While the reasons for this come from a strengthening economy andsustained retail sales throughout the region, Center City'sresidential boom is bringing special strength to that market,particularly among investors. "Multi-tenant assets in Center City,where the residential market is flourishing, will command multiplebids in the quarters ahead," he predicts.

Beyond the heart of Center City, he points to SouthPhiladelphia, an area that is undergoing a transformation that isattracting white-collar residents. Inexpensive available land and a10-year new homebuyers' tax abatement are sparking new residentialconstruction, "and national retailers should find their way intothe area as a new demographic profile evolves," Algatt says.

The average sale price of single-tenant assets throughout theMSA dropped 33% to $107 per sf in 2004, according to M&M data,due primarily to a limited supply of high-quality, for-saleproperties in desirable locations. "With many potential buyerschasing too few assets," Algatt predicts, "the stage appears to beset for a run-up in prices when superior single-tenant assets hitthe market over the remainder of the year."

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