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:
Hunt Real Estate Capital:
Wolf Commercial Real Estate: