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Spencer Levy
Powered by the recent success of its sports teams, there's been a spotlight on Philadelphia. The Phillies just made an underdog run to the World Series. And this NFL season, the Eagles have emerged as a potential Super Bowl favorite. Now we turn from the sports page to the real estate section for our own version of the Philly Special. A conversation with a real estate leader who's also a new team owner in the City of Brotherly Love.
David Adelman
For me, Philly has always been the hidden gem. People focused on New York and focused on D.C. and for me, Philly was an obvious choice.
Spencer Levy
That's David Adelman, a native Philadelphian who recently became a partner with Harris Blitzer Sports and Entertainment, the group that owned the NBA's 76ers. David's bread and butter, however, is real estate, specifically student housing, as the CEO of Campus Apartments, the oldest and largest privately held company of its kind in the U.S.. He's also a founder or investor in a variety of other businesses, including Darco Capital, FS Investments and more.
Spencer Yablon
We see interest from everywhere. The nuance is that some of that capital that's first time to Philadelphia needs to really understand the Philadelphia story.
Spencer Levy
And that's Spencer Yablon, a senior vice president at CBRE who leads a multifamily capital markets team that covers Philadelphia, what he's described as a roughly 90 minute ring around the city. It's one of the top apartment sales teams in the company. And Spencer has handled more than $7 billion in transactions during his tenure. Coming up, a conversation for fans of all kinds with some refreshingly candid insights into how the business of sports ownership works and, of course, two interesting real estate sectors in a market with a lot going on: The Philadelphia Story. I'm Spencer Levy and that's right now on The Weekly Take.
Spencer Levy
Welcome to The Weekly Take. David Adelman, thanks for joining us.
David Adelman
Great to be here.
Spencer Levy
Great to have you, David. And then the man with the best name in real estate, at least the best first name in real estate, Spencer Yablon. I just had to say that, Spencer, we don't get a lot of Spencer's on this show. Thanks for coming, Spencer.
Spencer Yablon
Thanks for having me.
Spencer Levy
So let's start off with the Philadelphia Story. Right. We're here in University City near Penn, and I am proud to say, or you guys should be proud that University City came out and CBRE’s recent Tech 30 Report as the number one tech sub market in the United States. So, David, in your words, why Philadelphia?
David Adelman
For me, Philly has always been the hidden gem. You know, people focused on New York, people focused on D.C.. And for me, Philly was an obvious choice. You know, our eds and med, and I'm sure we'll get into that, are kind of second to none. You know, maybe some might say Boston as well. But for us to have this confluence of higher education, people want to live in the city, moving back into the city. And for Spencer, I'll talk about that. And, you know, having institutions like Penn, Drexel here as well, we've just seen that people like it here, that good job growth. It's an easy city to navigate.
Spencer Levy
And Spencer, what's your take? Why Philadelphia?
Spencer Yablon
Philly has always been from an investment standpoint, kind of a steady as she goes marketplace So we don't have big boom and bust cycles here. If you look at how we performed in the Great Recession through COVID, Philly does quite well. Maybe we're not the sexiest market when everything's white hot and interest rates are plummeting and fundamentals are great everywhere, and you want to be in the Sunshine State or somewhere else. But Philly has always been kind of a predictable, steady, safe place for capital. And as it relates to a place to live, just unbelievable historical and cultural amenities, great nightlife and a phenomenal cost of living.
Spencer Levy
And from a macro standpoint, you're on the Northeast corridor. It took me an hour to get here from Baltimore, Philly an hour and 40 from New York hour and 40 from D.C., maybe even less than that. So it couldn't be better located. And you're an hour from the beach, which can't be said for everybody as well. But at the same time, I think it's fair to say that capital looks at Philadelphia differently than it does New York, D.C., other big cities. First of all, do you agree with that? And second of all, what you think needs to change in Philly to maybe make capital look more fondly on the city?
David Adelman
I think historically, Spencer, you you're probably right that we were kind of not in the A-list, right? We were kind of the A-minus, maybe the B-plus. I think in let's talk because I have to talk pre-COVID and post-COVID. I think pre-COVID, that was really starting to change. Okay. Our food scene, I think, is a hidden gem. People who know it, people come to hear that they're like, holy shit, this stuff is great. They're really cool vibes here. One of my partners, Michael Schultz, is, you know, on his 12th restaurant in Philadelphia here. And I think people said, wow, this is like a fun place to come visit for a weekend. And so I'm seeing people come from New York to here in my other business. FS Investments, it’s very exciting for us. We were getting people relocating from Wall Street to Philadelphia to go work for us. And so I think the apartment boom that Spencer could talk about empty nesters moving from the suburbs into the city for the culture, the excitement, all of that was really taking form pre-COVID. We got a little bit of a stall that needs to reignite now, but I think capital has started to say Philadelphia is a place we want to come to. I think certainly in multifamily transactions, we've seen a lot, you know, the infamous New York capital that wants to come down here and buy stuff up because they think it's on sale. We love those kind of buyers. So I think it's really positioning itself as a place that's interesting.
Spencer Levy
To the point that David made about New York money coming down here. Philadelphia is on sale, as you know, Spencer, I travel the world looking for pockets of capital that will come to Philadelphia and other markets like it. What are you seeing from a capital flows standpoint? Is it mostly domestic? Are we seeing foreign? What's it look like?
Spencer Yablon
It's actually a combination, I think, of all of that. We've always had New York capital coming to Philadelphia and they've kind of looked at us as a borough almost of New York, because to your point, it's 90 minutes down the turnpike. But we see capital from all over the country and frankly, foreign capital. We've had interest and done deals over the last few years with capital from the Middle East, from Asia, from Europe, Canada, South America. We sold an asset right here in University City to South American Capital about two years ago. So we see interest from everywhere. The nuance is that some of that capital that's first time to Philadelphia needs to really understand the Philadelphia story. They need to come here. They need to walk around. They need to spend a couple of days versus New York is maybe easy to understand for a global capita. D.C. is easy to understand is the political capital of the U.S.. Philadelphia just needs to be sold a little bit harder. But what we found is and we just had a Japanese investor in last week, is, you know, once they come here and they spend time, they actually really love Philadelphia.
Spencer Levy
So let's start off on real estate before we get to some of the other topics and on multifamily. So look, folks, we've had several shows on this about the capital markets distress we're seeing right now. Ten-year Treasury may have dropped a little bit recently, but inflation, interest rates, softening of demand. What are you seeing in multifamily?
Spencer Yablon
So demand is great. I think if you look back 6 to 9 months ago, the only concern that we were hearing from investors in the marketplace was the ocean of new supply that was going to come. But with interest rates rising, with supply chain issues and the cost of construction doing what it has, a lot of those deals just don't pencil anymore. And only a fraction of those proposed projects are actually going to get built. So that's no longer really a concern. Assets in Philadelphia, I would say, are averaging 95 to 96% occupancy. We've seen tremendous rent growth. Rents are above where they were pre-pandemic in Center City and surrounding neighborhoods. So the fundamentals are actually really, really good.
Spencer Levy
But I guess we need to look at the other side of the coin, too. The capital markets I would not characterize as really, really good. I would characterize fundamentals as really good, just as you would Spencer. So from a capital markets perspective, with the rising cost of debt, with the rising cost of equity, are we seeing trades? When will we see trades? What will spur it on?
Spencer Yablon
So yes, we're seeing trades, but the transactional velocity is down substantially from where it was six, nine months ago. That's likely to remain the case for a little while. I think when we round the corner into 2023, we'll have a little bit more transparency on where rates are ultimately going to wind up. And, you know, capital needs a home. So as you know, as an investment class, multifamily is still probably the best risk adjusted return that you can find in commercial real estate. So consequently, there's a lot of capital rushing into it, particularly out of other asset classes that are maybe a little bit more risky. So I don't think that's a Philadelphia problem. That's a capital markets issue. To your point, pricing is adjusted 15 to 20% probably in our marketplace. And so if you're an owner and you don't have a pending refi, a partnership dispute, management headaches or life issues, why you need to sell, now's not necessarily the best time to hit the market with a deal. And so I think owners with good fundamentals and, you know, growing wiser are taking their time and being patient.
Spencer Levy
David, let's turn now to student housing. Campus Apartments is on multiple university campuses all over the country. Tell us about student housing generally and then specifically, what's working today and where there might be some challenges.
David Adelman
First, you have to go back and say, well, how is student housing fared? And I've been doing this a really long time. You know, you go back over the Great Recession, okay? You go back when the advent of online learning started and people said, are all these things going to affect it? Then you have, you know, the pandemic. We collected 98% of our revenue during the pandemic. Okay. And I'll tell you what's really interesting is what I experienced as a father of a college aged kid. These kids during the pandemic, kind of the first wave when it was announced in March and April, kids came home for that, like April, May and June. Okay. And then immediately went back. Mom and dad didn't want them home. The kids were like, Wait, what? What's going on here? And like, everyone bounced back. I remember my daughter saying to me, Dad, you know, she went to Ohio State she was a freshman. If they closed the dorms, my roommates and I aren't going to come home. We'll go to one of your off campus properties and just zoom in. And so the resiliency that we've seen over through the Great Recession and through COVID, to me is like that's what real estate is all about. Slow and steady wins the race. And I think that's always been what's happened here. But to Spencer's point about rent growth and occupancy, our rent growth this past year in our new some newer developments was north of 15 16%. I mean, crazy. But cap rates have moved, no doubt about it. For me I think when you're underwriting something to buy, it's like, well, how long do I want to be able to have kind of this negative carry rate? I think everyone will underwrite it for a year. I think the guys who will do it are guys who will do it for two years are going to make some buys if you're patient. But that's where I think the market is choking right now.
Spencer Levy
I think for the benefit of our audience, negative carry means that when the cost of your debt is higher than the cash flow you're getting from that asset. And that's really the number one question right now in real estate, because there are some tremendous real estate in multifamily and in industrial where it's impossible to get or near impossible to get positive leverage on the deals today. But let's go back, David, to the COVID changes, and it could be a whole episode on that. But in the student housing space, when I went to college at Cornell, my dorm was a bunch of students in a common bathroom and, you know, people like right on top of each other. But I think one of the things we learned from COVID is that maybe that's not the way it should be going forward. Maybe there should be a replacement cycle of student housing. What's your point of view?
David Adelman
You're really talking dorms and on campus, and we do a fair amount of that as well. We've seen the evolution of universities. It's an arms race right. No differently than when they're recruiting athletes. Who's got the coolest locker room? You know, the Alabama's of the world. And what do they have and what are the amenities for the student athlete? The same thing is for students now. They're looking at the dorms. They're looking at the quality of the living. And they just say like, hey, like I want this kind of lifestyle. So we're getting asked all the time to take a look at these 1970 dorms that are done and outlive their useful life and what can we replace it with? So we're seeing more bed bath parity for the first time that you haven't seen in a long time. You're seeing lobbies and amenity spaces that feel like you're in a Starbucks, right? Like, how do people live and use space? And so we're spending a lot of time looking at that on the on campus side and on the off campus side, definitely because of the Zoom and stuff like that, making sure that students have a great place to work and their apartment is really important. We furnish everything we build. We design the unit around the furniture. Can you comfortably work at the desk, have a great dresser, bureau bed. What's the layout? So you can kind of hibernate in your room and do your zooms. And it worked out well during COVID, so people had that space and then had kind of the common areas to cohabitate with their three other roommates. So I think the evolution of design and construction is to make sure that people can like live and work in their units.
Spencer Levy
One comment, one question, David. When I've studied student housing, there was this funny little quirk about pricing. And the funny little quirk was that schools that had big time football programs had more valuable student housing and schools that didn't. We've actually showed it mathematically. So that's part A, you agree with that? And then, B, what other changes are you seeing to these units for students, whether it's on campus and off? And I'm going to point specifically to sustainability type issues.
David Adelman
Yeah. So to your first question, I would say 5 to 7 years ago, people focused on these big schools, you know, like the Southern land grant schools, big football programs, things like that. The flip side of that is those generally are built with a lot of land around them where new supply can come in. So I think for the novices started saying, well, I'm only going to go to school, the 20,000 plus students that are these big schools. We've always been a little more discerning than the way we underwrite and peel back the onion because we're like, you know, what's the supply and demand imbalance there? What's the trajectory of the school? And we go one step further Campus Apartments. What's the value proposition of the school? Okay, the education, your graduation rate, What's your starting salary? Because what we found is if the school doesn't have a good value proposition, what's its future? And so one of the things we look at is there's over 5,000 colleges and universities. In the next 20 years I think that number, it cuts it by 30% at least. Okay. A lot of small thousand student liberal arts colleges are spending $80,000 a year. And I just think the value isn't there. And so we would never develop there. But you had the opposite where so a lot of money flooded some of these big land grant schools and you'd have this wave of supply and demand and it'd be like feast and famine, feast and famine for developers. So, you know, we're always careful because we don't think we're smart enough to time the market to build, develop and know when to get out. And so we're careful about those schools. And for us, we kind of like we're, you know, here we are at Penn, right? Penn hasn't raised its enrollment in a long time, right. So I'm not worried about like, you know, hey, the raising enrollment, there's not been more supply comes like, how do you look at that? So it's been interesting. And then your question on sustainability, very important. Okay. Particularly if you're doing a deal with a university, they absolutely want to make sure that you're thinking about what it is now. Does it have to be Leads? Maybe, maybe not. But the sustainability conversation is really important.
Spencer Levy
So let's turn now to traditional multifamily. Spencer, What other amenities are you seeing in the modern multifamily building that's being built that's maybe different from where it was ten years ago?
Spencer Yablon
More package rooms, larger package rooms, technology infused package rooms, cold storage. You know, nowadays you can order your groceries online and they can show up at your door. So to the degree that delivery person can just throw your bag of groceries into a giant cold fridge and you can pick them up when you get home from work. That's something we've seen. We've seen a lot of pet amenities. People love their pets. There was a bit of a pet explosion during the pandemic. I was beaten down by my wife and kids as well and we got a puppy. So I feel that one. But, you know, dog washing stations, dog parks, that's a big deal. Outdoor space, rooftop decks, green roofs, you know, grilling stations. People want to be outside a little bit more than trapped inside their unit. Those types of things. And then which I'm sure David would echo on the student housing side, it really fast. Internet providers, you know, free Wi-Fi at high speed.
Spencer Levy
So some of these amenities they'll have they go in cycles, right? So I think if we were to have this conversation ten years ago, 15 years ago, we had got to have a great gym in the building. And then if. We had this conversation ten years ago. So you've got to have cold storage. What are you seeing, David?
David Adelman
First of all, the Internet was the one you know, we at camp Performance, we couldn't figure out early in the business how to provide fast Internet. And we actually created our own company that we started today called Campus Technologies. We wire apartment buildings across the country, and we have for almost 18 years. And so we do ours. We do others to solve that problem. If you have shitty Internet, people will move out more so than if you have bad maintenance. Okay, so that's first and foremost. Like that that to me is rule number one. For for student housing students like the gym. Okay. even though most schools have a robust place to go, we're still seeing that our gyms are really getting used. So we see that we have Amazon lockers and every property we were we were the first in student housing to do that. We thought that was really important. We're not doing cold storage for kind of your point. Like, I don't want some kid ordering food and forgetting about it. But you know, the gym is important. The workspace these students like to, to the extent possible, come down to lobby and do work. I'll tell you, another big amenity for student housing is free Coffee? Okay. So we keep the coffee machines on every morning in some properties all day long, but that's actually a big amenity.
Spencer Yablon
Yeah, that holds true in traditional multifamily as well. There are amenities that tenants use, and then there are amenities that leasing staff uses to lease the property effectively. And so sometimes just saying, hey, we have something that other properties don't. Even though the tenant isn't going to use it, it's just one other feather in your cap to try and draw them in.
Spencer Levy
So let's shift topic now to talking about sports and talking about the new arena. So first, tell us how you got into the Sixers.
David Adelman
It's a great story. Started actually backwards where the arena was the first thing I got engaged. I've been friends with Josh Harris and David Blitzer and the third principal, Michael Rubin's, one of my people know in Philadelphia, one of my closest friends. And they approached me about two years ago saying they need a new arena. And you know would I be interested in building it. And I had to think long and hard about it, You know, what do I want to do it It's going to be a big public project. And what would it look like? And, you know, first I wanted to make sure that we were aligning around a couple of goals. First was, if I do this, I'm not going to threaten to move the team if I don't get what I want. Like I don't want to be that guy. Two this project has to be a win for the city. We can't ask for any city money. And three, that the trifecta was, can we do some civic good with this project besides just building a building? And my partners were totally aligned in it. We started a search that lasted a while. And I kept coming back to this one location, which is the Fashion District Mall, formerly the gallery. And what is so remarkable about that is it's built on the biggest transit stop in Philadelphia. It's called Jefferson Station, named after Jefferson Hospital. And I couldn't get over the fact that you could really have, you know, an in Philadelphia we don't like to compare ourselves to New York, but like, we could have a Madison Square garden, right? Like it was going to be the same for people who were listening to this that's what we're talking about, being on top of a transit station like that and being able to create something. The second part was the small span, three blocks long. It's been there for 50 years. And the problem is it seems like a suburban mall in Philadelphia. Very cold on the outside. Spencer can tell you it just feels like you're in the suburbs. There's no soul to it. And that area is very bizarre. And for those who know Philadelphia, you can walk from Front Street to sixth or seventh Street. It's really vibrant, active old city from City Hall to 12th Street was redeveloped. There's a great new development done by National Realty, great ground for retail. The lit up billboards like you felt real vibrant energy. And then you have like the whole of the donut is just like a wasteland. Literally on the south side of the street, you still have boarded up retail. That's why I was like, I don't understand. Like, I kept coming back to this location. We looked at others and I was like, Wow, we could take one entertainment complex. I'm not going to have to displace one business or one residence, and I could kind of take one box and put another box in its place and reinvigorate the remaining part of the mall. And so we got to figure that out. Made a deal with Macerich and we made the announcement. Fast forward, my you know, you asked about, you know, buying the interest in the teams. It's actually the Sixers and my friend Michael needed to sell his interests to focus on the, his company fanatics. He's adding gambling so you can't be in it you know the team owner. And so I wound up also buying out his interest as well. And so what it did for me is I was already working on this project, Josh and David, you know, the main owners of the teams, they're not from Philly. So I think me being their Philadelphia partner and being on the ground here is beneficial for them. Beneficial for me. It added credibility related to the arena, and we're going to build a world class arena that's going to open eight years from now that doesn't exist yet anywhere in the world. And like you see the Chase Center and I've been to Seattle the new where the Kraken play the Climate Pledge is a beautiful, amazing take all of that. But those were all planned five, six years ago. Right. And so you look at the difference of what's going to happen now versus then, and I couldn't be more excited to bring that to Philadelphia.
Spencer Levy
What I find amazing about the sports arena business is how the business of real estate has changed around it. So traditionally we use term called CBD, Central Business District. Now we're seeing a term which I call Better Business District, which, by the way, I politely stole from Ted Klinck, CEO of Highwoods Properties. But that's what I see today about people wanting not just to be live, work, play in separate places. They want to live, work, play kind of in the same place. What do you see in multifamily, Spencer?
Spencer Yablon
Yeah, I mean, I think if you look around the country at stadium districts that have been built, you know, in or around, you know, the city, they're thriving. That real estate is bulletproof. Right. Because even I mean, the the NBA, despite shutting down during COVID, like when you have a sports team that particularly like Philadelphia, where the fans are insane about sports here. There's nothing not even a global pandemic that will get in the way of them cheering for their team, rooting on and supporting the local team right now. So what's happening with the Eagles right now? You can kind of feel it in and around Philadelphia. The challenge with our stadium district now is it's not walkable to anything. It's not really improving a neighborhood around the stadium district. You show up at a game on time unless you're tailgating and then you're there a couple of hours early on a Sunday. But generally you show up on a game on time and then you come back to Center City to go out to eat. So what David and his partners are proposing, I think, is a no brainer for Philadelphia. It will serve to really liven up a section of the city that desperately needs it. I mean, between Independence National Historical Park, where you've got Independence Mall, the Liberty Bell, the National Constitution Center and City Hall, it is a little bit sleepy. But in those kind of connecting neighborhoods, there are pretty cool vibes there. So I think connecting all of that would be huge for the city. People would show up at 5 to 6, have an early dinner, go into the game, come out at night, have a few drinks. I think it would serve to really invigorate the businesses in the neighborhood and people want to live next to that. If I was younger, right, I would love to be able to stumble home after Sixer’s game as opposed to having an hour commute and just struggling to get out of the parking lot.
Spencer Levy
Let's stick with neighborhoods for just a moment, because we've talked about the Arena district. We've talked about University City. For somebody coming in from Philadelphia outside the city, what are some of the other hot areas you might recommend in multifamily?
Spencer Yablon
So I would point to Northern Liberties in Fishtown. So when you head north from Old City, which we just talked about along the Delaware River, you run into a community called Northern Liberties. Many years ago, a local developer, Bart Bluestein, bought a brewery there. He kicked the stone that started the avalanche heading north along 95. And so Northern Liberties has blown up. And now another local developer, Post Brothers, who's got a really big presence here, they are building another thousand units there. So Northern Liberties has done phenomenally well over the last ten years. And when I started my career and you know, 19 years ago in real estate, you did not want to walk around in Northern Liberties. It did not feel like a safe place. Heading north beyond Northern Liberties. Now, Fishtown kind of feels like the village in New York City. It's unbelievable. So you've got really cool, trendy bars, restaurants, townhome developers. So I have a newer person on my team, Samantha Coopersmith, who we just made a partner she's like an up and coming rock star. She just bought a townhouse with her husband up there. That is a really cool neighborhood. It just has like this great vibe. And now we're starting to see that in Kensington, which is even further north. So I think that that trend, that neighborhood is doing really, really well. And it's starting to fill in, you know, along Broad Street, between City Hall and Temple University. It was empty there for a long time and you've seen institutional quality developers now building major mixed use projects up and down the Broad Street corridor. So that's another area that I think is poised to continue to do really, really well.
Spencer Levy
David This is primarily a real estate podcast, but I think people are fascinated by the business of sports. Congratulations on your success there. But let's talk about the business aspects of it. How does it work? In terms of the media rights, In terms of the stadium, in terms of how do you underwrite it?
David Adelman
Yeah, great question. Right. The how do you underwrite it? The you know, either you A believe it or not and B, you know, it's kind of like the greater fool theory, right? Like hopefully there'll be a bigger fool than me to buy this. Yeah. Someday that yeah, that's what I'm hoping now I think, you know, when you look at the components of the business, okay, you know, it's actually pretty, you know, what's your biggest cost Is player talent. Okay. How do you manage that? Everyone essentially spends a similar amount unless your goal. The state or one of the others that are really deep in the tax. But we've been in the tax before. And then the question is, what kind of infrastructure do you want to run this business? Our group owns the New Jersey Devils. We also own Crystal Palace, the Premier League. And so we have a robust infrastructure to run the business. Well, the League's in the NBA is just a really well-run league and Adam Silver has done an amazing job. So you've got obviously the TV revenue and those contracts constantly get renewed. The NFL's, you know, the leader and everyone kind of lags in behind. But you've got the TV revenue and then obviously your ticket sales. And you know, for us, let's talk business, the arena. Okay. We are currently a tenant in the current arena, so we don't get to participate in the economics in the way that we would if we owned our own facility. People say, well, why are you moving? While one, we want to give our fans a higher level experience, we want them to be able to not show up and then leave and versus pregame, post-game and revitalize the city. But two economics are part of it, right? You know, the club experience, the events, all of that. We'd like to be able to control that. So your revenues come essentially your TV rights and what happens inside on the court, Right. Ticket sales, sponsorships, partnerships. And that's really how it works.
Spencer Levy
And so in terms of the new arena and as we talked about, new arenas are being built every day with, you know, better cooler amenities. I know this is eight years before it's built. Any cool amenities that you give a sneak peek of what you're thinking about?
David Adelman
Well, what I'll say we're thinking about one is sustainability. You asked about on the student housing side. I would say it's really important on this side. The images we've shown in renderings show green roofs, solar panels, stuff like that. You really do to instill the fact that we want to do something right. But, you know, carbon capture, okay, water reclamation. How are we going to dispose of trash composting, all of those things. Seattle's probably the leader in that right now at the Climate Pledge Arena. Amazon really underwrote a lot of that to do that. But it's all of those technologies. And in my family office, we're investing in a lot of climate tech. Okay. So I'm seeing like an insight into the future on carbon capture and things like that. Every day those technologies are getting cheaper. And so for us, you know, can we do something that, you know, does good and does well for us? Right. That's kind of the balance.
Spencer Levy
But now an NBA team plays 45 to 55 games a year, you know, hopefully sixty games.
David Adelman
That's hoping we're more like 60.
Spencer Levy
We're hoping for 60 here. But what do you do for the other 230 days or. My math is a little off.
David Adelman
We're one of the biggest top ten, biggest cities that don't have two large scale venues. And so people are like, well, what happens to the Wells Fargo Center? To me, this is a net gain for Philadelphia. But to answer your question, when you think about concerts, events, Big Five basketball, which is really big here. We're going to also donate the arena when we're not using it to the community in Chinatown to have events there. You know, we're budgeting about 150 plus events a year.
Spencer Levy
So let's now have some concluding comments, starting with you, Spencer, Multifamily, Philadelphia, foreign capital coming to town. What do you see as the outlook for the next couple of years
Spencer Yablon
In terms of like my forecast for multifamily, I would say just by my nature and virtue of what I do, I am always optimistic. Certainly maybe today a little bit more cautiously optimistic. I think the short term is going to be a little bit choppy based really just on the capital markets. Whether or not we end up in a recession, fundamentals in multifamily are going to remain pretty good, particularly here in Philadelphia. From a supply demand standpoint, I think we're in good shape. So rent growth is likely to slow down. I think everybody predicts it's going to slow down. We're not going to see what we saw over the last couple of years, which were kind of record setting rent growth. But, you know, when I started in the business 19 years ago, we weren't at two bucks a foot in Center City. And now the newest, nicest high rises in Philadelphia, they're talking 550 a foot in rent. So rents have come a long way. We've got great demographics here in Philadelphia. We're one of the most populated downtowns in the entire country. I think we're number two or number three. I'm not sure if it's us or Chicago in that spot. But so generally I think Philly is going to do great. And I'm a big cheerleader for Philadelphia. I hope David and his partners get the stadium done. I think that's just another kind of feather in our cap in terms of selling the city. So I'm optimistic.
Spencer Levy
David, same question, but we'll break it into student housing.
David Adelman
Yes, student housing. I feel good about it. You know, there's been a lag of new supply, which always helps any industry. Right. So I think you're still seeing all of that. Rent growth is strong. We're ahead of multi we're ahead of pre-pandemic numbers and levels. I think transactions are going to a little funky, right? I think you're going to see not the large scale stuff. I think people will wait a little bit and I'm okay with that. There's a year or two that's a little bit slower and like everyone kind of catches their breath like we were on a good run. Like people should not forget that we had a great run. Everyone did well. And so if we have to hunker down a little bit, operate our business, there's nothing wrong with collecting cash flow. So I'm going to.
Spencer Levy
The last question, but I know this is more of a 76 was focused upon, I guess the Eagles going to win the Super Bowl.
David Adelman
You know, I don't want to get greedy. I feel really good, you know, But, you know, we lost to Washington and yeah, so like, I think you can't take your eye off the ball. We have to come in hungry every week. And if we do that, you know, could be like an Eagles-Bills Super Bowl. Who knows? That would be pretty interesting if that happens.
Spencer Levy
Well, on behalf of the weekly take, what a great episode about Philadelphia Sports and so many other things. And first, I want to thank our guests, David Adelman, CEO of Campus Apartments, co-founder of FS Investments and founder of Darco Capital. David, great job. Thank you so much. Thanks for having me. And Spencer Jablonski, the senior vice president, CBRE, focused on multifamily in the Philadelphia area. Spencer, thank you as well for arranging for today's podcast.
Spencer Yablon
My pleasure. Thanks for having me.
Spencer Levy
For more on the Philadelphia Story and our show, please visit our website, CBRE.com/TheWeeklyTake. As a preview of what's to come. We've got some interesting programs in the works on a remarkably diverse set of subjects. Down the road. We'll cover affordable housing well, delve into the evolution of data science and its use across the business world. And on our next show, a conversation with leadership consultant and author Barbara Annis on her concept of gender intelligence. If you want to find out what that is, well, tune in next week. Meanwhile, don't forget to share the show as well as subscribe rate and review us wherever you listen. Thanks for joining us. I'm Spencer Levy.. Be smart. Be safe. Be well.
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