- The market is up despite the issue with Silicon Valley Bank. (Joseph Pasquarella - Newmark)
- We’re not officially in a recession. Most economists are predicting it won’t be a deep recession. (Joseph Pasquarella - Newmark)
- Wage growth remains high causing upward pressure on inflation. (Joseph Pasquarella - Newmark)
- There is a lot of investment capital sitting on the sidelines. $300 billion in real estate, which is the highest level in many years. (Joseph Pasquarella - Newmark)
- Consumer spending is shifting and affecting retail. Layoffs are increasing, especially in tech jobs. (Joseph Pasquarella - Newmark)
- Banks are more conservative and more conservative underwriting is expected moving forward. (Joseph Pasquarella - Newmark)
- There are many properties that were financed to be refinanced and were underwritten with low debt cost, but the balloon amounts are high. (Joseph Pasquarella - Newmark)
- Net absorbtion of the office market is way down in all regions and all types of markets. Absorption is the worst of any market in recent history, with San Francisco reporting over 30% vacancy rate. (Joseph Pasquarella - Newmark)
- In years past there has always been a sense of stability in gateway markets, but there is no resilience this time. The Sunbelt has shown more resilience. Anecdotally, there is a 96K spec space being built in Delray Beach. But even the Sunbelt is experiencing decreases (Joseph Pasquarella - Newmark)
- Philadelphia is similar to other major cities in terms of employees in the office - about 50% of what it was. (Joseph Pasquarella - Newmark)
- There is an expectation of more adaptive reuse for office spaces. (Joseph Pasquarella - Newmark)
- Future office space will have to be loaded up with amenities and more square feet per person. (Joseph Pasquarella - Newmark)
- There has been a decline in investment sales activity quarter by quarter. Volume of investment down 60% from pre-pandemic levels. (Joseph Pasquarella - Newmark)
- It is possible that if there is a recession, people will get back in the office because employers will have more leverage. (Joseph Pasquarella - Newmark)
- Industrial sublease space is picking up. A lot of that space is low ceiling, bad location, etc. (Joseph Pasquarella - Newmark)
- Pennsylvania has more buildings with a million sq ft?than most, so if there is one vacant building it can affect overall averages. (Joseph Pasquarella - Newmark)
- Exploring new areas has not been working out. There is a resistance to locating further away from employment sectors. (Joseph Pasquarella - Newmark)
- E-commerce kickstarted a lot of the growth in industrial, which has dipped a little, but still really strong overall. Brick and mortar stores picked up a bit. (Joseph Pasquarella - Newmark)
- Some construction is paused due to concerns about high interest rates. (Joseph Pasquarella - Newmark)
- Cap rates are a little below interest rates in multi-family, which is rare but happened in the 80s because there was so much foreign capital seeking US markets. Usually it will be temporary. (Joseph Pasquarella - Newmark)
- Retail sales have increased 4% in 2022. E-commerce is taking a smaller share of that. (Joseph Pasquarella - Newmark)
- If the recession turns out to be deep, this will affect retail. (Joseph Pasquarella - Newmark)
- Muti-family is still the preferred real estate asset class. (Joseph Pasquarella - Newmark)
- With higher interest rates, some people must continue to rent. (Joseph Pasquarella - Newmark)
- Decades ago, a deep and wide recession might bring Class A properties down. Not seeing anything like that yet. (Joseph Pasquarella - Newmark)
- Increased mortgage rates will affect multi-family financing, but there is a safe haven in the Freddy and Fannie world. Only commercial real estate property class that has that benefit. (Joseph Pasquarella - Newmark)
- Some companies are dumping assets right now. Starting to see more distress in the markets with people who can’t refinance. Flight to quality may be a short term thing. (Joseph Pasquarella - Newmark, Bart Mellits - Ballard Spahr, Christian Dalzell - Counter Management)
- Anecdotally, saw two retail deals get terminated during diligence by the buyer. (Bart Mellits - Ballard Spahr)
- Fundamentals are not like they were in 2008. Properties are not so overvalued. (Bart Mellits - Ballard Spahr)
- People are having to dig into their pockets for a refinance and some are considering giving it back, which brings tax consequences. (Bart Mellits - Ballard Spahr, Michael Mostochuk - EisnerAmper, Christian Dalzell - Counter Management)
- 2018 and 2019 are a good valuation basis for appraisals. Head of JLL Capital Markets thinks values will drop double digits over the next year or so. (Brenda Nguyen - CoStar Group)
- Brandywine is trying to dispose of Class B and C suburban office. Selling at a loss so they have capital to acquire distress properties and/or companies over the next couple of years. (Brenda Nguyen - CoStar Group)
- We may not have seen the downturn yet, though Philadelphia might be in a better position than other locations. (Michael Fox - M.S. Fox Real Estate Group)
- Rental rates have not dropped yet. Office rental rates are not down in terms of advertised rates, but may be down in negotiated rates. (Christian Dalzell - Counter Management, Michael Fox - M.S. Fox Real Estate Group)
- Lenders are sitting on billions of dollars of residential mortgages, which is keeping them from lending at all. (Christian Dalzell - Counter Management)
- Interest rates have gone up but prices haven’t gone down as much. (Bart Mellits - Ballard Spahr)
- Many buyers are only looking at distressed deals. (Christian Dalzell - Counter Management)
- Demand is strong in areas like Northern Liberties and Fishtown, but not as much as this time last year. Market has been in under supply and will take awhile to catch up. (Brenda Nguyen - CoStar Group)
- Fishtown is a booming neighborhood, but the infrastructure is a problem. (Bart Mellits - Ballard Spahr, Matt Musilli - Johnson, Kendall & Johnson, Christian Dalzell - Counter Management)
- Land use and title departments are busy - mostly getting approvals for multi-family. Lots of new units are coming online. Hoping that there are enough jobs to support the units - there are lots of openings in lifesciences expected. (Bart Mellits - Ballard Spahr)
- Brookings Institute report said research universities have a much bigger impact on surrounding economies than other universities, which should bode well for Philadelphia. (Christian Dalzell - Counter Management)
- Seeing an uptick in leads for the leasing side with people looking for summer move-ins now. Rental market seems to change drastically week to week. (Christina Lutz - Counter Management, Christian Dalzell - Counter Management)
- Rents are going up but not as much as last year at the same time. (Christian Dalzell - Counter Management)
- More focus on retention. With rates where they are, people aren’t as eager to move, so they’re working with people. (Christina Lutz - Counter Management)
- They’re in the middle of audit season and are trying to look 12 months out. (Michael Mostochuk - EisnerAmper)
- Any debt coming due in the next 12 months to 2 years is creating a problem. (Michael Mostochuk - EisnerAmper)
- There have been a few projects that got scrapped due to the construction loans - after they had cleared the land and were ready to go. Less?issues with the smaller projects. (Michael Mostochuk - EisnerAmper)
- FOMC meeting next week. Information will be available on the fed boards on Wednesday. (Kevin Curran - Federal Reserve Bank of Philadelphia)
- There have been 24-26 consecutive quarters of insurance rate hikes. (Matt Musilli - Johnson, Kendall & Johnson)
- Insurance industry may not be considering the higher probabilities of natural disasters due to climate change. (Bart Mellits - Ballard Spahr)
