ULI Philadelphia Views from the Top shares insights and perspectives from top-tier sponsor members leading their organizations through unprecedented times with an eye towards impact and recovery.
Bradley J. Korman, Co-Chief Executive Officer, Korman Communities, AKA and AVE
How has your organization managed to adapt to the current environment and what lessons learned have you picked up along the way?
We continue to find ways to instill confidence and a sense of home for our residents during this unprecedented time and will continue to do so for as long as it is necessary. For a company that has been focused on hands-on property management for four generations, not being able to see our team leaders and properties on a daily basis has been the biggest change. We pride ourselves on going above and beyond for our residents and not being able to offer all of the amenities and services is a change, but it’s incredible how well everyone is pitching in and rising to the occasion. The biggest lesson we have learned is that being open, transparent and communicating well with your residents is the most important service you can provide. No one ever envisioned we would be in this position, but here we are and we have to focus on what we can control.
What observations do you have on how the COVID-19 pandemic either has or will fundamentally alter the real estate and land use industry?
In the short term, I believe there will be a flight to quality versus the rush to quantity we have been seeing of late. The multifamily space, particularly, saw increased supply as a favored asset class and capital flowed regardless of costs and supply/demand fundamentals. Underwriting will now be scrutinized more and the impact of job losses will need to be fully understood as it relates to new household creation. New projects will need to make a lot of sense to get the capital behind them as we are coming out of this pandemic.
The longer term effects might have to do with space allocation in real estate projects. Do office users want to give more distance to employees between desks? Do we need to separate more in conference rooms and common areas? Restaurants might not be able to squeeze as many tables into one space as diners won’t want to eat next to someone with a cough. Retail was already on a changing trajectory and this will undoubtedly speed up that process. For our business, I think the idea of home sharing apartments and temporary housing will also change as people look to understand the cleanliness of their surroundings and how protected they might be during the next event. The value of professional operators like AKA and AVE will carry more weight as people look to understand their landlord on a short term or long term basis.
Opportunity exists in every crisis. What do you think Philadelphia’s biggest opportunity will be coming out of the COVID-19 pandemic?
Philadelphia will certainly have an opportunity to capitalize on the potential relocation of companies looking to land in a more affordable area. Our rent base makes our region very attractive for companies that no longer see the need to have all employees in one high-priced location. Plus, the amount of industry-leading thought leaders in healthcare, biotech and education in our region make a compelling argument for an increased presence to many start-ups looking to call us home. The need to house all your employees all the time in one office could certainly change the longer we get used to working remotely.