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Philadelphia Metropolitan Area Real Estate Law Blog

County has zoning problem in emergency dispatch project

Officials in a Pennsylvania county are having a difficult time completing construction of an emergency communications system. For the past two years, Montgomery County officials say that they have been trying to convince township supervisors in Upper Merion to give them the zoning rights to construct a 180-foot tower. The $36 million project requires 30 towers, and so far all but one of the towers has been built.

If it is completed, the upgraded emergency dispatch system will improve communication between county dispatchers and emergency responders all over Montgomery County. Without the last tower in Upper Merion, the emergency dispatch system will be spotty in sections of Upper Merion, Lower Merion, West Conshohocken and Bridgeport. During major events, the old dispatch system can have poor coverage that makes emergency communications challenging.

Economic trends that are affecting real estate demand

Paying attention to economic trends may be helpful to those in Pennsylvania who are looking to invest in commercial real estate. Changes in demographics, geopolitical issues, decreased lending and shifts in consumer spending are just some of the factors that can influence commercial real estate prices. Unemployment statistics and the income levels of middle class households are other factors to consider.

According to a recent study by Pew Research, middle class income has been decreasing. From 2000 to 2014, the median income for middle class families went down by 5 percent as the cost of living went up. At the same time, people in the Millennial generation have been struggling financially, and many people in this age group are remaining in their parents' homes for longer than past generations.

Banks increasingly reliant on real estate lending

Bank branches in Pennsylvania and across the nation look much the same today as they did in decades past, but the financial sector has been undergoing huge changes behind the scenes. Banking assets have increased from about $209 billion in the mid-1950s to an eye watering $15 trillion today, and the financial sector has gone from accounting for less than half of the nation's GDP in 1955 to making up 83 percent of today's economic output. However, perhaps the biggest change in American banking has been the shift from commercial and industrial loans to real estate-based lending.

The National Banking Act of 1864 prohibited banks from making any real estate loans, but mortgages and other property-based loans now account for about half of all bank lending. The recent surge in property lending has coincided with a reduction in commercial and industrial loans, which have declined from about 40 percent of bank financing in 1955 to about 20 percent today. Smaller banks with assets of $1 billion or less are even more dependent on real estate loans with mortgages representing about three quarters of their lending.

Retail sector undergoing changes

Commercial real estate investors in Pennsylvania may be interested in some trends around retail real estate that are bucking typical expectations. Usually, restaurants can reliably act as anchors in shopping areas that are on the decline. They bring in more foot traffic and spending. However, for several quarters now, foot traffic and sales in the restaurant industry have been weaker.

Although spending in restaurants went up more than 6 percent in the first quarter of 2016, this was still not as high as the 8 percent increase in one 2015 quarter. A number of factors have been blamed for this sluggishness. Health care costs and rent have gone up. Restaurants in turn are unable to increase their profits under increasing demands that they raise employee wages. Furthermore, they cannot significantly raise their prices when consumers are getting good food prices at the grocery store.

Food trucks are bringing customers back to retail

Commercial real estate investors in Pennsylvania have probably heard about the suffering retail sector. With the popularity of e-commerce, consumers are buying their clothing and electronics online rather than in department stores and malls. While e-commerce is taking customers away from most brick-and-mortar retail, the restaurant sector has been growing, and landlords are now using food to lure shoppers back to retail spaces.

In 2015, restaurants earned more money than supermarkets for the first time in nearly 20 years. Consumers have become increasingly interested in food trucks, food halls, celebrity chef restaurants and grocery stores, such as Whole Foods, where customers can enjoy an ample selection of prepared foods in a dining space. Some of the celebrity chef restaurants that have opened in recent years include Wolfgang Puck Bar & Grill in Las Vegas and Bryan Voltaggio's East Coast restaurants.

Specifics of Security Deposit statutes in Pennsylvania

Prospective landlords and tenants are both well-served to familiarize themselves with Pennsylvania's basic statutes concerning the proper handling of security deposits. When it comes to lease conflicts, most of them come back in some way or another to disputes about a security deposit (or lack of one). While the statutes offer a great deal of flexibility to creators of leases regarding how security deposits must be handled, there are some clearly defined guidelines that will help both tenants and landlords stay within the reasonable boundaries of good practices.

Security deposits are not allowed to exceed more than two months' rent during the first year a tenant is renting, and not more than one month's rent in subsequent years. Upon the ending of a lease, a landlord has 30 days to return the security deposit to the tenant, from either the lease's termination date or the date when the premises are turned over and found acceptable, whichever occurs first.

What to consider before investing in real estate

Pennsylvanians who are interested in investing in real estate may not know where to begin. Real estate investments can be a good way for people to grow their money over a number of years. However, there are several things a potential investor should do before they put down capital on a property.

Investing in real estate involves a significant amount of legal paperwork. People should make certain that they educate themselves about the real estate market and the different legal issues involved with these transactions. They might want to seek out help from an expert or others who are involved in the real estate marketplace.

Pros and cons of leasing agricultural real estate

Under the right circumstances, leasing a piece of land for agricultural uses can be a lucrative option for both the landowner and the land user. A piece of land can have many uses, depending on how it zoned. Before leasing a piece of land for agricultural uses, it is wise to consider the advantages and disadvantages of this kind of arrangement.

Leasing a piece of land instead of buying it can give a relatively young farming venture a valuable head-start in making inroads to a competitive industry. As an agricultural operator, you may find that your particular business may benefit from having additional capital available for other expenses like livestock, annual inputs, and machinery. In most farming ventures, so many variables may affect your business plans that having the flexibility to move from one piece of property to another is invaluable, as most agricultural leases are based in one-year terms. Buying a piece of property instead of leasing a similar lot can place restrictions on the scalability of the operation, or place undue burden on an operation that can't quite meet productivity that justifies the full size of the land.

Shopping mall property being bought up

The commercial real estate landscape in Pennsylvania is experiencing some major movement in recent months. The Washington Crown Center mall south of Pittsburgh is under an agreement to be sold by Pennsylvania Real Estate Investment Trust, who is also seeking a buyer for another western Pennsylvania commercial property, the Beaver Valley Mall.

Pennsylvania Real Estate Investment Trust, a Philadelphia-based commercial property developer, has received a nonrefundable deposit to move forward with the sale of the Washington Crown Center, but there are still many contingencies to be worked through in order to complete the transfer. The company has stated that they believe the deal will be completed near the end of September.

Altered-reality technology and commercial real estate

Commercial real estate investors and developers in Pennsylvania may already be aware of the ways in which augmented reality technology is expected to impact the industry. The technology is already growing by leaps and bounds, thanks in part to the game Pokémon Go, which utilizes augmented reality technology to create the game in the real world around the player, via the camera of his or her mobile device. The game has seen rapid success. Nintendo, which owns the rights to Pokémon, has increased its market cap by $20 billion since the game was released July 6.

The altered-reality market, made up of augmented reality and more-fully-immersive virtual reality, is expected to be worth $80 billion by 2025. With regard to commercial real estate specifically, the potential of augmented reality technology is most obvious in the retail sector, where it may soon evolve to merge online and real-world shopping experiences. The head of occupier research at commercial real estate services firm CBRE said it could continue the lifespan of brick-and-mortar retail.

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