Report ID:
October 2, 2008
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Property Report
SAMPLE REPORT
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410 HORSHAM ROAD, SUITE A
HORSHAM, PA 19044
Prepared By:
Realpoint LLC
October 2, 2008
410 HORSHAM ROAD, SUITE A
HORSHAM, PA 19044
SALIENT INPUT FACTS
Property Name/ID:
Sample Report
Property Address:
Property Type:
Property Sub-Type:
Rentable (SF):
Search Distance:
OFFICE
Office Bldg - Sub
88,000
10 miles
City:
State:
ZIP Code:
Year Built:
410 Horsham Road,
Suite A
Horsham
PA
19044
1980
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PROPERTY MAP
Distance from
Subject
0 - 1 miles
1 - 2 miles
2 - 3 miles
# of Comparable
Properties
1
0
0
Page 1
410 HORSHAM ROAD, SUITE A
HORSHAM, PA 19044
October 2, 2008
ECONOMIC OVERVIEW - PHILADELPHIA
OUTLOOK:
Short Term
Long Term
STRENGTHS
Concentration of well-regarded educational
institutions.
z Center for health services and medical research.
z Well-developed port.
z Relatively affordable housing and living costs.
z
WEAKNESSES
Lower per capita income than other large Northeast
metro areas.
z Weak population growth.
z Old and aging infrastructure.
DOWNSIDE
A decline in house prices, causing a reduction in
household wealth.
z Tight credit conditions hurt financial services and lead
to substantial layoffs.
z Political red tape continues to delay construction of
casino.
z
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UPSIDE
z Tax incentive for filmmakers draws the industry to
Philadelphia.
z New office space attracts more employers.
RECENT PERFORMANCE Philadelphia’s labor market is stable, but weakness lies ahead. While nationally, job
growth on a year-ago basis is one-third the pace seen at the beginning of 2007, PHI has only shaved off a few basis
points. Steady, above average hiring in professional/business services is the major driver for the PHI economy.
Education/healthcare is adding to payrolls, although the pace of hiring has moderated. The current pace of hiring in
retail trade is unsustainable as household finances are tight and spending is slowing. Layoffs in financial activities
and manufacturing are the biggest weights on the labor market. PHI’s housing market is correcting, but there is a
tentative floor forming under single-family permitting. House-price growth is decelerating and prices are on the verge
of outright declines while mortgage credit quality is eroding quickly.
PHI’s manufacturing sector is in dire straits and a near-term rebound is unlikely.
MANUFACTURING WOES
According to the Philly Fed Survey, manufacturing has contracted for six consecutive months, its most severe
downturn since the last recession. Conditions are particularly gloomy in PHI’s pharmaceutical sector. PHI is home to
a number of the nation’s largest pharmaceuticals manufacturing companies including Merck & Company and
GlaxoSmithKline. However, both are facing increased competition from generic drug manufacturers as patents
expire on some of the industry’s blockbuster drugs. Additional manufacturing layoffs in PHI are expected. By the end
of this decade, manufacturing will be responsible for roughly 7% of total employment, down from 11% in 2000 and
14% in the early-1990s.
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Credit conditions in PHI have soured and will deteriorate further before improving. Most
FINANCIAL STRESS
troubling is that the deliquency rate on first mortgages 120-days past due is rising, which points to a rise in
foreclosures. If foreclosures increase more than anticipated, a self-reinforcing negative cycle may kick in:
Foreclosures send house prices lower, which in turn triggers more foreclosures. The silver lining is that outside of
mortgages, credit quality in PHI is sturdy. Delinquency rates on bank card, consumer finance and autos are all
below their recessionary levels. Indeed, the aggregate delinquency rate in PHI has increased 50 basis points over
the past year, compared to 140 basis points nationally.
TAX RELIEF The cost of doing business in PHI has been steadily rising over the past decade and is well above
the national average. High taxes in the City of Philadelphia itself, particularly the city wage tax, limit business
relocations and expansions, and are behind residential flight out of the city over the past two decades. Relief is on
the horizon as the mayor’s five-year plan includes eliminating the maligned gross-receipts tax over the next decade
and gradually reducing the net-income business tax. There are plans to reduce the city wage tax, which is among
the highest in the country. Pennsylvania is planning on using the revenue from the state’s slot casinos to reduce
property taxes. However, in PHI the relief will be applied to the wage tax rate rather than property taxes.
Source: Economy.com May 2008
Page 2
410 HORSHAM ROAD, SUITE A
HORSHAM, PA 19044
October 2, 2008
DEMOGRAPHIC STATISTICS - PHILADELPHIA
2004
MSA
USA
MSA
MSA%
USA
5,185,298
37
1,320
293,686,994
35
82
5,286,671
38
308,074,238
36
2,434,122
93.89
135,571,569
94.26
2,434,122
93.95
143,568,483
94.26
2,000,269
112,708,665
2,101,473
121,218,050
14.91
11.72
11.83
15.84
19.39
11.52
9.54
3.10
1.04
1.12
46,153
23,504
275,170
179,501
199,723
261,024
377,329
300,076
316,942
131,373
1,346
34,549
57,626
28,255
279,246
199,695
205,175
286,873
383,665
265,677
243,534
82,935
28,150
25,320
51,644
26,209
13.96
9.98
10.26
14.34
19.18
13.28
12.18
4.15
1.41
1.27
13.09
8.54
9.50
12.42
17.96
14.28
15.08
6.25
0
1.64
13.87
9.98
11.08
13.91
18.96
13.07
12.19
4.65
1.20
1.09
51,618
24,714
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POPULATION
Total Population
Median Age (yrs.)
Pop. Density (#/sq mile)
EMPLOYMENT
Total Employment
Employment Percentage (%)
HOUSEHOLDS
Total HH
By Income ($)
Under 15,000
15K to 24,999
25K to 34,999
35K to 49,999
50K to 74,999
75K to 99,999
100K to 149,999
150K to 249,999
250K to 499,999
500,000 +
Median HH Income ($)
Per Capita Income ($)
2009
MSA%
DEMOGRAPHIC STATISTICS - NEIGHBORHOOD
Radius
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POPULATION
Total Population
CAGR 1990 - 2004 (%)
CAGR 2004 - 2009 (%)
Median Age (Yrs)
Pop. Density (#/sq mile)
EMPLOYMENT
Total Employment
CAGR 1990 - 2004 (%)
CAGR 2004 - 2009 (%)
HOUSEHOLDS
Total Number of HH
CAGR 1990 - 2004 (%)
CAGR 2004 - 2009 (%)
By Income ($)
% Under 25,000
% 25,000 to 34,999
% 35,000 to 49,999
% 50,000 to 74,999
% 75,000 to 99,999
% 100,000 to 149,999
% 150,000+
Median HH Income ($)
CAGR 1990 - 2004 (%)
CAGR 2004 - 2009 (%)
Per Capita Income ($)
CAGR 1990 - 2004 (%)
CAGR 2004 - 2009 (%)
CAGR - Compounded Annual Growth Rate
1 Mile
2 Miles
3 Miles
9,589
1.06
0.44
35
3665
35,270
2.03
0.44
37
3729
72,847
-0.76
0.37
38
3788
5,387
0.84
0.55
19,246
1.80
0.59
38,552
-1.01
0.55
3,986
1.06
0.59
13,945
2.32
0.62
28,052
-0.27
0.56
16.41
11.23
17.15
23.46
14.43
13.99
3.33
55,467
2.58
2.56
24,323
2.96
1.48
15.38
11.25
15.29
22.68
17.10
13.35
4.94
59,727
2.08
2.44
25,820
3.02
0.74
15.61
10.38
15.22
21.93
16.76
13.60
6.51
62,107
1.57
2.42
27,137
2.99
0.54
Page 3
410 HORSHAM ROAD, SUITE A
HORSHAM, PA 19044
October 2, 2008
MARKET OVERVIEW
REGIONAL & NATIONAL COMPARISON
FALL 2008
Changes From Previous Period
MARKETS
Philadelphia, PA
Asking
Rent
$22.75
Vacancy
Rate (%)
13.30
Rent
Change (%)
0.66
Vacancy
Basis Pt. Change
30
Inventory
Growth (%)
0.30
East
$25.69
13.20
0.21
-16
0.26
National
$23.16
14.23
0.22
19
0.43
Metro vs Region
Metro vs US
Definition of Terms
-11.44%
.10
0.55
13
-0.05
-1.77%
-.93
0.45
11
-0.14
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Asking Rent - Annual rent per square foot for office, industrial, and retail sectors; Monthly rent per unit for apartments
Vacancy basis point change is the point change in vacancy rate x 100. Vacancy calculated per square foot for self storage.
Example: If vacancy rate = 2.5% in current period and basis point change = 30, then the vacancy rate in previous period was 2.2%
PHILADELPHIA, PA MARKETVIEW - OFFICE
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While risks are elevated in the near term as business investment and hiring may falter, Philadelphia’s wealth and strong
presence of education/healthcare will provide stability. Longer term, the PHI economy will continue to track the U.S.
business cycle, but employment and income growth will noticeably lag behind the pace seen nationally. Impediments to
growth include PHI’s above average living and business costs, weak immigration trends, aging infrastructure and mature
industrial structure. In sum, PHI is expected to be an underperformer over the extended forecast horizon.
Page 4
410 HORSHAM ROAD, SUITE A
HORSHAM, PA 19044
October 2, 2008
SUBMARKET SUMMARY
TOP RANKED FOR CONSTRUCTION FALL 2008
Number of Projects
22
SF
4,664,000
Share of Metro SF (%)
N/A
Philadelphia, PA
7
3,169,000
67.95
Voorhees, NJ
1
300,000
6.43
MARKET
Philadelphia
SUBMARKETS
Definition of terms
Includes multitenanted projects under construction or proposed
Units refers to Apartments, where applicable
SUBMARKET
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PHILADELPHIA, PA OFFICE FALL 2008 - SUBMARKET SNAPSHOT
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Philadelphia, PA
Inventory
(Buildings
Inventory
(SF)
Asking Rent
($/SF)
Vacancy (%)
0
246,941,103
22.75
13.00
Page 5
410 HORSHAM ROAD, SUITE A
HORSHAM, PA 19044
October 2, 2008
SALES COMPARABLES
Address
270 COMMERCE DR
Distance to
Subject (Miles)
4.60
Date of
Sale
05/2004
Yr. Built
1960
Rentable
Area (SF)
95,000
Price
($/SF)
105.26
250 GIBRALTAR RD
City
FORT
WASHINGTON
HORSHAM
0.63
06/2004
N/A
203,000
98.52
650 SENTRY PKWY
BLUE BELL
8.02
09/2003
1986
90,062
119.92
4 SENTRY PKWY
BLUE BELL
7.89
09/2003
N/A
63,930
159.55
SALES APPROACH
4
$98.52
$159.55
$120.81
Subject Property's SF
Estimated Property Value
Value per SF
88,000
$10,600,000
$120.81
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# of Selected Sales Comps
Min Price per SF
Max Price per SF
Mean Price per SF
Page 6
October 2, 2008
410 HORSHAM ROAD, SUITE A
HORSHAM, PA 19044
Realpoint LLC
Copyright : Realpoint LLC, 2008
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responsibility for its contents. U.S. clients wishing to effect any transactions based on the information contained
herein or seeking further information should contact directly only their U.S. sales representatives or Realpoint
LLC at (800) 299-1665.
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UNDER THE UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE ("USPAP") AND SHOULD
NOT BE USED OR RELIED UPON AS SUCH. This report constitutes an analysis of certain data received but not
reviewed, confirmed or verified by Realpoint LLC. The analysis is performed by the automated valuation model
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Realpoint LLC, 410 Horsham Road, Suite A, Horsham, PA 19044 (800) 299-1665
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