752 SF. of land next to the Wegman s in King of Prussia. The developer plans on building a 200,000 SF life-style center Virginia Drive 100 Brandywine Blvd. 14

16 1 International Plaza 100 Brandywine Blvd. DELAWARE COUNTY LOWER BUCKS COUNTY 4,376,733 3,953,668 8,330,401 Buildings ,465,544 4,558,737 8,024,281 Buildings Mid-Year 2013 $24.31 $18.06 $21.37 Year-End 2013 $24.26 $18.36 $21.46 Mid-Year 2013 $25.65 $17.23 $21.08 Year-End 2013 $25.19 $17.57 $20.86 Mid-Year % 15.53% 11.53% Year-End % 13.50% 10.51% Mid-Year % 15.30% 19.23% Year-End % 16.00% 18.07% Sunoco has announced they will consolidate and relocate their corporate headquarters to 3801 West Chester Pike and 3801 West Chester Pike on the Ellis Preserve in Newtown Square in early They will relocate approximately 120 employees from Center City and 340 employees from Tinicum Township into a 200,000 SF property. Sunoco purchased the property in December Sunoco plans on converting these two buildings into one structure. ACI Technologies will remain at 1 International Plaza in Tinicum. They have renewed their lease for approximately 26,000 SF. Coldwell Banker Hearthside, will consolidate several offices into a 17,000 SF headquarters located at 100 Brandywine Boulevard in Newtown. Magellan Behavioral Health of Pennsylvania has renewed its lease at 105 Terry Drive, Newtown for approximately 15,000 SF. In Yardley, MedErgy Health Group has renewed its lease for 14,170 SF at 790 Township Line Road. 15

17 HORSHAM WILLOW GROVE PLYMOUTH MEETING BLUE BELL 3,892,789 5,081,906 8,974,695 Buildings ,545,551 3,121,442 6,666,993 Buildings Mid-Year 2013 $21.27 $18.28 $19.57 Year-End 2013 $21.20 $18.10 $19.40 Mid-Year 2013 $23.39 $18.93 $21.28 Year-End 2013 $23.40 $17.83 $20.79 Mid-Year % 16.40% 11.38% Year-End % 14.80% 10.81% Mid-Year % 17.80% 18.48% Year-End % 18.40% 19.09% AAMCO Transmissions has renewed their 27,000 SF lease for its headquarters office at 201 Gibraltar Road in Horsham. Astea International has renewed a 14,000 SF lease at 240 Gibraltar Road. epharma Solutions will relocate their headquarters to 1 IMS Drive in Plymouth Meeting. The firm will occupy 25,000 SF. Corvest Realty Group has purchased Valley Square Office Park in Blue Bell. The 5-building 294,000 SF complex was acquired for $8.5 million or approximately $28 per SF. Corvest has announced they the complex will undergo $10 million of capital improvements. Preservation Realty Capital, LLC purchased 1710 and 1730 Walton Road in Blue Bell. The 47,137 SF complex was purchased from Toll Brothers Commercial. Endurance Real Estate Group has purchased 960 Harvest Drive in Blue Bell. The 3-building portfolio totals 129,430 SF traded for $4.1 million or approximately $32 per SF. The portfolio had significant vacancy at the time of the sale. 240 Gibraltar Road 1730 Walton Road 16

18 COMPANY NEWS New Assignments EisnerAmper, a professional service and accounting firm, has hired Jeff Seligsohn and Doug Newbert to represent the firm in their upcoming 50,000 SF office requirement. SSH Happenings In October, SSH participated in the Philadelphia International Dragon Boat Festival for the second consecutive year. In an exciting photo finish, the SSH team finished in second place in their division. Doug Newbert and Brennan Votel have been awarding the leasing assignment for 1710 and 1730 Walton Road. The two building portfolio totaling 47,137 SF was sold by SSH s Investment Services Division in July. Recent SSH Transactions Doug Newbert represented I & I Sling on their purchase of a 40,000 SF flex building in Aston, PA Jeff Seligsohn and Eric Muller completed a 26,777 SF lease with JEVS Human Services at 112 North Broad Street. SSH represented the owner of 1211 Chestnut by two lease renewals, a 16,936 SF renewal of JJPI and a 25,875 SF renewal of Mental Health Association. SSH Real Estate Represented Children s Crisis Treatment Center in the lease of 10,000 SF at 425 W. Lehigh Street. Led by Peter Shrier, SSH employees donated and delivered gifts and toys to children at the Children s Crisis Treatment Center (CCTC). Property Management News The Building Owners and Managers Association of Philadelphia awarded 123 S. Broad Street the TOBY (The Outstanding Building of the Year) award in the Historical Building Class. This prestigious award recognizes building management and operations. The award is one of the most admired distinctions given in the commercial real estate industry. SSH has been awarded the management assignment for a 47,137 SF office portfolio at 1710 and 1730 Walton Road in Blue Bell. For information on our property management services, please contact Phil Rosen at New Hire Julie Forman has joined the SSH team as Graphics/Marketing Associate. Julie will be responsible for implementing SSH s marketing strategy as well as producing marketing materials. Investment News SSH s Investment Services Division focused on selling investment real estate in the Mid-Atlantic region on behalf of third party clients. Below is a sample of the opportunities the investment team has listed for sale: Anniversaries: Peter Shrier 10 Years Judy Simon 15 Years Iris Rosen 15 Years Country Club Apartments Currently a 43-bed student housing project serving The College of New Jersey in Ewing, New Jersey, the complex has the potential for redevelopment into a 40-unit market rate apartment building. Approved multifamily/senior land near Bucknell University This offering consists of 10-acres of land within the master-planned development of Penn House Commons in Lewisburg, PA. The site is fully approved for over 200 residential units and is within walking distance to Bucknell University. Temple University Tyler School of Art (Under Agreement) Located in Elkins Park, Pennsylvania, this former college campus totals 12.7 acres with over 160,000 SF of existing building area. For more information on SSH s Investment Services Division please call Dan Mayock at (267) or Adam Gillespie at (215)

19 SSH REAL ESTATE SERVICES In 2012, SSH Real Estate celebrated 60 years of service to Greater Philadelphia. Through hard work and an entrepreneurial spirit, we ve grown to become one of the largest full-service commercia l real estate firms in the region. The only one with our size and scope of experience in brokerage, property management and investments. Knowing the market as we do, we believe the best real estate advisors are those who work in all aspects of the business, with an understanding of all interests involved. Our 360-degree perspective gives our clients an edge in an increasingly complex market. Our 75 professionals, experienced in all facets of the business brokerage, management, finance, and construction - provide clients with outstanding results in the full complement of commercial real estate services: Tenant Representation SSH Real Estate s 25 brokers provide strategic tenant representation to clients in the Philadelphia area and throughout the country. With an average of 20 years experience, our brokers draw on extensive knowledge, resources and expertise to provide each client with exceptional service and results. Investment Services SSH s Investment Services Division focuses on investment property sales in the Philadelphia region. Our team has represented owners in the sale of over 24 million square feet of income-producing real estate worth more than $2 billion. We also provide capital market services for incomeproducing real estate including multi-housing, industrial, office, retail, as well as developable land sites. Non-Profit Services SSH has cultivated an expertise in working with non-profit organizations to ensure that their real estate choices are financially sound and meet the specific needs of their constituents. Clients include associations; educational, health, social service, religious, legal, arts and cultural organizations. Landlord Representation Representing approximately 2 million square feet of office space in Philadelphia and more than 1.1 million square feet in the suburban market, SSH is a recognized leader in landlord representation. Our buildings consistently retain high occupancy due to aggressive and creative marketing. Property Management SSH manages approximately 6 million square feet of office space in the Greater Philadelphia region. As property owners ourselves, we manage our clients assets as we do our own. Our highly experienced staff uses innovative approaches to maximize our clients cash flow, while maintaining the highest quality service to our tenants. Construction Management SSH performs construction management for core and shell capital improvement projects, and new tenant improvement fit-outs. Receivership Services As an appointed receiver, SSH provides services to banks, loan services and financial institutions in need of help managing defaulted real estate assets for all commercial property types. CENTER CITY OFFICE 123 South Broad Street 8th Floor Philadelphia, PA T (215) F (215) Jeffrey R. Seligsohn, SIOR, Partner (215) Peter C. Soens, Partner (215) SUBURBAN OFFICE Two Radnor Corporate Center 100 Matsonford Road, Suite 107 Radnor, PA T (610) F (610) Doug Newbert, Partner (610) ext. 100