06/14/2024
Real Estate News You Can Use - Philadelphia County
Could mounting vacancies literally take down Center City office towers?
Some local developers believe aging, lower-quality high-rises could simply disappear from Philadelphia’s skyline. While demolition is a natural part of the real estate life cycle, tearing down 30-story office towers is a rare — and jarring — proposition. But the office vacancy rate in Philadelphia’s central business district has grown to around 20% since the pandemic made remote and hybrid work commonplace, and some buildings now have 70% to 80% of their office space sitting vacant. More tenants are moving from Class B and C buildings to newer trophy and Class A buildings that offer better amenities, leaving older buildings in dire financial straits. At least five Center City office buildings are either in receivership, have had their mortgages sent to special servicing or are facing imminent default. Eight properties along the Market Street corridor between 4th Street and 24th Street have commercial mortgage-backed securities loans that are past due or are set to mature within the next 18 months. Their owners have few options. High interest rates make refinancing debt difficult, and sinking property values make it almost impossible to sell without taking a considerable loss. With prime Center City parcels hard to come by, the land these buildings sit on could be more valuable than the structures themselves. Read more in the Philadelphia Business Journal.
Source: Philadelphia Business Journal; 6/6/2024
The Philadelphia Land Bank is a mess. What is Mayor Parker’s plan to fix it?
In the decade since its creation, the Philadelphia Land Bank sold only 892 lots and created 992 homes, while at least 7,680 lots sit fallow under municipal ownership. Sheriff sales never resumed post-2020, so the Land Bank hasn’t acquired more property in years. “Mayor Parker has laid out a bold vision of 30,000 units of housing, and the only way that works is if we have a functioning and fast moving Land Bank,” said Aren Platt, one of Parker’s top advisers. The Land Bank is understaffed, and applicants have long complained that it is hard to work with. Basic transparency and reporting requirements have not been met since 2019. The website baffles users. The board has been riven by faction and often unable to keep a quorum needed to make decisions. Legislation must be passed to move land from the city to a new owner, creating a veto point for influential actors and the loudest voices in the room. Without elaborating, Platt promised “real reform” is in the works. Read more here.
Source: Philadelphia Inquirer; 6/11/2024
Property tax bills are going up for many Philadelphians, but some relief is available
Many Philadelphia property owners will see higher real estate tax bills next year despite the new city budget containing no tax rate increases. That’s because the city is resuming property reassessments, which were paused in the final year of Mayor Jim Kenney’s administration. The new valuations will capture two years of growth and are likely to increase steeply in neighborhoods with strong real estate markets. The Office of Property Assessment was supposed to have published the new assessments by the time first-year Mayor Cherelle L. Parker and city council reached a budget deal. Instead, lawmakers gave preliminary approval to the budget based on estimates for the real estate tax, which is levied at 1.3998% of a property’s assessed value. The new valuations will be available by the end of the month, city finance director Rob Dubow said. Those values will be used to calculate property tax bills due by March 31. Parker’s administration in March estimated that revenue from residential properties will increase 8% while staying flat for commercial properties, due in part to uncertain valuations for office buildings amid the work-from-home era. That would produce $877 million in revenue during the budget year that begins July 1. It’s possible valuations will come in even higher, as the city bases assessments on the amount for which a home could sell. To help offset tax increases for homeowners, Parker and council agreed to approve two new property tax relief options for homeowners: an expanded homestead exemption, and the option for low-income homeowners to freeze their tax bills.
Source: Philadelphia Inquirer; 6/7/2024
