With the match-up of the Eagles and Patriots in Superbowl LII, lots of Philadelphia/New England comparison took place, both on the field and off. Among commercial real estate folks’ minds, in addition to the big game, there’s always the face-off of commercial real estate vacancy and market health as a passing thought. How do we stand up in retail, office, and restaurant against the thriving New England market? Is construction activity more prevalent, or are we trailing along following in NE’s footsteps?
A recent JLL News Release from Lesley Long points out that historically there’s been a linkage between CRE market strength and the Superbowl winner. For this year’s matchup, both Philly and Boston have such strong markets that it’s difficult to use real estate health as an indicator of who will come out on top.
According to the article, JLL’s research teams have accurately forecasted the SB winner almost 70 percent of the time, based on real estate market data gathered since 2011. But this year, the firm’s statisticians were stumped as the numbers reveal both cities have left it all on the field in their respective commercial real estate markets.”
So where do we really stand in Philly’s CRE “fitness”? Reports from 2017 reveal that the office market has peaked in Philadelphia. Another article mentions a quote from researcher Ian Anderson of CBRE that, “Now is about as good as it gets,” CBRE research director Ian Anderson said. “It’s still good, and we continue to think rents are going to rise, and there’s still going to be more job growth. But we’re beginning to see the end of the tunnel coming near.”
Across all sectors, organizations are decreasing space per employee. This densification is causing companies to vacate their existing buildings and leave notable voids in occupied space. Similar moves all throughout the local marketplace can cause some potential negative implications.
If the outcome of our market stability is anything similar to the outcome of the Superbowl, I look forward to what the future holds. Jokes aside, although these markets can be considered comparable, the award of the HQ2 will be a big determinant of who will be regarded as strongest (both Philly and Boston were featured on Amazon’s recent shortlist release along with 18 other cities).
The coming months will reveal a lot, as Amazon will make a final decision, as well as retail and office trends continuing to evolve and grow into a unique place as needs change.