The Center City condo boom peaked in 2005, said Allan Domb, president of Allan Domb Real Estate. "Between January and October 2006, prices fell between 12% and 15%," he said, and predicted, "not a third of the new projects will be built now." This is a revision from Domb's earlier prediction that half of those announced would not be built during this cycle.
There is still residential sales movement when sellers reduce prices, he said. Sales are strongest near Rittenhouse and Washington squares, while "the waterfront is very weak," he added. Opportunities lie in "product that is not being done, smaller units in the $270,000 to $750,000 range."
Macy's, which was just converted from the former Lord & Taylor, "is creating retail momentum," said Ron Rubin, chairman and CEO of Pennsylvania Real Estate Investment Trust. "Rents are starting to increase along West Walnut and Chestnut streets. Restaurants are booming; retail will follow," he predicted, adding, "retail has a herd mentality."
The hospitality sector has overcome the 2001 over-supply of rooms, according to Jay Shah, CEO of Hersha Hospitality Trust. One gap is the lack of boutique hotels," he said. "A W will start filling that space, but we could use a couple of branded boutiques, and, with convention center expansion, another four-star property."
In the office sector, "most markets will see moderate growth, and Philadelphia is in that category," said Bill Hankowsky, chairman and CEO of Liberty Property Trust. Predictions of rising vacancies with the addition of Cira Centre and Comcast Center "didn't happen." In the industrial sector, "the Lehigh Valley and Central Pennsylvania are very hot," he added.
Ken Balin, CEO of AMC Delancey and chair of ULI's Philadelphia District Council led the presentation. Joseph Gyourko, professor of real estate and finance at the University of Pennsylvania's Wharton School, moderated.
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