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Understanding Section 45L & Section 179D Tax Credits

Section 45L & Section 179D Tax CreditsThe recently enacted Covid-19 relief package titled “Consolidated Appropriations Act, 2021” has extended the Federal Energy Tax Credit (Section 45L) through December 31, 2021 and made the Energy Efficient Commercial Building Deduction (Section 179D) permanent. While both tax incentives offer significant value and the qualification process is simple, they are often overlooked by developers and homebuilders.

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Section 45L Federal Energy Tax Credit 

Section 45L is a tax credit of up to $2,000 for each new or rehabilitated energy-efficient dwelling unit that is first leased or sold by the end of 2021. If you qualified for the credit but did not take advantage of it in previous years, your tax returns can be amended for up to three past years—2017, 2018 and 2019—to get you the credits you are entitled to.

Qualifying dwellings include newly constructed or rehabbed single-family homes, low-rise apartments, and other complexes of three stories or less, including condominiums, townhouses, senior living facilities, and student housing.

The projected annual heating and cooling cost of the dwelling or residential unit must be at least 50% below the annual energy consumption level based on 2006 standards. Most new developments today exceed these standards simply through energy-efficient features, such as high-R value insulation and roofing, windows, doors, and/or HVAC systems.
To capitalize on the 45L credits, you must engage a licensed professional to certify energy improvement standards have been met.

The cost of certification is typically much less than the financial rewards gained from the tax credit. For example, consider a three-story apartment complex with 60 qualifying units that were fully leased or sold in 2020:

• Tax credit = $2,000/unit x 60 units = $120,000
• Project Certification Fees (estimated) = $400/unit x 60 units = $24,000
• Net benefit of the 45L credits = $96,000

Section 17D Energy Efficient Commercial Building Deduction

The 179D Energy Efficient Commercial Building Deduction of a maximum of $1.80 per sq. ft. per qualifying property is available to those who have built or renovated properties they own with energy-efficient commercial building property (EECBP). EECBP includes interior lighting, materials used on the building structure, and mechanical systems. The 179D deduction is also available to those who have designed or built government-owned buildings, such as engineers, architects, and contractors. In certain situations, more than one of the companies designing and building a property will qualify for the credit, so it is important to address the issue up front in the building contracts.

Both the Section 45L and 179D tax incentives have been available for years, but few developers and builders who qualify take advantage of them. If you think you might qualify for either one, call your tax advisor. It could mean a significant financial benefit to you and your company.

ABOUT THE AUTHORS

Michael Wolf, CPA, Principal

Michael Wolf is a Principal of HBK CPAs & Consultants and works primarily out of the Blue Bell, PA. office. He leads HBK’s Construction Industry Group in the Mid-Atlantic Region. He can be contacted at 215-628-8080 or by email at mrwolf@hbkcpa.com.

Patrick Higgins, CPA, Manager

Patrick is a Manager at HBK CPAs & Consultants and works out of the Blue Bell, PA office. He has many years of experience working with construction contractors to help them achieve their goals. Patrick is a member of the Construction Accounting Network (CAN) and an associate member of Associated Builders and Contractors (ABC) – Eastern Pennsylvania Chapter. He can be contacted at 215-628-8080 or by email at phiggins@hbkcpa.com.

About HBK Construction Solutions Group

At HBK, our Construction Solutions is comprised of dedicated team members devoted to keeping pace with industry changes impacting your business and in turn providing you and your company with strategies and solutions customized to fit your unique needs.

Our specialized group serves a broad range of clients throughout the region who include general contractors, heavy construction, home builders, bridge painters and other specialty trades.

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Covid-19 is affecting CRE lease negotiations. Here’s what experts are seeing.

How will Covid-19 affect the future of commercial real estate? It’s a multibillion-dollar question that’s been debated since the start of the pandemic.

With many businesses still plotting their returns to the office, the answer remains to be determined. 

But experts say the effects of Covid-19 are likely to reverberate in the industry for years to come, and commercial lease negotiations — particularly those over the next year — are likely to provide some early clues about the pandemic’s effects.

Industry experts have a few ideas about what to expect. Especially in the short term, experts say it’s likely tenants will have more leverage to negotiate terms. That’s particularly true for larger tenants and those that draw other tenants or customers to a property.

One potential area of focus is specific clauses in leases that could provide protection in the event of a future pandemic.

Maria V. Bernstein, a real estate attorney at San Francisco-based SSL Law Firm LLP, expects more discussion around force majeure or unforeseen circumstances clauses in the wake of Covid-19. 

As shutdowns and shifts to remote work dominated the early days of the pandemic, Bernstein said many companies rushed to review their force majeure clauses, generally finding little to no relief. 

In the aftermath of the pandemic, Bernstein said it’s likely many tenants will be negotiating those clauses to create an avenue for relief in future situations like Covid-19.

She also expects companies to take a closer look at condemnation clauses and their potential role in a scenario where the government shuts down businesses or limits capacities. 

Bernstein said condemnation clauses often say that if there is a “taking” by a government, then the lease is automatically terminated. 

In a case where a government limits capacity to 25%, for instance, she said a good argument can be made that a government took 75% of the space, which could create leverage for potential relief. 

“Everybody looked at force majeure. People looked at the environmental clause. People even looked at casualty. Those clauses helped almost no one. I’ve looked at it,” she said. “But the condemnation takings clause has given me leverage.”

When using condemnation clauses to find leverage, Bernstein said the use clause is very important.

“The narrower the better for tenants, but in negotiating leases, the broader the better,” Bernstein said. “Since we don’t have crystal balls, this is something that probably won’t change in lease negotiations, but landlords can take comfort when granting broad use rights that this may ultimately benefit them should we face future catastrophes that lead to the type of government-mandated shutdowns we have just seen.” 

Tim Blair, president of Chicago-based CCIM Institute, a global commercial real estate investment education group, said he expects to see more interest in common-area-maintenance fee caps and lease structures that allow tenants to benefit from decreased maintenance costs. As we’ve noted, CAM charges are an area where landlords are seeing more scrutiny. 

Blair said Covid-19 will likely accelerate the trend of triple-net leases for office buildings — something that was already becoming more common in newer buildings in larger cities. 

Those arrangements allow landlords to allocate specific expenses to specific office suites. In a shutdown situation like Covid-19, that would allow tenants to benefit from an expense reduction — a benefit many tenants didn’t have during the pandemic. 

Blair said he also envisions more tenants will push for being able to opt-out of certain services, such as janitorial expenses, in a future scenario with offices being shut down for a long period of time. 

Evelyn Ward, Houston-based vice president of agency leasing at Transwestern, envisions health and wellness amenities will be a more prevalent discussion between tenants and landlords in lease negotiations. But she’s not referring to gyms or outdoor spaces.

She said more tenants will be asking about specialized air filters, touchless amenities and fixtures, and enhanced janitorial services, among other options. 

“It’s a constant conversation, and it’s not a one-time thing,” Ward said. “A lot of it is because of what’s being demanded by the employee.”

She said health and wellness considerations are likely to become an expected standard like a conference room. 

Ward said it will likely be a particularly heavy focus in the short term, as companies prioritize creating a safe and welcoming environment that makes it easier to bring workers back to the office. 

“HR has been a part of the leasing decision forever. I think (Covid-19) just ratchets it up to another degree,” Ward said.

*Article courtesy of Philadelphia Business Journal

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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THE $5 BILLION DECADE: Even through the pandemic, University City remains a hotbed of development.

Throughout the pandemic, real estate development has ramped up in University City where in excess of $5 billion has been spent on construction projects over the past decade. 

Billions more are in the pipeline. 

Just about every local academic and medical institution has contributed to the development in University City, solidifying it as a hub of innovation and as a place for investment. Private developers such as Brandywine Realty Trust, Wexford Science & Technology, GMH Capital Partners, Radnor Property Group, and Southern Land Co. are among those participating in the boom and signaling to those outside the region to also bet on University City’s future. 

As a result, the neighborhood saw more national and international investors come on the scene in the past year than ever before. Examples include: 

    • Ventas Inc., a Chicago company, is financially involved with Wexford in the development of uCity Square and Drexel University’s new academic tower. Last fall, Ventas sold a stake in those projects to GIC, Singapore’s sovereign wealth fund. Ventas formed a joint venture with GIC that now owns part of four buildings under construction totaling 1.4 million square feet. The cost of the development of those four buildings is roughly $930 million. Under the terms, Ventas will own more than 50% and GIC will own a 45% stake.
    • Republic Properties Group, a Washington, D.C., real estate company, plans to develop a $190 million, 185,000-square-foot life sciences building on a parcel at 125 N. 32nd St.
    • Brandywine secured two partners — one an undisclosed global institutional investor — on the development of a $287 million project at Schuylkill Yards. The other investor is Gotham Organization, a New York real estate company.
    • Silverstein Properties Inc. and Cantor Fitzgerald have made a $56 million investment in the development of 3.0 University Place, a proposed 250,000-square-foot life sciences building at 4101 Market St.

WHERE IT’S HAPPENING
Below is a rundown of projects underway, proposed, or completed, according to University City District. Scroll over the locations on the map to see details on each project.

Map Legend
Academic Commercial Medical Public space
Residential/mixed-use

“It speaks to how well the market has performed and the prospects for continued growth. University City has arrived,” said John Grady, senior vice president at Wexford. “I think there’s always risk in any market but what we see here is based on strong fundamentals. It’s not a fad. Most research you see coming out of the pandemic indicates there is going to be more focus on life science research and development and more investment in academic and medical centers. People that look to invest in Boston or San Francisco for life sciences see Philadelphia is a world-class market that has room to grow. We do have to be aware that we’re not the only place in the country seeing this growth. We do have to be conscious that it will be a competitive landscape.” 

Wexford and its partners have real estate projects underway in University City totaling $750 million.

The University of Pennsylvania alone completed $300 million in projects over the last two years including a new dorm called New College House West, a 68,000-square-foot innovation center at 40th and Sansom streets called Tangen Hall, and a 68,400-square-foot academic research building at Wharton. That figure excludes Penn Medicine’s new $1.5 billion, 1.5-million-square-foot Pavilion, which was delayed for a few months because of the coronavirus and is set to open this year. 

Between 2006 and the end of 2022, Penn and Penn Medicine will have invested $6.8 billion in new construction or renovation including $1.2 billion spent by third-party entities Penn partnered with on development. 

“We’re looking at the next phase of Pennovation Works, updating the master plan, looking at new infrastructure investment and assets in ground lease development,” said Anne Papageorge, vice president for facilities and real estate services at Penn.  

The infusion of billions of dollars of investment is solidifying University City as an innovation powerhouse on the global stage and helping to establish an innovation district between the neighborhood and Center City.

For decades, innovation was concentrated in suburban corporate campuses, which gave rise to such places as Bell Labs in North Jersey and the Research Triangle in North Carolina. By the early 2000s, urban areas such as University City were emerging as innovation hubs. This coincided with the return of cities and urban living along with anchor institutions such as universities investing more in commercialization, licensing, and startup spaces. 

In May 2017, the Brookings Institution issued a 62-page report outlining several recommendations to better position Philadelphia as a center for innovation. 

The report, titled “Connect to Compete: How the University City-Center City innovation district can help Philadelphia excel globally and serve locally,” was a culmination of an 18-month study that began in the spring of 2015. It urged officials to do more to take advantage of anchor educational and health care institutions and to focus on establishing an innovation district between 17th and 43rd streets. Brookings describes these districts as “dense engines of economic activity where research-oriented anchor institutions, high-growth firms, and tech and creative startups exist within an amenity-rich residential and commercial area.”

University City and Center City had all of the ingredients to firmly establish such a district but the city wasn’t taking advantage of them in an organized, concerted effort. 

“But for all these strengths — perhaps because of these strengths — Philadelphia leaders have been missing a sense of collective urgency to determine the position the region should play in the global economy and to fully leverage the power of the innovation district’s institutional, corporate, and civic anchors to drive innovative firm and job growth,” the report said. “The lack of a cohesive vision exacts a severe opportunity cost that Philadelphia can ill afford to ignore.”

The report’s recommendations were taken to heart by the university, civic and corporate leaders. Penn, Drexel University, the Science Center, Children’s Hospital of Philadelphia, and other institutions committed to University City, stretched its boundaries and moved forward with significant projects. 

In addition to its clean and safe mission, University City District mounted placemaking, a jobs program called the West Philadelphia Skills Initiative and other economic development efforts to improve the neighborhood for businesses, visitors, and residents. As University City undergoes more development, areas such as Baltimore Avenue have remained vibrant tree-lined corridors with eclectic restaurants and retailers. 

Over the years, Drexel, Penn, and Brandywine seized upon various opportunities presented when large pieces of underutilized real estate such as the Civic Center, U.S. Post Office at 30th Street, and former University City High School became available. The development by Brandywine of the Cira Centre campus and Schuylkill Yards, along with a westward shift of Center City, have also helped to knit Philadelphia’s academic hub with its financial district.

“It’s hard for people to remember what it was like,” said Alan Greenberger, vice president of real estate at Drexel. Greenberger spent years as Philadelphia’s deputy mayor for economic development, director of commerce, and executive director of the planning commission. 

“There was the giant gap between the heart of Drexel and Penn and Center City,” Greenberger said. “It’s hard for people who haven’t been around to realize how significant of a gap that was. It’s hard for them to picture how uninteresting [John F. Kennedy Boulevard] was and there were gigantic parking lots on 17th, 18th and 19th and people said JFK will never get developed. Here we are and it seemed so obvious. It’s not just dumb luck. It’s because of very smart investments that have been made.”

When the city, under Greenberger’s tutelage, began working on the Philadelphia 2035 comprehensive plan, Center City and University City were increasingly being discussed as a metropolitan center. Of the 700,000 jobs in the city, half are concentrated between those two sections, Greenberger said. 

For all of the progress that has been made, there’s more work to be done. The last 25 years laid the groundwork for innovation and the commercialization of that innovation so Philadelphia could seize upon its dominance in life sciences and the emerging cell-and-gene therapy industry, which have thrived during the pandemic.   

The next frontier is executing on Amtrak’s master plan for eventual development over the rail yards next to 30th Street Station. The ambitious plan involves creating 40 new acres of open space and the potential for 18 million square feet of new development with a mixed-use neighborhood as an anchor project on top of 88 acres of rail yards along the Schuylkill River. In all, an estimated $4.5 billion in real estate activity could be undertaken.

While the billions of dollars spent on new buildings portend economic development activity, that success could easily be overshadowed by the abundance of work that remains in the West Philadelphia neighborhoods surrounding the college campuses, medical institutions, and office buildings.   

“We still have so much potential for growth and expansion,” said John Fry, president of Drexel University. “Key to that is that it needs to be done in an inclusive way.”

For Fry, that means thinking of a plan that looks at the area toward Spring Garden Street Bridge, Powelton Village, Mantua, and areas up to the Philadelphia Zoo and marries the innovation district with the area’s designation as a Promise Zone and Promise Neighborhood. 

“As part of our work in West Philadelphia, this is the next big thing we need to think about,” Fry said. “We need to think about going into the neighborhoods not to develop but to create neighborhoods, not for students, but for those who live in them and want to live in them. The key to that is affordable housing. We can set the example for real equity and inclusion. We have generations worth of work there.

*Article courtesy of Philadelphia Business Journal

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Brandywine Expects Return-to-Office Recovery To Take At Least Three Quarters

Brandywine Realty Trust is seeing a big comeback in leasing activity as more tenants contemplate returning to the office, but executives cautioned it could take several months until operations are back to normal.

More than a year into the pandemic, office landlords across the country are seeing more tenants start to return to their office space as the coronavirus vaccine rollout expands. However, as Brandywine’s portfolio shows, the return to office is likely to unfold in fits and starts over the coming months as companies evaluate their long-term real estate needs.

“We have to keep in mind that we are in the beginning phases of a transition in the return-to-work journey. … We believe it will take three quarters or so to fully play out,” said Jerry Sweeney, CEO of Philadelphia-based Brandywine, during an earnings call Thursday with investors.

Brandywine solely and jointly owns about 25 million square feet located mostly around Philadelphia and Washington, D.C., and is one of the largest office landlords in fast-growing Austin, Texas. It recently expanded into Maryland.

The office-focused real estate investment trust said physical tour activity from prospective tenants increased 40% in the first quarter and it had more than 1,500 virtual tours. The company’s overall pipeline of leasing activity jumped by 400,000 square feet in the first quarter, hitting about 1.2 million, with 165,000 square feet in advanced negotiations.

Most of the midsize to smaller tenants are leading the charge to get back to the office, Sweeney said. Many companies also are still determining how many employees may work from home permanently, he said.

“We are clearly seeing from the pipeline additions that the return-to-work movement will accelerate and the flight to higher-quality office buildings is increasingly clear,” Sweeney said. 

Among the tenants searching for space, there is a greater emphasis on health and safety. Tenants are increasingly favoring spaces with private offices, more air circulation, larger workstations, and smaller gathering areas versus one large central space, Sweeney said. Some tenants in Philadelphia even took more square footage to allow for a more spacious layout, he said. 

“Certainly more and more companies are seeing the value of having people together physically,” Sweeney said. In conversations with larger companies, he said some employees are pushing back on the idea of being remote-only workers and want some flexibility to switch between remote work and being in an office at a dedicated workstation.

Few Workers Want Full-Time Return

While data varies, a January survey of office workers from Slack found that only 17% of office-based workers want to return to the office full time, 20% want to work remotely full time and 63% want the flexibility of a hybrid model.

Overall in the first quarter, Brandywine signed 493,251 square feet of new leases and renewals, according to its earnings results. Its profits were down about 14% year over year to $6.77 million, while revenue dipped 16% to $120 million, according to its first-quarter earnings results. However, about 99% of its office tenants are paying rent despite mostly not being back at the office. Brandywine is expecting some deferred rent later this year.

Although there is still uncertainty about the timing of a full recovery, Brandywine is seeing noticeably more touring activity, with tenants in the Philadelphia market seeing the biggest jump and Austin ranking last in its portfolio for tour activity, Sweeney said.

Brandywine is moving forward with Block A and the first phase of Block F in its massive redevelopment of the IBM Broadmoor campus into a mixed-use district near The Domain in north Austin. (Brandywine)

In downtown Austin, Brandywine has substantially completed construction of the office tower at 405 Colorado St., Sweeney said. The 25-story tower has struggled with leasing in the pandemic, particularly after law firm DLA Piper abruptly dropped its lease commitment last year. 

The 206,000-square-foot tower has remained about 18% leased since at least October, according to Brandywine’s previous earnings and first-quarter supplemental earnings results. However, Sweeney said the firm has a letter of intent for a full floor that it hopes to finalize in the next 30 days.

“Activity is definitely picking up. We’ve had four new tours in the last week alone,” Sweeney said.

Elsewhere in Austin, at Brandywine’s proposed Broadmoor campus in north Austin across from The Domain, IBM has declined to renew its lease at Building 905, and Brandywine expects to demolish the structure as part of its redevelopment of the area into a 66-acre mixed-use development.

Brandywine plans to advance Block A and the first phase of Block F at the project, encompassing $360 million of development. That includes 613 apartments, with about 341 units to start at a cost of about $119 million by the third quarter, Sweeney said. Brandywine also wants to kick off Broadmoor with 350,000 square feet of office but plans to wait until a significant portion is preleased prior to starting construction. Brandywine is looking for a joint-venture partner to help develop the first phase of Broadmoor and expects to select one within the week, Sweeney said.

Philadelphia Life Science Space

In Philadelphia, Brandywine and its joint-venture partner started construction on the $287 million Schuylkill Yards West in March at 3025 JFK Blvd.That project is expected to include 326 apartment units, 100,000 square feet of life science space and 100,000 square feet of office and street retail.

Brandywine struck a deal last month with the Pennsylvania Biotechnology Center to create B.Labs, a life science incubator at Cira Centre directly adjacent to the Schuylkill Yards neighborhood in the University City section of Philadelphia. 

The initial 50,000-square-foot lab and research space is expected to open in the fourth quarter. Sweeney said Brandywine has a pipeline of leasing activity for 35% of the space in that project.

Discovery District in Maryland includes The Hotel at the University of Maryland on U.S. Route 1. (Robert Isacson/CoStar)

Last quarter, Brandywine expanded outside of its core markets into Maryland after it was selected by Terrapin Development Co. and the University of Maryland as the exclusive developer of a 5-acre mixed-use neighborhood within the University of Maryland’s Discovery District. 

Plans for the development include 550,000 square feet of research and life science space and about 200 to 250 multifamily units in several phases. Permitting and planning is underway with a target groundbreaking in the second half of 2022. 

Discovery District is a $2 billion, 150-acre research-focused campus located in College Park, Maryland.

*Article courtesy of Costar

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

 
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Retail Sales Explode in March as Consumers Use Stimulus Checks to Spend Heavily

A fresh batch of stimulus checks sent consumer purchases surging in March as the U.S. economy continued to get juice from aggressive congressional spending.

Advance retail sales rose 9.8% for the month, the Commerce Department reported Thursday. That compared to the Dow Jones estimate of a 6.1% gain and a decline of 2.7% in February.

Sporting goods, clothing and food and beverage led the gains in spending and contributed to the best month for retail since the May 2020 gain of 18.3%, which came after the first round of stimulus checks.

A separate report showed first-time filings for unemployment insurance plunged, with the Labor Department reporting 576,000 new jobless claims for the week ended April 10. That was easily the lowest total since the early days of the Covid-19 pandemic and represented a sharp decline from the previous week’s total of 769,000.

The Dow Jones claims estimate was 710,000.

As the jobs picture brightened, consumers took their $1,400 stimulus checks and spent aggressively. The money came courtesy of the nearly $1.9 trillion American Rescue Plan Act that Congress passed in March.

The legislation took total stimulus and rescue payments approved in the year since the pandemic began to about $5 trillion, fueled by red ink that fiscal authorities say is necessary to keep the economy running.

Spending for the month was broad-based, boosting sales by nearly 28% from March 2020 as pandemic-related business closings began.

The critical bar and restaurant industry saw a 13.4% surge, thanks to the increasing relaxing of restrictions as Covid vaccines accelerate to a pace of more than 3 million a day. Sporting goods spending was the highest percentage gainer at 23.5%, followed by clothing and accessories at 18.3% and motor vehicle parts and dealers at 15.1%.

March’s retail sales report was another sign that consumers overall are willing to spend, even though increasing amounts of stimulus checks are going towards savings rather than spending.

“Spending will almost certainly drop back in April as some of the stimulus boost wears off, but with the vaccination rollout proceeding at a rapid pace and households finances in strong shape, we expect overall consumption growth to continue rebounding rapidly in the second quarter too,” wrote Michael Pearce, senior U.S. economist at Capital Economics.

A recent report from the New York Federal Reserve indicated that stimulus recipients expect to save 41.6% of their checks and spend 24.7%. Following the first round of checks in the spring of 2020, consumers saved 34.5% and spent 29.2%.

As the recovery has gained speed, consumers have had to deal with the strongest signs yet of inflationary pressures building. The consumer price index rose 2.6% in March from a year ago, thanks in part to a surge in gasoline prices. The year-over-year gain was the largest since August 2018.

Thursday’s economic data also showed more signs of a thawing in the labor market.

The plunge in jobless claims generated the lowest weekly number since March 14, 2020, just after the official pandemic declaration. Nearly two weeks later, weekly claims filings would top out at a staggering 6.15 million, easily the worst week in U.S. history.

Since then, the jobs market has improved dramatically, with the unemployment rate falling from a pandemic peak of 14.7% to its current 6%. The nonfarm payroll addition of 916,000 in March brought more hope that the healing is accelerating.

Despite the big decline in weekly claims, continuing claims were little changed at 3.73 million.

The four-week moving average for weekly claims declined to 683,000, also the lowest since March 14.

The total for those receiving benefits under all government programs tumbled by more than 1.2 million to 16.9 million for the week ended March 27. That decline came mostly due to drops in those filing under pandemic-related programs.

About half the weekly decline in filings came from California, which dropped by 75,645, according to unadjusted data. Virginia fell by 23,110, Ohio was down 22,731, and Texas reported a drop of 18,883.

A pair of other economic indicators also turned in much stronger readings than expected.

The Philadelphia Fed’s manufacturing survey registered a reading of 50.2, representing the difference between firms reporting expansion vs. those seeing contraction. That was well ahead of the Dow Jones estimate of 42 and the highest reading since March 1973.

At the same time, the Empire State Manufacturing survey came in at 26.3, its highest since October 2017 and better than the Dow Jones estimate of 20.

*Article courtesy of CNBC

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Nearly 10,000 Apartments Under Construction in Philadelphia, With More on the Way

The Durst Organization’s proposed 26-story, 360-unit apartment project along the Delaware River is among a series of multifamily developments going through the approval process in Philadelphia, underscoring the optimism residential developers have for the city in spite of the pandemic.

A new housing report by Center City District reveals that an area defined as Greater Center City had 9,400 residential units under construction as of the end of last year, which is a 39% increase compared with the 6,762 units under construction at the end of 2019. 

Post Brothers is tackling one of the largest multifamily projects currently under development as it continues to transform the Piazza in Philadelphia’s Northern Liberties neighborhood. When it bought the Piazza in 2017, the community had 500 apartments. Another 700 units is in development at a project called Piazza Terminal. 

Post Brothers also developed 280 units at the Poplar at Ninth and Poplar streets that is 25% leased. 

“Absorption has been incredible,” said Matt Pestronk of Post Brothers. “During the early part of Covid, the market was dead but, across the whole portfolio, we are more leased than we were and at higher rents.”

Post Brothers owns 3,000 units in Philadelphia, excluding apartments under development. Of those apartments, 95% are occupied. 

The strong absorption last year was likely helped by a reduction in the number of newly constructed apartments that hit the market. A total of just 1,126 new housing units were built in 2020, which was half of what was completed in 2019, according to CCD. The reduction incompletions last year can be attributed to a halt in construction activity from March through June as a result of state mandates early in the pandemic. 

Despite that lull, developers did not stop planning for the future, banking that any population declines driven by the pandemic will be temporary and may even increase as flexible working arrangements have led people to move to Philadelphia, which is more affordable compared with other cities. 

The sale last year of development parcels throughout the region, and particularly in Philadelphia, was the highest it has been in at least five years, according to Real Capital Analytics data. By the end of the third quarter, $417.7 million of these properties had traded throughout the region with more than half of that transacted amount — $282.4 million — coming in Philadelphia.

In 2020, even with the pandemic, the 3,842 permits issued stood as the third-highest over the last 30 years, according to CCD.

The surge in permitting activity was driven by a pending expiration of the 10-year tax abatement on new construction, which was scheduled to sunset at the end of December 2020 but was extended for another year. Historically low-interest rates were also a contributing factor. 

Proposed projects in the pipeline that have gone or will go before the Philadelphia’s Civic Design Review Committee this month alone involve 1,612 new units. Including the Durst project, the number swells to nearly 2,000 apartments in the works at the early part of this year. The proposals include: 

    • Newtrack Development Corp. seeking to build 200 residential units in a 185,266-square-foot building at 2300 Market St. The project is proposed to have 12,048 square feet of commercial space. 
    • Atapco Properties proposing 185 apartments in a 178,837-square-foot building at 4401 Ridge Ave. that will have 4,400 square feet of commercial space.
    • 801 Girard LLC planning 80 units in a 61,291-square-foot building at 801 E. Girard Ave.
    • Riverwards Group envisions two projects on East Somerset Street. The developer envisioned 145 units in a 148,936-square-foot building at 2151-58 Somerset and 390 units in a 380,959-square-foot building at 220-50 Somerset. 
    • Glen Mills Associates has plans for 139 units and 12,991 square feet of commercial space in a 133,897-square-foot building at 1810-34 E. Hagert St., which is also referred to as 1825 E. Boston St. 
    • Mosaic Development Partners proposes 83 units in a 79,040-square-foot building at 6134-46 Wayne Ave.
    • Ampere Capital Group plans 110 units in a 106,374-square-foot building at 1640-48 Hancock St.
    • Another 280 units in a 272,111-square-foot project at 119 S. 31 St., which is a property owned by Horizon Housing Inc.

The Durst Organization’s development will be its first along the Delaware River, where it has assembled a series of properties and was last year named developer of Penn’s Landing. The new building will rise on a 1.6-acre parcel located between Vine and Callowhill streets. As planned, it will include 10,000 square feet of retail and a third of the property will be dedicated as open space. 

*Article courtesy of Philadelphia Business Journal

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Recovery in the Big Markets Is Catching Up With the Small

The U.S. has maintained a 2.5 million vaccine dose per day average for the past two weeks, and the benefits have become immediately apparent. Every state has vaccinated at least 25% of its population, with many states likely to pass 50% in the next few weeks.

As the virus goes, so goes the economy, and the Census Bureau’s Household Pulse Survey shows just how immediate these benefits have been. Compared to

the end of 2020, a staggering 13 million fewer people have noted loss of employment income compared to pre-recession. (Note: This is a broader phrasing than “Are you working?”, hence being much higher than job growth figures.)

The single most significant driver of this improvement comes from those out of work due to COVID symptoms. When combined with those not working due to COVID fears, or because they are caring for someone with COVID symptoms, there are 5 million fewer noting loss of employment income than at year-end 2020.

The improvement has been incredibly broad, with 2 million fewer out of work due to layoffs, another 2 million fewer out due to reduced business and over a million fewer who lost income due to temporary closings.

It is also worth noting that much of this improvement came at the end of March: As of March 30, 7.2% of the nonretired population had lost employment income due to business changes (i.e., poor business conditions), a major decline from 8.6% only

two weeks prior. We think there’s no coincidence this improvement happened right as vaccinations were aggressively picking up pace.

One aspect we’ll be watching closely as these trends continue is the relative outcomes for the largest cities compared to more suburban or rural areas. The pandemic hit the densest areas the hardest, most notably New York City, San Francisco, and Los Angeles. In data released last week by the Bureau of Labor Statistics, in February 2021, these three cities — in addition to entertainment and hospitality-heavy Las Vegas — still showed employment over 11% lower than pre-pandemic levels.

As seen in the chart above, these largest cities slowed the most in the fall and winter of 2020, but have caught up somewhat since.

Looking to higher-frequency data for more clues, we see the urban-suburban gap narrowing even more rapidly in early February and into March. The chart below shows spending changes for majority urban and majority rural counties compared to January 2020. In the early pandemic months, the difference spiked to over 5%, but slowly narrowed for most of the year. This suddenly reversed to close 2020, as seen in the graph above, as COVID cases spiked again. But as of March, the difference between the two series is negligible.

If there’s pent-up demand in the economy right now, it is in these major cities, and is likely to become a prominent part of the story over the next few months.

The next shoes to drop, so to speak, involve decisions to fully return to pre-pandemic daily habits. The question we hear most often relates to office usage and when things will go back to normal, or what a new normal might look like. Looking to the data, the increased pace of vaccinations has not lead to a meaningful return to regular office usage as of March.

According to data from Kastle Systems, across 10 major office-using cities, only 1 of every 4 employees is back in the office. In New York and San Francisco, it’s only 1 of every 7.

Last week’s comments from JP Morgan CEO Jamie Dimon are the latest hint that office use will be different from before the pandemic. Some companies will follow JP Morgan’s lead and cut office space by 40%, others may cut more and some may not change their office footprint at all. While many companies seem to enjoy the benefits of remote work, and the smaller rent bill, we also wonder how these soundbites will evolve as the majority of the population becomes vaccinated and other behaviors, such as public transit usage, return to normal.

Our hunch is that the cities with the longest commutes and the most expensive office space will be the slowest to recover. So far, the data bears that out. But the next few months of economic data should be very strong, and attitudes can change. Decisions made during the fog of a global pandemic may seem too extreme when that fog lifts. And make no mistake, that fog is slowly lifting.

The Week Ahead …

Next week is highlighted by retail sales and industrial production data for March. We discussed the divergence between the two series last month, when strong consumption while factory production remains limited has meant delays in delivery times, and likely some temporary inflation. We expect this trend to continue in March, as new stimulus checks hit household accounts and the late March Suez Canal blockage slowed global deliveries even more.

While not as exciting on the surface, consumer price index data for March is set to be released on Tuesday and should exhibit how these dynamics have been playing out so far in 2021. The noise-to-signal ratio will be high on this one, and we’re looking forward to sorting through it as inflation remains the bugaboo du jour for many macro commentators.

 

*Article courtesy of CoStar

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Pandemic Prompts McDonald’s to Close 325 Restaurants in Walmart Stores

McDonald’s Corp. plans to close about 325 restaurants in Walmart stores as it shifts spending to new openings and renovations while Walmart looks to introduce new food concepts.

The in-store food service changes come after what started as an experiment in 1994 between the two high-profile consumer brands expanded to more than 1,000 Walmart SuperCenters at its peak.

Over the years, however, sluggish sales at McDonald’s sites at Walmarts have led to closings periodically. That has gotten worse since the onset of the pandemic as traffic into Walmart has notably diminished because of lockdowns, capacity restraints, reduced hours and a dramatic shift to online shopping. At the same time, in-door dining has lost much of its attraction during the coronavirus outbreak.

Moreover, Walmart stores do not have drive-thru service for the McDonald’s units, further impeding sales results under the golden arches at a time when Walmart’s sales were on fire. That also has led to “frayed” bonds between the two, according to the Wall Street Journal, which first reported the split.

After the closings, which McDonald’s alluded to in its annual report, the two expect only about 150 Walmart stores will be selling Big Macs and fries in coming years. McDonald’s did not respond to a request for a comment.

McDonald’s instead will spend about $1.1 billion in capital expenditures this year on new restaurants openings, estimated now at about 650 net of store closings elsewhere throughout the system.

Some $500 million of this year’s spending will be allocated to adding new technological bells and whistles to about 1,200 restaurants, according to the regulatory filing. The fast-food giant has been installing touch-free ordering devices into its stores for much of the past five years and has implemented other technologies into stores in the past year.

Walmart, meanwhile, is looking to beef up its fast-food service offerings in its stores by adding to-go meals as well as delivery with big-name eateries and smaller local food sites. It is testing Taco Bell and Domino’s Pizza counters and is bringing in ghost kitchens for a multitude of food choices in some stores.

“We have a great opportunity with our leased space business to help our stores become even more convenient and relevant to local communities,” Avani Dudhia, a Walmart spokesperson, said in an email to CoStar News. 

“We are excited to continue to bring in new businesses that make sense for our customers and their changing needs,” Dudhia added.

 *Article courtesy of CoStar

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Consumers Spent $900 Billion More Online in 2020. Here’s Who Will Keep the Biggest Gains

Consumers across the globe spent $900 billion more at online retailers in 2020 compared with the prior two-year trend, according to a report released Tuesday by the Mastercard Economics Institute. 

Shoppers are heading back to restaurants and returning to stores to buy clothes and shoes in person. Yet they will continue to stock their fridges and hunt for good deals online — a sticky habit developed during the Covid pandemic, according to the report.

Nearly every retailer’s online sales jumped as shoppers were stuck at home. As consumers picked up online purchases in the parking lot and got packages or takeout dropped at their doorsteps, e-commerce made up about $1 out of every $5 spent on retail globally. That’s an increase from about $1 out of every $7 spent in 2019, the report said.

In an interview on CNBC’s “Worldwide Exchange” with Frank Holland, Mastercard’s chief economist, Bricklin Dwyer, said about 20% to 30% of the $900 billion in additional digital spending will continue into 2021 and the next few years.

However, the long-term e-commerce gains will be uneven and will depend on what a retailer sells, how they adapted their business model and how consumers prefer to shop. For some merchandise, such as clothing, shoppers may prefer to go back to brick-and-mortar stores where they can try on an outfit before buying it. In certain retail categories, such as electronics, online purchases already drove a larger share of overall sales, so there was less room to grow.

Grocery and discount stores will see the most dramatic and lasting shift to e-commerce, according to the report. Discount stores include dollar stores, wholesale clubs, and other retailers that sell to customers at near-wholesale prices. Grocers will likely retain about 70% to 80% of the digital sales gains they saw during the peak of the pandemic and discount stores will hold onto about 40% to 50% of them, the report said.

For both sectors, online sales made up only a single-digit share of overall sales before the pandemic — creating an opportunity for more noticeable growth.

Clothing stores, restaurants, and sporting/toy stores saw the biggest initial spike during the pandemic, however, but only kept 10% to 20% of that peak in sales, according to the report.

Electronics and department stores had the highest penetration of online sales before the pandemic, with e-commerce making up about 55% to 60% and 40% to 50% of their total sales, respectively, according to Mastercard. For the two sectors, their expected permanent shift will be around 20% to 30% of their peak jumps.

Dwyer said grocers face unique hurdles — even as more consumers shop online for produce, meats, and other ingredients. Only about 10% of overall grocery spending is through e-commerce, he said.

“You have to trust someone else to pick your peaches,” he said. “You have to have trust for someone else to deliver your goods and still have them good when they arrive. So that really is some of those barriers that we’re crossing.”

 *Article courtesy of CNBC

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Retail Rent Collections Climb to 90% for the First Time in a Year

Retail rent collections are steadily improving. In February, rent collections surpassed 90% among national retailers for the first time since March 2020, when the pandemic began, according to research from Datex Property Solutions. In the same month last year, national retailers paid more than 93% of rents, showing that retailers in this category are inching closer to pre-pandemic performance.

Mark Sigal of Datex says that a few factors are driving rent collections. “For one, there is a commitment to a lease, so it’s part of the basic give and take, he tells GlobeSt.com. “At the same time, most tenants have had some form of coordinated efforts with the landlord, which is the embodiment of ‘we are in this together,’ so that is no small driving force. Plus, for those who have weathered the storm unbroken, there’s an enduring commitment to and belief in their craft. Underlying all of this is an expectation that there is pent up demand from the consumer, which seems logical. The light at the end of tunnel is real based on all of the data we have.”

Rent collections among non-national tenants however, fell nominally in February to 80.76%, down from 80.79% in January. However, this signals stability in the sector. Overall, retail rent collections totaled 85.6% in February. “February collections data shows that we are holding steady at 85% and some change, with collections for nationals hitting the 90% range for the first time in about a year,” says Sigal. “Plus, we have the stimulus kicking in, and the slow thaw of the pandemic, which will feel to the economy and retail operators in general like a volume control gradually turned up in the next few months. I am bullish on the overall direction of things.”

Retail collections have steadily improved as COVID-19 restrictions are lifted, which is happening across the country in accordance with vaccine distribution. The stability of rent collection signals to a retail recovery once pandemic eases. “I believe that there is pent up demand,” says Sigal. “People have foregone travel and the usual bloated holiday spend, to some degree, so there is consumer spend waiting to be deployed, which is further bolstered by the stimulus.”

 *Article courtesy of Globest

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Inflation Seen As Low Risk for Commercial Real Estate Investors

As the third COVID-19 relief bill made its way through Congress, a new concern dominated conversations among economists: inflation. Massive stimulus packages that more than bridge the current output gap mixed with a 25% increase in the money supply has some concern over expected inflationary pressure that hasn’t been seen in a generation.

The 10-year Treasury rate has jumped 60 basis points since the beginning of 2021 as new supply from government spending and inflation concerns have rolled through the market. Disrupted supply chain problems internationally could also put pressure on price increases.
In the short term, there is good reason to believe inflation will run significantly higher than it has over the past 10 years. For commercial real estate, this could lead to lower real returns on income, as net operating income is somewhat sticky. Continued increases in construction costs for both material and labor would also be a problem for developers.

But commercial real estate is a longer-term investment and inflation is unlikely to run out of control in the next 10 years. For investors concerned about the inflationary effects of the new stimulus, the benefit of a strong economic recovery out of the pandemic crisis should far outweigh the risk of some transitory price increases. The real risks to commercial real estate asset values — Fed rate hikes and rising bond rates — are likely still a few years out and expected to remain low by historical standards.

For the short-term view on where inflation might go, the risk is almost completely to the upside. The argument for higher inflation primarily comes from what economists refer to as demand-pull inflation. Government transfers of cash to lower-income households, along with some additional investments in education and local government, push aggregate demand to unsustainable levels. When that demand outstrips supply at a given price, the economy undergoes inflation.
Currently, there is an estimated 3.5% output gap. Including the 2% expected growth in potential gross domestic product, the U.S. economy would need to grow roughly 5.5% next year just to reach a point of neutral inflation pressure. Given a continued strong recovery, Oxford Economics is currently projecting GDP growth of 7% in 2021, which would push inflation to 3%, but for only an expected brief period.

After a short-term bump, Oxford Economics is forecasting inflation levels will return to the Fed’s 2% inflation target by 2023 as the effects of the pandemic and government stimulus wear off. The bond market seems to be in agreement, with five-year break-even rates, which reflect the bond market’s implied average inflation rate over a given period, running 50 basis points higher than the 10-year rate, marking the first time the short-term and long-term rates have inverted since 2008.

Break-even rates have increased dramatically in the first quarter of 2021 but still, fall within historical norms. For commercial real estate investors, a brief increase in inflation to 3% could squeeze real income returns briefly, but not significantly.

While the aggregate demand argument works well for a short-term bump in prices, it is less effective for explaining why prices will continue to spiral long term. Higher unemployment benefits for six months and $1,400 one-time payments to consumers do not provide years of fuel for an overheated economy. Typically, for long-term inflation risk, we look at expectations, in this case, indicated by the break-even rate, which remains well within historical norms.
To qualify both the long-term expectations for inflation and short-term (five-year) projections, the risk is mostly to the upside. Economists have become exceedingly optimistic about the U.S. economy’s future, and rightfully so. Spending packages that focus on a bottom-up approach to stimulus, mixed with a stronger-than-expected labor recovery, should help push economic growth as the U.S. economy starts from a strong base.

All of this suggests higher long-term inflation than the last cycle but still well within historical norms, as deflationary pressures such as historically weak demographic growth, an aging population, automation, and income inequality have not disappeared, despite some short-term reprieve for low-income households.

*Article courtesy of CoStar

For more information about New Jersey or Philadelphia industrial space, New Jersey or Philadelphia retail space, and New Jersey or Philadelphia office space or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, and New Jersey and Philadelphia industrial space.

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

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

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for New Jersey or Philadelphia office space, Philadelphia or New Jersey retail space, or New Jersey or Philadelphia industrial space for sale or lease, Wolf Commercial Real Estate is the New Jersey and 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, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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While Covid-19 Caused Office Vacancies…WCRE Moves and Doubles Office Space in Marlton, New Jersey Headquarters

WCRE Moves & Doubles Office Space in Marlton, NJ HeadquartersDue to COVID-19, office space vacancies have risen throughout the country and some companies have been forced to scale back. But not Marlton, New Jersey based Wolf Commercial Real Estate (WCRE); they moved in early March 2021 to larger headquarters and doubled their space. A full-service Philadelphia and South Jersey commercial real estate brokerage, advisory and property management services company, they are proud to announce their move to One Holtec Drive, Marlton, NJ. The firm specializes in office, retail, medical, industrial, and investment properties in the Greater Philadelphia region, Southeastern Pennsylvania, Northeastern Pennsylvania, the Lehigh Valley and Southern New Jersey.

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Bucking the trend in office space vacancies, Managing Principal and Founder Jason Wolf is proud of WCRE’s ability and need to move. He explained,

“Our move is an indication of our belief in the future. While we have all struggled in so many ways through the Pandemic, we are feeling optimistic and see great potential in the market.”

Wolf is betting on the idea that, despite the downsizing that has occurred in response to the pandemic, the pendulum will swing back, and WCRE will be well-positioned to meet the anticipated demand for office space. He continued,

“We know that people thrive in an energized work environment, and collaboration breeds success. We embrace that philosophy fully.” Wolf adds more about future opportunities, and said, “What’s going to start happening over the next few years is flight to quality. Tenants in this market, especially post-pandemic, are looking for healthier, newer, inspired spaces to encourage their staff to return to the office.”

WCRE also takes great pride in their place in the community, as Wolf explains,

“This is our home, our mission, our work, and our play. Our community is growing, and we are part of that through our charitable arm – The WCRE Foundation. Our staff gets totally involved in our charities, and their commitment to helping others is a great demonstration of their dedication to our clients as well.”

The WCRE Foundation supports six local charities with strong personal connections to their employees. Bancroft, CARES Institute at Rowan University, the American Cancer Society, Susan G. Komen Foundation-Philadelphia, Samaritan New Jersey, and the Jewish Federation of Southern Jersey are the Foundations current beneficiaries. Each year, The WCRE Foundation hosts both a Celebrity Charity Golf Event and an Ice Hockey Event, that includes 6 Philadelphia Flyers Alumni playing in a competitive ice hockey game with donors and enthusiasts that support their mission. Flyers Alumni that have participated in past events include Brian Propp, John LeClair, Todd Fedoruk, Doug Crossman, Kjell Samuelsson, Andre Faust and Brad Marsh. Lou Nolan (Flyers Emcee) and Kerry Frasier (Retired NHL referee) are also involved each year.

WCRE oversees more than 200 properties

WCRE oversees more than 200 properties, comprising 4.8 million square feet, and still embodies the values set forth when Wolf founded the company: integrity, quality, teamwork, and focus.

In addition to teamwork being a core pillar of the company’s philosophy, it resonates on another level with several of the staff members who are former collegiate and professional athletes. Brian Propp played for the Philadelphia Flyers, Ryan Barikian played college football at Towson, Mitchell Russell played national championship caliber lacrosse at Duke University, Sean Kelly played baseball for Rutgers University, Phil Costa played college football at University of Maryland and in the NFL for the Dallas Cowboys, and Michael Scanzano played college baseball for University of Pittsburgh and minor league professional baseball.

About WCRE

Built on keen market expertise and intensely personalized service, WCRE has been operating in Southern New Jersey and the Greater Philadelphia area since 2012. 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. They 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 intensive focus on clients’ business goals and their highly personal approach to client service, WCRE is creating a new culture and a higher standard, going well beyond handling property transactions and serving as a strategic partner invested in clients’ long-term growth and success.

WCRE’s innovative and analytical approach to the market, using SEO, digital media, blogging and a very strong social media presence, has cultivated a massive, highly engaged customer base with followings almost ten times those of some of their competition. Their unparalleled expertise and commitment to service has earned the trust of a broad array of clients, and the firm has been a five-time winner of the prestigious CoStar Power Broker Award, which recognizes the “best of the best” in commercial real estate.

WCRE’s South Jersey headquarters can be reached at 856-857-6300 and inquiries for the PA offices in both Philadelphia and King of Prussia may be directed to 215-799-6900.

Learn more about WCRE online at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at  southjerseyofficespace.comsouthjerseyindustrialspace.comsouthjerseymedicalspace.comsouthjerseyretailspace.comphillyofficespace.comphillyindustrialspace.comphillymedicalspace.com and phillyretailspace.com.

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