Ensemble Real Estate Investments and Mosaic Development Partners are preparing to break ground on two new biotech buildings at the Navy Yard, their first projects since being selected last year to lead an expected $2.5 billion in fresh development over 109 acres of the former barracks in South Philadelphia.

The two life-science projects ― a lab and office building and a drug-manufacturing plant ― are part of a first phase of development under the deal that Ensemble and Mosaic struck with the Philadelphia Industrial Development Corp., which manages the Navy Yard on the city’s behalf.

That initial phase is expected to involve $400 million in new construction and to include the Navy Yard’s first residential properties, the companies and PIDC said in a release on Tuesday.

“Commencement of [these] initial life sciences projects will launch the next exciting chapter of development at the Navy Yard,” said Kate McNamara, a PIDC vice president. They “will bring high-quality jobs to the Navy Yard, support growing companies in the advanced life-sciences sector, and contribute to development of this dynamic campus.”

Ensemble developed the Navy Yard’s Marriott hotel and later acquired several other buildings there — including the headquarters of FS Investments and WuXi AppTec.’s biotech-manufacturing lab — from the tract’s previous main developer, Liberty Property Trust.

Ensemble is now the largest private property owner at the former base, with 10 buildings there under its ownership.

Mosaic has led projects in Philadelphia neighborhood involving $120 million in investment since 2012, including the Eastern Lofts apartments in Brewerytown.

The Navy Yard, which employed 40,000 at its peak, came under city ownership in 2000 after the U.S. Defense Department decommissioned the site as a military base.

Under PIDC’s watch, Liberty Property Trust turned a centrally located 80-acre section of the former barracks into what is known as the Corporate Center, a collection of contemporary buildings — some by renowned architects — comprising 800,000 square feet of office and lab space.

When Liberty decided in 2018 to cease work on office projects such as those at the Navy Yard, nearly all of the Corporate Center’s development parcels had been built on or spoken for, setting the stage for the next phases of work at the 1,200-acre South Philadelphia tract.

Ensemble and Mosaic were selected by PIDC in July to lead that work.

The team’s first new building is to be a three-story, 100,000-square-foot lab and office building that would rise at 1201 Normandy Place, near the Corporate Center Development, Ensemble and Mosaic said Tuesday.

It will be built as a “speculative” project, meaning that work will begin without having tenants lined up for the space, and is expected to be completed before the end of next year, the companies said.

Ensemble and Mosaic will also soon begin marketing another nearby property, at 333 Rouse Blvd., as a development site for life-science companies seeking a custom-built drug-manufacturing plant, the developers said.

That property can accommodate a facility of up to 120,000 square feet, they said.

Future tenants of the planned buildings also may be eligible for breaks on some city and state taxes through the Navy Yard’s designation as a Keystone Opportunity Zone if they create enough jobs or invest enough money there.

One South Broad St., a 464,000-square-foot building, is the latest Philadelphia office property to enter the life sciences fray.

Aion Partners of New York, which owns the 26-story building, is marketing 108,418 square feet over floors three through eight as space that can be converted into labs. The six contiguous floors were vacated last year by Wells Fargo, which relocated to Two Logan Square.

Landlords in Philadelphia and its suburbs are sensing an opportunity in the region’s growing life sciences sector and looking to convert vacant office space into lab space. About 1 million square feet or more of these tenants are being tracked in the Philadelphia market.

Examples of buildings in Philadelphia that are in the midst of a conversion or are being considered for labs include converting several floors in Cira Centre, turning some space in the Curtis into labs, and evaluating whether to transform several floors in the Wanamaker.

Not every building is a candidate for conversion and there are several minimum requirements that allow for space to be adapted into labs. For example, ceilings need to be at least 15 feet high to house mechanical duct work. Floor load, or the amount of weight it can handle, is important for lab equipment. Mechanical systems, ventilation, electrical power redundancies and vibration mitigation are also crucial to accommodate lab space.

Life sciences companies tend to gravitate to locations that are already hubs of research and educational institutions such as University City, though that doesn’t mean Center City or suburban locations aren’t conducive for these firms.

A study of the space at One South Broad was conducted to ascertain whether lab space would work in the building, which was constructed in 1932 by John Wanamaker during the Great Depression for his men’s department store.

The ceiling height in the building ranges from 16 feet to 20 feet, which provides enough room for mechanicals necessary for lab space. Old elevator shafts can be used for air circulation and exhaust.

Rents on the space will run in the mid-$40s a square foot.

Aion Partners bought One South Broad in 2014 for $68 million. At the time, it was 88% occupied with Wells Fargo as its anchor tenant, leasing 33% of the property until 2020.

*Article courtesy of Philadelphia Business Journal

For more information about Philadelphia office space for sale or lease in Philadelphia or about any other Philadelphia properties for sale or lease, please contact WCRE at 215-799-6900.

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Please visit our websites for a full listing of Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Shorenstein Properties has tapped into the commercial mortgage-backed securities market to refinance its 1818 Market St. Class A office building in downtown Philadelphia, according to analysis of the loan being rolled into a new offering likely to come to market next week.

Barclays Capital Real Estate provided a two-year, floating-rate, interest-only loan totaling $222.9 million, according to S&P Global Ratings. The loan has three 12-month extension options. Barclays has contributed the loan to a CMBS deal, BSST 2021-1818.

Shorenstein officials did not immediately respond to requests for comment from CoStar News.

The loan is secured by the 37-story, 999,828-square-foot multitenant building.

Shorenstein purchased the property in April 2015 for $184.75 million, or about $188 per square foot, according to CoStar data. Bank of America had provided $174 million in acquisition financing.

Since that deal, Shorenstein has spent $94 million through last month on renovations, tenant improvements and leasing costs, according to S&P Global. The property was appraised at $282.1 million for the purposes of the refinancing.

The refinancing returned about $44 million in equity to Shorenstein, S&P Global said.

The largest tenant in the property is WSFS Financial, after which the building is named, which occupies 96,800 square feet in a lease that runs through 2028. WSFS, which has it headquarters in Wilmington, Delaware, took over the space in its March 2019 purchase of Beneficial Bancorp, for which the building was previously named.

In its CMBS presale analysis, S&P Global said it believes there remains high, but moderating, uncertainty about the evolution of the coronavirus pandemic and its economic effects.

Shorenstein is facing at least one other major loan maturity this year. It has a $350 million CMBS loan coming due in November on its 1.1 million-square-foot 1407 Broadway office building in New York.

*Article courtesy of CoStar

For more information about Philadelphia office space for sale or lease in Philadelphia or about any other Philadelphia properties for sale or lease, please contact WCRE at 215-799-6900.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate broker that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Please visit our websites for a full listing of Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.