“There has been a lot of demand from tenants who either weren't sure enough about their business or didn't have the capital to expand coming out of the recession,” he says. “Now we're seeing a shortage of amenitized space for larger tenants.”

The presidential election has created some market uncertainty, but Gleason expects sentiment to stabilize.

“The ten-year Treasuries have increased by about 25 basis points, but our view is that interest rates will come down, some of the volatility will come out of the market, and some of the new Adminisitation's plans, including stimulus, is really good for real estate,” Gleason says. “It will create growth, it will create pressure on rental rates, and we obviously think that's going to be good for the market.”

Many Kairos leases have been in the health sector, and changes to the Affordable Care Act could cause concern, he says.

“A lot of leases across our portfolio have been with healthcare related companies, either pharmaceuticals or service companies that are in the insurance business or making healthcare more efficient, so obviously with that sector representing such a large percentage of the economy, and with the announced plans to roll back some or all of the Affordable Care Act, that's something that we're keeping our eye on,” he says.

Kairos has been turning around its suburban investments in recent months, particularly with the successful repositioning of Apex, a 400,000 square-foot, three-building campus in Fort Washington, PA. At the time of the purchase, Kairos knew occupancy was going to decline to about 44 percent.

Since acquiring the property last December, Kairos spent $5 million to renovate the asset, successfully leasing 190,000 square feet of office space, having attracted notable anchor tenants such as Citizens Bank, Allstate Insurance, Lincoln Investments, and Impax Labs, and taking the occupancy to 91 percent.

“We look for buildings that are in great locations but have been neglected,” he says. “We bought the building at a good basis that allowed us to reinvest in the property to create best-in-class amenities.”

In September and October alone, three new tenants have signed eight-year leases including: Citizens Bank – 38,000 square feet, relocating its suburban offices from Plymouth Meeting to Apex in July 2017; Office Practicum, an electronic health records software company, taking 18,000 square feet, relocating its headquarters to Apex in March 2017 from Horsham, PA; Compassus, a health services company, taking 7,400 square feet.

Apex is luring big corporate names with its attractive campus setting and the newly constructed Hub, a glass box at the center of the campus that connects the three buildings. In addition, tenants enjoy the brand new amenity spaces, including the Apex Café, Apex fitness center and a 7,000-square foot conference and training center. Outdoor grounds include seating for functions, casual gatherings with fire pits and a great lawn for outdoor events.

Situated on 40 acres, just 16 miles northwest of Philadelphia's CBD, Apex is accessible to the area's two major roadways, near the interchange of PA Route 309 and the Pennsylvania Turnpike. In addition, the property enjoys direct access to the Virginia Drive slip ramp of the Pennsylvania Turnpike, located just 0.2 miles from the property.

In addition, Apex provides many benefits to large corporate users, including: abundant electrical power fed from two separate PECO substations; nine-foot finished ceiling heights; efficient floor plates; and, on-site surface and structured parking at an above-standard ratio of 5.3 spaces per 1,000 square feet of rentable area.

Newmark Grubb Knight Frank's Jeff Mack, Adam Shute, Patrick Nowlan and Taylor King represented Kairos in new lease transactions.

Kairos has also put its Triad building at 2200 Renaissance Blvd., King of Prussia, PA, up for sale. As previously reported by GlobeSt.com, Kairos redeveloped the property with extra amenities after acquiring it in 2013, and successfully attracted new tenants to the reimagined complex.

“At the time, the property was 20 percent leased. We spent $4 million there in basic building renovation, and we've been able to take occupancy up to 95 percent,” Gleason says. “We've retained CBRE to take the property out to the market, and we're expecting offers within the next week.

Kairos is now focusing on 518 Township Line Road, Blue Bell, PA, another “distressed property that we see as a value-add opportunity.” The building, currently 23 percent occupied, will get an amenity makeover.

“We've had a strong amount of pent-up demand from tenants who want to be in the Blue Bell Market, but no other buildings in the market offer those amenities,” Gleason says. “Seeing what we've done at Triad and Apex has really generated interest from tenants and brokers.”

Apex, 600-602 Office Center Drive, Fort Washington, PA

KING OF PRUSSIA, PA—With two successful suburban office repositionings behind them and one more in the pipeline, Steve Gleason, president of Kairos Real Estate Partners says the firm remains optimistic that its value-add strategy of redeveloping older office properties is the right one moving into 2017.

“We're still big believers in well-located properties, and buying them at a basis that will allow us to create great amenities and still offer them at a discount to other properties in the market,” he says. “We're still bullish on the market. We're not just looking in the suburbs, but we are looking at some opportunities in the CBD of Philadelphia and other markets. Philadelphia is no longer a well-kept secret. A lot of investors from outside of the market have discovered Philadelphia and have invested significantly in this market, and we think that's a trend that's going to continue.”

In an exclusive interview with GlobeSt.com, Gleason says market fundamentals remain strong and did not get overheated.

“There has been a lot of demand from tenants who either weren't sure enough about their business or didn't have the capital to expand coming out of the recession,” he says. “Now we're seeing a shortage of amenitized space for larger tenants.”

The presidential election has created some market uncertainty, but Gleason expects sentiment to stabilize.

“The ten-year Treasuries have increased by about 25 basis points, but our view is that interest rates will come down, some of the volatility will come out of the market, and some of the new Adminisitation's plans, including stimulus, is really good for real estate,” Gleason says. “It will create growth, it will create pressure on rental rates, and we obviously think that's going to be good for the market.”

Many Kairos leases have been in the health sector, and changes to the Affordable Care Act could cause concern, he says.

“A lot of leases across our portfolio have been with healthcare related companies, either pharmaceuticals or service companies that are in the insurance business or making healthcare more efficient, so obviously with that sector representing such a large percentage of the economy, and with the announced plans to roll back some or all of the Affordable Care Act, that's something that we're keeping our eye on,” he says.

Kairos has been turning around its suburban investments in recent months, particularly with the successful repositioning of Apex, a 400,000 square-foot, three-building campus in Fort Washington, PA. At the time of the purchase, Kairos knew occupancy was going to decline to about 44 percent.

Since acquiring the property last December, Kairos spent $5 million to renovate the asset, successfully leasing 190,000 square feet of office space, having attracted notable anchor tenants such as Citizens Bank, Allstate Insurance, Lincoln Investments, and Impax Labs, and taking the occupancy to 91 percent.

“We look for buildings that are in great locations but have been neglected,” he says. “We bought the building at a good basis that allowed us to reinvest in the property to create best-in-class amenities.”

In September and October alone, three new tenants have signed eight-year leases including: Citizens Bank – 38,000 square feet, relocating its suburban offices from Plymouth Meeting to Apex in July 2017; Office Practicum, an electronic health records software company, taking 18,000 square feet, relocating its headquarters to Apex in March 2017 from Horsham, PA; Compassus, a health services company, taking 7,400 square feet.

Apex is luring big corporate names with its attractive campus setting and the newly constructed Hub, a glass box at the center of the campus that connects the three buildings. In addition, tenants enjoy the brand new amenity spaces, including the Apex Café, Apex fitness center and a 7,000-square foot conference and training center. Outdoor grounds include seating for functions, casual gatherings with fire pits and a great lawn for outdoor events.

Situated on 40 acres, just 16 miles northwest of Philadelphia's CBD, Apex is accessible to the area's two major roadways, near the interchange of PA Route 309 and the Pennsylvania Turnpike. In addition, the property enjoys direct access to the Virginia Drive slip ramp of the Pennsylvania Turnpike, located just 0.2 miles from the property.

In addition, Apex provides many benefits to large corporate users, including: abundant electrical power fed from two separate PECO substations; nine-foot finished ceiling heights; efficient floor plates; and, on-site surface and structured parking at an above-standard ratio of 5.3 spaces per 1,000 square feet of rentable area.

Newmark Grubb Knight Frank's Jeff Mack, Adam Shute, Patrick Nowlan and Taylor King represented Kairos in new lease transactions.

Kairos has also put its Triad building at 2200 Renaissance Blvd., King of Prussia, PA, up for sale. As previously reported by GlobeSt.com, Kairos redeveloped the property with extra amenities after acquiring it in 2013, and successfully attracted new tenants to the reimagined complex.

“At the time, the property was 20 percent leased. We spent $4 million there in basic building renovation, and we've been able to take occupancy up to 95 percent,” Gleason says. “We've retained CBRE to take the property out to the market, and we're expecting offers within the next week.

Kairos is now focusing on 518 Township Line Road, Blue Bell, PA, another “distressed property that we see as a value-add opportunity.” The building, currently 23 percent occupied, will get an amenity makeover.

“We've had a strong amount of pent-up demand from tenants who want to be in the Blue Bell Market, but no other buildings in the market offer those amenities,” Gleason says. “Seeing what we've done at Triad and Apex has really generated interest from tenants and brokers.”