It’s an exciting time for Philadelphia, and no firm knows that better than us.
“There’s a real buzz here,” says Mike McCurdy, managing director of the Philadelphia market. “Cranes are everywhere, and new retailers are coming in. Millennials through Baby Boomers are moving downtown, while key suburban markets remain strong. It’s the best economy I’ve seen in my 30-year real estate career here.”
Why here? Why now?
Philadelphia has historically maintained a fairly stable economy—never swinging too drastically with national highs or lows. In some ways, JLL experts say, the region actually benefited from the last recession, having now recovered more jobs than what were initially lost.
With a front-row seat to the region’s development boom, JLL specializes in the full gamut of office and industrial real estate— from sales, financing, and leasing to construction and property management.
JLL Research Director Lauren Gilchrist notes that the city currently has more than 2.2 million square feet of CBD office construction and 3,500 multifamily residential units underway, and the two largest development deals ever on record for Pennsylvania were completed within the Philadelphia market in the last 18 months.
“Philadelphia is on the radar for institutional investors all over the country and around the world. People aren’t just interested in what’s currently on the market; they want to know what will be available in the future, which is a good sign,” says Doug Rodio, managing director of capital markets.
Helping to propel this economic boon is the fact that 64 percent of Philadelphia college students are now staying in the city after graduation—up from less than 40 percent in years past. Strong industries like higher education and healthcare are further stabilizing the future of the real estate economy.
“We continue to see rents increase across asset types—office, retail, and multifamily rents are at an all-time high,” notes Jim Galbally, co-lead of capital markets. “Several recent trades have set benchmark pricing as a result of the increasing rents, low-cap-rate environment, and the influx of new capital coming to Philadelphia.”
JLL recently sold the ICON 1616 Walnut Street for over $500,000 per unit, and 1801 Walnut Street for over $1,800 per square foot, both record-setting transactions.
Beyond the city.
But Center City isn’t the only area with real estate opportunities, Rodio notes: “Areas along the Main Line are also showing benchmark pricing. A well-known and well-respected institutional investor recently made a direct investment in Radnor, and we believe other investors will be following that lead.”
From the Lehigh Valley through Central Pennsylvania, JLL is seeing increased interest from the large industrial warehouse and distribution occupiers and investors, driven by prime location related to supply chain and logistics. Finally, the energy sector remains a key area of future growth due to both location and infrastructure.
“The bottom line is that the population’s increased interest in living and working in Philadelphia has positively impacted all regional real estate asset classes,” concludes McCurdy, “and JLL’s innovative solutions and understanding of the needs of our clients ensures a valuable partnership for capitalizing on those opportunities.”