By Jennifer E. Garrett
Photo: Philadelphia Convention and Visitors Bureau and Edward Savaria, Jr.
Until 1987, Philadelphia buildings were kept below the height of founder
William Penn’s statue atop City Hall, which rises 547 feet. That has
changed in a big way.
Soaring skyscrapers may become the
new norm as Philly tries to attract businesses. The Comcast Center, a 58-story,
975-foot tower, opened this past June.
Ground broke in November 2007 for
Cira Centre South, a mixed-use development planned to house 2.8 million
square feet of office, hotel, residential,
parking and retail space in a 40- to
What the Locals Say
“The commercial real estate market in Philadelphia
is not too hot and not too cold. It’s steady. There
has been a slight price adjustment because of the
market. Investors are waiting for prices to drop out
even further, but I don’t think that’s going to happen
because the price of land has been stable.”
— Len May, senior commercial real estate specialist, Aptcor Commercial Realtors
What’s next? Plans for the American Commerce Center call for it to become one of the country’s tallest
buildings at 1,500 feet. That comes with a big if, however, because the development has significant hurdles
to overcome — beginning with zoning. The city has already enforced zoning codes against Unisys, which
as of September was reconsidering moving its headquarters to Philadelphia after the city rejected its plan to
place a 600-square-foot logo on a skyscraper.
Attracting businesses to fill in these massive spaces will be key for Philadelphia. Office vacancies in the city
have held steady in the past year, and net absorption was positive for 11 consecutive quarters through the
second quarter of this year, according to CB Richard Ellis.
Population: 1.4 million
n Population in 2000: 1.5 million
n Rank (U.S.): 6th-largest
n Metropolitan-area population: 5. 8 million
n Metropolitan-area rank (U.S.): 5th-largest
Average commute: 31. 4 minutes
n Average commute in 2000: 32 minutes
n U.S: 25 minutes
Median household income: $33,229
n Median household income in 2000: $30,746
n U.S.: $48,451
Median age: years 35. 4
n Median age in 2000: 34.2 years
n U.S.: 36.2 years
Inflation (Consumer Price Index): 4. 4 percent
n Inflation in August 2007: 1.1 percent
n U.S.: 5. 4 percent
Unemployment: 7.2 percent
n Unemployment in June 2007: 6.2 percent
n U.S.: 5. 7 percent
n Asking: $23.90 per square foot
n Effective: $20.38 per square foot
n Asking: $20.13 per square foot
n Effective: $18.21 per square foot
n Asking: $1,019 per unit
n Effective: $979 per unit
Industrial: $4.17 per square foot
Office: 11. 7 percent
retail: 6. 3 percent
Apartment: 4. 3 percent
Industrial: 7. 4 percent
net office: 1.58 million square feet
net retail: 110,000 square feet
net industrial: 40,000 square feet
Apartment: 106 units
Office: 1.3 million square feet
retail: 0 square feet
Apartment: 214 units
Industrial: 7.1 million square feet
Largest area employers: School District of Philadelphia,
Jefferson Health System, University of Pennsylvania,
University of Pennsylvania Health System, Merck & Co. Inc.
45 percent black, 43 percent white, 7
percent other, 5 percent Asian; 10 percent identify as
Hispanic or Latino
Pennsylvania Convention Center expansion to create
largest contiguous exhibit space in the Northeast upon
completion in 2011
U.S. capital from 1790 to 1800
Sources: CB Richard Ellis, CityFeet.com, TheDailyGreen.com, GlobeSt.com, Greater Philadelphia Chamber of Commerce, Market Watch.com,
The Philadelphia Business Journal, The Philadelphia Inquirer, Reis Inc., The Temple News, U.S. Census Bureau, U.S. Department of Labor
Jennifer e. Garrett is an associate editor at Scotsman Guide. Reach her at (800) 297-6061 or email@example.com.
Industrial sector shows resilience
By Victor Calanog,
director of empirical research, Reis Inc.
As brokers seek opportunities with more stability and less
risk, the industrial sector stands out. Recent macroeconomic trends have worked to bolster the industrial sector’s performance, especially compared to that of office
Strong international-trade activity has supported the
stability of the industrial sector, with robust demand for
bulk-warehouse and distribution facilities. In the past two
years, the dollar’s trade-weighted exchange rate relative to
its major foreign trading partners has fallen by more than
15 percent. This has made U.S. exports cheaper in foreign
markets, resulting in more exported goods. The number
of imported goods also has yet to fall significantly despite
the economic malaise.
Manufacturing facilities also benefit from the strong international trade, and leading indicators for industrial production imply positive — if slightly measured — growth.
n The Federal Reserve’s industrial-production index
increased 0.5 percent from May to June.
n The Institute of Supply and Management’s (ISM) manufacturing index surpassed 50 in June, its highest value for
2008, though it fell to 49. 9 by August. For perspective, the
ISM index averaged 43 during the last recession in 2001. If
relative stability continues, this may herald recovery for the
Still, the sector does show soft spots. It’s vulnerable to risks
in the office sector because business-services and research-and-development facilities or “flex” space combine elements of warehouses and office or showroom space. This
is an issue because the office sector is regarded to have hit
its peak in 2007 and is registering signs of a slowdown.
12-Month Change in
-5% Export Volume 10
-10% 12-Month Change in - 10
Square feet (millions)
-15% Industrial Net Absorbtion - 30
-20% - 50
’ 99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08
Sources: reis Inc. and U.S. Bureau of economic Analysis
Although international trade has benefited markets such as
Los Angeles and Miami, whose industrial sectors are closely
aligned with the global supply chain, areas with smaller,
isolated warehouse markets have not prospered as much.
These markets include Raleigh/Durham, N.C.; Atlanta; and
Memphis, Tenn. Further, if the United States’ economic
woes continue to drag down global demand, it’s unlikely
any element of the industrial sector will be spared.
Overall, however, the industrial sector has shown remarkable stability relative to the office and retail sectors. We’ll
see if this resilience is short-lived or if it can maintain its
strong performance in the next few years.
Victor Calanog, director of empirical research
at Reis Inc., writes a monthly column on property
types for Scotsman Guide. As head of Reis’ core
economics team, he is responsible for data models,
forecasting, valuation and portfolio services for
clients in commercial real estate. Reach him at
firstname.lastname@example.org. Faruk Ozdemir, senior
analyst in Reis’ economics department, contributed to this article.