PHILADELPHIA-Tenants here, as elsewhere, have the upper hand in today's market. During a session at RealShare Philadelphia yesterday, moderated by Sidney Smith, president, Smith Mack & Co., users shed light on the Philadelphia CBD's distinctions, strengths and drawbacks.
“Of the 17 markets we're in, only two -Bangor, ME and Cherry Hill, NJ – are less expensive. From a tenant perspective, Philadelphia is undervalued in just about every way,” said Mark Brookman, chairman of the real estate department of the locally based Duane Morris law firm. “We have concerns about the quality of the workforce, however, not among lawyers, but within the day-to-day, non-attorney labor pool.”
The pool of knowledge workers here is “enormous,” said Bill Fisher of University Science Center. “We hear companies telling us they're eager to scoop up people from the universities. On top of that, they're amazed at how little its costs to buy a house here versus San Diego, for example. In addition, the quality of life issues here are a big plus. The city wage tax,” he concedes, “is always a problem.”
“There's great opportunity [for corporate tenants] in the Philadelphia market,” said Robert L. Hamilton, VP of global corporate real estate, Cigna. “We can grow here.” Regarding the impact of the wide spread between rental rates at trophy buildings in relation to class-A office properties, he said, “corporate America is changing its idea of office buildings. We now look at whether or not the rental rate will enable corporate growth.”
In a RealShare session about the current capital markets, moderated by Ed Reidlinger, SVP of GMAC Commercial Mortgage, Steven Kohn, president of Sonnenblick-Goldman Co. advised investors to “take on as much 10-year debt as you can get your hands on, even if there's low return on occupancy. We're recommending going fixed.” The multifamily and retail segments are gaining special interest here, Kohn said.
“We're hoping commercial lenders will put even more pressure on owners,” said Art Pasquarella, EVP and COO of Berwind Property Group. “It will put more distressed assets into play. We can take some risk [given today's interest rates].”
The industry's failure to recruit top-notch professionals rose to the fore in a discussion of “Managing a Real Estate Business in Difficult Times,” moderated by Bob Walters, managing director of CB Richard Ellis mid-Atlantic region. “Hiring practices by most commercial real estate companies is very poor to mediocre,” said Anthony LoPinto, managing director and CEO of Equinox Partners.
He added, however, “companies' are not hiring MBA graduates, primarily because they don't have enough stock in the real estate MBA programs. We need to address how to make those programs better.”
Summaries of an economic crossfire between two local economists, moderated by Jonathan Schein, president and CEO of Real Estate Media; a town hall meeting, moderated by GlobeSt.Com editor John Salustri; and a one-on-one interview with William Hankowsky, CEO of Liberty Property Trust, by Michael Desiato, editor-in-chief of Real Estate Media and GlobeSt.com will appear on this page tomorrow. RealShare Philadelphia was conducted by Real Estate Media Inc. and GlobeSt.com.
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