Philadelphia commercial real estate sees new trends
9/9/2011 | Real Estate Blog
There are many discouraging stories about the economy these days, especially involving real estate development and construction markets. Development for both housing and shopping centers has been declining for the past several years. However, some developers believe that they have found ways to capitalize on the commercial real estate trends in Philadelphia. Many developers are moving their focus from new development to existing properties.
Recent research, tracking the retail vacancy rates in Philadelphia between 2007 and 2011, shows that vacancies are up by nearly 3% (9.4% from 6.5%) in the past four years. That’s about 5.7 million square feet of vacancies out of about 60.9 million square feet of existing commercial real estate, which is primarily composed of shopping venues. For many, it makes more sense to fill these existing spaces before investing in new developments.
According to industry experts, the best investments are net-lease acquisitions, which are commercial properties that are built and occupied. Businesses, such as drugstores, banks or retail stores, are typically tenants with good credit who assume maintenance responsibilities for their rental spaces. Net-lease acquisitions are often appealing investments for commercial real estate investors because they usually come with long-term leases (often 20 to 30 years) and have attractive locations that are easy to fill in the event of a vacancy.
However, transactions involving highly valued and potentially lucrative properties can often involve complex legal issues, whether the transaction involves a purchase or a lease. When confronting a commercial real estate transaction, an experienced real estate attorney can help you understand and prepare for the legal issues that are unique to your situation.
Source: The Philadelphia Inquirer, “Prolific builder turns to existing properties,” Diane Mastrull, Aug. 21, 2011