Tuesday, December 17, 2013

The biggest real estate stories of 2013

by Natalie Kostelni - Staff Reporter- Philadelphia Business Journal
When reviewing my list of top real estate stories from 2012 and comparing it to what I have compiled for this year, I'm struck by how vastly different 2013 has been.
The economy gained momentum this year, the future got somewhat more confident and it’s reflected in the commercial real estate activity that took place throughout the region.
This year, I am taking a look at what I think are the biggest stories in real estate, which are more thematic in nature. I'm also writing about the biggest surprises and the biggest deals in two other blogs (stay tuned.) As always, please let me know what you think and if I overlooked something of significance.
Here are my picks for the top stories:
Construction activity is booming. From King of Prussia, Pa., to Philadelphia to South Jersey, construction is booming. A week doesn’t goes by when there isn’t either a ground breaking, topping off, ribbon cutting or an announcement about a new building. It’s not just government money at work, such as with the Family Court building, but across the board including private and institutional investment.
Multifamily sector is healthy. The apartment market in Center City and even in the suburbs is robust. There’s construction of new apartments and conversion of old buildings as well as investors buying and selling multifamily properties. I’ve started to see some concessions being offered, which leads me to believe too much inventory is coming on the market but they haven’t been rampant.
Office investment sales in the suburbs and Central Business District are coming back — as shown by closed deals such as 1500 Spring Garden St. and 2000 Market St. and pending deals such as 1000 Continental in King of Prussia.
The tax increment financing package for the proposed W Hotel. It highlighted, again, the issue of how public funds are used to financially support construction projects in Philadelphia. Any developer will tell you the cost of construction, particularly labor costs, can’t be supported without a TIF, tax abatement or a Keystone Opportunity Zone. These tax breaks essentially subsidize Philadelphia’s expensive construction labor.

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