Philadelphia's Comeback Shows No Signs of Stalling
Philadelphia is booming in ways not seen since the end of World War II, according to the speakers at Bisnow's Philadelphia State of the Market. Is it going to continue? Probably, because people want to be here.
As recently as the 1990s, there was an exodus of graduates and other young talent from Philadelphia to New York and Washington, our speakers noted, but now the situation is reversed, in part because Downtown Philadelphia enjoys a relatively lower cost of living, while at the same time offering an urban quality of life that's every bit as good as those other East Coast cities. Snapped: MRP Realty managing director Charley McGrath, JLL VP Lauren Gilchrist and HFF senior managing director Mark Thomson.
Employers have also taken notice of Center City growth, and decided they need to be Downtown, too. Currently over 25% of office leasing in the Downtown market represents net new demand to that market, our speakers explained, and growth since the end of the recession means that Philadelphia now has the second-largest Downtown on the East Coast, with a working population of 290,000 in Center City. In the metro market an average of 16,800 jobs have been added each year for the last decade. Liberty Property Trust VP Brian Cohen, Berkadia senior managing director Bob Falese and Lyons Cos EVP Joe Valerio, who moderated.
Workers and employers aren't the only ones to notice Philadelphia's renaissance. Investors have entered the market in recent years from other parts of the country and all over the world—Canada, Europe, Latin America, China, the Middle East. The influx of capital is supporting massive new projects, and sustaining a cycle of growth in a variety of industries, all of which use space: medical, R&D, technology. That growth, in turn, fuels the need for residential properties. O'Neill Properties Group founder Brian O'Neill and Post Brothers Apartment president Matthew Pestronk.
The outlook for new development is still promising, our panelists said, especially in the rental apartment sector. Demand for apartments is robust—largely in the city, for previously mentioned reasons, but also in the strongest of the suburbs. Some Baby Boomers now want apartments, but mainly Millennials are doing the renting, because of a confluence of reasons. For them, family formation is now coming later; they're experiencing homebuyer skepticism as the result of coming of age at the time when the residential market had been crushed; and they've discovered the city after growing up in the suburbs. BET president Michael Markham and McGladrey partner Beryl Simonson, who moderated.
Another thing about Philadelphia apartments, according to our panelists: New and newly renovated properties are great improvements on the last generation of apartments. They have better designs, more interesting amenities, better views and more outdoor space. That's the result of sophisticated and affluent renters flooding the marketplace. Also, the last generation of apartments was mainly for empty nesters, and the units were relatively small. People want bigger spaces now, and developers are accommodating them. Snapped during the networking: Kawa Capital Management's John McElwee, Joe Valerio, and Charley McGrath.