Northeast Market Reports

Pitfalls, Opportunities Abound Within Pittsburgh’s Property Tax Code

by Taylor Williams November 13, 2020

By Brendan Kelly, associate, Siegel Jennings Over the past decade, Mr. Rogers’ adopted hometown of Pittsburgh has been named the most livable city in the continental United States — a hipster haven, tech hub and other trendy titles. Affordable housing stock in a stable real estate market, access to the arts in an established cultural community and world-class healthcare and higher education place the Steel City at the forefront of medicine and robotics. This attention has drawn real estate investors to submarkets well beyond downtown Pittsburgh’s Golden Triangle. As competition increases, investors from outside the region should be aware of idiosyncrasies and pitfalls lurking in Pennsylvania tax law and the local market. Welcome, Stranger As in most states, assessors in Pennsylvania cannot independently change a property’s assessment upon its transfer. However, Pennsylvania lets local taxing districts appeal assessments and request value increases, which they frequently do following a sale. Locals often call this the “welcome, stranger” tax. “One of the most common reactions I hear from our out-of-state clients who are new to this market is disbelief that districts can appeal assessments,” says Sharon F. DiPaolo, Esq., managing partner of Siegel Jennings’ Pennsylvania property tax practice. “Of course, in most …

November 13, 2020

Healthcare Life Sciences Market Reports Massachusetts Northeast Northeast Market Reports Office

Specialized Labor, Tenant Demand Fuel Growth of Boston’s Life Sciences Market

by Taylor Williams October 30, 2020

By Brendan Carroll, research director, Cushman & Wakefield Through the first three quarters of 2020, the Boston life sciences market is seeing record occupancy, a continuation of large new-building leases, stable rents at record levels, high levels of pre-committed new construction and an insatiable appetite for inventory in new submarket clusters. Cushman & Wakefield defines laboratory properties as facilities optimized for the physical scientific research of biotechnology products. COVID-19’s Impact Following a pause of leasing activity in the first quarter of 2020, lease negotiations for laboratory facilities resumed quickly in the second quarter, hitting a level that commercial office properties have still yet to see. While optimism quickly returned for the region’s office-using businesses, widespread execution of remote office-using job functions has proven to be more effective for many of these workforces than market leaders previously envisioned. The consensus among real estate observers suggests a long-term decrease in the percent of in-office workers for traditional office-using functions. However, the importance of the continued use of physical spaces for biotechnology research will not be affected, as this function cannot be accommodated through current and easily envisioned remote work practices. These are highly specialized jobs performed by employees with highly targeted skill …

October 30, 2020

Market Reports Northeast Northeast Market Reports Pennsylvania Retail

Philly Retail Market Responds to COVID-19

by Taylor Williams October 9, 2020

By Taylor Williams What a difference a year makes. Around this time in 2019, the Philadelphia retail market was experiencing something of a Renaissance. Driven by forward-thinking projects in chic neighborhoods, such as Fashion District Philadelphia, as well as the delivery of new phases of retail at destinations like Schuylkill Yards and the Philadelphia Navy Yard, the market was embracing new users, customers and spaces alike. The evolution of Philly’s retail market at this time inevitably bred winners and losers. Six months later, the onset of a global pandemic would give rise to political policies that crushed capacities and foot traffic for retailers and restaurants. Add in a healthy dose of elevated online shopping, and the result was a one-two punch that was simply too much for some retailers to survive. Such is the scene playing out today in the City of Brotherly Love. But real estate professionals are quick to point out that the demise of some retailers was unavoidable before COVID-19 came around, and that ultimately the city’s strong demographics will usher its retail market through the recession. “We shouldn’t lose sight of the fact that pre-COVID, several categories of retailers were not thriving or were irrelevant or …

October 9, 2020

Market Reports Multifamily Northeast Northeast Market Reports Pennsylvania

Three Key Trends to Monitor in Philadelphia’s Multifamily Market

by Taylor Williams September 11, 2020

By Christine Beechan, area vice president, Morgan Properties If there’s one certainty about the unusual year that is 2020, it’s that COVID-19 has significantly impacted every industry across the globe. For apartment owners and operators, we’ve entered uncharted territory in terms of changing renter demands, unconventional leasing methods and new operational procedures. Consequently, it’s especially important right now for apartment professionals to understand the complexities of the current state of the market and where it’s heading. As 2021 is fast approaching, here are three key trends we can expect to see in the Philadelphia multifamily market for the remainder of 2020 and into the new year. Demand Remains Stable When the pandemic initially hit, we noticed a decrease in leasing because Pennsylvania was under strict orders to shelter-in-place. Because of this uncertainty, people wanted to see how the pandemic would shake out and ultimately decided to stay put, affecting markets across the nation. However, as those restrictions were lifted and the economy started to stabilize, we noticed people felt more comfortable moving into new units, which is typical during the summer season prior to school commencing. Unlike most cities, both urban and suburban parts of Philadelphia have seen accelerated growth …

September 11, 2020

Industrial Market Reports New Jersey Northeast Northeast Market Reports

New Jersey Industrial Market Displays Remarkable Resiliency Amid Pandemic

by Taylor Williams September 4, 2020

By Mark Russo, director of research, Newmark Knight Frank The industrial markets of Northern and Central New Jersey have held strong thus far in 2020 as heightened e-commerce activity has offset the disruption caused by COVID-19. Total e-commerce sales rose by 31.8 percent in the second quarter relative to that period in 2019, according to data from the U.S. Department of Commerce. While demand for retail and office space has been negatively impacted, steady rent growth and stable vacancy highlight the resilience of the industrial sector. Industrial tenants moving into new deliveries have helped generate 4.2 million square feet of positive net absorption year-to-date. Vacancy currently averages 4.3 percent, down from 4.5 percent a year ago. Meanwhile, the average asking rent grew by 2.1 percent over the past year to a record mark of $9.20 per square foot. Online Shopping Fuels Leasing Social distancing measures and store closures caused by the pandemic have accelerated the adoption of online shopping. This has led to increased demand for logistics and distribution space among e-commerce companies. In fact, e-commerce deals have accounted for 75 percent of industrial leasing activity in Northern and Central New Jersey since April, compared to a quarterly average of …

September 4, 2020

Market Reports Northeast Northeast Market Reports Office Pennsylvania

Philadelphia Office Market Enters ‘Wait-and-See’ Mode

by Taylor Williams September 1, 2020

By Tom Weitzel, managing director, JLL The Philadelphia office market at the moment is running in place, which is to say that there is certainly energy being expended, but it is going nowhere fast. Tenants and landlords alike are partnering with real estate experts to navigate this challenging time. However, while office users evaluate businesses and study workforces, the benefit of making a decision has not yet outweighed the downside of making a wrong decision, so most users are adopting a “wait-and-see” approach. Tenant Perspective Tenants are finding it challenging to make long-term decisions about their office spaces given the lack of clarity in the future. Business leaders and executives are tasked with considering factors such as health and safety, productivity, profitability and overall employee morale on a daily basis as they evaluate their physical office space usage during COVID-19. Throughout the region, executives continue to balance health and safety concerns with operational needs as they advance office re-entry plans. They are also assessing the current productivity of their employees compared to that at the beginning of the pandemic. Many companies that we have spoken with have cited declining productivity and creativity from their employees. At the same time, these …

September 1, 2020

Industrial Market Reports New Jersey Northeast Northeast Market Reports Pennsylvania

Philadelphia, Southern New Jersey Industrial Market: Everything Investors Need to Know

by Taylor Williams August 28, 2020

By Marc Isdaner, senior managing director, principal, Colliers International; and Ian Richman, senior managing director, Colliers International Strong job and population growth in recent years have caused the Philadelphia/Southern New Jersey industrial market to continually rise on the radars of both investors and developers. As the nation battles COVID-19, we see demand for industrial space growing as more users look to service last-mile customers in densely populated areas. This market is no exception. With the right guidance and counseling, investors can achieve strong returns here, even as variables like user demand and land/construction costs continue to rise, bringing valuations and sales prices along with them. Projects Get Bigger We continue to see developers take down large tracts near major thoroughfares in this region, oftentimes building on speculative bases. Examples of such projects are Mansfield Logistics Park, a 960,000-square-foot, two-building spec development by Clarion Partners off Interstate 295 in Burlington County that is nearing completion; and The Cubes at East Greenwich, a two-building spec development located off I-295 in Gloucester County. The latter project is being developed in an area that was largely inactive until 2018, as land sites and established industrial parks such as Pureland were essential built out. Scout …

August 28, 2020

Company News Market Reports New Jersey Northeast Northeast Market Reports Retail

Jersey Mike’s Sandwich Chain Invests in Delivery, Pick-Up

by Taylor Williams August 18, 2020

By Alex Patton During the business lull caused by the outbreak of COVID-19, fast casual sandwich chain Jersey Mike’s made news by rolling out a $150 million nationwide retrofit project for its stores. The project will include aesthetic and comfortability upgrades for 1,700 franchise stores, as well as expanded functionality for delivery and pick-up services — all paid for by the company. “Paying for the retrofits ourselves is a tactical move on our part,” says Peter Cancro, CEO of Jersey Mike’s. “Whenever you put money in your business, it always comes back. It’s an investment into our people — every dollar we put into the project we’ll get back in loyalty and trust from our franchise owners and our customers.” The Manasquan, New Jersey-based company operates approximately 1,750 stores across 48 states and plans to expand to 2,000 by the end of 2021. Though the company is growing its store count quickly, it is still a relatively small player in the national sandwich game. By comparison, Jersey Mike’s two closest competitors, Subway and Jimmy John’s, operate 24,000 and 2,800 stores in the United States, respectively. Amid state-mandated temporary closures of retail stores and restaurants, Jersey Mike’s was able to continue …

August 18, 2020

Market Reports Northeast Northeast Market Reports

Northeast Lenders Eye Fourth-Quarter Recovery

by Taylor Williams August 11, 2020

By Taylor Williams Decreased acquisition activity across virtually all asset classes is among the most visible impacts that COVID-19 has had on commercial real estate, but capital markets professionals say there’s reason to believe deal volume will rebound sharply toward the end of the year. For most property owners, the net result of the economic disruption and job losses has been a decrease in cash flows. With net incomes faltering or dissolving for property owners, many prospective investors have temporarily hit the pause button on new acquisitions. As the pandemic has unfolded, bureaucracies have taken action. The federal government appropriated hundreds of billions in small business loans and stimulus payments to taxpayers, and state coffers have been gutted by disbursements to the unemployed. While this activity was designed to stimulate consumer spending and help businesses stave off permanent closures, it has done little to fuel sales of commercial properties. Numbers Tell All Real Capital Analytics (RCA) tracks investment sales activity across the country, including in nine major markets in the Northeast region. The New York City-based research firm recently released its findings for the second quarter. Per RCA, the total volume of commercial sales during this period clocked in at …

August 11, 2020

Market Reports Massachusetts Northeast Northeast Market Reports Retail

Wanted: Essential, Durable Retailers in Boston

by Taylor Williams August 7, 2020

By Alex Patton Retail real estate investors in Boston are cautiously evaluating the risk profiles of tenants even as businesses reopen following temporary closures due to the COVID-19 pandemic. The emerging consensus is that until a vaccine is developed to safely treat the virus, the safest investments are tied to essential tenants with reliable incomes. That short list includes grocers, drugstores, home improvement businesses and liquor stores. Like the rest of the country, all nonessential retail businesses in Massachusetts were forced to close temporarily in early March, for what was originally expected to be a short period. After several weeks, the commonwealth’s government implemented a phased reopening system that allowed some retail businesses to resume operations. However, after months with significantly reduced income, a number of small retailers are declaring bankruptcy and permanently closing stores to save money. “The underlying question that permeates the retail investment industry, as an investor or a lender, is how much of the income is durable? In other words, which retailers are going to survive?” asks James Koury, senior managing director of investments at the Boston office of Institutional Property Advisors (IPA). “A vaccine would be a game-changer, but we can’t know if it will …

August 7, 2020

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