6/13/22 Philadelphia Mastermind Group Meeting

June 2022 Philadelphia Mastermind Group Key Take Aways!

• Continually rising costs are creating extra pressure to get deals done, as it is difficult to accurately price supplies and predict delivery times. Inflation has increased some prices by 50% or more and many lead times by 200% or more. (Bart Mellits – Ballard Spahr, Matt Musilli – Johnson, Kendall & Johnson)
• The multi-family market is strong and rent growth is still increasing. Landlords must decide whether to raise rents or work with existing tenants to avoid turnover costs. (Christian Dalzell – Counter Management, Christina Lutz – Counter Management)
• Though rent prices in Philadelphia are increasing, they are still less than other major cities. There are issues with the supply of units on the market and regulations (such as changes to the tax abatement) that make it harder to get new units. There are concerns about Philadelphia becoming less affordable if supply issues continue. (Christian Dalzell – Counter Management)
• “Eds and Meds” continue to be a driving force in Philadelphia, with Philadelphia being seen as the Silicon Valley of the healthcare industry. Many current tenants are healthcare workers and it’s important to have plenty of available housing to offer to those workers. (Christian Dalzell – Counter Management)
• The Fed will be meeting this week. This recession has been different than most, more of an economic shock with ongoing aftershocks. (Paul Flora – Federal Reserve Bank of Philadelphia)
• In Old City, visits were down over the past month though 66% recovered year to date. Despite the recent lower numbers, activity seemed like it was up. The discrepancy may have to do with the way data is collected through cell phones.  Population has doubled in the past decade (Job Itzkowitz – Old City District)
• Office activity is up overall. Many companies have decided they do need space but still considering what type of space they need. Insomnia Cookies just signed a big deal in the city. (Joseph Viturello – PernaFrederick Commercial Real Estate)
• There are more pre-builds in the office market for smaller spaces. Those deals move faster than deals requiring major renovations, which are subject to supply chain issues and shortages. (Joseph Viturello – PernaFrederick Commercial Real Estate)
• The Surfside Condo collapse was settled for just over a billion dollars that involved 31 different insurance entities.  Developer insurance paid out $28 million, the  condo association paid $29 million, the general contractor paid out $157 million along with a project-specific policy for $84 million and the global security firm group paid out $517 million. It was a single-event catastrophe and didn’t have a huge impact on rates, though it may affect the way policies, particularly for condo associations, are written in the future. (Matt Musilli – Johnson, Kendall & Johnson)