Monday, April 28, 2025
Wednesday, April 23, 2025
Philadelphia saw accelerated population gains in 2024, led by suburbs
By Brenda Nguyen CoStar Analytics
According to the latest data from the U.S. Census Bureau, the Philadelphia metropolitan area added an estimated 88,100 new residents between 2019 and 2024, marking one of the region's strongest five-year growth periods in decades. In 2024, the region experienced accelerated population growth, adding 49,520 residents—comprising 56% of the five-year population gain in a single year.
The recent population surge has bolstered apartment demand, with nearly 10,200 new units leased in 2024—the second-highest performing year, behind only 2021's post-pandemic boom. Moving van rental firm U-Haul released its Midyear Migration Trends analysis, indicating that the Philadelphia region primarily attracts residents from New York City, Central New Jersey, Washington D.C. and Wilmington, Delaware. People have increasingly sought Philadelphia's relative affordability while maintaining access to Northeast economic opportunities.
Suburban areas are the primary drivers behind the region's expansion, with Burlington County in New Jersey leading at a 1.1% growth rate in 2024, followed by Chester County, New Castle County and Gloucester County, each expanding by 1%.
This continues a five-year trend where Burlington, Chester, and Gloucester counties each averaged 1.3% annual growth. In contrast, Philadelphia County showed a slightly negative average growth rate of -0.1%.
This suburban population expansion has led to tight rental markets. Due to limited new supply and growing demand, suburban apartments have experienced higher annual rental increases than units located in the city's urban core.
Several factors drive suburban appeal, including excellent school districts, expanding corporate campuses along Route 202 and I-295 corridors, and the development of walkable town centers. Communities like Phoenixville, Media and Conshohocken have become particularly attractive to millennials, forming families who desire space and accessibility.
Despite recent robust growth, demographic experts anticipate Philadelphia's population to moderate in the near future. For a region historically dependent on international migration to offset domestic outflows, future immigration policy shifts could significantly impact Philadelphia's demographic trajectory. Oxford Economics forecasts the region's population growth to average just 0.2% annually through 2029.
Monday, April 21, 2025
Monday, April 14, 2025
Northeast Philadelphia company sells HQ for $27.2M
By Ryan Mulligan – Reporter, Philadelphia Business Journal
Exertis Almo has sold its Northeast Philadelphia headquarters to a Boston real estate investment firm in a $27.2 million sale-leaseback deal.
An entity associated with Cabot Properties acquired the 143,060-square-foot building at 2709 Commerce Way, property records show. The sale breaks down to $190.13 per square foot.
The sale of the warehouse-headquarters comes after the longtime family-owned Almo Corp. was acquired by Ireland-based DCC plc for $610 million in late 2021.
Exertis Almo is a distributor of appliances and audiovisual equipment that was founded in 1946 and was owned for three generations by the Chaiken family. It tallies annual revenue of approximately $1 billion and has over 300 employees. The company was rebranded Exertis Almo after the acquisition as a nod to DCC plc's (LON: DCC) subsidiary DCC Technology, which trades as Exertis.
Exertis Almo operates some 2.7 million square feet of warehouse space across 12 locations spanning the U.S., according to its website. The sale of 2709 Commerce Way falls in line with a corporate policy from DCC Technology to lease rather than own buildings.
Full story: http://tiny.cc/qvjg001
Thursday, April 10, 2025
Tariffs likely to have indirect impact on CRE at first
By Ashley Fahey – Managing Editor, National Content, The Business Journals
President Donald Trump on Wednesday announced a 90-day pause on the reciprocal tariffs that went into effect this week, except for those impacting China. Because China issued retaliatory tariffs in response to the 104% tariff imposed by Trump on goods shipped from China to the U.S., the president also said he would be raising the tariff on Chinese goods to 125%, "effective immediately."
Where to begin? Let's try to unpack the potential consequences of tariffs on commercial real estate amid the whiplash nature of tariffs and Trump's trade war, which are already having material ripple effects on U.S. businesses.
Tariff impact for CRE likely to be medium term
While tariffs — and the uncertainty around them — have already affected pricing for construction materials, most of the impact on commercial real estate from President Trump's trade war will not be felt immediately.
On Wednesday afternoon, Trump said on the social-media platform Truth Social there would be 90-day pause on all reciprocal tariffs except for the ones imposed on China. The flat 10% tariff on most other imports that took effect April 5 remain.
But if the economy were to tip into a recession, the odds of which economists say are heightened by Trump's trade war, commercial real estate dealmaking and activity will inevitably slow, too.
The predominant concern for commercial real estate so far is how much replacement and construction costs will rise, especially in an environment where recent inflation and capital constraints have already hiked the cost of deals. Tariffs will make more projects unpalatable, and that will create additional pressure on supply, particularly in the housing sectors, Tim Bodner, U.S. real estate deals leader at PricewaterhouseCoopers, told me.
There are also medium-term questions and potential impact that've yet to be determined, including whether consumer confidence will slip and lessen demand for certain sectors of the economy — which will then have consequences for commercial real estate.
Full story: http://tiny.cc/tu3g001
Pair of Bucks County shopping centers sell for combined $29 million
By Paul Schwedelson – Reporter, Philadelphia Business Journal
A joint venture has bought two open-air retail shopping centers in Newtown and Bensalem for a combined $28.9 million.
New York-based ShopOne Centers REIT Inc., London-based Pantheon and a global institutional investor bought Goodnoe’s Corner in Newtown for $15.38 million and Village Center in Bensalem for $13.55 million. The buyers announced the purchase in March and the price was recently revealed in property records.
The two shopping centers were previously owned by Palladino Development Group.
Goodnoe’s Corner, at 290 N. Sycamore St. in Newtown, is a fully leased 34,660-square-foot shopping center. Tenants include Firstrust Bank, AT&T Store, Apple Cleaners and Jules Thin Crust. It’s on the southwest corner of North Sycamore Street and Durham Road.
Village Center, at 2363 Pasqualone Blvd. in Bensalem, is anchored by an Acme grocery store and spans 87,705 square feet. Wells Fargo, Neshaminy Beverage and Children’s Dental Health of Bensalem are among the other tenants in the shopping center.
Full story: http://tiny.cc/ot3g001
Friday, April 4, 2025
US office leasing bounces back to start 2025
By Phil Mobley CoStar Analytics
Growing economic uncertainty was not enough to stem the tide of tenants’ appetite for U.S. office space in the first quarter of the year.
Office-seeking companies leased an estimated 115 million square feet in the first three months of 2025, according to preliminary CoStar data. This was a 13% increase from the prior quarter and the most since the middle of 2019, offering the strongest evidence to date that a sector-wide recovery is underway as companies set their expectations for office attendance and space utilization.
The amount of square footage leased represents almost 1.4% of the country's office inventory. That is a shade below the average quarterly amount observed between 2015 and 2019. However, it matches the figure from the opening quarter of 2022 as easily the most since the beginning of the decade.
The surge in overall volume occurred despite a continuation of a trend of smaller transaction sizes. The trailing four-quarter average lease size of about 3,500 square feet is about 15% below its five-year, pre-pandemic norm. This was more than offset, though, by an estimated 33,000 transactions, a number that, when finalized, may ultimately be the highest on record.
The leasing recovery has some geographic breadth, with eight of the top 12 markets — including much-beleaguered San Francisco — showing first-quarter volume within 5% of the pre-2020 average.
Boston, which had suffered from the evaporation of demand from biotech lab occupiers, saw a tremendous swing in the first quarter, led by Biogen’s commitment to 580,000 square feet at the future 75 Broadway in Cambridge’s Kendall Square outside Boston.
Other major markets have shown improved leasing activity in recent quarters even if it remains depressed by historical standards. Washington, D.C., for example, saw a slight quarter-over-quarter decline in volume, likely related to reductions in the federal workforce and announced plans by the government to consolidate its real estate footprint. Even so, the general trend has been positive over the past year.
Leasing trends will be worth watching closely in the coming months. The rapid drawdown of the office supply pipeline means that tenants have fewer options for first-generation space. Most markets, of course, still have plenty of vacated space available for backfilling — but will tenants settle for space that may not tick every box on their wish lists? The answer will determine which landlords win the biggest in the new cycle.
Tuesday, April 1, 2025
Philadelphia pulls ahead of nation’s office recovery in 2025
By Brenda Nguyen CoStar Analytics
Philadelphia emerged as the most stable office market among the 15 largest U.S. office markets heading into the spring season. Following a year of occupancy gains, the Philadelphia region now boasts the lowest office availability rate at 14.1%, slightly ahead of Minneapolis at 14.2%.
In a notable departure from national trends, Philadelphia is one of only three major U.S. office markets experiencing positive absorption—the measure of space occupied versus vacated—over the trailing 12 months, joining Dallas-Fort Worth and New York in registering occupancy gains, while the remaining top U.S. office markets continued to see occupancy losses.
The Philadelphia regional office market recorded 1.2 million square feet of net absorption during this period, representing a 0.4% increase relative to its inventory. Recent performance places the market ahead of the national recovery trajectory at a time when office downsizing remains prevalent across the country.
Developers pump brakes on new Philadelphia-area industrial buildings
By Brenda Nguyen CoStar Analytics
Philadelphia's record-setting industrial development boom is winding down after an unprecedented five-year stretch that saw 55 million square feet of industrial space added to the region's inventory. As of March, 12.4 million square feet remain under construction across the Philadelphia region, a 52% decline from the early 2023 peak.
The development slowdown, which mirrors the national trend, primarily stems from the growing backlog of vacant newly delivered buildings. Approximately half of the 32 million square feet of industrial space completed in the Philadelphia region over the past two years remains unleased. Compounding this issue, 80% of the current 12.4 million square foot development pipeline is characterized as speculative, with no secured tenants.
The growing inventory of vacant newly built facilities has increased Philadelphia's industrial availability rate by 420 basis points since mid-2022. The market now faces a double-digit availability rate of 10.4%, which exceeds the national average by 80 basis points.
Several Philadelphia industrial brokers have indicated that their landlord clients had sat on their vacant properties for longer than anticipated when many projects broke ground in 2022 and 2023, a period of robust demand.
However, as unanticipated carrying costs pressure landlords, they have become more open to subdividing their warehouses to cater to a wider range of tenants.
CoStar data for Philadelphia's industrial market shows that the median time it takes to secure a tenant has inched upward from 4.7 months to 7.3 months during this two-year period.
In response to these market conditions, the number of industrial construction projects has plummeted. Only 1.7 million square feet of new industrial space broke ground in the second half of 2024, the lowest two-quarter level since 2018.
The ongoing development pipeline of 12.4 million square feet represents a 1.9% increase in existing inventory—still outpacing the national rate of 1.5%. However, the current downward construction trajectory suggests less supply will enter the Philadelphia market starting in 2026. The pullback should provide time for demand to absorb the 30 million square feet of additional available space added since mid-2022.
