February 2024 Philadelphia Mastermind Group Key Take Aways!
Has been kind of slow from a contractor perspective, but it looks like things may be better moving forward with a little more activity as interest rates have settled down. (Michael Mostochuk – EisnerAmper)
Contractors are still a bit nervous for the future. 2023 was a good year (better than 2022), but 2024 is not looking as great. (Michael Mostochuk – EisnerAmper)
ECS Limited offers engineering consulting services based in VA, with offices in Morristown and Norristown and 90 offices nationwide. Work with architects, engineers, developers, owners, property managers, GCs, etc. (Teresa Matozzo – ECS Limited)
Seeing a slowdown on the architecture side with projects being on hold. (Teresa Matozzo – ECS Limited)
Seeing more work in the public sector. (Teresa Matozzo – ECS Limited)
The big news in the Old Town district is that the I-95 cap park is under construction. It’s an incredible project and is expected to be completed by the end of 2026, which was delayed due to the pandemic. (Job Itzkowitz – Old City District)
There is an RFP out in Old City for Market Street Improvements. (Job Itzkowitz – Old City District)
There are a lot of public projects coming before 2026. (Job Itzkowitz – Old City District)
The vacancy rate in Old Town in 2019 was 12%, just over the national average. By Dec 2020 it was 20%. They are now catching back up and are under 13%. The difference is there are now fewer office workers in the area with many large office buildings sitting empty. (Job Itzkowitz – Old City District)
There is a challenge with what happens with reassessing those properties, as much of their budget is paid for by a few large properties. (Job Itzkowitz – Old City District)
GAF Building Materials is based in Parsippany, but has a presence in Philadelphia. They specialize in below grade and roofing materials and provide design and product considerations. (Tom Donnellan – GAF)
They are seeing a slowdown from years in the past as some large projects were put on hold or slowed down. (Tom Donnellan – GAF)
Some construction materials are – believe it or not – going down in price. (Tom Donnellan – GAF)
It has been a steady uptick each quarter, but now seeing a market turn on waterproofing and roofing membranes. (Tom Donnellan – GAF)
Has not been looking into new acquisitions and focused on keeping good tenants in current properties. Waiting for clear waters before they do anything on the capital assets side.(Christian Dalzell – Counter Management)
Hoping that the Fed starts cutting rates so they don’t drown all the banks. (Christian Dalzell – Counter Management)
2024 began better than 2023 ended. 2023 felt like treading water, but people are hopeful that transactions will start happening. (Christian Dalzell – Counter Management)
Select Commercial Advisors is a vertically integrated development group, primarily in Philadelphia but expanding in the suburbs. (Samantha Miller – Select Commercial Advisors)
They haven’t made an acquisition on the development side in over a year. (Samantha Miller – Select Commercial Advisors)
Things are slow, but there is cautious optimism moving forward. (Samantha Miller – Select Commercial Advisors)
Seeing lots of land transactions, which tells you what people are anticipating in a few years. (Samantha Miller – Select Commercial Advisors)
There are lots of theories and strategies over the past year, but there is skepticism that any of these things will pan out. Most owners don’t have to sell. (Samantha Miller – Select Commercial Advisors)
Most of their work is public sector work, or will advise developers on working with municipalities. (Matt Wanamaker – Pennoni Associates Inc.)
In New Jersey, warehouses still appear to be strong. Cannabis is a sector still growing in New Jersey. Cultivation, distribution and smaller retail. (Matt Wanamaker – Pennoni Associates Inc.)
There is redevelopment in some of the smaller specific Pennsylvania municipalities. (Matt Wanamaker – Pennoni Associates Inc.)
Pennsylvania’s governor is pushing for recreational marijuana, but municipalities can opt out. Some towns don’t want the political risk. (Matt Wanamaker – Pennoni Associates Inc.)
Doing a lot of renovation work at universities. (Chris Beahan – Pella Windows and Doors)
They are focusing on added services, such as pre-construction quotes and options and offering free energy studies. (Chris Beahan – Pella Windows and Doors)
179D tax deduction exists if you can reduce your energy use. Expires in 2026. (Chris Beahan – Pella Windows and Doors)
Biggest current project is a building in Fishtown – it is mixed use, multi family available for sale. (Stephen Perna, Jr. – PernaFrederick Commercial Real Estate)
From the landlord’s perspective, there is a reluctance to put in additional capital. Not getting the return back, in part due to refinancing issues. (Joseph Viturello – PernaFrederick Commercial Real Estate)
There are still subleases in the market. (Joseph Viturello – PernaFrederick Commercial Real Estate)
Whether direct or sublease, it is preferable to find a place that is completely built out. It makes a lot of difference for spaces that are actually moving and leasing. (Joseph Viturello – PernaFrederick Commercial Real Estate)
Properties are not leasing fast enough and a couple of properties that are in tough financial situations are the ones getting the headlines. (Joseph Viturello – PernaFrederick Commercial Real Estate)
They are seeing more activity in the market. More people touring, but taking longer to go through the process. (Joseph Viturello – PernaFrederick Commercial Real Estate)
The office market may not be at the bottom, but they don’t expect it to go to 20-25%. Some subleases have 1-5 years left. (Joseph Viturello – PernaFrederick Commercial Real Estate)
Mayor wants people back in the office 5 days a week, but the city gave up space and now doesn’t have enough room. (Job Itzkowitz – Old City District)
With city leases, you can’t put them through City Council, or it will take too long and the scrutiny will be too involved. They usually just put them through as short term leases. (Joseph Viturello – PernaFrederick Commercial Real Estate)
There are lots of alternative valuations being done by the clients. (Daniel Hanlon – Cushman & Wakefield)
Some office buildings are being converted into residential. (Daniel Hanlon – Cushman & Wakefield)
Life sciences has done well but right now with inflation the costs are a lot higher. (Daniel Hanlon – Cushman & Wakefield)
Retail is one of the best performing markets right now. People were doing remote work and looking to get out. (Daniel Hanlon – Cushman & Wakefield)
There is a lot of distress and expects more transactions with defaults happening and more overall transactions next year. (Daniel Hanlon – Cushman & Wakefield)
Their distressed real estate practice has been quiet for awhile, but it’s back full throttle. (Bart Mellits – Ballard Spahr)
There is over $2 trillion in maturities by 2025 across all commercial real estate. (Bart Mellits – Ballard Spahr)
Concern about cycle of failing deposits leading to a run on the banks. (Bart Mellits – Ballard Spahr)
Most people aren’t reporting a pickup in transaction volume. There are distressed deals happening, but not on a large scale. (Bart Mellits – Ballard Spahr)
JP Morgan runs a life sciences conference. More for the actual science than for real estate. There are still a lot of new companies going through the cycle. (Bart Mellits – Ballard Spahr)
Definitely seeing a slowdown in life sciences, from being a hot market. The pace of leasing and development has slowed. Could be a good tenant market for life sciences. (Bart Mellits – Ballard Spahr)
Bullish on life sciences in Philly long term. Elements that make Philly a strong place for life sciences remain. (Bart Mellits – Ballard Spahr)
The price of aluminum has come down a lot. (Chris Beahan – Pella Windows and Doors)
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