Trading in an off-market deal, DH Property Holdings LLC recently acquired a 365,000-square-foot shallow bay industrial portfolio in South Jersey.

The $48.55 million purchase includes two industrial parks located in Blackwood and Cherry Hill. The package features 10 shallow bay buildings and more than 40 tenants. NAI Mertz represented both the New York-based buyer and the seller, a longtime client.

Situated on 34.5 acres, the location is within minutes of Interstate 295 and Interstate 95 as well as 25 miles from Center City Philadelphia. The Philadelphia International Airport is 28 miles away, as is CSX Rail Yard Philadelphia.

The portfolio includes:

• The Village of Pine Run – 1001 Lower Landing Road, Blackwood
  • 235,000 square feet; six buildings
• The Cherry Hill Commerce Center – 1951 Old Cuthbert Road, Cherry Hill
  • 130,000 square feet; four buildings

A Walker & Dunlop team led by Senior Managing Directors Aaron Appel and Jonathan Schwartz and Senior Director Michael Ianno arranged $40 million of financing for the transaction, DHPH said.

The deal highlights gaining interest in the small-bay space in the larger industrial sector. Commenting on the transaction, DH Property Holdings founder and Principal Dov Hertz said, “The shallow-bay supply/demand fundamentals in Southern New Jersey are stronger than ever.”

“On the demand side, the tenancy is very sticky, with stellar renewal rates and continuously rising rents, in spite of negative tailwinds on some of the larger blocks of availability,” Hertz continued. “On the supply side, the block of 100,00-square-foot assets in Southern New Jersey is extremely limited, and new developments in that size range are cost-prohibitive to build.

“It is virtually impossible to develop shallow bay properties in the current interest rate environment and even more so, the cost to demise spaces into 4,000 to 20,000-square-foot units.”

Upgrades due

Both parks boast occupancy rates upwards of 90%. DHPH said the average tenant tenure is more than 15 years, with some as long as 40 years. More than 40 businesses occupy the properties. The mix of light industrial uses includes clean energy, IT services, printing, welding, construction, food manufacturing, HVAC supply, masonry, janitorial and automobile part supplies, and more.

A NAI Mertz brokerage team of Executive Vice Presidents John Adderly and Fred Meyer, Vice President Roy Karden and President Scott Mertz facilitated the sale to DHPH.

NAI Mertz was tapped nearly 40 years ago to lease the parks on behalf of the unnamed seller and said it has represented ownership since. Meyer was initial leasing agent before transitioning leadership to Kardon.

“This was a unique transaction that was in process for several years through rate hikes as well as the unfortunate passing of a key executive, neither of which were easy to navigate, but were ultimately overcome,” Adderly commented.

The firm will also continue its involvement with the property following the sale. DHPH named NAI Mertz leasing agent for the portfolio. Mertz will lead the program. Current availabilities range from 4,000 square feet to 40,000-square-feet.

Hertz founded DHPH in 2016. He said the firm plans to bring “several million dollar of upgrades to the portfolio to further institutionalize the parks.”

“We look forward to working with Scott Mertz and his team at NAI Mertz on the lease-up which includes many units that have not been available to the market for 10-20+ years,” Hertz said.