Philadelphia Metropolitan Area Real Estate Law Blog

Commercial real estate developers in Pennsylvania and around the country are likely paying close attention to the explosive growth currently being enjoyed by companies in the office sharing and coworking segments. The New York-based workspace sharing company WeWork has gone from startup to a valuation of more than $16 billion in just six years, and many industry analysts are predicting that this is just the start of a paradigm shift for the commercial real estate sector.

An active real estate investor and a conservative saver might meet at a real estate club and work together to each get a higher return on investments than either is accustomed to. The conservative saver is a person who has traditionally put money into vehicles such as certificates of deposits and savings accounts. There might be a few stocks and bonds as well, but the return is low.

The general outlook held by executives in the commercial real estate industry is something Pennsylvanians who are involved in the market should take note of. Forbes has taken a survey of executives, and the results were mostly positive.

Philadelphia real estate investors should take note that U.S. commercial real estate values have stopped appreciating, according to an April report by real estate research firm Green Street Advisors. The news comes after six years of steady market growth.

Philadelphia new business owners as well as commercial property landlords are both operating in a culture of change. For decades, commercial real estate leasing was governed by a combination of written laws and regulations as well as customary business practices. During the last decade, changes in how businesses operate have caused major disruptions in the commercial real estate industry.

Pennsylvania real estate developers may be somewhat alarmed that loss rates on banks’ commercial real estate loans rose in the fourth quarter of 2015, according to a new report by Sageworks. Late last year, regulators announced that they would increase oversight of CRE lending activities by financial institutions after noting a loosening of underwriting standards.

Technological innovations available to real estate brokers and agents allow them to access data and communicate with buyers and sellers more effectively than ever before. No longer do Pennsylvania agents who are showing a property have to wait until returning to their office to access the latest comparable properties. Mobile technology brings the office to the field to allow the agent to immediately access the data and show it to the prospective buyer.

As we have mentioned in previous posts, the development and use of commercial real estate can be beneficial not only to the owners or developers of the property, but to the surrounding community as well. While at times the benefits reaped in connection with commercial real estate are mutual, other times one party will benefit more than the other. Legislation that was recently proposed by two Pennsylvania lawmakers illustrates this.

Commercial development could be driven by many things. The creation of addiction centers is currently a catalyst for this type of development throughout the nation including the state of Pennsylvania. Recovery Centers of America is planning to expand into several areas, including Pennsylvania.

While some people run their small businesses out of their home, in most situations, at some point or another it becomes necessary to find another space to work out of. In some cases, once found, that location will be purchased. Other times however, a business will opt to lease a space. In these cases a commercial lease agreement is necessary.