By Ryan Mulligan – Reporter, Philadelphia Business Journal
Three of Philadelphia's leading developers say the commercial real estate industry is at a delicate point and needs support from the business community.
PMC Property Group's Ron Caplan, Keystone Development and Investment's Bill Glazer and Alterra Property Group's Leo Addimando spoke at a panel hosted by Business Clubs America of Philadelphia in front of hundreds of attendees at the Kimmel Center on Friday. Their three companies collectively own more than 7,000 apartments in Philadelphia and operate some of the region's prominent office buildings, with billions invested into the city.
The developers called for workers to return to the office five days per week and for the members of the audience — an exclusive, membership-based group of business stakeholders — to continue to spread optimism about the state of Center City amid a precarious commercial real estate environment.
Glazer juxtaposed St. Louis' story of high vacancy rates and an empty downtown with what he said is a resurgence and renewal in Detroit. While the business district in St. Louis has become increasingly desolate, office and residential development is booming in downtown Detroit.
"Philadelphia today can straddle both stories," Glazer said. "It could go in either direction."
Addimando said that without workers in Center City's office buildings, the real estate begins "to degrade." The solution to that issue is simple — to bring people back to the office — but the developers said that needs to start with business leaders.
The larger challenge is what to do with space that's not new and not leased, Addimando said.
"That's a very hard problem to solve, but I think Philadelphia has a manageable amount of what I would call functionally obsolete office that we can find better uses for," Addimando said. "Other cities have a much bigger problem than we do here, so I'm actually pretty optimistic. But start by getting your people back to work five days a week. That'll make a big difference."
Caplan said developers and property owners are challenged to be nimble, and they will rise to that challenge.
"The problem for everybody in the real estate business is what do you do with all the available space that's been created," Caplan said. "Not because there's been a change or a shift in the amount of business being done in Philadelphia. We are not losing tenants to the Sunbelt. But it's just, 'What is going to happen in the normal course of business as properties or vacancy opens up?' It's incumbent upon the three of us to figure out what's going to happen. And it's incumbent upon really everybody in this room to say, 'I could use an extra 10 feet' and we would appreciate that."
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