In The Market
By Kathryn Smith ’15
Whether buying your first home, working in construction or leasing space for a small business, a knowledge of the real estate market, as well as its practices and trends, is pivotal—and can be hard to come by. Few programs connect academic study and real-world application more effectively than the Haub School of Business’ Real Estate Finance program.
With the Philadelphia real estate industry booming, SJU’s recently launched real estate finance minor is already a leader in market research and offers students a hands-on understanding of the field. Built on the foundation of a longstanding and wide-reaching alumni affinity group and developed by a faculty with industry expertise, the program is gaining momentum — both in the form of student enrollment and industry participation — and producing research.
At SJU’s annual Real Estate and Construction Advisory Board Luncheon this past December, HSB faculty surveyed professionals to better evaluate the Delaware Valley real estate market. In collaboration with members of the alumni group’s advisory board, Karen Hogan, Ph.D., chair and professor of finance, Dan Jubinski, Ph.D., assistant professor of finance, and Rajneesh Sharma, Ph.D., associate professor of finance, authored the survey. They connected with 117 respondents ranging from real estate agents to construction specialists, property owners, bankers, project managers and more, representing 134 professions in 10 areas of commercial real estate. The resulting report contained 2016 year-end results as well as expectations for the market in 2017.
“In the 10th year of the Saint Joseph’s Real Estate and Construction Alumni group, we are thrilled to have collaborated with the faculty of the Haub School of Business for this inaugural report,” says Real Estate and Construction Alumni Board member Joseph Kessler ’79 of Dilworth Paxson LLP, who sent three children to SJU.
The report launched a new series of annual research in real estate out of the Haub School of Business.
Hogan hopes the report will make vital market information more accessible to the community and serve as “a weathervane for the local real estate and construction industry and that professionals will look to the survey to guide them in the future year’s projects.”
Responses were collected from roughly 30 percent of the annual luncheon’s 475 attendees, the majority of whom conduct business in Philadelphia and its suburbs. Over time, the authors will compare the respondents’ expectations with actual performance.
“The overwhelming majority of respondents,” says Jubinski, “reported that business increased in 2016, and indicated that, overall, the Philadelphia and Delaware Valley’s real estate market would continue to grow.” Jubinski and the team note, however, that employment will not keep pace with industry growth, as “union and labor costs, along with various tax issues, weigh heavily on participants’ minds.”
When asked how the government can assist with industry growth, over 30 percent of participants cited lowering taxes, and 20 percent wanted to reduce bureaucracy. Similarly, these industry experts believed the largest issues facing the Philadelphia real estate community were taxes and costs, including real estate, business, and wage taxes; tax abatements; and construction, union and labor costs.
Respondents agreed that the millennial market will be one of the top strategic opportunities in 2017. “In talking to experts after the survey, we found that compared to previous generations, millennials have a stronger affinity toward city living,” cites Sharma. “This trend has possibly caused an increase in demand for urban residential housing and public transportation.”
Sharma adds that the group plans to watch this trend closely as research continues. Though only in its first year, the survey authors expect it to become a mainstay of the real estate and construction industries for years to come.
“Our goal,” says Joseph DiAngelo, Jr., Ed.D. ’70, dean of the Haub School of Business, “is to become a resource to the community and to explore ideas that are on the cutting edge of real estate development.”