9/13/21 Philadelphia Mastermind Group Meeting

Key Take Aways from Philadelphia September 2021

• Climate Change is an important issue and its effects can be felt across a variety of industries.  It’s quickly becoming a crisis and developers and lots of work must be done to avoid it becoming a catastrophe.  ESGs are becoming an important factor to a lot of deals and many new multi-family units are more eco-friendly.  A recent “Philadelphia Inquirer” article addressed the issue of Philadelphia’s aged sewers. (Ballard Spahr LLP – Michael Sklaroff, Counter Management – Christian Dalzell)
• The insurance industry has been busy dealing with all of the claims related to Hurricane Ida and flooding. (Johnson, Kendall & Johnson – Matt Musilli)
• Cap rate have descended to a level where many deals are unappealing. (Counter Management – Christian Dalzell)
• Rental market has transitioned from weak to strong very quickly.  Rent growth has been strong both nationally and in the Philadelphia Market. The eviction moratorium has not had as much impact on units where renters are heavily vetted as has people leaving when cities closed down, but many people are returning. (Counter Management – Christian Dalzell, Yardi Systems – Paul Fiorilla)
• The infrastructure bill may have a large impact in a lot of areas, including housing and issues relating to climate change. (Yardi Systems – Paul Fiorilla)
• EisnerAmper has just completed a merger with TowerBrook Capital Partners.  It’s an unusual setup for a CPA firm but may be more like it in the future. (EisnerAmper – Ed Opall)
• The office market is still down, though the last two months have not gotten worse.  Some people are looking into converting office space to lab space. There are a lot of factors involved in these conversions, including floor load, utility infrastructure, tenant mix, regulations, and ventilation. (Colliers – Matt Shanahan)
• The retail market is doing better than expected and industrial space continues to be sought after. (Colliers – Matt Shanahan)
• The multi-family market remains strong and there is lots of activity particularly in West Philadelphia where some existing units are being converted to multi-family as there is not a lot of vacant land. (Colliers – Matt Shanahan, Republic Bank – Joseph Dafcik)
• Supply shortages of specific items continue to be a barrier, though many deals are still happening and Kelly Maiello continues to be busy with new projects. (Kelly Maiello Architects – Jim Karmolinski)
• There has been a major uptick in owner-controlled insurance policies (OCIPs), so owners know they have quality insurance and can consolidate policies for better rates. (Johnson, Kendall & Johnson – Matt Musilli)
• The Delta variant and rising cases have made returns to the office more uncertain and complicated for many businesses. (Ballard Spahr LLP – Michael Sklaroff, Colliers – Matt Shanahan, Eisner Amper – Ed Opall)