4C — September 17 - October 21, 2021 — Fall Preview — M id A tlantic Real Estate Journal
www.marej.com
A ppraisal
By Carlo Batts, MAI of Rittenhouse Appraisals Philadelphia’s state of the market
T
he commercial real es- tate market has tradi- tionally been viewed as
tain sectors within the Greater Philadelphia market. Hospitality The hospitality industry was one of the sectors most nega- tively impacted during the pan- demic. But recent months have shown, for the most part, the industry recovering with major indicators at or above pre-Covid levels. The forerunners in this recovery are those property owners who used the downtime as an opportunity to undertake a property management plan. Our work with one such owner is generating higher RevPARs than the property previously achieved. In other cases we
assisted some chains using the time to change flags. During the height of this year’s summer travel season RevPARs were slightly over $100 which is near the record heights of 2019. In our compa- rable sales research, there is some consolidation happening where independent operators were exiting the market and their properties being brought in under various established flags. Business travel is re- covering at a higher pace than was anticipated with weekday occupancy at around 67%. Multifamily Multifamily developments
are continuing to thrive in the region and the country. We are seeing both redevelopment plays as well as new construc- tion projects, with access to public transportation being a driving force in the project location. The ability for future residents to utilize current transportation infrastructure remains a hot topic. Specific to Philadelphia, we just completed an appraisal of a historic building being redeveloped into a mixed-use project with a new addition of 35 total apartments in Olde Kensington, as well as a 90-unit redevelopment of a warehouse
building that just secured its building permits in Port Rich- mond. The development trend in the city keeps pushing out into areas adjacent to the more established hotspots of Fish- town and that general area, and localities surrounding the Market Frankford EL. Also interesting is how the manu- facturing history of Philadel- phia is now leading the way in adaptive reuse of industrial properties. Senior Housing Another area we see becoming more active is senior housing. While there are a number of large-scale developments in the Philadelphia suburbs offering a continuum of care, within the city itself there appears to be a tremendous amount of unmet de- mand. With capitalization rates the lowest we’ve seen, investors have more incentive than ever to fill the demand. In our work we recently completed an appraisal of a proposed independent living facility in the city. In General Continued low interest rates are driving capitalization rates down providing for higher asset values. The city’s 10-year tax abatement is also a major factor in the development and the fea- sibility of many projects is tied directly to the abatement. With the sheer number of units that are under construction and in the planning stages, there will be some pricing pressure, especially on existing inventory. However the units are being absorbed and we see some of that absorption tied to inward migration from other metro areas. We foresee a cycle of expansion continu- ing over the next six to twelve months. Carlo L. Batts, MAI is principal of Rittenhouse Appraisals. MAREJ continued from page 3C Seeking sites for your next retail project? Bottom line: Save yourself the headache of potential is- sues - have your title report and ask your lender about Table A requirements. It’s important to note that you can’t rely on old title reports and surveys. They can be used as a reference, but an update should be completed if it’s older than 6 months. MatthewKelly, PLS is prin- cipal, director of land survey- ing at Nave Newell, Inc. MAREJ
a safe, stable market and despite the u p h e a v a l of the past 18 months, m a n y i n - vestors still f e e l t h e s ame way .
Carlo Batts
Of course the current state and valuation of assets has changed, and Covid-19’s impact created a new way of life. But with all of these factors, we see stabilization and growth in cer-
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