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New Census Figures Show Rise in College Educated Renters in Philly

Just before the start of 2020, the U.S. Census Bureau released a treasure trove of its most recent demographic data from 2018.

While the census’ data releases are slightly dated, the bureau still provides far and away the most granular insights available on changes in long-term demographic trends that offer a view of the national and Philadelphia commercial real estate markets.

For the U.S. commercial real estate market – including Philly retail space – one of the most important takeaways from the recent release was the continued surge in Philadelphia’s population of college-educated renters.

This CoStar Realty Information Inc. report involving U.S. and Philadelphia commercial properties is being made available through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

The year-end tally of overall renter households in Philadelphia County wasn’t particularly noteworthy. At 287,500, the figure was almost unchanged compared to 2013 levels. (See Chart “New Households Moving into Philadelphia County”)

But the slow-growing headline masks dramatic changes in the demographic makeup of Philadelphia’s renter population. With rents having risen for 10 years straight, low income renters are being priced out of Philadelphia at an alarming rate.

The number of renter households without a college degree declined by almost 20,000, or 13 percent over the past five years, more than 10 times the national rate of decline in this cohort. Conversely, the number of renter households with bachelor’s or graduate degrees jumped to 97,000 in 2018, an acceleration over the 5.4 percent annual growth the figure has averaged during the past five years. (See Chart “Renter Households With Bachelors Degrees or Higher”)

In line with these shifts, Philadelphia’s share of renter households earning over $75,000 has now doubled from 10 percent in 2010 to 21 percent in 2018, with most of the gains accruing during the second half of the decade. (See Chart “Percentage of Renter Households Earning $75K+”)

Why is Philly experiencing such rapid growth in high income renters? Increasing affordability barriers to homeownership (which will be covered in a future Costar Research update) are keeping more high-income residents living near U.S. and Philadelphia commercial real estate listings in the renter pool well into their 30s.

However, even greater affordability challenges in nearby New York and Washington, D.C., are sending residents to be closer to national and Philadelphia commercial real estate properties. As housing costs have skyrocketed in those locations during recent years, the number of college-educated migrants arriving in Philadelphia annually has grown by more than 50 percent since 2012.

This influx has been offset by Philadelphia’s continued losses in low- and middle-income renters. Census data suggests that in many cases, these renters are moving to some of the lowest-cost corners of the Philadelphia metropolitan statistical area, including Delaware County, Pennsylvania, and New Castle County, Delaware, which both saw their tallies of non-college educated renters rise by more than 4,000 over the past five years. However, others continue to leave national and Philadelphia commercial real estate properties seeking the mix of lower housing costs and better blue-collar employment prospects offered in the southern U.S. (See Chart “Total Renter Households”)

The overarching takeaway from the 2018 census release is that while Philadelphia’s renter population is growing more slowly than it was five years ago, it continues to gentrify at a rapid pace – By Adrian Ponsen, CoStar Realty Information Inc.

For more information about Philly retail space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly retail space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly retail space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

 

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Job Growth, Consumer Spending Bode Well for CRE in 2020

The longest economic expansion since World War II in the national and Philadelphia commercial real estate markets shows indications of staying solid in 2020, extending the record bull run for U.S. commercial real estate despite some risks that could eventually move the country toward a recession, according to CoStar economists.

Trade wars and a slowdown in the U.S. manufacturing sector as well as around the globe last year roiled equity markets and rattled businesses in the U.S. commercial real estate market – including Philly retail space, CoStar economists say in the “2019 Year in Review of the U.S. Economy” video (available by clicking here). This robust job growth has, the CoStar experts said, extended the spending power of American consumers, the heart of the nation’s economic engine.

This CoStar Realty Information Inc. report involving U.S. and Philadelphia commercial properties is being made available through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

“Our growing economy still bodes well for demand for commercial and multifamily real estate,” said Christine Cooper, managing director and senior economist from CoStar’s Los Angeles office. “Expanding payrolls will continue to fuel demand for office space, while rising incomes and consumption will boost demand in industrial and retail sectors. As job growth continues, consumers appear quite optimistic and unconcerned by the trade war and any economic slowdown abroad.”

Trade tensions caused markets dominated by U.S. and Philadelphia commercial real estate listings to swoon, resulting in distress and uncertainty for businesses dealing with disruptions to their supply chains and higher costs. That made firms cautious in their plans for expansion and private business investment, which has been slowing since mid-2018, said Galina Alexeenko, managing director and senior economist from CoStar’s Atlanta office.

“The business sector’s mood soured in 2019 as uncertainty reigned, costs rose, profit margins compressed and earnings growth slowed,” Alexeenko said. “Falling exports and the pullback in business investment have been a drag on economic growth.”

Migration of workers from the Northeast and Midwest – as well as throughout national and Philadelphia commercial real estate properties as well – continued to bolster surprising strength in labor markets, with job growth fueling real estate demand in the South and U.S. West, said Alexeenko. The Federal Reserve Bank faced rising trade uncertainties, slowing inflation and a global economic slowdown, the analysts said in the video.

“Going forward into this new decade, we expect economic growth to slow somewhat as the labor market cools, consumer spending loses some momentum and persistent global and trade policy headwinds weigh on business sentiment and investment,” Cooper said. – By Randy L. Drummer, CoStar Realty Information Inc.

For more information about Philly retail space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly retail space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly retail space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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2019 U.S. Office Investment, Leasing Shatters Records

Demand for U.S. offices throughout national and Philadelphia commercial real estate markets set a post-recession record in 2019 as companies and real estate investors set aside concerns about a slowing global economy and snapped up workspace.

The average U.S. office vacancy rate matched a post-recession low of 9.7 percent and office sales and leasing set new records in 2019 in the U.S. commercial real estate market – including Philly retail space, CoStar economists say in the “2019 Year in Review of the U.S. Office Market” video (available by clicking here). This should result, they say, in strong demand and performance through at least the middle of this year as technology companies like retailer Amazon and iPhone maker Apple move into new offices.

This CoStar Realty Information Inc. report involving U.S. and Philadelphia commercial properties is being made available through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Led by about 8 million square feet taken by shared-office provider WeWork, total signed leases among U.S. and Philadelphia commercial real estate listings increased to a record 360 million square feet in 2019, and the total could rise by another 100 million square feet as CoStar researchers wrap up data collection for the year, said John Affleck, CoStar’s vice president of market analytics. WeWork is expected to scale back in 2020 after it scrapped an initial public offering and replaced its CEO in 2019.

About 160 million square feet of office space is under construction, roughly 2 percent of the nation’s total office supply, with Austin, Texas; Nashville, Tennessee; and San Jose in California logging the most building activity. Expanding tech firms such as Salesforce and Pinterest have snapped up space for future growth, signing leases for national and Philadelphia commercial real estate properties even before buildings receive development approval, said Mike Roessle, director of U.S. office analytics for CoStar Group.

“It’s surprising that large tenants are finding available space in such a low-vacancy rate environment,” Roessle added.

While average rent growth decreased in 2019, it ended the year at an average 1.8 percent. CoStar expects those trends to continue in 2020, forecasting 1 percent average annual rent growth from this year through 2024, Roessle said.

Despite rising concern about the possibility of a global recession, investors shelled out more than $130 billion to buy buildings last year, a figure that could approach $150 billion as CoStar’s researchers finish collecting deal information. That would be the highest total since 2007, the peak of the previous real estate boom.

Office investment in New York City was down significantly while sales in Seattle, San Francisco and other tech-focused markets increased last year, Affleck said. – By Randy L. Drummer, CoStar Realty Information Inc.

For more information about Philly retail space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly retail space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly retail space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Sale and Leaseback of Commercial Real Estate

Sale and Leaseback of Commercial Real EstateLet’s explore the sale and leaseback of commercial real estate. Confer with the professionals at WCRE or ask us for a seasoned real estate or tax attorney but here’s one technique Abo has seen work well with business clients. Although real estate is generally thought of as an illiquid asset, some liquidity can be achieved by taking out a loan backed by the property. Alternatively, a sale and leaseback may be used effectively if a company’s balance sheet is burdened with excessive debt or just having difficulty in obtaining new capital. Typically, the transaction involves the company owned property being sold to a third party and then leased back to the company under a long-term lease.

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Sale and leaseback transactions may be on the rise but clients need to be aware that the IRS often focuses on transactions between closely-held corporations and their controlling shareholder to make sure that these transactions benefit the company as well as the shareholder. In one common type of sale and leaseback transaction, the company sells the land with a building on it to the shareholder and, in turn, the shareholder leases it back to the company. Some of the financial and tax benefits we’ve seen have included:

The rental deductions the company could take might be significantly larger than the former depreciation deductions if the property had been in service for many years.

After the sale and the leaseback transaction, the shareholder’s basis in the property will be its fair market value which is usually greater than the price paid for the property by the corporation. Thus, the shareholder’s depreciation deduction would be much greater than what was previously available to the corporation (also still need to consider the tax consequences of the sale to the corporation).

The sale and leaseback may enable the shareholder to generate passive rental income that could be offset
against passive losses of the shareholder.

The IRS would obviously be concerned that these transactions have economic substance and that they are
based on reasonable market conditions, and not just designed to generate larger tax deductions. Thus, for
a sale to be valid, the controlling shareholder should have taken an equity interest in the property and also
assumed the risk of loss. For the leaseback to be valid, four tests come to mind that really should be met:

1. The useful life of the property should exceed the term of the lease.

2. Repurchase of the property by the corporation at the end of the lease term should be at fair market value and not at a discount.

3. If the leaseback allows for renewal, the rate should be at a fair rental value (speak to WCRE, not necessarily the accountant).

4. The shareholder should have a reasonable expectation that he or she will generate a profit from the sale and leaseback transaction based on the value of the property when it is eventually sold and the rental obtained during the lease term.

I suspect one of the biggest risks for the seller-lessee is the loss of a valuable asset that could have substantially appreciated over its useful life. Also, the rental market could drop, leaving the seller locked into a rental rate in excess of fair value. On the other side of the table, the seller could move or default, leaving the buyer with unattractive real estate in a soft market.

Even if there are no other problems, the benefits of the deal could be substantially reduced if the IRS deems that it is merely a “financial lease.” In that case, the IRS will treat the seller-lessee as the true owner of the real estate, with all the appropriate tax assessed, and the buyer-lessor will be treated as a lender-mortgagee.

Since sale and leaseback transactions can be quite complicated and also have to pass IRS muster, as I stated earlier, whether you are a buyer, seller or investor, you are well advised to consult with WCRE and seasoned real estate/tax counsel about your financial and tax consequences and the manner of structuring and implementing them to withstand possible IRS challenge.

FOR MORE INFORMATION:
Martin H. Abo, CPA/ABV/CVA/CFF is a principle of Abo and Company, LLC and its affiliate, Abo Cipolla Financial Forensics, LLC, Certified Public Accountants – Litigation and Forensic Accountants. With offices in Mount Laurel, NJ and Morrisville, PA, tips like the above can also be accessed by going to the firm’s website at www.aboandcompany.com.

 

Martin H. Abo, CPA/ABV/CVA/CFF
307 Fellowship Road, Suite 202
Mt. Laurel, NJ 08054
(856) 222-4723
marty@aboandcompany.com
For more information, contact:

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Mixed Messages Cloud the View Toward Clarity in Economic Policy

Analysts had hoped to get some clarity in the past week on both monetary policy and fiscal policy fronts. Instead, with all the recent announcements, reversals, and delays related to trade deals, there were many moving parts with which to contend.

On the monetary policy side, the Fed formalized its intent to keep interest rates in the U.S. economy – along with national and Philadelphia commercial real estate markets – steady for the foreseeable future. This was largely expected, though some comments by Federal Reserve Chairman Jerome Powell suggested an interesting shift in the committee’s mindset over the previous year.

In his most recent press conference, Powell said “even though we’re at 3.5 percent unemployment, there’s actually more slack out there.” And then later, “I like to say the labor market is strong. I don’t really want to say that it’s tight.”

This CoStar Realty Information Inc. report from Robert Calhoun and Matt Powers involving economic issues as they relate to U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

The suggestion by a Fed chairman that 3.5 percent unemployment affecting, among other segments of the economy, the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – doesn’t represent maximum employment would have seemed crazy even just three or four years ago and would have been met with incredulity.

We know that to be true because in June of 2016, then-Fed Governor Jerome Powell said, “The unemployment rate has fallen from 10 percent to 5 percent, close to the level that many observers associate with full employment.”

We should congratulate the Fed for being humble about its ability to estimate something unobservable like full employment. You can’t see full employment, but you will know it by its fruits. Those fruits are rising wages and rising inflation.

November’s consumer price index showed little risk of an undue rise in inflation any time soon. While the monthly increase in the core consumer price index (excluding food and energy) was double that of October, the year-over-year increase remained at 2.3.

The Fed bases its inflation target on a measure known as personal consumption expenditure, which tends to run lower than the index due to differing weights. As the core index was most recently 73 basis points above core expenditure, this week’s inflation data suggests that the Fed should continue struggling to meet its inflation target and its resultant effects on U.S. and Philadelphia commercial real estate listings.

As for future wage growth, that depends on continued hiring. Earlier in the week, we got more information on the health of the labor market in the form of the National Federation of Independent Business’s survey. Widespread small business sentiment – as well as the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – appears to have rebounded from uncertainty-driven declines over the last few months.

Plans to increase both capital spending and hiring rebounded strongly, reversing declines that were looking worrisome. The reason for the improvement appears to be better November sales, with more firms reporting an increase in sales than a decline.

Firms were already seeing improvements even before this week’s improved clarity on the outlook. The survey questions about labor tightness and wage growth involving national and Philadelphia commercial real estate properties showed meaningful upticks as well. Given such low recent levels in sentiment across the board, we have been expecting a slowing in growth. While this is still likely, as seen in Friday’s weaker retail sales figure, the most recent small business report says maybe we’ve found a floor.

Last week also provided needed clarity from the fiscal side after weeks of conflicting reports. On Tuesday, the Democrats and Republicans came to an agreement on revamped language for a U.S.-Mexico-Canada trade deal. On Thursday, the U.S. and China reportedly finally agreed to terms on “Phase One” of their trade deal, two months after it was initially reported to be agreed on.

Later is better than never, with the deal reported to call off the planned Dec. 15 tariffs and cut the Sept. 1 tariffs in half. While some details are still lacking and there is no guarantee of further progress, the worst case has been averted. Much like with the Fed, there appears a reduced chance of this issue forcing the U.S. into recession and influencing national and Philadelphia commercial real estate listings. construction. (Robert Calhoun is a managing director and senior economist and Matt Powers is associate director of market analytics for CoStar Market Analytics in New York City.)

For more information about Philly office space, Philly retail space, and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

A Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, Wolf Commercial Real Estate provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Are Retailers’ Earnings Reports Telling Us Something?

 “After seven consecutive quarters of comparable sales growth, we experienced a deceleration in our third-quarter sales,” – Macy’s CEO Jeff Gennette in a statement accompanying the retailer’s most recent earning release.

Retail has been the big story these past few weeks as many publicly traded companies reported earnings for the third quarter. The tone was … not positive.

Macy’s stock fell 11 percent during the week after reporting the first decline in sales in nearly two years. Home Depot dropped 8 percent after a sales miss. Kohl’s fell by 19 percent, missing significantly while also lowering its outlook. Urban Outfitters fell by 19 percent. Nordstrom fell 10 percent. Only the Target and the TJX Companies – owner of discounters TJ Maxx, Marshalls and HomeGoods – saw their shares rise after each reported a strong quarter.

It is well established by now that the U.S. economy – along with national and Philadelphia commercial real estate markets – are heavily dependent on the consumer, so how worried should we be about the red flags waving in these retail earnings reports? Is this what a strong consumer looks like? The story feels like it is about more than just shoppers shifting to online spending.

This CoStar Realty Information Inc. report from Robert Calhoun and Matt Powers involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Consumer spending in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – is ultimately built on the foundation of a strong labor market. While we continue to see job growth and low unemployment nationwide, cracks could be starting to show. We have seen job openings decline in recent weeks, and now it seems employers could also be actively laying off more workers. Weekly claims for unemployment insurance rose to 226,000 last week. While still very low from a historical standpoint, claims are up 15,000 in just two weeks.

Weakness in employment appears to be regional, focused largely on the Midwest and some scattered Northeast and Western states. However, the South remains the healthiest region. Every single state in what the U.S. Census Bureau defines as the South – except Maryland and Oklahoma – continues to see jobless claims fall. The economy in Oklahoma is much more heavily dependent on oil than other states (8 percent of employment versus only about 0.5 percent nationwide), so it has seen jobless claims rise as oil prices have declined from 2018 highs. And Maryland really isn’t even in the South, right?

This regional divergence in jobless claims seems largely driven by prolonged weakness in the manufacturing sector, on which Great Lake states are reliant. Manufacturing accounts for roughly 17 percent of that region’s gross domestic product compared to 11 percent in the U.S., including U.S. and Philadelphia commercial real estate listings.

It has been noted earlier that increased uncertainty causes a decline in business activity in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – as well as a decrease in hiring. It also typically signals a slowdown in firing, as decision-makers wait to see how events such as the trade war situation play out. Is this dynamic beginning to change in a worrisome way?

That is hard to say, but if it was, you would see it first in the areas of the country that are most at risk from the trade war, and it appears as if that could be happening.

Fortunately for the economy, the consumer isn’t the only game in town. Housing continues to buck the otherwise weakening trend in most areas of the U.S. economy, with more strong data out this past week, especially involving national and Philadelphia commercial real estate properties.

The National Association of Home Builders’ Housing Market Index posted one of its best figures since the last recession in its November report. The portions of the survey that asks homebuilders their thoughts on current sales, sales over the coming six months, and foot traffic of prospective buyers all have substantially improved in 2019.

Housing starts and permits also reported a leap in the Census Bureau’s October report. By “back-of-the-envelope” math, the rise in homebuilder sentiment and issuance pace of new permits is roughly equivalent to nearly a 1 percent boost to real GDP growth among national and Philadelphia commercial real estate listings. With no trade deal signed yet and wavering hiring indicators, that 1 percent becomes essential.

Meaningful regional divergence also can be seen in homebuilding activity: The Midwest is seeing declines in new building permits while the South leads the way on new construction. (Robert Calhoun is a managing director and senior economist and Matt Powers is associate director of market analytics for CoStar Market Analytics in New York City.)

For more information about Philly office space, Philly retail space, and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

A Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, Wolf Commercial Real Estate provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Landlord Issues from Tenant Bankruptcies

Landlord Issues for Tenant BankruptciesTenant bankruptcies are creating headaches for landlords. RadioShack. Brookstone. Toys R’ Us. Sears. With fifteen major retail bankruptcies filed last year in 2018, the toppled retail behemoth has almost become a cliché, and brands once courted by commercial landlords have become major sources of risk. With no sign of a slow-down, this article provides a refresher on your rights, as a commercial landlord, in commercial tenant bankruptcies.

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Commercial Tenant Bankruptcies 101: THE BASICS

• Ipso facto clauses in a lease, which trigger default or acceleration upon the filing of a bankruptcy case, are generally unenforceable under the Bankruptcy Code. Thus, you cannot terminate a lease or stop performing your obligations under the lease on account of the bankruptcy filing.

• The filing of a bankruptcy case triggers the automatic stay, which requires all actions to enforce the lease, evict the tenant or collect a debt (including unpaid rent) to cease. Unless you have a judgment to possess the subject premises, or the lease has otherwise expired by its terms, you must not continue to pursue collection or enforcement activities.

• A commercial debtor may assume a lease and assign it to a third party, in most circumstances without your consent, even if the lease requires the consent of the landlord to assignment.

• A commercial debtor may reject a lease based on its business judgment, and you have very few (virtually no) grounds on which to object to a lease rejection.

Commercial Tenant Bankruptcies 201: WHEN WILL I GET PAID AND HOW MUCH?

The Bankruptcy Code requires bankrupt tenants to continue paying rent under the lease during the pendency of the case (post-petition rent). If a debtor does not assume a lease within 210 days of the commencement of the bankruptcy case, the lease is deemed rejected.

Depending on whether the lease is assumed or rejected and the financial health of the bankruptcy estate, rent that was unpaid as of the date of the filing (pre-petition rent) may be paid in full, in part or not at all. Tenants under assumed leases must cure all breaches under the lease, including to pay in full all unpaid pre-petition and post-petition rent and any damages incurred as a result of the breach of the lease. The cure amounts must be paid at the time the lease is assumed by the debtor or its assignee.

Landlords under rejected leases, on the other hand, are entitled to a claim against the bankruptcy estate, which, depending on the financial health of the debtor, may be paid in full, in part or not at all. While unpaid postpetition rent constitutes an administrative (or dollar-for-dollar) claim against the estate, all other pre petition rent and damages caused by the rejection of the lease constitute unsecured (often, cents-on-the-dollar) claims, and will be paid pro rata with other unsecured creditors. Further, while rejection damages include the amount of rent remaining in the life of its lease, damages are statutorily capped at the greater of one year of rent or the rent for 15% of the remaining term of the lease, not to exceed three (3) years. Landlords who successfully mitigate their damages and re-let the premises may not be entitled to any claim if the rent received under the new lease is greater than or equal to the rent under the existing lease. Payments on unsecured claims are typically paid, if at all, after the debtor has confirmed a plan of reorganization.

Commercial Tenant Bankruptcies 301: DO I HAVE TO ACCEPT A RENT REDUCTION?

Bankruptcy affords the debtor tenant a unique opportunity to re-negotiate its leases. On one hand, the Bankruptcy Code prohibits the debtor from cherry picking which provisions of a lease it wants to assume and which provisions it would like to reject; instead, the Code requires the debtor to assume or reject the lease in its entirety. On the other hand, many debtor tenants leverage the specter of potential rejection to obtain significant rent concessions from landlords. Rent reduction negotiations often begin in the pre-bankruptcy period and continue in the early days of the case, with landlords being told that failure to negotiate will result in certain rejection.

You do not have to negotiate with the debtor tenant or accept a rent reduction, though doing so may increase the possibility of the assumption of your lease. Debtor tenants are more likely to reject leases:

• Not essential to the continued operation of the business,
• With above-market rent,
• In areas saturated with other debtor locations, or
• With low-performing stores.

If your lease falls outside of these categories, then the debtor may assume the lease even without obtaining a rent (or other) concession.

Commercial Tenant Bankruptcies THE BIG PICTURE

As soon as a tenant shows signs of financial weakness, consider actively pursuing remedies under the lease, including termination or eviction proceedings. If the lease has expired or you have already obtained a judgment for possession when your tenant has filed for bankruptcy, tear up this article! (after confirming with your attorney that the lease is, in fact, properly terminated).

If the lease has not expired or terminated at the time of filing, be sure to engage bankruptcy counsel to review the proceedings and protect your interests in the case. Bankruptcy counsel will object to any insufficient cure amount, file a proof of claim for your damages and review any plan of reorganization to advise you of your
anticipated recoveries. Even though retail bankruptcies have become commonplace, sound counsel will ensure
that your rights are protected and help you get paid.

Finally, engage competent real estate professionals, who can provide an accurate assessment of current market
rent and assist in finding a replacement tenant to satisfy and requirement that you mitigate your damages
after rejection/termination of the lease.

The contents of this article are for informational purposes only and none of these materials is offered, nor should be construed, as legal advice or a legal opinion based on any specific facts or circumstances.

 

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Big-Box Store Landlords See Signs Shoppers Still Spending

Some big-box store and mall owners in both national and Philadelphia commercial real estate markets are releasing sighs of relief: Consumers still are spending and could keep that up throughout the crucial holiday shopping season and into 2020, lifting any concerns of an immediate acceleration in store closings.

Peering into the earnings results of some the nation’s predominant big-box discounters like Target and TJ Maxx can offer a sense the economy and consumer confidence in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – will stay strong, at least for now.

That’s been a much-talked-about topic recently in U.S. and Philadelphia commercial real estate listings circles as investors awaited earnings reports they hoped would shed light on the current state of an industry evolving quickly to balance in-store and e-commerce sales as well as its brick-and-mortar footprint.

This CoStar Realty Information Inc. report from Jennifer Waters involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Store closings across the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – have been at a record pace, causing owners, investors and lenders to watch retail earnings reports closely to see if any slowing demand could mean more closings and empty store property on their hands.

Even with results that fell short of some of Wall Street’s expectations, retailers repeated the same song: the economy is still ticking away, and consumers still are in good shape. Of course, many of these retailers in national and Philadelphia commercial real estate properties remain focused on keeping their costs low, which can help lure shoppers into stores. The harder test is faced by the department stores that offer more expensive items and are reporting earnings results later this week.

But for the lower-cost sellers, the healthy results came despite the Commerce Department’s October sales report, which showed a reduction in spending tied mostly to vehicles and gasoline sales, two volatile segments. Skipping over those, spending rose, albeit at a speck of 0.1 percent, but analysts mostly have disregarded those factors as outliers.

Target, for example, exceeded earnings expectations with results that buttressed its strategy of providing consumers with unique items. The Minneapolis-based chain introduced new apparel brands, a proprietary grocery brand, and opened 25 mini Disney stores last month at competitive prices.

TJ Maxx, the parent of its namesake stores as well as Marshalls, Home Goods, and Home Sense in Canada, also reported robust results and plugged its forecasts. For TJ Maxx, for example, the wave of store closings has been a boon to the company’s business model of purchasing leftover inventory and selling it at reduced prices.

There are exceptions, such as J.C. Penney and Kohl’s, which are scrambling for ways to keep their brands relevant, according to analysts. While big-box and mall owners with national and Philadelphia commercial real estate listings continue to keep an eye on those retailers, they can rest assured that consumers are still opening wallets as job growth continues to keep unemployment at low levels. – By Jennifer Waters, CoStar Realty Information Inc.

For more information about Philly office space, Philly retail space, and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

A Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, Wolf Commercial Real Estate provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Lower Inflation Figures Reflect Slowing Rent Growth

Recently released October consumer inflation numbers indicate less upward pressure on prices throughout national and Philadelphia commercial real estate markets, largely driven by weaker growth in housing costs, including slowing rent growth. The weaker inflation report comes after the Federal Reserve has already cut interest rates three times this year, in part to boost inflation closer to its target.

The slowdown in rent growth reflected in these lower inflation figures in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – is consistent with the trend in CoStar data on apartment rents, which have decelerated to around 2.6 percent today from above 3 percent in recent quarters.

This CoStar Realty Information Inc. report from Robert Calhoun involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

According to the Bureau of Labor Statistics’ data, the consumer price index, which measures the price Americans pay for consumer goods and services, increased 1.8 percent in October compared to a year earlier. A meaningful increase in energy services and gasoline prices affecting U.S. and Philadelphia commercial real estate listings drove the slight uptick from the 1.7 percent increase seen in the previous month.

The core consumer price index, which excludes volatile food and energy prices and is a better measure of underlying inflation pressure, slipped to 2.3 percent year over year, down from 2.4 percent in September. The resultant decline in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – was largely driven by housing-related costs.

The shelter costs among national and Philadelphia commercial real estate properties account for roughly one-third of the consumer price index and nearly half of the core index. While government figures show rent for primary residences growing at 3.7 percent from a year ago, month-over-month rent growth decelerated to just 0.1 percent. This is the slowest growth in more than eight years.

Goods inflation, excluding food and energy, slowed somewhat in October as well. Apparel prices were the primary cause. While they are very noisy, the month-over-month decline of -1.8 percent represents the third-largest drop in apparel prices since at least 1947.

Prices for goods may see upward pressure going forward because of higher tariffs on imports from China and a recent decline in the foreign exchange value of the U.S. dollar. Continued strength in the labor market and wages concerning national and Philadelphia commercial real estate listings should allow retailers to pass on much of the expected price increases through to consumers.

Households in the U.S. spend three times as much on services as on goods. Despite slowing shelter costs, services inflation rose slightly in October to 3 percent. The cost of medical care services has been rising dramatically in recent months and now stands 5.1 percent higher than a year ago. Unemployment among healthcare practitioners and technicians is currently just 1.1 percent, which could be pushing up the cost of such services.

This report is not likely to change the central bank’s current stance on interest rates, at least for now. Although inflation is not trending in the direction the Fed would like, the Federal Open Market Committee indicated at its meeting in October that it intends to hold interest rates steady as it monitors incoming data. (NOTE: Robert Calhoun is a managing director and senior economist for CoStar Market Analytics in New York City.)

For more information about Philly office space, Philly retail space, and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

A Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, Wolf Commercial Real Estate provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Avoiding Exposure for Commercial Real Estate Developers

Avoiding Exposure for Commercial Real Estate Developers

Commercial real estate developers and owners of recently completed development projects should be aware of a few things that can be done after the ribbon cutting to prevent headaches later on, avoid exposure to potential penalties for failing to comply with certain development conditions, and possibly put some money back in the till. Attention should be paid to these three issues after a project is completed.

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OBTAIN AN AS-BUILT SURVEY OF YOUR PROJECT.

An as-built survey is a detailed land survey that includes exact locations of subsurface infrastructure such as pipes and foundations. Sometimes owners rely on contractor notes that have been scribbled on design plans in the field during construction to serve as an as-built. Incorporating these notes in a clean and accurate as-built survey is well worth the time and expense as it will save headaches trying to piece information together later.
An as-built survey should be prepared immediately after the project has been completed. A purchaser might also consider procuring an as-built if one is not available. Some might view this an unnecessary expense; however, consider the following:

1) what is actually built by the contractor in the field doesn’t always line up exactly with the engineering design plans;

2) preparing a clean survey to document as-built conditions immediately after construction eliminates the time consuming and often costly effort required to piece together the information at a later date; and

3) if, at a later date, you want to make improvements or put an addition on the property, having an accurate as-built survey of existing conditions shows exactly where everything is on your site and expedites the process.

As an example of how an accurate as-built survey can save time and money, consider a scenario in which an owner wishes to construct an addition to an existing building and tie a new sewer lateral into an existing underground sanitary sewer force main. The design plans for the addition are developed based on the original design plans for the main building rather than an as-built survey, because the owner never had an as-built survey completed after construction. The design plans for the addition referenced an ‘approximate’ location of the force main, as the ‘exact’ location was never documented. What if that force main was not in the location indicated
on the design plans? If not, it would require a lot of digging and an expensive subsurface utility investigation to locate the pipe to determine the exact location. This costly delay could be avoided if the owner invested in a complete and accurate as-built survey of the property immediately after construction, including the location of all underground infrastructure.

MAKE SURE YOUR NJDEP PERMITS (INCLUDING YOUR WETLANDS LOI) WERE RECORDED WITH THE COUNTY CLERK

Many landowners and commercial real estate developers understand the need to obtain permits from the NJDEP to make improvements to land in New Jersey. However, compliance with administrative permit conditions is sometimes overlooked. One of the conditions of all permits that are issued by the NJDEP under the Freshwater Wetlands Protection Act Rules (Rules), N.J.A.C. 7:7A, is that permits must be recorded with the Office of the County Clerk (or the Registrar of Deeds and Mortgages, if applicable) where the site is located. Permits must be recorded within 30 calendar days of receipt (for activities taking place in only one county) and within 90 calendar days of receipt (for activities within two or more counties). A copy of the recorded permit must be forwarded to the NJDEP. Recently, as of July 2019, NJDEP has also required that freshwater wetland delineations and verifications must also be recorded. As
stated in the Rules, within 90 calendar days after the NJDEP issues a wetland delineation or verification letter of interpretation on a privately owned lot, or on a publicly owned lot other than a right-of-way, the recipient of the delineation or verification shall submit certain information to the Office of the County Clerk or the registrar of deeds and mortgages in which the site is located, and shall send proof to the NJDEP that this information was recorded on the deed of each lot referenced in the delineation or verification letter of interpretation.

It is important that this condition is not overlooked, as the NJDEP has the authority to take enforcement action if permit conditions are not met. As stated in the Rules, any noncompliance with a permit constitutes a violation of the NJDEP rules and is grounds for enforcement action under N.J.A.C. 7:7A-22, which includes potential penalties and suspension and/or termination of a permit. In the case of a wetland delineation or verification letter of interpretation, termination of a permit may mean having to re-delineate the wetlands which can be expensive, time-consuming, and subject to a new interpretation.

CLOSE OUT YOUR ESCROW ACCOUNTS AND REQUEST RELEASE OF PERFORMANCE GUARANTEES

Under the Municipal Land Use Law, N.J.S.A. 40:55D-1 et seq. (MLUL), there is a specific process for closing out escrow accounts and requesting release of performance guarantees. For application review escrow accounts, once the approving authority has signed the subdivision plat or site plan, or for inspection escrow accounts, once the work is completed, the commercial real estate developers are to send a written notice by certificated mail to the chief financial officer (CFO) of the municipality, to the approving authority, and to the relevant municipal professionals. After such notice is transmitted to the appropriate parties, the professionals are to submit a final bill to the CFO of the municipality within 30 days, with a copy to the developer. The CFO of the municipality must render a written final accounting to the commercial real estate developer on the uses to which the deposit was put within 45 days of receipt of the final bills. Any balances remaining in the deposit or escrow account, with any interest, must be refunded to the developer along with the final accounting. See N.J.S.A. 40:55D-53.2.

For performance guarantees, upon substantial completion of all required street improvements (except for the top course) and appurtenant utility improvements, and the connection of same to the public system, the commercial real estate developers may submit a request by certified mail to the governing body to the attention of the municipal clerk, with a copy to the municipal engineer, for the municipal engineer to prepare a list of all uncompleted or unsatisfactory bonded improvements. That request should specify which of the bonded improvements have been completed or remain uncompleted in the opinion of the developer. In response to the request the municipal engineer is to inspect all bonded improvements and submit a detailed list and report, in writing, to the governing body, with a copy to the developer, within 45 days after receipt of the request. Simply put, depending on the outcome of the inspection, the performance guarantee may be either released or reduced by a specific amount, commensurate with the remaining work. If the municipal engineer fails to send or provide the list and report as requested within 45 days from receipt of the request, the commercial real estate developer may seek a court order compelling the engineer to provide the list and report within a set time and may also be reimbursed for the cost of applying to the court, including reasonable attorney’s fees. See N.J.S.A. 40:55D-53.

Following up on these three issues after a project is completed can save time, money and headaches. For more information on any of these topics, contact Rod Ritchie or Bob Baranowski for assistance.

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WCRE Exclusively Represents Samaritan Healthcare & Hospice Secure Their New Mount Laurel Headquarters Location

Redevelopment Continues in Region

Samaritan Healthcare & Hospice

WCRE is proud to have played a key role in representing Samaritan Healthcare & Hospice procure their new Headquarter location in Mount Laurel, New Jersey. Samaritan Healthcare & Hospice completed a long-term lease at the 27,600 square foot free standing office building located at 3906 Church Road in Mount Laurel, NJ. The property is positioned directly across from Lifetime Fitness and directly next to several other well-known community service occupiers, including Bancroft. 3906 Church Road provides immediate access to I-295 (Exit 36) and The New Jersey Turnpike providing for convenient access for their clients and employees.

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Samaritan plans to relocate their entire Marlton office where they currently occupy approximately 21,000 SF of office space for the last 20 plus years.

The new Mount Laurel facility will be a complete interior and exterior renovation bringing a fresh, new look to the building.

Samaritan will relocate its corporate office to the new location in the beginning of 2020, the year of Samaritan’s 40th anniversary. “It’s an exciting time for Samaritan. A new year, new expanded services, and a new home,” says Mary Ann Boccolini, President and CEO of Samaritan Healthcare & Hospice. “The expanded space in the new building will enable us to support our growing family of services and employee base that touches over 10,000 lives every year. This new space will support our growth in years to come as we provide more and more essential healthcare services across the healthcare continuum to more and more people in the south Jersey and surrounding communities.”

WCRE’s Managing Principal, Jason Wolf noted the complexity involved in matching the parties according to their needs. “This assignment showcases our ability to work with multiple parties to structure a long-term investment and redevelopment transaction that will provide excellent outcomes for everyone involved,” Wolf said.

This transaction adds to WCRE’s growing number of educational, non-profit and institutional transactions in the Philadelphia and Southern New Jersey region. This highly specialized sector is an area of strength and growth for WCRE.

The local ownership of 3906 Church Road was represented by Evan Zweben at Colliers International and Veritas Real Estate.

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about WCRE on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at  www.southjerseyofficespace.com,   www.southjerseyindustrialspace.comwww.southjerseymedicalspace.comwww.southjerseyretailspace.comwww.phillyofficespace.comwww.phillyindustrialspace.comwww.phillymedicalspace.com and  www.phillyretailspace.com.

 

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East and West Trade Deals Bring Sighs of Relief, for Now

Recession and trade talks recently have been in the same sentence, with political entrenchment a risk to sap growth through the rest of this year and next. In that case, new preliminary trade agreements between both the U.S. and China and U.K. and European Union offer seemingly good news for national and Philadelphia commercial real estate markets. However, while these two pre-deals are a relief on their face, neither appears completely satisfying, nor complete.

The U.S. agreement with China, announced late on Oct. 11 with details slow to leak, appears far from a done deal in relation to the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space. The faint sketch of the terms appears to focus on a phased agreement, where China would purchase more agricultural products from the U.S. and agree to new currency management standards.

This CoStar Realty Information Inc. report involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Meanwhile, across the pond, U.K. Prime Minister Boris Johnson returned home to sell his Brexit deal to Parliament last weekend, and the initial response was hardly positive. Parliament is likely to remain in a frantic state as the deal appears to choose a much harsher Brexit than that agreed to by Johnson’s predecessor, Theresa May, and some favor further delay until a consensus can be reached.

With industrial production growth turning negative compared to a year prior, based on August data released last week, any further slowdown in trade is everyone’s problem; U.S. and Philadelphia commercial real estate listings already are peripherally dealing with the consequences.

China’s industrial production, while staying positive, has slowed dramatically as well with GDP growth falling to a 30-year low, according to figures announced this past week. The industrial real estate sector in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – is cooling in the face of these headwinds.

Overall, third quarter growth for national and Philadelphia commercial real estate properties should continue, but it faces plenty of crosscurrents. One major plus has been personal consumption, which remains elevated because of the tight labor market and despite a modestly weaker retail sales report this past week.

The second biggest boost is likely to be from government, though U.S. subsidies may not be enough to counteract the more significant drag from trade. Non-residential investment is a concern, with businesses confidence dropping severely recently amid uncertainty. All those factors portend a mixed message for office and retail, ultimately with their fate determined by whatever long-term clarity can be glimpsed as the economy settles into a slower growth path.

One noteworthy data point: Investment in residential housing among the varied national and Philadelphia commercial real estate listings has been muted since the financial crisis, but it looks on track to have a stellar second half of 2019. Housing starts surged in September according to data released last week, and a rise in homebuilder confidence means it is likely to stay near that level.

This is good for the economy but perhaps negative for multifamily investors, as lower rates and higher incomes are spurring home ownership. Note: Robert Calhoun is a managing director and senior economist and Matt Powers is associate director of market analytics for CoStar Market Analytics in New York City.

For more information about Philly office space, Philly retail space, and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

A Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, Wolf Commercial Real Estate provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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