PHILADELPHIA | Penn's Landing Redevelopment | 703 - 175 FT | 57 - 12 FLOORS

[Urbanthusiat]

This isn't really a Durst issue so much as it is a interest rate issue. Durst isn't the only developer putting plans on ice in Philly while interest rates are high. Very few large projects are breaking ground, and frankly I don't see why they'd want to finalize a deal and start construction while the cap remains unfinished. And I mean... this was kind of the whole point of raising interest rates, to slow down economic activity to bring inflation down. IDK why people like to single out certain projects when it's a nation-wide issue.

[jaysb]

Originally Posted by Zapatan

It basically just says the project is stalled, which we knew but yea not a good update.

Never really expected this to happen anyway.

Yeah I didn’t really see anything new here. It does state the org is still in negotiation with Delaware River Org. I would have liked to hear an update on that but understand you probably don’t want leaks during that process. I feel like the D River Corp is a pretty competent group so we’ll have to trust they know what they are doing given the size and scope of this project related to the success of a revitalized waterfront.

[jaysb]

Originally Posted by Urbanthusiat

This isn't really a Durst issue so much as it is a interest rate issue. Durst isn't the only developer putting plans on ice in Philly while interest rates are high. Very few large projects are breaking ground, and frankly I don't see why they'd want to finalize a deal and start construction while the cap remains unfinished. And I mean... this was kind of the whole point of raising interest rates, to slow down economic activity to bring inflation down. IDK why people like to single out certain projects when it's a nation-wide issue.

Possibly but I feel like they shut down 300 Columbus before rates went crazy

[UrbanRevival]

Originally Posted by jaysb

Possibly but I feel like they shit down 300 Columbus before rates went crazy

Durst was probably being a bit too conservative regarding the 300 Columbus project. But even if they've been not completely forthright or a bit shady, I'd also agree that this clearly is just the macroeconomic environment the world is in for at least a couple more years. In my view, it's not a bad thing for the city to take a bit of a breather development-wise with larger projects while there's still a lot of uncertainty regarding the next stage of the economy.

There's also thousands more multi-family units coming still-to-come online later this year in other parts of the Philly. It's better for the fundamentals to show that the higher-than-historical-average number of units are still being absorbed to keep vacancy rates in-check. The last thing Philly needs is headlines showing rising apartment vacancy rates and some type of narrative twisting that information, causing developers to shy away completely.

Right now, Philly is actually at a nice equilibrium with rents rising only a few % year-over-year, and units being absorbed at a respectable rate (from what I've seen in recent reports). It's not like NYC, Boston and Chicago, which are seeing unsustainable rent spikes due to crazy shortages, or conversely many of the Sun Belt hubs, that are seeing big supply gluts and decreasing rents. And that's a good thing.

[Johnland]

If inflation is about 3 or 4% and the federal funds rate is currently 5.3%, the real interest rate is about 1 to 2%. When inflation was running at 9% two and three years ago, real interest rates were negative since the fed funds rate never exceeded 5%. The system is so addicted to free money.

[christof]

Interest rates will not be falling anytime soon, and there is a real chance that they will go up before they go down.

Commercial office space construction is going to be DOA for the foreseeable future. Housing and logistics will be the only thing that will be built.

Penn Landing will remain as it was for years to come.

[Jawnadelphia]

^Hasn't stopped a lot of decent mid-sized high rise projects. Also, some developers are still building (look at Pearl Properties, for instance). I think it still all comes down to greed--if there's a will, there's a way.
BPG is building a 14 floor apartment building in little, old downtown Wilmington right now--a developer that felt truly committed to Penn's Landing and Philly for the long term could still get things done.

[TK2001]

Wow I just learned Hill International is involved with the capping...who were the developers of the American Commerce Center. I didn't even know Hill International still existed today