New year, new you, amirite? Or if you’re Philadelphia, maybe it’s new year, pretty much the same you, but hopefully we’ll do a little better this year. That doesn’t look so good on a bumper sticker, alas.

Now that we’re two days into 2025, it’s a great time to reflect on last year and look forward to what’s coming up. First, let’s dive into last year’s predictions and share how we covered ourselves with glory, as usual.

We were hopeful that the new Mayor would make an immediate impact, and indeed the Parker administration has very much changed the vibe in Philadelphia. Mayor Parker’s vision of a safer, cleaner, and greener Philadelphia still has a long way to go, but we can already see positive steps in many directions, with renewed efforts in Kensington, a dramatic reduction in violent crime, a pilot program for twice weekly trash collection, and increased efforts to clean up trash-filled streets and vacant lots. The administration also brokered the community benefits agreement between the Sixers and the City, which resulted in City Council’s approval of the plan for a new arena in Market East.

We anticipated that mid-size infill development would dominate the headlines in 2024, and indeed that was the case. Interest rates remained a drag on development all year, even as the Fed cut rates 100 basis points. Underwriting huge projects in a higher rate environment is not easy, and as a result we’ve been covering a ton of smaller and medium sized projects coming down the pike. There have been a handful of exceptions, like the increased multi-family component to the latest phase of Northbank or the possible Gretz redevelopment after years of delays, but these are small potatoes compared to just a few years ago.

In the sports world, we were correct that the Eagles wouldn’t get back to the Super Bowl, that the Phillies wouldn’t make it to the World Series, and that the Flyers wouldn’t make the playoffs. As for our prediction that the Sixers would get to the Finals? No comment.

Okay, so we are basically Nostradamus, at least as it relates to the specifics of real estate development in Philadelphia. Perhaps you’re wondering what we’re seeing in our crystal ball, as we look forward to 2025? Wonder no longer and read on!

We don’t expect too many sizable projects to break ground in the coming year, but we do anticipate announcements for sizable projects to accelerate, compared to the last couple years. The rental market has been struggling to absorb all the new supply, borne out of the construction boom that occurred thanks to the combination of low rates and the tax abatement change at the end of 2021. We expect that the market will start to move from oversupply to balance next, which will inspire developers to start thinking big again, with an eye toward completing projects in 2027 or 2028.

Along those lines, we will continue to see former office buildings reposition themselves into housing. Already, we’ve seen several buildings in and around Center City announce a pivot to apartments, and more will certainly follow. Some of those large residential projects we just mentioned will undoubtedly be office to apartment conversions, with the planned conversion of the former Wanamaker building a fine example. By the end of this year, we will have much better visibility on what buildings will remain offices and what buildings will make the shift, as the office market finds a new normal in the post-Covid work world.

We will start to see some real tension between the Mayor’s office and City Council, with regard to development. Mayor Parker has made it a priority to deliver 30,000 new housing units, which would have a material impact on the availability and affordability of housing in Philadelphia. District Council members, on the other hand, are seemingly obsessed with making development as difficult as possible in their districts. Whether it’s underzoning commercial corridors, supporting historic districts, or introducing overlays that require affordability or limit height, density, or zoning bonuses, City Council is constantly adding time, risk, and bureaucracy to the development process. At some point, developers are simply going to throw up their hands and take their business elsewhere, and it looks like it’ll be up to Mayor Parker to keep that from happening. Hopefully the mayor and City Council can build on their collaboration that led to the approval of 76 Place and find common ground on this issue.

Speaking of 76 Place, it won’t take until the arena opens in 2031 for it to have an impact on Market East. In the coming year, we predict that we will hear concrete plans for a big project on Market Street, east of City Hall. Perhaps plans will coalesce for the hotel/commercial project at the Disney Hole turned surface parking lot at 8th & Market. Maybe we’ll see something come into focus at 13th & Market, where we don’t think the office building proposed in 2016 will ever rise. It’s possible that we’ll hear about another section of the Fashion District getting redeveloped into something else. Who knows, maybe developers will combine some of the long underused properties on the 900 or 1000 blocks and build something substantial?

Nobody could have predicted that University of the Arts would declare bankruptcy and shut down overnight, as it did in 2024. Not only has the shuttering of this 150+ year old institution left a hole in the higher education fabric of Philadelphia, but it has also had a significant impact on real estate. The school owned a number of prominently located properties in the heart of Center City, all of which are currently sitting vacant. But they shouldn’t be vacant for long, as all of these properties are now listed for sale. New owners will surely invest considerable sums into the redevelopment of these buildings and we expect at least two residential projects, a hotel, and several new commercial spaces on and around South Broad Street. Figure at least two projects will be announced in the coming year.

Okay, let’s make sure we cover the most important prognosticating. The Eagles will make a run to the Super Bowl and the Phillies will make a run to the World Series. One will win the whole enchilada, the other will come up just short. Meanwhile, the Sixers will make a run to the first round of the playoffs and the Flyers will make a run to the top of the draft. Call your bookie now! Or just bet on sports on your phone, like the rest of us.

When we were making our predictions a year ago, we indicated that a successful 2024 would build on the city’s momentum and continue to push Philadelphia on a positive trajectory. And indeed, new leadership was just what the doctor ordered, and the city feels like it’s very much heading in the right direction after several years wandering in the wilderness. But we’re not out of the woods, as it were, just yet. This city is loaded with potential, and it’s up to us citizens and our elected officials to continue pushing the city forward. Let’s hope for more incremental progress in the year to come, and maybe some less incremental progress, if that’s not asking too much.

And a parade down Broad Street wouldn’t hurt either.