CoStar compiles news of corporate expansions, relocations, extensions, closures, layoffs, lease cancellations and mergers in the weekly Lease Up/Lease Down news report, a concise read keeping you updated on major corporate moves affecting commercial real estate, and can also be a valuable source for business leads.
In this week's issue:
Hummer winds down
Peerless Industries consolidates in Illinois
Capmark Financial rejects more leases
Closures & Layoffs
Hummer: Stalling Out for Good?
Last week, General Motors said that it was unable to complete a deal with Chinese road equipment company Sichuan Tengzhong Heavy Industrial Machines Co. to sell its ailing Hummer line. As a result, the wind-down of production for America's most famous "gas guzzler" now looms, possibly costing about 3,000 employees their jobs.
Tengzhong was unable to gain the support of Chinese government, which has been making an effort to promote fuel-efficient vehicles. Tengzhong was also unable to obtain financing for the $150 million acquisition from Chinese banks,
The New York Times reported.
"One year ago, General Motors announced that we were going to divest Hummer, as part of focusing our efforts on Chevrolet, Buick, GMC and Cadillac going forward," said John F. Smith, vice president of corporate planning and alliances at GM. "We have since considered a number of possibilities for Hummer along the way, and we are disappointed that the deal with Tengzhong could not be completed."
Among the probable closures is the GM plant in Shreveport, LA, which produces the Hummer H3. However, that facility also produces Chevy and GMC vehicles, so it is possible that jobs could be retained. But the fact that the factory was already scheduled to close in 2012 doesn't bode well.
Another likely casualty is the Hummer H2 Assembly Plant in Mishawaka, IN. Located next to government contractor AM General's HMMWV Assembly Plant (the plant where the civilian Hummer line was born), the facility totals 673,000 square feet. It has already been temporarily closed since December, while GM was attempting to iron out the Tengzhong deal.
Fortunately, AM General, not GM, produces the vehicles at the Mishawaka plant. Thus, there is a possibility that some workers could transition over to the contractor's neighboring facility, building military vehicles. But AM General is also in jeopardy, as the government moves closer to replacing the Humvee.
Additionally, employees at Hummer and GM dealerships across the nation are in limbo.
On Tuesday, GM reported a 32 percent increase in February for its four core brands, Chevrolet, Cadillac, Buick and GMC, compared to the same month last year. The surge was driven by consumer interest in GM's new line of crossovers and passenger cars.
These positive results were a sharp contrast to Hummer's sales, which continue to plummet as Americans are moving towards more fuel-efficient vehicles.
But there is still hope for Hummer, as a
similar wind-down announcement was also made for Saab at the end of last year. GM had been attempting to sell the Swedish car company until negotiations with a potential buyer, Spyker Cars, fell through. But Spyker came back with another offer, and two sides worked out a deal that finally closed last week.
Blockbuster Shuttering Up to 545 Stores During 2010
By Sasha Pardy
Keeping with the ongoing contraction of the traditional movie rental retail business, Blockbuster Inc. (NYSE: BBI, BBI.B) said it would close 500 to 545 of its company-owned U.S. retail stores during 2010. To date, the retailer has already closed 253 of these stores and said 150 more will close by the end of April, with the remainder shuttering throughout the rest of the year. Over the last three years the company has closed 983 of its U.S. stores, comprised of 374 closures in 2009, 270 in 2008 and 339 in 2007. Blockbuster currently operates 3,525 U.S. movie rental stores.
The average Blockbuster store is 5,500 square feet, with the typical range between 4,000 and 8,000 square feet. From this, we can estimate the 545 store closures planned for 2010 could create another 3 million square feet of vacant retail space for the already-challenged retail real estate market in 2010. Most Blockbuster stores serve as junior anchor tenants in outparcel or corner in-line locations for grocery-anchored neighborhood and community shopping centers. Plus, keep in mind that Blockbuster's long-term plan is to have a smaller overall store base with fewer large stores and more small, urban stores; so it is most likely closing more of its large stores than small stores -- the retailer's "smaller" store format is about 3,000 square feet.
The retailer continues to make efforts to compete in the technologically-evolving movie rental business, however. During 2010, it plans to broaden its alliance with NCR to open 7,000 Blockbuster Express kiosks, more than doubling the division's current size of 3,000 units. The Express kiosks are designed to compete directly with the likes of RedBox; which has a much stronger foothold in the marketplace with its more than 19,000 existing kiosks -- RedBox added at least 7,000 new kiosks during 2009.
Additionally, Blockbuster has expanded its movie rental by mail service, "Total Access" and launched "Blockbuster On Demand"; which competes directly with cable companies' video on demand services and Netflix.
| Company | Address | Closure or Layoff | # Affected | Impact Date | | MTA New York City Transit | 2 Broadway, New York, NY | layoff | 620 | 5/7/2010 | | General Linen Supply & Launry Co. | 835 Mytle Ave, Brooklyn, NY | closure | 258 | 6/1/2010 | | Pinnacle Food Group | 90 Linden Oaks, Rochester, NY | closure | 205 | 7/15/2010 | | Pali Capital, Inc. | 650 5th Ave, New York, NY | closure | 145 | immediately | | Sheraton Hotels of New York | 790 7th Ave & 51st St, New York, NY | layoff | 42 | 5/15/2010 | | Estee Lauder Cos. | Oakland, NJ | layoff | 77 | 4/2/2010 | | Pacific Coast Feather Co. | 1560 Joel Dr, Lebanon, PA | layoff | 130 | 4/30/2010 | | Girard Medical Center Continuing Care | 8th St & Girard Ave, Philadelphia, PA | layoff | 100 | 4/24/2010 | | Ceratizit USA Inc. | 5369 Rte 982 N, Latrobe, PA | layoff | 69 | 4/25/2010 | | Universal Music Group | 9999 E 121st St, Fishers, IN | layoff | 34 | 5/9/2010 | | Siemens Healthcare Diagnostics | 5210 Pacific Concourse Dr, Los Angeles, CA | layoff | 128 | 3/31/2010 - 12/31/2010 | | Unilever Supply Chain | 19161 E Walnut Dr, City of Industry, CA | closure | 61 | 6/30/2010 | | Ralph's Grocery Co. | 1500 Eastridge Ave, Riverside, CA | layoff | 417 | 4/7/2010 | | Ralph's Grocery Co. | 4841 San Fernando Rd W, Los Angeles, CA | layoff | 245 | 4/7/2010 | | Hayden Automotive Manufacturing & Distribution | 1241 Old Temescal #101, Corona, CA | layoff | 73 | 4/1/2010 - 10/1/2010 | | Lifesparc | 1871 Airway Dr, Hollister, CA | closure | 75 | 3/31/2010 - 5/31/2010 | | Amtex | 550 Carnegie St, Manteca, CA | closure | 97 | 3/31/2010 - 6/15/2010 | | Artex Aircraft Supplies | 14405 Kiel Rd, Aurora, OR | closure | 68 | 4/30/2010 - 6/30/2010 | | La Corsha Hospitality Group | St. Anthony Hotel, San Antonio, TX | layoff | 112 | immediately | | Milwaukee Forge | 1532 E Oklahoma Ave, Milwaukee, WI | closure | 107 | 4/19/2010 | | Morningstar | 920 Sextonville Rd, Richland Center, WI | layoff | 57 | 2/22/2010-4/23/2010 |
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Expansions, Relocations & Extensions
Peerless Industries Consolidating International Operations
Peerless Industries is consolidating operations, inking a full-building lease just west of Chicago. The manufacturer of television and speaker mounts plans to add about 85 jobs over the next three years, and retain its 405 local employees.
Peerless signed a long-term deal for the 307,813-square-foot distribution building at 2300 White Oak Circle in Aurora. Originally constructed in 1997 as a build-to-suit for 3M, the facility features 35 loading docks and sits on a 22.5-acre parcel. Peerless plans to convert about 22,000 square feet to office space shortly after taking occupancy, which is slated for the end of June. A 185,000-square-foot expansion is also planned.
Peerless, which is currently based in Melrose Park, IL, had been contemplating moving out of state, said President/COO Michael A. Campagna. Potential locations were Indiana, which had been offering a generous incentive package, and Mexico, where the company already has a small facility.
"But our roots in Illinois date back almost 70 years, and we wanted to stay here if it was economically feasible," said Campagna. "The incentives we received from the state played a major role in our decision to remain in Illinois and make the investment in our new property."
The state provided Peerless with $2.9 million in incentives to leverage nearly $17.5 million in private investment to facilitate the relocation. Additionally, Illinois' Department of Commerce and Economic Opportunity (DCEO) is providing the company with tax credits over a 10-year period, as well as funds for employee training.
"Losing the company to an out-of-state location would have put hundreds of people out of work and prevented Illinois from gaining new jobs," said Governor Pat Quinn.
But although no Illinois jobs will be lost, the move does represent a significant downsizing for Peerless. According to CoStar information, the company occupies approximately 613,000 square feet in its two Melrose Park campuses. In addition, Peerless is also moving its China and Mexico operations to the new facility, following a company decision to return all manufacturing jobs to the United States.
Jason West, Sean Henrick and Michael Magliano of Cushman & Wakefield represented the landlord, Northern Builders Inc. Larry Goldwasser and Jay Maher with NAI Hiffman Industrial Services Group represented Peerless.
Capacity Signs Two Industrial Deals in New Brunswick
Capacity has signed two long-term leases in the Sudler Corporate Park in North Brunswick, NJ, a total of 255,000 square feet. The company, which provides warehousing and order fulfillment services, is renewing its headquarters lease and expanding into an adjacent facility.
Capacity extended its full-building lease at 1112 Corporate Road, a 125,000-square-foot warehouse built in 1989. The Sudler Cos., the property's owner, first signed the tenant in 1998.
Additionally, Capacity signed for the 130,000-square-foot facility at 1101 Corporate Road. Built in 1980, the warehouse was formerly occupied by Church & Dwight, owner of the Arm & Hammer brand. Capacity is relocating its operations from 1600 Livingston Ave. to the new space.
Steven Spinweber, executive vice president of real estate at Sudler, represented the landlord in both deals. John Maloney, vice president at CB Richard Ellis, represented Capacity.
"Although the real estate market is challenging, leasing activity in the Central New Jersey industrial market has been on the upswing," Spinweber said. "Industrial tenants are taking action, and Capacity took the opportunity to concentrate its office and warehousing needs together."
Par Pharmaceutical Renews in Bergen
By Kari Ausherman
Par Pharmaceutical Inc. inked a 59,485-square-foot renewal at 300 Tice Blvd. in Woodcliff Lake, NJ. Mack-Cali Realty Corp. signed the generic drug developer for another five years.
The three-story, 230,000-square-foot office building was built in 1991 in the Upper Parkway submarket. Additional tenants include Eisai Inc. and KPMG LLP, according to CoStar information. It is currently at 96 percent occupancy.
The James J. Scancarella, Larry Leib, and Robert Rencarge of CresaPartners represented Par Pharmaceutical, Inc. Mack-Cali Realty Corp. was self-represented.
CIGNA Government Services signed a two-year renewal for the entire office building at 2 Vantage Way in Nashville. Known as Metro Exchange, the five-story, 94,822-square-foot building was built in 1986 in the MetroCenter submarket. Harrison Johnson of CB Richard Ellis represented CIGNA in the deal. Mark Parker of SDG Real Estate Advisors represented the landlord, in-house. (By: Rebecca Payne)
Cox Communications signed a long-term lease for 84,397 square feet in the industrial building at 985 Trade Dr. in North Las Vegas. The 109,585-square-foot warehouse is in the Hughes Cheyenne Center. It was constructed in 1997. Kevin Higgins of Voit Real Estate Services represented the landlord, CIP Real Estate. Jeremy Green of CB Richard Ellis represented Cox. (By: Jason Kuyper)
FARO Technologies Inc. renewed the lease for its world headquarters at 250 Technology Park in Lake Mary, FL. The technology developer signed a 10-year lease for the entire building. The 46,481-square-foot flex building was built in 1999 in Technology Park, in the Seminole County Industrial submarket. It sits on 6.1 acres. Miguel de Arcos of Sperry Van Ness represented FARO and Crescent Resources represented the landlord, Sun Life Assurance Co. of Canada. (By: Vanessa Hicks)
NEJ Inc., an off-price apparel solutions firm, renewed and expanded into 170,000 square feet of warehouse space at 158 Pines Bridge Road in Beacon Falls, CT. Built in 1966 and renovated in 1992, the industrial building totals 176,000 square feet, sits on 31 acres and is zoned IP. Ernest Delucia of FirstService Williams handled the transaction on behalf of landlord, SMSP CT LLC. (By: Brooke Koch)
Ogletree Deakins Nash Smoak & Stewart, PC leased 18,146 square feet on the 41st floor of 155 N. Wacker Drive in Chicago. The law firm is taking occupancy this summer, with expansion options for the remainder of the floor. The office tower stands 46 stories tall at more than 1.1 million square feet. Construction started in 2007 and was completed last July. Contiguous blocks of space still available in the building range from 2,000 to 143,000 square feet.William Truszkowsi and Mark Gunderson with The John Buck Co. represented the building owner, in-house. John Ziesmer with Grubb & Ellis represented the tenant. (By: Justin Sumner)
Rabo Agrifinance Inc. leased 48,151 square feet at the Creve Coeur Pointe in Creve Coeur, MO. Occupancy is scheduled for August 2010. The four-story, 102,000-square-foot office building was constructed in 1987 in the I-270/Olive Boulevard submarket. Rabo Agrifinance provides loan brokerage services to the agriculture sector. Kevin Bittman of CB Richard Ellis represented Rabo Agrifinance. Susan Finney of EVS Realty Advisors represented the landlord, Great Point Investors LLC. (By: Judith Johnson)
Road Runner Transportation Services Inc. leased a portion of the Norvanco location at 3520 142nd Ave. E. in Sumner, WA. The transportation company will take possession of the space on March 1, for 66 months. The 185,700-square-foot warehouse was built in 1998 on 180 acres. Sarvent LLC owns the property. Ed Turpin of Investco Management represented the landlord. The tenant representative was not disclosed. (By: Addam Jordan-Burns)
Storr Office Environments, creator of high performance work environments, has renewed its 20,000-square-foot lease at Air Park South, Warehouse I in Greensboro, NC. The 100,000-square-foot industrial building is located at 496 Gallimore Dairy Road. It was built in 1998. Reggie Beason represented the landlord, Highwoods Properties, in-house. Greg Wilson of CB Richard Ellis represented Storr Office Environments. (By: Chinedu Anikwata)
Superior Office Systems inked an 11,000-square-foot lease at 49 W. 37th St. in New York. Samco Properties signed the authorized Canon Copier Dealership to a 12-year deal. The 17-story, 150,000-square-foot office building was built in 1925 in the Penn Plaza/Garment submarket, just a few blocks from the Empire State Building. Marc Schoen and Brian Neugeboren of Savitt Partners represented Superior Office Systems. Jeff Smith represented Samco, in-house. (By: Delphine Thomas)
XOJet, a San Carlos, CA-based private aviation company, signed a 17,480-square-foot lease for seven years with Diamond Investment Properties at the Sierra Point business park. The firm will occupy the entire second floor. The 12-story, 219,213-square-foot, Class A office building is at 2000 Sierra Point Parkway in Brisbane. It was built in 1987 and completely renovated in 2007. David Wright and Jonathan Moeller of CB Richard Ellis represented Diamond. William Benton of Newmark Knight Frank represented XOJet. (By: Alexis Van Noy)
Lease Cancellations
Capmark Financial Group is rejecting more leases in connection with its October
bankruptcy filing. The most significant cancellation is at 48 Wall St in Manhattan, where Capmark leases four floors, a total of 51,250 square feet. The commercial real estate finance company is also terminating contracts for three office spaces that it is currently leasing out to subtenants, as well as the leases of a small office space in Utah and a suite at Lincoln Financial Field, home of the Philadelphia Eagles. Capmark has deemed the leases as unprofitable and unnecessary as it continues to restructure.
Sonix Medical Resources, which also filed for bankruptcy in October, is rejecting a pair of month-to month leases that it considers to be burdens on its business. The Long Island-based provider of diagnostic medical imaging vacated both properties on December 31, 2009. Sonix has also requested an extension of time to assume or reject the lease of its corporate headquarters in Hauppauge, NY, as well as the leases of six diagnostic centers in New York and New Jersey that it provides to various radiology practices under turn-key license agreements.
| Company | Address | Affected Parties | Comment | | Capmark Financial Group | 48 Wall St, Flrs 14, 15, 16 & 17, New York, NY | 48 Wall, LLC | 51,250 SF, dated 10/11/2000, terminated 2/28/2010 | | Capmark Financial Group | 6955 Union Park Center, Ste 450, Midvale, UT | Washington Capital Management | 12,770 SF, dated 7/13/2001, terminated 1/31/2010 | | Capmark Financial Group | 15 Campus Blvd, Ste 100, Newton Square, PA | Brandywine Realty Trust (landlord), Executive Health Resources (subtenant) | 16,551 SF, dated 12/22/2004 | | Capmark Financial Group | 120 Gibraltar Rd, Ste 215, Horsham, PA | Liberty Property Trust (landlord), Witmer Partners LLC (subtenant) | 4,307 SF, dated 10/24/2006 | | Capmark Financial Group | 44 Montgomery St, Ste 2450, San Francisco, CA | OTR (landlord), MMA Financial, Inc. (subtenant) | 6,228 SF, dated 7/1/2003 | | Capmark Financial Group | Lincoln Financial Field (Eagles Stadium), Ste 2010, Philadelphia, PA | Eagles Stadium Operator LLC | dated 9/25/2003 | | Sonix Medical Resources, Inc. | 2500-15 Nesconsett Hwy, Stony Brook, NY | Bonvi Realty, Inc. | 13,704 SF, terminated 12/31/2009 | | Sonix Medical Resources, Inc. | 163-03 Horace Harding Expy, Fresh Meadows, NY | Banle Associates | terminated 12/31/2009 | | Sonix Medical Resources, Inc. | 150 Motor Pky, Hauppage, NY | RXR Realty | corporate headquarters, 5,000 SF | | Sonix Medical Resources, Inc. | 455-459 Jack Martin Blvd, Brick, NJ | Kinetic Diagnostic Center Associates | licensed to radiology practice | | Sonix Medical Resources, Inc. | 848 49th St, Brooklyn, NY | Teicher Enterprises | licensed to radiology practice | | Sonix Medical Resources, Inc. | 17 White Horse Pike, Haddon Heights, NJ | Medical Heights Associates | licensed to radiology practice | | Sonix Medical Resources, Inc. | 4277-4040 Hempstead Tpke, Bethpage, NY | Bethpage Professional Center, Alpaso Inc., Public Storage | licensed to radiology practice | | Sonix Medical Resources, Inc. | 19 Mule Rd & 1565 Rte 37 W, Toms River, NJ | CSS Associates LLC, Route 37 Associates LLC | licensed to radiology practice | | Sonix Medical Resources, Inc. | 97 Main St, Chatham, NJ | Hickory Tree Properties LLC | licensed to radiology practice |
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