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January 7, 2015

Philly Suburbs Rock in '15

Philadelphia's a great city to do real estate deals, but the suburbs are indisputably strong as well going into '15, Zommick McMahon president Ryan McMahon tells us. That's why we're excited to hold the Future of the Suburbs on Jan. 22.

Ryan, who will be a speaker at our event, says that the suburbs continue to strengthen on a number of levels. For instance, the top four counties in the state in per capita income are Chester, Montgomery, Bucks and Delaware, while Philadelphia ranks 45th out of the 67. He also points out that the suburbs have been hamstrung by travel times, but are now seeing a lot of improvements: the Turnpike's additional ramps, the widening of 202, the future widening of 322 and the future I-95/Turnpike connect. All of these will improve commute times and help push residential expansion in the suburbs.

Ryan adds that retailers know that the suburbs still include limited shopping options to service those residents with healthy bank accounts. “We've seen projects being driven by Whole Foods, Wegmans, Giant and Shop Rite in many areas of the suburbs,” he says. At the same time, space users like Royal Farms, CVS, Wawa, Rite Aid and a handful of banks are absorbing traffic-light corners. The Future of the Suburbs will be at the Radisson-Valley Forge Casino Resort: sign up here.

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Industrial's Revved Up for Another Good Year

Another hot property type in greater Philly in '15 will be industrial (as it was in '14, which our Industrial Summit speakers pointed out last month). NAI Mertz SVP Jeff Licht (snapped with son Jared), who's in the Bucks County office, tells us that he anticipates an overall strong year for industrial activity. Among other factors, demand for the property type has been strengthened by the ability of industrial properties to be repurposed for recreational, religious or multifamily use, he says.

Also, Jeff notes, interest rates are expected to remain low--at least through mid-year--spurring users and investors to find a property before they rise. “Increased volume in transactions should push prices per square foot higher, enough to hopefully trigger owners on the fence to finally participate in the market,” he says.

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Philly: Innovative Building Design Hotbed

Congrats to Wallace Roberts & Todd (WRT)'s Karen Blanchard, who's been elected chapter director for the 2015 AIA Philadelphia Board of Directors (her colleague Jared McKnight was elected associate director). Karen tells us this is an extraordinary time for architecture in Philadelphia, since the city has reawakened as a place to be. “More than ever people are embracing living, working and spending their free time in the city, making Philly a real urban hub,” she says. “That's reflected in the diversity of architecture that's stretching the definition of Center City, both horizontally and vertically."

Karen's latest design is the redevelopment of the 4.5-acre Wanamaker Middle School site at 11th Street and Cecil B Moore Avenue in Philadelphia, which has become mixed-use student housing with 832 beds. Completed last August by developer Goldenberg Group, and adjacent to Temple U, the property includes a residential and retail center, along with lively public open spaces and supporting retail options to anchor the southern edge of the campus.

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Energy Opportunities for Owners/Operators

Deregulation of electricity and gas has created savings opportunities for commercial property owners in Pennsylvania and most other states throughout the Northeast and Midwest. With bargaining power dependent upon their aggregate energy usage, owners can negotiate with utility companies and competing private suppliers for deals involving the best fixed pricing (set dollars/kilowatt hours) or index-based pricing (variable pricing based on the performance of the energy commodities markets). Owner-occupiers (including healthcare systems, universities and retail banks) stand to pocket their energy savings and should be motivated to explore opportunities with private suppliers. Electric and gas contracts must be carefully negotiated and documented. For example, property owners should make sure the ability to sell their buildings will not be subject to the consent of the energy supplier.

Our sponsor McCausland Keen & Buckman shareholder Andrew Maguire (pictured) negotiates commercial real estate and energy transactions on behalf of his clients. For more info, please contact Andrew at amaguire@mkbattorneys.com. The views expressed here do not constitute legal advice; parties to transactions should seek legal counsel.

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