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Center City development pipeline trails off considerably after 2019; significantly fewer deliveries anticipated in 2020 and 2021

•A review of 241 development projects (office, retail, multifamily, and other) that JLL tracks throughout the City of Philadelphia reveals that 2018 and 2019 will be large years for project deliveries, with 37 projects encompassing over 11.8 million square feet. Given the average new construction lead time of 30 months, the construction market could enter a lean period in 2020 if no additional large projects kick off before year’s end. Total deliveries in 2020 and 2021 are expected to total barely 2.2 million square feet for investable real estate across all asset classes.

•Recent legislative discussions concerning the proposed Construction Impact Tax and possible modifications to the 10-year tax abatement could prolong the lull currently anticipated in future years, extending it into the status quo. While some of the 9.8 million square feet currently proposed would likely proceed, it is possible that projects with tighter margins (either due to lower rents in less central locations or other factors) would be the developments most likely to get mothballed. 

Source: JLL Research

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