Will Demand For Philadelphia Real Estate Fall in 2020

Will Demand For Philadelphia Real Estate Fall?

Stephen M. Spaeder, SVP of Acquisitions and Development at Equus Partners – a real investment and development firm located in Newtown Square, has an article in the Philadelphia Business Journal, Viewpoint: Confluence of recent events is likely to accelerate urban withdrawal, looking at whether we will see a drop in demand for real estate in Philadelphia‘s Central Business District (CBD) and an increase demand for real estate in the Philadelphia suburbs and in business friendly states?

Mr. Spaeder points to both the recent lock down and protests, as factors which would speed up which many have already been predicting. A number of real estate investors have pointed out the demographic trend of aging Millennials which could lead to an increased desire for homes outside the city. This trend along with the recent lock downs could lead to an increased demand for commercial real estate in the outer suburbs.

Some interesting points Mr. Spaeder made in the article:

  • Office closures that forced suburban commuters to work from home meanwhile exposed significant weaknesses in the Central Business District’s (CBD) value proposition. These weaknesses will become even more obvious as employees return to work while trying to avoid crowded trains, streets, building lobbies and elevators.
  • Multifamily is not without impacts either as millennials, who were already showing signs of “aging out” of the urban lifestyle, became disenchanted with forced lockdown and returned to their childhood home for a respite from two-room living. They are likely evaluating suburban relocation options now.
  • It has been my opinion for a while that the suburbs would regain favor to the city as millennials age out and that the tax and regulatory burden of doing business in the city would assure the gradual migration of certain businesses to more business and tax friendly environments.
  • Peak millennials are hitting age 30 and will begin starting families and settling down.
  • Finally, the imposition of even greater tax and regulatory burdens will drive businesses to explore new locations including not only our suburbs but the southern states with more pro-business and tax friendly policies.