2/13/23 Philadelphia Mastermind Group Meeting

February 2023 Philadelphia Mastermind Group Key Take Aways!

• The city has 15% of its employment in higher education and about ⅓ of employees are in either education or healthcare. (Alan Greenberger – Drexel University)
• Most students are back on campus and most want to be. (Alan Greenberger – Drexel University)
• Number of college age students is going to fall off dramatically in the next two years. (Alan Greenberger – Drexel University)
• Before Covid, the expectation for faculty was to be on campus 4 days per week, and after Covid, they are on campus 2.5-3 days per week. A lot of administrative work is still done remotely. (Alan Greenberger – Drexel University)
• Employees who work fully remotely can avoid the city wage tax. (Alan Greenberger – Drexel University)
• Small scale technology based meetings simulate in person meetings effectively, particularly among people who already know each other. (Alan Greenberger – Drexel University)
• Large groups are less effective remotely. These are a pure exchange of information but are not very effective for creative thinking and the world of ideas. The back and forth of ideation doesn’t happen very effectively remotely. (Alan Greenberger – Drexel University)
• Creativity is also often spontaneous. Randomness allows you to overhear colleagues, bump into people, and it can help to relieve tension. (Alan Greenberger – Drexel University)
• Employees benefit from some aspects of remote work, including no commute time, less commuting fees, avoidance of the city wage tax, working without people looking over your shoulder, and ability to do things like laundry or dog walking (which doesn’t impede overall time spent working). (Alan Greenberger – Drexel University)
• One big downside is a lack of mentorship for young employees. Watching other experienced people do what they do is a learning experience but is being lost with remote work. (Alan Greenberger – Drexel University)
• Employees also lose out on bonding with co-workers and don’t have the chance to commiserate or celebrate. (Alan Greenberger – Drexel University, Job Itzkowitz – Old City District)
• Many employers worry if they demand more in-person work, they will lose employees to more flexible employers. If the job market changes, employers may gain leverage. (Alan Greenberger – Drexel University, Bart Mellits – Ballard Spahr)
• It’s important for senior level employees to be in the office if younger employees are going to benefit by their mentorship. (Bart Mellits – Ballard Spahr)
• City employees aren’t back as much as many would like and many criticize them for not leading by example. (Alan Greenberger – Drexel University)
• Public transportation is more full over the past 4-6 months than it had been. (Dennis Carlisle – OCF Realty)
• There is a societal risk in not having people interact with more people outside of their social bubble. (Alan Greenberger – Drexel University)
• It’s more difficult to track subleases than it is to track traditional vacancies. (Joseph Viturello – PernaFrederick Commercial Real Estate)
• City public meetings changed to zoom meetings, so now it’s possible to attend all of the many zoning board and other types of meetings without having to attend in person. (Dennis Carlisle – OCF Realty)
• Multi-family market feels like there’s a little more demand, which could be seasonal. Greater velocity of people looking for apartments and commercial clients are seeing more volume. (Christian Dalzell – Counter Management)
• Rent acceleration has slowed somewhat. (Christian Dalzell – Counter Management)
• In addition to the many reasons, it’s important for employees to return to the office, it’s also important for employers to be able to evaluate future leaders. (Craig Bryson- Pennoni Associates)
• There are record levels of construction underway, especially multi-family – the highest since Co-Star has been tracking it – mostly in and around Center City. Surge caused by low interest rates and changes to the 10-year tax abatement. (Brenda Nguyen – CoStar Group)
• Seems like more people are living with family as opposed to purchasing a home or seeking an apartment. With the new influx of construction noticed a slowing of the rent velocity. (Brenda Nguyen – CoStar Group)
• Expecting a restricted supply over the next 1-2 years. (Brenda Nguyen – CoStar Group)
• Working with a lot of general contractors and developers, there is concern about the future into 2024. Owners are sitting on contracts and not signing. Supply chain issues and wage costs continue. (Michael Mostochuk – EisnerAmper)
• There has not been a big drop in the pipeline for new projects, in part because of the American Rescue Plan. (Mark Celoni – Pennoni Associates)
• There is a new program with UPenn promoting diversity on boards working with professionals learning about leadership skills and communication. (Andrea O’Neal – Berkshire Hathaway Homes Services)
• Majority of groups subleasing their space aren’t getting rid of all space but deciding whether to downsize or make other changes. (Joseph Viturello – PernaFrederick Commercial Real Estate)
• People are also locking in longer lease terms – not looking for houses and nervous about inflation. (Christina Lutz – Counter Management)
• MRP listed their four properties in Old City – the Bourse, the Bourse Garage, 325 Chestnut (mostly leased) and 400 Market. Charlie McGrath is handling the sale. (Job Itzkowitz – Old City District)
• Seeing more foot traffic – had been around 70% of pre-pandemic, but year over year their January has been way up and the streets and subways have felt busier. (Job Itzkowitz – Old City District)
• Job Itzkowitz is running for Philadelphia City Council At-Large. Info can be found at jobforphilly.com. (Job Itzkowitz – Old City District)
• 3201 Cuthbert had a groundbreaking last week. Being billed as the largest life science development project in the City of Philadelphia. (Mark Celoni – Pennoni Associates)
• Seeing a general slowdown. Nobody is stopping what they’re doing, but less of a rush to get financed. Lots of people are hopeful rates will come back down. (Andrew Hunter – Eyzenberg & Company)
• Equity is difficult to raise right now. (Andrew Hunter – Eyzenberg & Company)
• As we head into uncertain economic times, Ballard Sphar is gearing up for distressed assets and special services. (Bart Mellits – Ballard Spahr)
• Commercial banks are starting to build up reserves for defaults. Less available to doing new deals. (Bart Mellits – Ballard Spahr)
• Affordable housing tends to be busy. (Bart Mellits – Ballard Spahr)
• If your mortgage is coming due you may have a problem. Lenders want more equity to refinance. (Ed Opall – EisnerAmper)
• Expectation is that 2023 will be another strong year for industrial, especially in southern New Jersey. (Chris Massey – Brennan Investment Group)
• Surveys are out for February and hoping to get a sense of whether inflation is going to come down or not. (Paul Flora – Federal Reserve Bank of Philadelphia)