12D — January 2023 Forecast — M id A tlantic Real Estate Journal
www.marej.com
2023 F orecast
By Neil Andrew Stein, Esquire, Kaplin, Stewart, Meloff, Reiter & Stein Political headwinds for real estate in 2023
B
oth Philadelphia and Montgomery County have traditionally been
harder to get, developers need to make their projects as cost- effective as possible. The IRA’s tax credits – for carbon seques - tration and solar panel instal - lation – can make renovation and ground-up projects finan - cially viable. The new law also supports less capital-intensive green project development measures like using sustain - able building materials and connected HVAC systems that use less energy. As inflation is making the entire develop - ment process more expensive, embracing eco-friendly poli - cies gives developers a way to regain some control of their budgets. In addition, green building development is gain - ing more popularity as a strat - egy to bring remote workers back to the office. Staying Dry. Planned de - velopment and redevelopment may run afoul of a new defini - tion of “waters of the United States” recently implemented by the Environmental Protec - tion Agency and Army Corps of Engineers. Just what is a “wetland” has traditionally been part science and part non - sense. Most of us know a river, stream, lake, or pond when we see one. The Clean Water Act has protected these bodies of water for over half a century. The problem is when the EPA and the Army Corps of Engi - neers define which less-obvious bodies of water are protected by law in 2015. The EPA estab - lished a relatively broad defi - nition of waters of the United States or WOTUS. In 2020, the Trump administration limited
the types of waterways that received federal protections, excluding much of the country’s wetlands and smaller water - ways. The new definition re - instates similar protections to those that were in place before 2015. These updated standards are, in part, a response to sev - eral Supreme Court decisions in cases that challenged past definitions of WOTUS over the last two decades. To Compete or Not to Compete. While not having a direct link to the real estate industry, employment agree - ments are common in the real estate industry. Those agreements frequently con - tain non-compete clauses. Not unlike the recent “gas stove” fiasco that began the year, another federal agency may be planning to delve into another aspect of personal choice. Following the Federal Trade Commission’s January 5, 2023 announcement of its Notice of Proposed Rule Making setting forth a ban on all non-compete clauses between employers and employees, the Notice was published in the Federal Register on January 8, 2023. The sixty-day comment period for this proposed rule ends on March 10, 2023. If the rule is finalized in its current form, the FTC anticipates that it will impact nearly thirty mil - lion workers that are subject to these types of restrictive covenants. The FTC also esti - mates that eliminating non- competes could result in $300 billion in additional wages for these workers. The responses
have been extreme on both sides. Some cheer the possible benefit to employees, while others claim the proposed rule would simply be illegal. While the FTC seems to be taking a more “wait and see approach” during the public comment phase, the outcome is far from clear. Your Air Supply . By now, everyone is familiar with Airb - nb. Founded in 2008, it allows people to rent homes, apart - ments, and rooms to others. In a little more than a decade, Airbnb has morphed into a lodging goliath, offering more than 6 million places to stay in more than 191 countries. Its listings outnumber those of the top six hotel chains combined, helping the company reported - ly generate billions in revenue. Operating an online market - place for short-term homestays and experiences, the company acts as a broker and charges a commission from each book - ing. However, war has broken out between Airbnb and local governments across the coun - try. Airbnb is often a cheap option for travelers. On the other hand, hotels are subject to costly health, safety, zoning, and tax requirements that do not apply to Airbnb. Recently, Airbnb began striking deals with officials in select cities to collect and deliver taxes from its hosts, referred to as Volun - tary Collection Agreements, or VCAs. In exchange, these cities legalize home-sharing arrangements. However, those agreements don’t require hosts to meet other zoning, health, visualize it,” said PARA Vice Chairman Daniel Gonzalez. “At PARA, we believe the rede - velopment projects under con - sideration are our generation’s shining opportunity to create lasting amenities for Perth Amboy, further catalysts for redevelopment and investment throughout our city.” In March 1997, the City created the Perth Amboy Re - development Agency (PARA) and adopted a redevelop - ment plan, FOCUS 2000, to revitalize almost 1,500 acres within the city. PARA was charged with developing and implementing the redevelop - ment plan within the City in conjunction with the City’s Special Improvement District
and safety rules, and they pro - hibit cities from attempting to collect back taxes. Locally, in April 2019, the Pennsylvania Supreme Court held that municipalities have the authority to prohibit short- term rentals of single-family homes without changing their zoning ordinances. The deci - sion also makes it harder to argue that these types of rentals are consistent with the traditional “single-family dwelling” use, at least if the local zoning ordinance defines “family” in a manner similar to the ordinance addressed by the Supreme Court. While the issue seems to have been decided for now, at least in the courts, undoubtedly, this issue will continue to be debated lo - cally and in state legislatures in 2023 and in years to come. In conclusion, the real estate industry will need to weather political decisions that tran - scend the more typical fiscal and monetary decisions made by the Federal Reserve and Congress. The phrase “all politics is local” is commonly used in political circles. While the phrase may be true to a certain extent, federal, state, and local decision-making will all have an effect on the indus - try in 2023. One can only hope that politicians recognize the economic necessity for a strong real estate industry. Let’s hope. Neil Andrew Stein, Es- quire is a principal of Kap- lin, Stewart, Meloff, Reiter & Stein and a member of the Land Use, Zoning & Devel- opment Department. MAREJ and Urban Enterprise Zone. Through over $1 billion in private investment within the City, PARA’s efforts to date have directly resulted in: The construction and imple - mentation of numerous rede - velopment projects, generating over $15 million in additional tax revenue and over 3,000 much-needed jobs for the resi - dents of the City. Environmental remediation of over 500 acres of contami - nated property throughout the City, some of which is consid - ered “legacy” contamination in that is has been left unad - dressed for many years. The provision of more than 20 acres of open space for the public’s enjoyment. MAREJ
identified as two of the most “resil - ient” markets in real estate. According to Redfin, these two areas have the sec - ond and third lowest reces -
Neil A. Stein
of Historic Places in 1984 and now serving nearly 900 weekday commuters each day. The goal is to build density on the four blocks between Market Street and New Brunswick Av - enue, replacing low-rise build - ings that are currently not tak - ing advantage of the strategic proximity of the train station. PARA is also eager to introduce entertainment and culture into the downtown mix, creating a more vibrant outdoor environ - ment into the evening hours. Another key project will be at 599 Fayette St., a brownfield that is the former site of a municipal landfill that closed in 1974. The 20-acre parcel is ideal for office space, homes and commercial/ Getting Greener. The re- cently signed Inflation Reduc - tion Act (IRA) will pressure property owners to make sig - nificant investments in reduc - ing carbon emissions and clean energy. The IRA contains mul - tiple incentives to stimulate environmentally friendly build - ing projects to curb overall car - bon dioxide emissions. Given the state of the U.S. economy and the return to the office trend gaining momentum, green building development is on track to become a prominent trend in 2023. With financing becoming more expensive and sion risk scores, behind only Akron, Ohio. This score results from a diverse economy, which attracts investors and busi - nesses from across the country and the world. This area is no longer the best-kept secret. Even price increases still result in a less expensive market than other major cities in the north - east corridor. There are a few headwinds that could derail this trend. However, some subtle ob - stacles may loom large in the coming year and beyond. continued from page 11D
Perth Amboy Redevelopment Agency focuses on three . . .
retail opportunities. This unique site of empty land in the middle of the city, with easy access to Smith Street and all the local high - ways, is ideal for redevelop - ment, with private investors
required to cap the landfill as a “final remedy,” manage any soil gas and comply with all other state environmental regula - tions as conditions. “It’s often been said that the future belongs to those who can
Made with FlippingBook interactive PDF creator