City's Property Market, at Least, Defies Curse

Some sports fans in Philadelphia feel their teams are victim of a real-estate curse.

That is because none of the city's major professional teams -- the Phillies, Flyers, Eagles and 76ers -- have won a championship since before 1987, when Malvern, Pa.-based Liberty Property Trust's One Liberty Place rose above a statue of William Penn that tops City Hall. Mr. Penn's hat previously set the bar for the city's skyline.

The American Commerce Center, shown in renderings, would change the look of Philadelphia's skyline.

Fortunately, Mr. Penn doesn't seem to have focused his chagrin on the real-estate market.

So far the Philadelphia area's commercial real-estate leasing market, particularly Center City Philadelphia apartments, have held steady in the midst of the growing economic carnage. The city's office market, more than the suburbs', has benefited from "steady, unspectacular growth married with little supply," says John Gattuso, senior vice president and regional director of Liberty's urban development group.

While the metropolitan area's office vacancies rose to 14.5% in the second quarter (and rents are expected to decline slightly in the second half of the year), they are still below the national average of 15.6%, according to Boston-based Property & Portfolio Research, a real-estate research firm. University City Apartments, retail and warehouse vacancies rose in the second quarter but held at or below averages for the 54 major metro areas surveyed by PPR, while rents were still rising in all but the retail sector.

To be sure, the geographic proximity of the region to the crisis on Wall Street -- with Philadelphia about two hours south of Manhattan, give or take -- is a concern among the area's real-estate professionals. As with most markets globally, sales of office, retail and apartment buildings have slowed since the credit crunch began in the summer of 2007, although sales of office buildings valued at $5 million or more this year through August fell just 14% compared with last year's period. That is better than a 77% drop nationwide over the period, according to Real Capital Analytics, a New York-based research firm.

The Philadelphia metro area, home to about 5.1 million people, saw continued growth in its education and health-services sector. And so far overall job growth has remained in the positive territory as of July compared with the year-earlier period, albeit just barely at 0.1%, according to the Bureau of Labor Statistics.

For now, the new 975-foot-tall glass-encased Comcast Center tower that officially opened this year seems to reflect the market's strengths. Designed by Robert A.M. Stern Architects, the building has created a buzz with a 25-foot tall high-definition video screen in its lobby.

The building also has leased all of its roughly 1.2 million square feet of office space, much of it as the new headquarters of cable giant Comcast Corp., says Liberty Property's Mr. Gattuso. It has also done so despite skepticism early on from some brokers who said asking rents in the $40-per-square-foot range were too rich for the City of Brotherly Love, Mr. Gattuso said.

That success may be encouraging other developers. One project planned near the Comcast Center is the American Commerce Center. If built, it would rise about 1,500 feet high and include office, hotel and retail space, according to Peter Kelsen, an attorney for Philadelphia-based Hill International Real Estate Partners LP, which is developing the project.

Citing Hill's joint-venture relationship with a large pension fund, Mr. Kelsen said he's confident the group will have the financing. Developers also need some preleasing commitments and for the city to remove a height limit on the property, he says.

The scale is just one of the project's striking elements. New York firm Kohn Pedersen Fox Associates' design includes a glass facade and futuristic-looking cutouts as well as a lower section that abuts a higher tower that together look something like a chair. "It's not going to be very colonial," Mr. Kelsen says, referencing the city's past architectural leanings.

There's even hope that the tall-building curse may soon vanish. The new Comcast Center gave a nod to Mr. Penn by welding a small statue of the city's founder to one of its beams.

By: Maura Webber Sadovi
Wall Street Journal; September 24, 2008

City of Brotherly Love is Named Best for Grads

Historic Landmarks Plays Key Role Providing Urban Lofts For Grad Students in Historic Neighborhoods

Joey Hyde, a 25-year old physics grad student at the University of Pennsylvania, likes living in downtown Philadelphia because he can get around without a car, make spontaneous plans with friends or his fiancée for a night on the town, and enjoy a great meal at his favorite upscale Cuban restaurant for half of what it would cost in Manhattan.

“Philadelphia is pretty livable for people my age,” says Hyde, a Florida native who moved to the city at 22 after completing his undergrad degree in Pittsburgh. “It’s a lifestyle like New York’s, but much more affordable. People here can bunk up together like in Brooklyn if they want, but real estate is a lot less expensive than in New York.”

Hyde’s assessment sums up new findings from Apartments.com and Careerbuilder’s CBCampus.com job site, which today released their list of the top 10 most affordable cities for young college grads. The survey ranks Philadelphia at the top of the list, based on research criteria including the population of people age 20 to 24, the number of entry-level job openings suitable for new grads, and the average cost to rent a one-bedroom apartment.

According to the data, the average price of a one-bedroom apartment in Philadelphia is $962, 58 percent less than the $1,562 monthly rent on a one-bedroom in New York. And, if the survey is correct, there are plenty of jobs available for young workers both in and beyond college.

Finding a place, and finding a job

Of course, many factors play in to a young adult’s choice of where to live—and cities around the country have struggled for years to offer both lifestyle amenities and compelling job opportunities, and in a setting that’s affordable to younger workers.

According to Carol Coletta, president and CEO of Chicago-based research organization CEOs for Cities, roughly two-thirds of young adults consider where they want to live first, then consider how they’ll earn a living.

“Jobs aren’t always the first thing young people are looking for in a city,” she says. “They want a city that’s clean and attractive, offers the lifestyle they want, is safe, ‘green’ and with outdoor amenities, and that has the kind of housing they like. Lastly, they want a city that will enhance their professional reputation.”

However, given the current fragile economy, new graduates may need to consider their employability more carefully as they scope out potential cities. Grads this year face stiff competition now.

“Employers are proceeding with caution as they wait to see how the nation’s economic situation unfolds,” said Brent Rasmussen, chief operating officer at CareerBuilder.com.

According to CareerBuilder research among 3,147 hiring managers at major employers, 58 percent plan to hire recent college graduates this year, down from 79 percent during 2007. The pay isn’t great: Most employers (42 percent) plan to pay salaries below $30,000; 32 percent will pay $30,000 to $40,000 range; 15 percent will pay $40,000 to $50,000; and 11 percent will pay more than $50,000.

Personal versus practical concerns

While housing availability is important to new grads, so too is the opportunity to participate in key industries. The list of top cities includes some usual suspects — Boston, a hub for research and academia; New York, the financial and media capital; Dallas and Houston, where energy and big business thrive.

Frontrunner Philadelphia, along with other cities on the list, has been working to enhance its reputation among younger workers and prevent the “brain drain” that happens when young adults graduate and leave. Phil Hopkins, vice president of research at Select Greater Philadelphia, a regional marketing organization, says his organization and the non-profit group Campus Philly are both working to retain and educate young adults and college grads about local career options before they hit the job market.

“New York is the undisputed financial capitol of the U.S. Washington D.C. is the political capitol,” says Hopkins. “Our strength is in pharmaceuticals and life sciences. There are 85 pharmaceutical companies within an hour and a half of the center city.”

His job, he says, is to make sure students are aware of this.

Nice homes – for now, anyway

Cities focus on attracting young workers both because younger workers are more entrepreneurial and because, once they hit 30, they often land in life circumstances — marriage, home ownership, parenthood, caring for aging parents — which can slow their mobility, says Coletta.

Hyde, who’ll earn a doctorate and get married by the time he graduates from an Ivy League college, isn’t necessarily loyal to Philadelphia. Asked if he wants to work there once he’s completed his education said “Not particularly.”

“The nice parts of Philly are really nice. But the bad parts are awful,” he says. “It’s the flip side of cheap real estate.”

But for a certain type of Gen Y renter, Philadelphia, particularly University City apartments, will offer just the right mix of job and lifestyle options.

Hopkins, the Select Greater Philadelphia executive, says that his son, a 24-year old working at insurer AIG and living with his parents to save money, is now debating whether to move to the New York area or stay closer to home. Because he wants to buy a home, he has no options in Manhattan—and few options in nearby New Jersey cities.

“He can’t afford the monthly payments in Hoboken, Jersey City, or Manhattan,” Hopkins says. “So now he’s thinking about Philadelphia.”

By: Jane Hodges
MSNBC contributor; April. 29, 2008