A Philadelphia Stalwart

By staff writer

March 2019

Philadelphia’s legal sector has been one of its strengths for decades. Firms are expanding their Philadelphia presence or entering the market, whether through mergers, acquisitions or opening new offices. Philadelphia stalwart Obermayer Rebmann Maxwell & Hippel LLP, on the other hand, has always known the City of Brotherly Love is the place to be for law firms. Founded in 1904, Obermayer has been a part of the community longer than the cheesesteak. Just like the city itself, Obermayer is going strong and seeing a lot of growth.

“The Tax Cuts and Jobs Act added a new tax provision to the Internal Revenue Code, which aims to provide big capital gains tax breaks to real estate and business investors who make investments in certain economically underdeveloped areas known as Qualified Opportunity Zones (QOZs),” Obermayer’s managing partner, Mathieu Shapiro, told Invest: Philadelphia.  “Against this backdrop, our interdisciplinary Real Estate & Construction team has been addressing the increasing needs of real estate investors and developers seeking to take advantage of these tax breaks.”

Obermayer’s growth mirrors Philadelphia’s nicely. Real estate and construction are two booming sectors for the city that show no signs of decreasing over the next year. Philadelphia is growing as a tech hub as well, and of course with all of this innovative technology comes the challenges of privacy and security. Obermayer has that covered.

“More and more, companies are seeking to protect their proprietary information — which could mean a secret formula, client lists, or even the magic mix they use to make their pricing work,” Shapiro told Invest:. “We are increasingly guiding clients across a range of activities: maintaining confidentiality, drafting effective agreements, investigating potential misconduct, gathering evidence of misconduct and, if necessary, commencing legal action.”

Cybersecurity is also a growing area for the city and the firm. For Obermayer, the commercial litigation team is protecting corporations and helping their businesses remain competitive.

“The advent of technology and innovation in the region has ushered in an increasing level of cybersecurity issues that keep our corporate clients across the board awake at night,” Shapiro said. “As such, we help more and more clients remain competitive by helping them overcome these challenges every day.”

A “Philadelphia lawyer” is someone who knows the most detailed and minute points of law or is an exceptionally competent lawyer. With their growth and longstanding history in the city, it is clear that Obermayer is a firm of Philadelphia lawyers leading Philadelphia’s growth.

For more information about our interviewees visit: https://www.obermayer.com/

The Talent Struggle

By staff writer

February 2019

Philadelphia is a city filled with diverse and creative talent, yet many of its businesses — like those across the country — cite the inability to attract and retain a high-quality younger workforce as one of their greatest struggles. Unemployment is low (4.8 percent in Philadelphia and just 3.7 percent nationwide), competition is high and turnover is expensive. Job seekers are in the driver’s seat when it comes to choosing a job and employer, and often they want to know about more than just salary and benefits before accepting a new position.

Our team at Invest: Philadelphia spoke with local leaders across a number of industries about innovative strategies for finding and keeping top talent in a tight labor market and the benefits Philadelphia has to offer its workforce. Here’s what they had to say:

“Employers that we are talking to in the region are working with an aging workforce. Baby boomers are no longer the largest generation in the workforce; it is now millennials. The speed of innovation is multiplying, and to keep up with trends and growth opportunities, employers have to focus on young talent. Because the generation after the millennials is smaller, there is more competition for them. We are already seeing that. Students these days are very savvy and know exactly what kind of employer they want and what kind of work they want. In order to be the employer of choice for this talent, employers are going to have to build relationships with this talent pool earlier.”

— Deborah Diamond, President, Campus Philly

“Overall, Philadelphia is a strong market. Life sciences and real estate are huge industries in the area, and businesses in these industries are investing more in their companies. These investments take the form of physical capital, improvements to buildings or machinery and technological innovations that streamline processes. These organizations have also been investing in their employees to boost retention. This emphasis on employee empowerment is beneficial for millennials whose work ethic is driven by social impact and purpose. It is important for them to understand how their work relates to their communities. Companies that spend the time empowering their employees will ultimately strengthen Philadelphia’s workforce.”

— Denise McKnight, Partner, Friedman LLP

“Philadelphia is an attractive market for people living and working here because you can have a work-life balance. There are high quality professional sports teams, engaging arts and cultural venues, great restaurants and a wonderful mix of history, tradition and modern energy. You can have a challenging and exciting career without being required to work 100 hours a week or spend all of your time commuting. Philadelphia offers an attractive and fulfilling lifestyle.”

— John Kirwin, Founding Partner and CEO, Argosy Capital

 

For more information on our interviewees, visit their websites:

Campus Philly: https://campusphilly.org/

Friedman LLP: https://www.friedmanllp.com/

Argosy Capital: http://www.argosycapital.com/

 

MontCo Is the Way to Go

By staff writer

February 2019

Student debt and the growing cost of education are topics of discussion across the country. In the Greater Philadelphia region, these concerns affect the hundreds of thousands of students who pursue their education in the City of Brotherly Love and its surrounding suburbs. Students and parents alike are looking for ways to minimize debt while maximizing education and experience. At the same time, colleges and universities are looking for ways to cut costs and increase enrollment while continuing to support the local economy.

Many students are choosing to attend community college, either to pursue an associate’s degree or to begin their education at a lower cost before transferring to a four-year institution. While community college once held a stigma, that perception is quickly shifting as more and more students recognize the value of the programs offered at these institutions. Montgomery County Community College (MCCC), located in Blue Bell in Montgomery County, PA, has been educating students since 1964. It has an enrollment of almost 13,000 students seeking education in programs like business, health, engineering, social services and more.

“One of the areas we are focusing on is workforce development to address the needs of the businesses in Montgomery County, as well as surrounding counties,” Dr. Kevin Pollock, president of MCCC, told Invest: Philadelphia when he sat down with our team. “We work closely with employers to develop customized training programs that have value in the workplace today and in the future. Through our training programs, businesses gain a skilled, knowledgeable workforce and a competitive advantage in the workplace.”

With a tuition that comes in significantly lower than many of the surrounding options, especially for in-county students, MCCC proves to be a smart economic choice for students of all ages and backgrounds. The college has programs for every type of student, from those looking to continue their educations to high schools students looking to get a jumpstart on their postsecondary degrees.

“We offer dual enrollment for high school students.” Pollock told Invest:. “This program allows high school students to earn college credits while still in high school. Students are able to challenge themselves with college-level courses and gain credits that can then be used toward completion of their associate’s degree here or transferred to a four-year institution.”

As education costs continue to grow, community colleges in the area are standing out for their lower price tags and exceptional programming. Whether a student wants to immediately enter the workforce or seamlessly transfer into a four-year institution, Montgomery County Community College is paving the way for students to meet their goals.

And that’s not the only benefit MCCC provides to the community; it is also a significant economic driver for the county. According to a recent study, MCCC students earn $6 more per hour for every dollar they invest in their education. From 2009 to 2010, these higher earnings and the related increased business output contributed an additional $362.4 million to the regional economy. Taxpayers also see a 7.2 percent return on their investment in MCCC.

Rising costs and accessibility will continue to pose challenges to higher education across the country, but community colleges are stepping in to provide cost-effective and quality alternatives to students while also serving as important economic engines for their local economies.

For more information on our interviewee, visit https://www.mc3.edu/.

Philly braved the rain to make Invest: Philadelphia’s inaugural launch conference a huge success!

January 25, 2019
FOR IMMEDIATE RELEASE

Philadelphia, PA – Philadelphia was the star of the show at the Invest: Philadelphia launch conference. Covering topics like healthcare, education and innovation, the standing room-only crowd was enrapt throughout the entire event. The 2019 edition, which debuted at the inaugural launch event on January 24, 2019, highlights the five-county region of Greater Philadelphia, including Philadelphia, Montgomery, Bucks, Delaware and Chester counties, with special focus chapters on the City of Chester and the dynamic neighborhoods in the City of Philadelphia. The launch conference took place at the Loews Philadelphia Hotel in Center City with over 300 people in attendance.

Following a short networking breakfast, the program began with an insightful keynote speech by Director of Commerce Harold Epps, who highlighted Philadelphia as a City on the Rise that has an abundance of offerings for talent and businesses alike. “Our economic success is all the more reason for Philadelphia to double down and keep moving forward,” said Epps.

Capital Analytics then hosted three in-depth discussion panels that focused on key topics related to the area’s dynamic growth and economy.

The first panel discussed Philadelphia’s leading healthcare industry. The panel was moderated by Susanne Svizeny of Wells Fargo, and panelists were Jack Lynch from Main Line Health, Jay Feldstein from Philadelphia College of Osteopathic Medicine, Larry Kaiser from Temple University Health System and Lauren Murdza from DLA Piper. Jack Lynch discussed the importance of collaboration between healthcare institutions, providers and payers. Jay Feldstein discussed the challenges and opportunities of being a graduate medical school. Lauren Murdza discussed private equity groups’ involvement in the healthcare space, and Larry Kaiser talked about making sure healthcare is accessible to all.

The second panel was centered on higher education in Philadelphia. The panel was moderated by Capital Analytics’ very own Abby Melone, and panelists were Craig Carnaroli from the University of Pennsylvania, Michael Mittelman from Salus University and Guy Generals from the Community College of Philadelphia. All of the panelists addressed the growing issue of student debt and the accessibility of higher education. Craig Carnaroli talked about Penn’s involvement in the community. Michael Mittelman discussed the importance of making sure students are ready to join the workforce directly after graduation, and Guy Generals spoke to the importance of switching the mindset of education to a K-16 focus.

 

The third and final panel focused on innovation across all industries. The panel was moderated by Mathieu Shapiro of Obermayer, and panelists were Tricia Marts of Veolia, Atif Ghauri of Mazars, John Giordano of Archer Law and Terry Booker of Independence Blue Cross. “I was able to walk from my office in Centre Square all the way to the event underground. If anyone from SEPTA is here, that is truly innovation at its finest,” moderator Mathieu Shapiro mused as he kicked off the panel.

Tricia Marts revealed that through Veolia’s partnership with Penn, they have accomplished the equivalent of taking 75,000 cars off the road. Terry Booker spoke to Independence Blue Cross’ partnership with Comcast and its focus on human-centered innovation. John Giordano discussed the innovation he sees in the clients he works with, while Atif Ghauri spoke about the importance of innovation in tech and cybersecurity. “The key term is pace, and the pace of innovation is now,” said Ghauri.

The event was attended by high-level guests and officials from some of Philadelphia’s key industries and economic institutions. Attendees were engaged, high energy and excited despite the bad weather. The house was still full at the end of the event.

“The panels were engaging and educational. This was a wonderful event,” Kathy Schriver of AKA Residences said after the event. Even the rain couldn’t dampen the excitement of celebrating the launch of Invest: Philadelphia!

***

About Invest: Philadelphia

Invest: Philadelphia is an in-depth economic review of the key issues facing Greater Philadelphia’s economy featuring the exclusive insights of prominent industry leaders. Invest: Philadelphia is produced with two goals in mind: 1) to provide comprehensive investment knowledge on Philadelphia to local, national and international investors, and 2) to promote Philadelphia as a place to invest and do business.

The book conducts a deep dive of the top economic sectors in the county including real estate, construction, utilities and infrastructure, transportation and aviation, banking and finance, legal, healthcare, life sciences, education, sports, and arts culture and tourism. The publication is compiled from insights collected from more than 200 economic leaders, sector insiders, political leaders and heads of important institutions. It analyzes the leading challenges facing the market, as well as covers emerging opportunities for investors, entrepreneurs and innovators.

 

For more information, contact us at: contact@capitalaa.com

The Bank of Millennials

By staff writer

January 2019

For the last few years millennials have been accused of “killing” products and industries — everything from Applebee’s to starter homes. Of course, millennials are not the sole cause of the downward trend in purchasing homes and breakfast cereals; rather, they are simply spending their money differently than their parents and grandparents did before them.

With this in mind, our team at Invest: Philadelphia sat down with local industry leaders to look into what effect millennials have had on the city’s, and the country’s, banking and finance industry. Here’s what they had to say:

The world has changed so much for individual investors. People are living much longer than ever before, and the cost of basicneeds like education and healthcare are at an all-time high. We have also seen a shift in financial planning responsibility from institutions to individuals. More and more people, especially younger generations, are looking for ways to secure their futures financially, and we are helping them do that by accessing alternative forms of investments.”

Steve DeAngelis, President, FS Investment Solutions

“Digital connectivity is important right now. With more millennials in the market than ever before who are used to seamless digital experiences, offerings need to be simple, and it needs to be easy to open an account. We have found success customizing our products for the different demographics we serve, like the student loan refinancing program. We provide a number of services online, like wealth management.”

Dan Fitzpatrick, President, Citizens Bank, Mid-Atlantic Region Head of National Industry Verticals, Citizens Bank

“We build long-term relationships with clients through high-touch and high-tech solutions that help establish life plans and stay on track. While the perception is that millennials and the younger populations are savvy with digital products, we think that is true of the more mature generations, too. It is our aim to offer banking how, where and when our clients want it.”

James Dever, Philadelphia Market President, Bank of America

For more information on our interviewees, visit their websites:

FS Investment Solutions: https://www.fsinvestments.com/support/articles/FS-Investment-Solutions

Citizens Bank: https://www.citizensbank.com/HomePage.aspx

Bank of America: https://www.bankofamerica.com/

Philadelphia’s Diversified Economy Highlighted at the Launch of Invest: Philadelphia 2019

FOR IMMEDIATE RELEASE

January 14, 2019

City of Philadelphia Director of Commerce Harold Epps will give the keynote address at the launch of Capital Analytics’ first publication focusing on Greater Philadelphia.

Philadelphia, PA – Greater Philadelphia’s robust healthcare industry, historically strong higher education sector and focus on innovation are just some of the focal points in the first edition of Invest: Philadelphia from Capital Analytics. The 2019 edition highlights the five-county region of Greater Philadelphia, including Philadelphia, Montgomery, Bucks, Delaware and Chester counties, with special focus chapters on the City of Chester and the dynamic neighborhoods in the City of Philadelphia.

Philadelphia’s housing market is one of the hottest in the country, and the region’s real estate industry is attracting increased interest from investors both domestically and abroad, particularly in the multifamily space. Utilities and infrastructure are covered in detail as the city looks to alternative sources of energy to sustainably grow and develop. Transportation is a hot topic, with the Philadelphia International Airport continuing to expand its reach and SEPTA making improvements to help keep counties connected via extensive bus and train routes. The Invest: Philadelphia publication from Capital Analytics is a 208-page economic analysis that highlights business opportunities for investors, entrepreneurs and innovators alike looking to Philadelphia for opportunities.

The official launch of the publication will take place on January 24, 2019, at the Loews Hotel. Following a short networking breakfast, Harold Epps, Director of Commerce for the City of Philadelphia, will give a keynote address that underscores some of the major achievements of Philadelphia’s economy over the past 12 months. This will be followed by three robust panel discussions.

The panels will address major themes currently dominating Philadelphia’s economy: education, healthcare and innovation. The “Healing the Community: Healthcare in Philadelphia” panel will be moderated by Susanne Svizeny of Wells Fargo. Panelists will be Dr. Jay Feldstein of the Philadelphia College of Osteopathic Medicine, Jack Lynch of Main Line Health, Dr. Larry Kaiser of Temple University Health System and Ray Williams of DLA Piper. The “World Class Minds: Education in Philadelphia” panelists will be Craig Carnaroli of University of Pennsylvania, Guy Generals of Community College of Philadelphia and Michael Mittelman of Salus University. The “On the Cutting Edge: Innovation in Philadelphia” panel will be moderated by Mathieu Shapiro of Obermayer, and panelists will be Dan Hilferty of Independence Blue Cross, Tricia Marts of Veolia, Atif Ghauri of MAZARS and John Giordano of Archer Law.

The event will be attended by hundreds of high-level guests and officials from some of Philadelphia’s key industries and economic institutions.

“Invest: Philadelphia is Capital Analytics’ first foray into the Northeast,” said Abby Melone, president of Capital Analytics. “After resounding success in South Florida and Georgia, we wanted to expand up the coast to the hidden gem of the Northeast. Philadelphia is increasing its global visibility, and we wanted help the city capitalize on that. As the most affordable major city in the Northeast corridor, Philadelphia has a great deal to offer people of all ages, from students to young professionals and from entrepreneurs to capital investors. We are excited to be a part of Philadelphia’s journey.”

 

***

About Invest: Philadelphia

Invest: Philadelphia is an in-depth economic review of the key issues facing Greater Philadelphia’s economy featuring the exclusive insights of prominent industry leaders. Invest: Philadelphia is produced with two goals in mind: 1) to provide comprehensive investment knowledge on Philadelphia to local, national and international investors, and 2) to promote Philadelphia as a place to invest and do business.

The book conducts a deep dive of the top economic sectors in the county including real estate, construction, utilities and infrastructure, transportation and aviation, banking and finance, legal, healthcare, life sciences, education, sports, and arts culture and tourism. The publication is compiled from insights collected from more than 200 economic leaders, sector insiders, political leaders and heads of important institutions. It analyzes the leading challenges facing the market, as well as covers emerging opportunities for investors, entrepreneurs and innovators.

For more information, contact us at: contact@capitalaa.com

 

 

Midterm Madness

By staff writer
November 8, 2018 – 2 min. read

Tuesday’s midterm elections attracted record numbers of voters, with estimates putting the count at 113 million. This historic turnout brought 110 female winners, the country’s first openly gay governor and more than 30 flipped seats in Congress, but it also underscored the deep and often contentious divide facing our nation. Capital Analytics has been keeping a close eye on the results, particularly those affecting our markets in Florida, Georgia and Pennsylvania.

One of the biggest takeaways is the Democrats regaining control of the House, surpassing the 23 seats necessary for majority rule by more than 10. In Florida, former University of Miami president Donna Shalala won the 27th District previously held by Republican representative Ileana Ros-Lehtinen, edging out Republican opponent Maria Elvira Salazar. Democrat Debbie Mucarsel-Powell also won over Republican Carlos Curbelo in Florida’s 26th District. Pennsylvania saw three seats flipped by Democrats Mary Scanlon in the 5th District, Conor Lamb in the 17th District and Chrissy Houlahan in the 6th District.

Two congressional races in Georgia remained too close to call Wednesday evening, the first in the 6th District, where Republican Karen Handel is seeking reelection but trailed Democrat Lucy McBath 49.55 percent to 50.45 percent. In the 7th District, Republican Rob Woodall and Democrat Carolyn Bourdeaux were in a similar position, with Woodhall holding a slight lead of 50.23 percent over Bourdeaux’s 49.77 percent. Georgia law requires a recount if the final vote margin is 1 percent or less, according to the Associated Press. Both campaigns are waiting for absentee ballots to be counted in hopes of naming a clear winner.

Though the House succumbed to the “blue wave,” the GOP not only retained control of the Senate but also bolstered it with a number of key victories in states like Indiana, North Dakota and Missouri. In Florida, the hotly contested race between Republican former governor Rick Scott and incumbent Democrat Bill Nelson is heading for automatic recount. According to unofficial returns posted on Wednesday by the state Division of Elections, Scott held a 30,239-vote lead out of 8.1 million ballots cast — a difference of just .38 percent. In Florida, if the margin in a race is less than .5 percent, a recount is automatically triggered. The Senate race might not be the only one to move to recount, either. Florida’s agriculture commissioner contest between Republican Matt Caldwell and Democrat Nikki Fried is even tighter, with Caldwell carrying a slim .16 percent lead on Wednesday evening.

While Tom Wolf comfortably won reelection in Pennsylvania, the Florida and Georgia governor’s races were much more hotly contested. In Florida, Democrat Andrew Gillum conceded to Republican opponent Ron DeSantis early on Wednesday, but by late Wednesday DeSantis’s lead had narrowed to a margin of just .57 percent. However, this still remained outside of the .5 percent margin that requires a recount under Florida law. Votes were still being counted on Thursday morning, and if the margin falls below .5 percent, a recount will be triggered.

Georgia’s gubernatorial race is even closer, with Democrat Stacey Abrams refusing to concede to Georgia Secretary of State Brian Kemp (R) and vowing to “fight for every vote.” While Kemp’s campaign declared victory to reporters on Wednesday evening, the Abrams campaign readied its legal team to challenge the election results. A runoff, if it comes to that, would be held on December 4.

Even as heated battles underscored the increasingly polarized nature of U.S. politics, culminating in a divided Congress, the 2018 midterms marked a new high for women taking seats in the chamber, with 98 women projected to win in the House and 12 in the Senate. Even more notable is the fact that 34 of these women are newly elected members of Congress. This “pink wave” includes 29-year-old Alexandria Ocasio-Cortez, the youngest woman in history to take a seat in Congress, serving New York’s 14th District. In Pennsylvania, a record-breaking four women are projected to win seats in the House. This is particularly momentous considering not a single woman currently represents the state in the House. Women are also projected to win in nine gubernatorial races (not counting Stacey Abrams, who is still vying to become the country’s first female African-American governor).

In addition to the inroads made by women, there has also been a noticeable push for diversity in public office. Two Muslim women and two Native American women will take seats in Congress, and Colorado’s Jared Polis (D) will become the country’s first openly gay governor. Overall, more than 100 LGBTQ candidates claimed victory on Tuesday night, indicating changing attitudes toward how voters think about both LGBTQ candidates and rights. Exit polls suggest that voter diversity also hit all-time highs for midterm elections, with the non-white vote estimated at 28 percent. (For perspective, in 1990 non-white voters accounted for just 9 percent of the vote.)

While some races remain too close to call and others were resounding losses or victories, depending on which side of the party line you walk, the fact that so many people showed up to vote is something all parties can be proud of. We’ll be keeping an eye on the tight races in Florida and Georgia and looking forward to what’s in store in 2020.

 

A Surge of Competition

By staff writer
October 2018 – 2 min. read

Over the last five years, several new hotels have been announced in Philadelphia to accommodate the waves of leisure and business travelers visiting our fair city. These are both big-name hotels and smaller boutiques, both of which are strengthening Philadelphia’s credibility as a prime tourist destination. What’s more, nearly all of these hotels are planned for Center City.

Visit Philadelphia recently reported that “nine new hotels are unlocking 1,902 new rooms to meet visitor demand, which has increased at a rate of 86 percent over the past 20 years.” And these new projects couldn’t come at a better time. Visit Philly also reported that in 2017, a record was set for 1.1 million leisure hotel room stays, a 334 percent uptick since the late 1990s. With nearly 44 million leisure travelers visiting Philadelphia last year, leisure travel is the biggest driver for bookings in the city as a whole.

One of the newest hotels on the scene is the Cambria, located along the Avenue of the Arts in downtown Center City. General Manager Jerry Rice says that this hotel is owned and built by Philadelphians for Philadelphians. “We’ve worked hard to curate a sense of place with the locally inspired designs and unique upscale amenities that the Cambria brand is known for nationwide,” Rice told Invest: Philadelphia when he sat down with our team earlier this year.  “Our presence on Broad Street has drawn consistent interest from travelers and locals alike, and we hope the hotel will continue to serve as a gathering place for all to experience the heart and soul of the city.”

Nevertheless, with so much new inventory coming online in Philadelphia’s hotel and hospitality sector, existing suppliers are rightly apprehensive. We spoke with some of these hoteliers to get their take on the issue.

Philadelphia’s Warwick Hotel.

“Philadelphia is seeing a 2,000-room increase from 2012 to 2019, so inventory is going up quite a bit,” Ed Grose, executive director of the Greater Philadelphia Hotel Association, told Invest:. “This means that we have to be on top of our game in terms of marketing the city and bringing people in.”

As inventory increases, it will become more difficult to keep Philly hotels running at 80 percent occupancy. The Hotel Association is hoping that the proposed hospitality investment levy will help the average daily rate increase.

The positive side of the story, as Michael Roberts, general manager of the Windsor Suites, understands it, “is that we hope the increase in rooms available in Center City Philadelphia will help to accommodate large conventions needing more rooms available within proximity to the Convention Center.” The increase in demand across all segments — including the corporate, convention and leisure businesses — should help to mitigate the effects hotels across the city might feel as the supply of available rooms increases.

For institutions like the Rittenhouse Hotel, it’s all about staying true to their history and their goals. “We want to deliver on the expectations and services of a traditional luxury hotel without the weight of a brand,” General Manager Reginald Archambault told Invest:. “Our ultimate goal is personalized service. It doesn’t matter if you are coming in for a stay, a spa treatment or tea; we want you to have a memorable and wonderful time. We want everyone who comes to the Rittenhouse to feel cared for, and it is that philosophy that keeps people coming back.”

These are the strategies that will allow Philadelphia’s hotels to stay competitive in the face of a rapidly growing hospitality industry. We’re excited to see what the future holds for Philly’s hotels!

For more information about our interviewees, visit their websites.
The Cambria: https://www.cambriaphiladelphia.com/en-us
Windsor Suites:
https://www.thewindsorsuites.com/
Rittenhouse Hotel: https://www.rittenhousehotel.com/
Greater Philadelphia Hotel Association: http://www.gpha.us/
Visit Philadelphia: https://www.visitphilly.com/

Changing Tides and Market Resiliency in Philadelphia

By staff writer
September 2018 – 2 min. read

Some cities are currently booming, but there’s always a thought looming in the background that at any time the pendulum could swing in the other direction. Philadelphia’s industry leaders say that the city has recession-proof businesses, which were in full view 10 years ago during the economic crisis.

“Philadelphia is a dynamic market. It’s also a diverse economy; we don’t depend on just one thing. We’re slower and steadier than most,” Harris Heller, managing director – originations at Hunt Real Estate Capital, told Invest: Philadelphia when he sat down with our team earlier this year. “We never got too high, therefore we don’t get too low.”

While its real estate market has not traditionally been investors’ first choice when compared to other more glamorous markets like nearby New York City, there’s no denying that its steady growth creates low-risk investment opportunities with excellent potential for appreciation. Slow and steady is what will keep Philadelphia strong and sustainable.

 

 

Harris Heller, Managing Director – Originations, Hunt Real Estate Capital.

Jason Wolf, Managing Principal, Wolf Commercial Real Estate.

“This is a very positive and exciting time to be in real estate in Philadelphia, and we want that to continue,” Jason Wolf, managing principal of Wolf Commercial Real Estate, told Invest:. “Philadelphia is seeing a lot of investment coming from New York and New Jersey. Buildings that trade for $100 or $150 per square foot in our market are opportunities to make an investment at almost half the cost of what someone would spend in the New York market. This makes us an attractive market for investment, which is why we are seeing so much capital come in from these neighboring, more expensive markets.”

Innovations in technology and e-commerce that are upsetting the real estate industry in other cities have led to exciting trends in Philadelphia and increased investment from outside channels. As Credit Suisse reports, roughly one-fourth of the nearly 1,100 malls in America are in danger of closing. (However, it should be noted that the King of Prussia Mall, the largest shopping mall on the East Coast, is in no danger of shutting down and remains a huge economic driver for Montgomery County.) Moreover, a report from the U.S. Bureau of Labor Statistics indicates that department stores have lost 500,000 jobs since 2002, while online retailers created only 200,000.

 

In order to make up for this deficit, one of the biggest shifts in commercial real estate has been the move to a more experiential retail model, hence the concept of “de-malling.” De-malling refers to the partial or entire demolition of malls to create a more dynamic kind of retail experience, placing a bigger emphasis on things such as restaurants and movie theaters.

“Take a look at the Gallery Project in the Market East neighborhood of Philadelphia,” John Adderly, executive vice president of NAI Mertz, told Invest:. “They are changing a mall-like space and bringing the focus back to the street. These are trends we are seeing in the region.”

“Industrial has much more development going on right now,” Adderly noted. “There is a demand for it, especially in this region. Philadelphia is in a great location: the least expensive primary market in the Northeast Corridor.”

Opportunities in this market are on the “value-add” side of things. Investors and developers are searching for old malls or large decommissioned shopping centers with large vacancy boxes and generating novel plans for revitalizing these spaces.

As Adderly notes, Philadelphia offers something that other dynamic cities do not: an affordable cost of living. As such, the city can retain a robust and talented labor pool; the skilled analysts, graphic designers and marketing professionals aren’t getting priced out. In Philadelphia, young professionals can live affordably, and that has fostered a healthy live-work balance. As long as existing structures can be co-opted for the times and the younger generations are encouraged to land here, Philadelphia looks to maintain its trajectory of steady, sustainable growth for many years to come.

John Adderly, Executive Vice President, NAI Mertz.

For more information on our interviewees, visit their websites:
NAI Mertz:  http://www.naimertz.com/
Hunt Real Estate Capital:
https://huntrealestatecapital.com/
Wolf Commercial Real Estate: https://wolfcre.com/