PHILADELPHIA-“This is a story about growth right now,” Alan Greenberger, deputy mayor for economic development ands director of commerce, summed up his assessment of his city’s present and near-term future. Keynote speaker at this year’s RealShare Philadelphia conference, Greenberger was so upbeat in his appraisal of the City of Brotherly Love that a fellow RealShare speaker later joked that he’d bring Greenberger along on all future meetings.
The half-day conference, held Thursday at the Union League, drew 450 industry professionals to Center City. Greenberger and other expert speakers at this year’s event offered plenty of hard evidence to support the civic boosterism.
Greenberger and Korman Communities‘ Bradley J. Korman both cited Philadelphia’s top ranking for residents in the 20-to-34-year-old bracket. Also, Greenberger quoted developer Don Peebles, who recently declared Philadelphia “one of the three hottest development markets in the US.” Earlier this month, Peebles announced a partnership with Kimpton Hotels to redevelop the Family Court Building in the Logan Square neighborhood.
On the subject of development, Greenberger and CBRE‘s Robert W. Walters each pointed to Comcast Corp.’s recent announcement that it would build a second tower, even taller than its skyline-altering headquarters, as a game-changer for Center City’s commercial real estate profile. “Talk about moving the needle,” said Walters, executive managing director at CBRE. “It’s like a bomb went off.”
All told, Greenberger said, the city has about $7.5 billion worth of projects in the pipeline, including $3 billion worth of projects now under construction. With Kimpton, Peebles and Jonathan Rose Cos. all having announced or recently completed projects here, “We haven’t seen outside investment like this in a long time,” said Greenberger.
Korman told the RealShare audience that for years his company had steered clear of building in its own backyard. That has changed and Korman said it is for the same reasons that outside investors are being attracted to Center City: opportunities to do deals yielding respectable profit are more possible today, and capital partners are showing increased interest.
HFF‘s Jose Cruz, senior managing director with the company’s New Jersey office, noted that his company opened an office here in December. “We run lockstep with the capital,” Cruz said, adding that investors recently have been less-than-happy with the potential yields in New York City or Boston.
In Philadelphia, risk-adjusted returns can be 50 to 1200 basis points higher than in the Big Apple or Beantown, Cruz said. “There really is demand from the capital side to be here,” he added.
Arthur Pasquarella, EVP and COO of Equus Capital Partners Ltd. also spoke about investors’ new willingness to go outside the core cities being a boon to “secondary” markets such as Philadelphia. “Capital is spreading out across the country,” Pasquarella said.