Real Estate Trends in the Philadelphia Region: Innovation on the Rise

This is the first article in a series covering issues facing specific real estate sectors.

Real Estate Trends in the Philadelphia Region - Innovation on the Rise

Center City’s 41.2 million square feet (sf) of commercial office space is the backbone of the downtown economy.” State of Center City 2018

Some highlights from our Civil Engineering and Site Design Team:

Commercial/Office: Bigger, Taller, Better – The Comcast Technology Center opens this year, and promises to be big (the tallest building in the city), green (LEED Platinum), and smart (with a smart brain center that predicts weather, optimizes energy consumption).  You can get a taste of the Comcast Technology Center with drinks and dinner on the top floor. 

The Center City District, in their just released State of Center City report, notes that investor demand for office space in Philadelphia continues to grow, driven in part by Philadelphia’s affordability compared to our neighbors – NYC, Boston, DC.  The report laments Center City’s tempered office sector growth as compared to other Central Business Districts (CBDs) nationwide.  How do we fix that? Calls for tax structure reform and the need for streamlined processes for inner city construction abound.  All things considered, however:

“One of the things that I think is really interesting about Philadelphia is the fact that we’ve never really experiences the high highs or the low lows like a lot of other places.” Lauren Gilchrist, VP Director of Research JLL

Warehouse/Big Box: Never Enough - One of the largest vacant factory properties in the city just got purchased by Commercial Development Corp., with plans for three large warehouse buildings “totaling more than 1.6M SQFT of office space, an area larger than each of the Comcast and Liberty Place office towers”. 

Big Box development has been a growth area across Eastern Pennsylvania, with hot spots in the Lehigh Valley, Carlisle, and increasingly in the greater Philadelphia region.  Colliers research shows 2017 as a record year for big box development in Eastern Pennsylvania.  AGC helped design Urban Outfitters’ warehouse at Gap, PA, part of the growing trend of warehouses and distribution centers cropping up along major transportation corridors. 

We are also seeing growing interest in multi-story warehouses, which offer owners more options for either single or multiple tenants. 

Retail: Innovation Wanted – The warehouse growth in our area is a direct result of ever increasing online sales, as companies strive to position themselves near consumer hubs.  What does this mean for the retail sector? Joe Coradino, CEO, PREIT, addressed this changing landscape at the Urban Land Institute’s (ULI) 2018 Real Estate Forecast Event, boldly stating that the retail sector’s death is “fake news,” and that retail is going through a period of “detox.” Coradino’s position is that retailers are not failing due to a fundamental problem with retail, but rather because they have not embraced new technology and changing consumer preferences. The sector, he explained, is moving towards omnichannel retailing, in which retailers have both online and brick-and-mortar presences with greater optionality.  Some retailers are blurring the lines between online and brick and mortar stores by including “lockers” or holding areas for online orders in their stores.  Other retailers are promising same-day delivery for their customers.     

Many retailers, such as Urban Outfitters, have turned their locations into “destinations”.  At the forefront of this trend years ago, Urban continues to create destinations around their brands.  AGC has been part of Urban Outfitters’ project team and has helped create these innovative places.  Their Devon Yards project is a bold redesign of the former iconic Waterloo Gardens to a collection of retail and leisure offerings with a dreamy, European inspired Terrain Gardens at the heart of the site. 

  Image Credit: Terrain Gardens/URBN

Image Credit: Terrain Gardens/URBN

In the suburbs, malls have either expanded their luxury offerings, such as King of Prussia Mall, or have created recreational areas, like Lego Discovery Center and Dave & Buster’s at Plymouth Meeting Mall.   Many stores are reducing the size of their footprint and relying on warehousing and distribution to handle the bulk of their orders.

AGC’s Land Development Services Team has worked in the real estate sector for over 25 years and has the expertise to help you navigate the real estate process.  Contact us for support with: due diligence for site selection, land planning, landscape architecture, site design, permitting, geotechnical engineering, stormwater issues, construction monitoring, and much more

To learn more about our Land Development Services and how we can assist you with your site, please contact:

Daniel T. Wright, P.E.
Senior Project Consultant
610.840.9167