Monday, 26 November 2012

Real estate prices on the rise near Allentown arena project

Dale Kessler, owner and manager of R.E.O. Complete Real Estate Inc. in Allentown, is in the process of buying property not far from the Allentown hockey arena project.

“The arena is going to put Allentown on the map. More people will be interested in investing than there already are… you’re starting to see people walking around the city during the day, not running for their cars and they look happy,” said Kessler.

Those in the real estate industry are giving mixed reports about the current status of residential and commercial properties near the Allentown arena. But many seem to agree that commercial investors are swooping in left and right to secure a spot by the arena.

Realtors who have been in the business for many years are attempting to list as many properties as they can while there are a few new Realtors with listings in the city.

According to Kessler, who buys bank-owned foreclosures, investors have been “hoarding their money, waiting for a market with really low interest rates, where the price is right, and those people are buying with cash because they held on to their money.”

He said that the other thing that is happening is that people are staying in rent to get their credit back on track. Rental property owners are keeping tenants longer and still able to make good returns, as rental prices climb higher.

Ron Coleman, an associate broker at NextRE Associate in Allentown, has been a Lehigh Valley Realtor since 1980. He said that he has seen many positive changes taking place in the vicinity of the arena.

Coleman owns three properties on Hamilton Street, on both sides of the hockey arena. These properties are commercial storefronts with residential space above.

“Prices have firmed up, gone up, and there is kind of a scramble in the Neighborhood Improvement Zone (NIZ) zone because of the taxes… let’s say a restaurant wants to come into the area and they spend the money to improve the property, then the sales tax comes back to that business once a year,” said Coleman.

“The owner (of a NIZ property) knows he can lower the price per square foot on his property because he gets money back from the state.”

Coleman, who is also a principal with Smith, Coleman, Stoker & Kave Realty Services in Allentown, reported that the hockey arena has created a rippling effect, giving people a great incentive to buy and improve properties – many of which had a negative stigma, were in disrepair or left vacant for years well before NIZ and the hockey arena project took shape.

“There is still a negative perception of Allentown,” said Coleman. “There are still people who say that things are not getting better, but crime happens everywhere.

“People are worried about the parking and traffic congestion when the arena comes, but I say the traffic is a good thing. We want the traffic. Traffic means more people driving past businesses, people eating at our restaurants, shopping at our stores.”

Those Allentown Realtors polled said that homebuyers prefer to live outside of Center City, specifically on the West Side of Allentown. Homes in that section of the City do not stay on the market long when they are available for under $100,000.00.

Realtor Loren Keim of Century 21 Keim Realtors in Allentown reported that his West End properties sell the best, and he recently sold a home near the Rose Garden for about $465,000.00.

But, in the last six months, there were less than a dozen properties sold within five blocks of the hockey arena. He offered a list of homes sold since early May. The list consisted of 10 homes ranging in price from as low of $20,500 to as high as $150,000.

He said that, in the last year, there were virtually no homes sold in downtown Allentown for above $200,000.

“In all honesty, if you are a residential homebuyer, would you want to spend the money to be close to the arena? I am not so sure,” said Keim.

“But with the tax benefit near the arena we are more likely to draw businesses from the suburbs.”

Keim noted that a quarter of all sales recently in Allentown were made by investors. About two-thirds of those purchases were made by local investors while the rest of the properties were purchased by investors from places such as New York and New Jersey.

“A buyer wants to know what his return will be… if you live two blocks outside the NIZ zone, you are less likely to find a tenant,” said Keim.

At Progressive Realty Inc., owner and broker Maurice Muhammad said that competition is steady among Realtors listing commercial property near the arena. He has seen an increase in commercial sales, as sellers have slightly dropped the price per square foot on office buildings.

Last week, Muhammad said he was working with one commercial investor who wanted to get better situated on Hamilton Street.

“It is not hard to acquire property by the arena if you are an investor, but Class A commercial buildings come with a premium,” the Realtor told Lehigh Valley Business.

Kessler at R.E.O. Complete Real Estate said that his clients are doing a lot to property near the arena to make it marketable.

“I love the City. I live here, and I think the City is very capable of doing what they are doing. The big picture is that someone needs to do something,” Kessler said.

“I see real estate in Lehigh Valley as stable, as stable as you can get in this environment.”


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