Tuesday, February 16, 2016

RealShare Philadelphia 2016: Build, Rebuild, Renew Panelists See Confusion, Opportunities

by Steve Lubetkin, Globest.com
Redevelopment in Philadelphia can be perplexing and confusing to outsiders because of the lack of transparency regarding taxes, assesments, and how assets are perceived, according to panelists on the “Build, Rebuild, Renew” panel at ALM’s RealShare Philadelphia Conference February 9 at the historic Union League Club in Philadelphia.

“One of the most important things I’m seeing is the lack of education in terms of the opportunities that might exist on different properties, whether it’s new construction or a redevelopment project, or an acquisition with a value-add component to it, of all the different federal, state, local, even down to the utility credits, incentives, and rebates, available to the investors,” says Michael D’Onofrio, managing director, Engineered Tax Services. “It’s a lack of awareness of the opportunities involved.”

D’Onofrio says regardless of property type, investors should look comprehensively “up and down the food chain” for ways to leverage tax benefits. “It’s staggering the additional dollars that are left on the table every time,” he says. Historic tax credits could amount to between 10-30 percent of the property, he noted.

One member of the panel counseled a bit of caution regarding the currently frothy market.

“For us, it’s about caution today,” says Robert Cottone, president and CEO, IMC Construction. “I’ve been in the market for almost 40 years, and when things get too hot, we worry. The real estate industry is very good at putting product in place quickly, and when people are overly optimistic, we worry.”

The vendor market has not rebounded to the same extent as the overall economy, Cottone says. “As a result, there are stress cracks in the economy. There are looming labor shortages,” he says. “We’re not at a crisis point yet. We think the market will regulate itself, we’re seeing a stalling over the next year and a half.”

“We’ve put our focus on our new training complex,” says Chris Heck, chief revenue officer of the Philadelphia ‘76ers, noting that the NBA team is one of just three in the league that are tenants in the sports arena where they play. “It’s an opportunity for us to carry help carry the torch of Camden, and the rebuild of Camden, and the rebirth of Camden, but it also gave us the opportunity to do something very different.”

The team’s $80 million training complex is expected to include retail development eventually, he says.

“The first rule of real estate is to not fall in love with your buildings,” says Eric Blumenfeld, founder and principal, EB Realty Management Corporation, who described his experience developing residential multifamily space at 640 North Broad and the coming redevelopment of the Divine Lorraine Hotel on North Broad Street, which he originally bought ten years ago, sold, and then repurchased for the current renovation project. “I failed that test.”

The “Build, Rebuild, Renew: Development and Redevelopment Around Philadelphia” panel, also will included as panelists Brady Nolan, vice president of development for Dalian Development; and Gary Gabriel, executive vice president, Cushman & Wakefield of New Jersey. Moderating the panel was Carl Primavera, partner, Klehr, Harrison, Harvey, Branzburg.
www.omegare.com

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