Archives

July, 2017

Pioneering the Market East Revival – A Look Back at 833 Chestnut Street

In 1998, 833 Chestnut Street, then known as 841 Chestnut, was taken over by a financial institution when a major tenant moved out, leaving the building only 27% occupied and valued internally at $5 million. AthenianRazak stepped in, shepherded the property steadily through five different owners and asset managers and two major market changes and the building sold to a national healthcare REIT in 2015 for an undisclosed price well over $100 million.

 

The turnaround of this huge (3/4 million sf) property was a quiet but steady success story that helped ignite and support the revitalization we’re seeing in the area now known as Market East.

 

The Philadelphia Inquirer saw potential in the area and in 2012, moved its offices to the third floor of the former Strawbridge and Clothier department store at 801 Market. Century 21 department store opened on the first level of that building in 2014. East Market, a 4-acre mixed-use development that spans an entire block between Market and Chestnut streets will house an apartment tower and retail such as WaWa, Iron Hill Brewery and Mom’s Organic Market. Target has opened on Chestnut St. and the Gallery Shopping Center is being transformed into The Fashion Outlets of Philadelphia. This is just the beginning.

 

AthenianRazak always knew the potential of Market East because the location was prime and we recognized the value of all of the transit there. However, the area was always battling an image of being the lesser side of town. We think the development there makes perfect sense, is long overdue and love that we were in on its inception. As Market East continues its boom as one of Philadelphia’s hottest real estate markets, 833 Chestnut can be viewed as the foundation of this transformation. Its quiet turnaround set the stage and created the stability that catalyzed today’s growth.

The 2017-18 CRE® Top Ten Issues Affecting Real Estate

CRE recently shared new information about important business disruptors – the issues and trends impacting U.S. commercial and residential real estate. The Counselors of Real Estate® (CRE) is the global professional association which annually announces The CRE® Top Ten Issues Affecting Real Estate, an update of market trends and conditions which influence real estate opportunities and risks. 

Read the Top 10 issues here.

 Members of CRE are recognized property experts who provide specialized and objective advisory services to clients.  CRE membership is by invitation. Jackie Buhn is a longtime member.

 Political polarization and global uncertainty lead the 2017-18 list because divisiveness–which is occurring at all levels (and is fueled by news headlines, political beliefs and budget constraints)–makes decision making difficult.)  Global uncertainty is also creating challenges for investment and employment in non-U.S. markets, and could negatively impact foreign investment in U.S. properties.

 Other issues include the technology boom – causing extraordinary changes in how real estate is bought, sold, valued, and managed.  Robotics, predicted to replace up to 47% of today’s jobs, clearly will have a serious impact on everything from housing and retail to business offices, tenants and leasing.  Two distinct generations–the Baby Boomers and Millennials–living and working side-by-side – now also present challenges in that they have quite different preferences in the kinds of offices in which they wish to work, as well as housing choices.

The other disruptors on the CRE Top Ten Issues list are:

  • Retail disruption–with malls and downtowns adapting to nationwide store closures with new kinds of experience-driven offerings and the reinvention of the grocery stores which have anchored many upscale shopping malls;
  • Infrastructure investment – such as bridges, ports, and roads, which are now attracting new private investors;
  • Housing: the big mismatch — affordability at all levels is challenging home ownership and even who can rent and where;
  • Lost decades of the middle class – including wage stagnation that significantly restricts purchasing power and home ownership;
  •  Real estate’s emerging role in health care – illustrated by increasing demand for buildings to be designed and operated in ways that promote positive healthy outcomes;
  • Immigration – restrictions could negatively impact this large source of residential tenants and home buyers;
  • Climate change—focusing this year on sea level rises as a serious threat to property values in many parts of the U.S. should  the trend in rising water levels continue.

 

The Counselors of Real Estate organization is known for thought leadership, objective insights and extraordinary professional reach, with more than 50 real estate specialties represented among its member experts who are admitted to the organization by invitation. Members contribute to development of the Top Ten Issues Affecting Real Estate by participating in the CRE External Affairs (Issues and Trends) initiative.