April 2023 Philadelphia Mastermind Group Key Take Aways!
• 1-3 star apartments are notably compressed. Demand for 4-5 star apartment units has slowed. (Brenda Nguyen – CoStar Group)
• Multi-family rents grew an average of 10% year over year during the pandemic. Market is starting to normalize now. (Brenda Nguyen – CoStar Group)
• Multi-family fundamentals remain strong over the long term. (Brenda Nguyen – CoStar Group)
• Cost to build is high but rents aren’t as high in Philadelphia compared to other markets. (Brenda Nguyen – CoStar Group)
• There has been a slow down in building permits. After this wave delivers, there will be very little new MF construction. (Brenda Nguyen – CoStar Group)
• Retail has less available inventory now than pre-pandemic. (Brenda Nguyen – CoStar Group)
• A lot of retail has been torn down or converted, but that’s a small percentage. (Brenda Nguyen – CoStar Group)
• Algorithms drive specific users to given websites, but storefronts for ecommerce offer more exposure to random customers. (Brenda Nguyen – CoStar Group)
• There were record levels of personal savings in the pandemic which dipped to one of the lowest personal saving rates in recent history. (Brenda Nguyen – CoStar Group)
• Retail is still going. It hasn’t stalled, but has tempered. (Brenda Nguyen – CoStar Group)
• There is more available industrial than we had pre-pandemic, which is likely due to record levels of construction. (Brenda Nguyen – CoStar Group)
• Philadelphia is among the fastest growing industrial markets. It is capturing spill over from demand from New York markets, with lots of construction along 95 and 81. (Brenda Nguyen – CoStar Group)
• Many retailers have expanded their distribution. Amazon acquired too much and had to sublease some of their space out. (Brenda Nguyen – CoStar Group)
• New industrial construction is mostly larger spaces. Properties below 100K sq ft are the most compressed. The smaller the industrial space the more sparse it’s becoming. (Brenda Nguyen – CoStar Group)
• The labor market is another obstacle to greater expansion. (Brenda Nguyen – CoStar Group)
• Seeing a shift in projects. Private sector is starting to slow down a little bit, but the public sector is strong. Issues plaguing the private sector will likely affect the public sector soon as well. (Craig Bryson- Pennoni Associates)
• It’s been a difficult year handling office building financial statements. (Ed Opall – EisnerAmper)
• Inventory is still low. Buyers are still buying despite increasing interest rates. (Andrea O’Neal – Berkshire Hathaway Homes Services)
• Baby boomers seem to be staying in their homes longer. (Andrea O’Neal – Berkshire Hathaway Homes Services, Bart Mellits – Ballard Spahr)
• There is a need for some types of retail stores. People still want to try on clothes and receive customer service. (Joseph Viturello – PernaFrederick Commercial Real Estate)
• There are some positive activities on the street level. Waiting for some of those buildings with bigger vacancies to see what happens. (Joseph Viturello – PernaFrederick Commercial Real Estate)
• Class B and C market has done a lot better with more people and more activity. (Joseph Viturello – PernaFrederick Commercial Real Estate)
• The next few years will determine how things play out in the office market. (Matt Frederick – PernaFrederick Commercial Real Estate)
• There are not likely to be many multi-floor tenants moving forward. Yet, rental rates are holding solid. Landlords are providing more TI dollars. (Matt Frederick – PernaFrederick Commercial Real Estate)
• Thee has been a lot of multi-family trading activity. Q1 was busy, but a lot were deals from 2022. Seeing some slowing across the board. (Sara McCormick – Ballard Spahr)
• Seeing an increase in joint venture work in private equity sources. (Sara McCormick – Ballard Spahr)
• Crime in Center City is an issue. The direction of the mayor’s race, as well as City Council, will see where things are headed. People don’t want to come to downtown, which is affecting street level retail. (Bart Mellits – Ballard Spahr)
• Public Sector is strong with lots of IAJ funds. (Robert Bright – Talson Solutions)
• EV charging and climate related projects are still being defined. (Robert Bright – Talson Solutions)
• They are putting 300K EV chargers in New York. (Robert Bright – Talson Solutions)
• The market has been a little better the last couple of weeks, better than the first couple months of the year. Lots of people touring properties, signing new leases and renewing leases. (Christian Dalzell – Counter Management)
• Rent growth from last year has slowed but not stalled. (Christian Dalzell – Counter Management)
• For the first time in a long time, they saw a project get shelved. Construction costs and interest rates have risen dramatically. (Phil Glick – Conner Strong & Buckelew)
• They remain busy with commercial development and construction projects, but expecting to see a slow down. (Phil Glick – Conner Strong & Buckelew)
• There has been a big trend converting office to residential. (Phil Glick – Conner Strong & Buckelew)
• Insurance market continues to be very difficult. Expected to get worse over the next couple of years. (Phil Glick – Conner Strong & Buckelew)
• Expecting mayor’s race and City Council to turn further left and more anti-business. (Stephen Mullin – EConsult Solutions)
Recent Comments