Guest Commentator: Bradley J. Korman, Co-CEO, Korman Communities
What economic trends will create opportunities or challenges for our region’s real estate development industry in 2017?
As we usher in 2017 the real estate development scene in Philadelphia continues to thrive in ways we haven’t seen in 30 years. A bold combination of multifamily, office, retail and mixed-use properties continue to evolve in many different neighborhoods throughout our region. Center City continues to see the rewards of a national trend to return to the urban core, while our outer suburbs like King of Prussia have evolved into 24-hour live, work, play communities. Everywhere we look there is new development and the runway seems clear, but is that the reality or the perception?
Opportunities have been abundant as interest rates remained low, access to capital – both domestic and foreign – was plentiful, and demand for new products seemed strong, especially those that combined residential with retail, office and ancillary amenities. AKA University City exists within the vertical neighborhood of FMC Tower, and AKA Washington Square resides within The Franklin, both of which include an element of long term stay apartments, short term luxury furnished residences, office and retail. Most of those fundamentals remain in play, but a change may come if developers aren’t careful.
Interest rates are starting to move and we haven’t seen real inflation for a long time. If developers aren’t mindful of the fundamentals then challenges may occur. You can’t just build “anywhere” because you have the capital. Patience and discipline must still guide you on where to build, how much to build and what to build. At some point we will reach a saturation point for new product and those projects that are better located with the right amenities and best price points will win.
As a region we have wonderful cultural amenities, exciting sports teams, a vibrant restaurant scene, and improving housing stock, yet we still haven’t attracted enough new employers who could make the biggest difference in our community. By attracting new companies and their growing workforces, we could spend more on our schools, infrastructure and public services. This would have the most impactful on our community and allow us to flourish even more. If we don’t attract new jobs, our growth will be limited to what we have today and that could result in a glut of new projects with limited users.
The future is bright for Philadelphia as it relates to the real estate scene, but we still have work to do to fill these beautiful new spaces.
Bradley Korman, along with other business leaders, will be speaking about the upcoming economic trends that will affect our regional business community at the Chamber’s 19th Annual Economic Outlook Conference, presented in partnership with Firstrust Bank. The program’s three-part agenda features results from the Federal Reserve Bank’s economic forecast survey of Chamber members, a discussion of the state and future of the global economy and markets from keynote speaker Kai Ryssdal and a panel of regional b