4 min read January 2024 — In an interview with Invest:, David Fahey, principal and managing director of Avison Young, talked about challenges in the office sector due to the pandemic’s impact on work preferences and the fight against inflation. Fahey expressed a bullish outlook for Avison Young Philadelphia, citing talent attraction, its collaborative culture, and anticipated growth despite economic fluctuations.
What are some of the opportunities in the market right now?
I think that 2023 was a significantly challenging year where we all had hopes that, coming out of the pandemic, there would have been an improvement on the office side of the business from an occupancy standpoint. What we found, though, was an adjustment in how people want to work. On top of that, we had and still have a Federal Reserve that is fighting inflation. With rising interest rates and the rising cost of money and buildings, with lower occupancy, there has been a lot of turmoil in the office sector.
As we look forward, Avison Young is optimistic as interest rates stabilize, and the costs to borrow money should come down. At this time, opportunities are tenuous, but the second half of the year should see an uptick of activity across various fronts.
What is the rationale behind the Madison Marquette acquisition?
The acquisition of Madison Marquette bolsters Avison Young’s retail platform, on both the brokerage and property management side. By strengthening Avison Young’s retail platform, real estate management, and market intelligence teams, it is a well-positioned choice for our continued growth and success.
The acquisition is a strategic investment to expand on our service offerings to support our occupier clients, owners and investors across an array of sectors as they navigate through accelerating marketplace needs during challenging times.
What is your take when it comes to redevelopment opportunities?
There is a lot of talk about redeveloping office into residential. It sounds good at face value, but developers need a deep understanding whether an opportunity is good or bad. They have to consider the demand of the community for residential and the cost to redevelop, and that cost won’t be the same for every redevelopment project. It can all be very expensive.
Which assets do you see performing the best?
Office is still up in the air. Companies are getting employees to come back to the office, which will help things, but there are still questions about what that workday or workweek looks like for people. In the office sector, Avison Young has seen many cases of companies with expiring leases reducing their footprint, whether it is because they are not growing or their utilization of space is changing, it is hard to say.
There is a lot of demand for the flex space component. I think the multifamily business will pickup in the second half of the year. We expect the money, currently on the sidelines, will be put to use at that time.
Are there any overarching marketing trends you want to incorporate into your portfolio?
We are prioritizing client focused and data-centric opportunities for our clients. Avison Young’s proprietary platform, AVANT, provides real-time data analytics that help our clients make better decisions, with a user-interface that is beneficial to use and adds value to their portfolio. Our competitive edge is this tool we provide to our real estate clients, to ensure the most accurate data and informed decisions at all times.
As Avison Young continues to prioritize other service lines, such as property management and Project construction management as well, business will keep growing in sync with our global company.
How do you see technology becoming more integrated in your business?
As a company, we know that how we operate is going to change over time. Our focus is on information and data, and we are in a great place because of our AVANT platform. The utilization of AI is also going to help immensely not only with how we deliver information to our clients, but also how vital our AI powered strategic site analysis and location intelligence tools currently are and will be to their business growth.
That is an important part of our future since we are in the information business.
What is your outlook and what are your top priorities for the next two to three years?
I am bullish on the Greater Philadelphia region and Avison Young’s success in this market for a number of reasons. As a growing and innovative challenger in global commercial real estate, we attract the best talent in our industry – planners, advisors, brokers, marketers, support. Our longstanding culture of collaboration, and the fact we’re majority owned by our Principals, means we put the client first. That means that no matter what, our top priority is to work together to get it done for our clients.
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