A popular parking lot near Philadelphia International Airport has been snapped up for $45 million by Prologis, a real estate giant that specializes in leasing space to retail, e-commerce, and logistics businesses, according to the firm that brokered the deal.
What caught the San Francisco-based company’s eye is a nearly 19-acre property, long used by PHL travelers who stowed their cars at the PreFlight lot. Owned by a subsidiary of InterPark — a Chicago-based company that operates nearly a dozen parking facilities in Center City Philadelphia — the PreFlight lot closed to the public last month.
The deal is yet another sign of intensifying interest in the Philadelphia region for companies that focus on getting goods to customers, a trend epitomized by Amazon’s growing footprint of warehouse and distribution centers in and around Philly.
“The pandemic really accelerated this trend of last-mile, logistics-focused industrial real estate,” said Ryan Guittare, with commercial real estate firm Newmark, which represented InterPark in the sale. “Everyone is focused on shortening the time of getting products to consumers.”
InterPark did not return a request for comment.
Prologis acquired Philadelphia developer Liberty Property Trust, and with it more than 500 industrial sites, in a $13 billion transaction that closed last year. As of June, Prologis either owned or had invested in nearly one billion square feet of real estate in 19 countries. The company says its top customers include Amazon, Home Depot, FedEx, UPS, and DHL.
A 271,000-square-foot facility sits on the parcel at 4700 Island Ave. In marketing materials, Newmark highlighted the property’s proximity to PHL, Center City and PhilaPort, its easy access to highways, and the 49 million people located within a 200-mile radius.
“We plan to fully renovate the existing building and turn it into a Class A logistics facility, which will serve customers looking for a highly functional distribution space near a major consumption hub, the Philadelphia International Airport and I-95,” Howard Freeman, senior vice president and investment officer at Prologis, said in a statement provided after this story was initially published.
The property “adds to our growing portfolio in the region, which spans more than 4.9 million square feet,” Freeman said. “We have 100% occupancy, reflecting the strong local economy and the value of our assets and solutions.”
In June, PHL announced a major initiative to expand cargo facilities at the airport over the next five to 10 years. News of those plans “tied in really well with our sales process,” Guittare said.
The property went on the market in April, and generated “an unbelievable amount of interest,” Guittare said. The listing received between 35 and 40 offers, he said, and went to multiple rounds of bidding.
The winning purchase price came in at 2.6 times the property’s tax-assessed value of $17,019,700, according to city records.
The $45 million amount breaks down to $166 per square foot of the existing building.
“It’s a big number,” said Rich Gorodesky, a senior managing director at Colliers, who was not involved in the sale.
Industrial real estate in Philadelphia is typically selling in the range of $50 to $100 per square foot, Gorodesky said, depending on factors such as existing leases at the property, the configuration of the space, and the functionality of the land.
Demand for industrial space “dramatically improved” in Philadelphia over the course of the pandemic, Gorodesky said. That demand is not entirely driven by e-commerce, but it is a big factor, he said.
And if two-day delivery once satisfied customers, now the window is shifting to a matter of hours. “You’re not going to get two-hour delivery if your warehouse is a four-hour drive away,” Gorodesky said.