Office Sector News
Slow Growth in Office District
Philadelphia�s central business district (CBD) has an overall occupancy rate of 84.9%, 3 to 4 points higher than rates in the surrounding suburbs, but 2 to 3 points lower than Boston, New York and Washington, D.C.'s CBDs, according to the office market report and forecast released this morning by Newmark Grubb Knight Frank. Vacancies continue to decline in trophy buildings, as firms continue to migrate from Class B space. Class A rents are averaging $28.60, the report noted. The company projects very modest positive absorption in 2013 of 150,000 square feet, with vacancy dropping to 13.75%.
Project Will House Two Hotels
A $280 million, 50-story hotel project planned for 1441 Chestnut Street will house a four-star luxury W Hotel; a three-star, extended-stay Element hotel by Westin; 10,000 square feet of ground-floor retail, including a restaurant; an outdoor pool and bar; meeting space; and a spa and fitness center. There will be two lobbies, the W at street level and the Westin Element a short elevator ride up. Both brands are owned by Starwood Hotels and Resorts Worldwide, Inc. Brook J. Lenfest, the developer, is aiming to have the project be LEED-certified. Subject to all components of financing coming together, construction could start in late spring or early summer.
Development May Replace Pornography, Low-Rise and Parking Lots on West Market
Richard Basciano, the owner of multiple parcels on the 2100, 2200 and 2300 blocks of West Market Street, that include the defunct Forum Theater, is planning to demolish those properties that he owns on the 2100 and 2200 blocks in order to make way for mixed-use development, including residential and retail. Reaching out through the City, the CCD and the media, Basciano indicates he is looking more for joint-venture partners, rather than outright sale of the parcels.
As the western end of Market Street has transitioned from proposed office to residential sites, the south side of these blocks has long been a deterrent to the type of vibrant uses that could link Center City to the eastward expansion of Drexel University, while connecting the Rittenhouse Square and Logan Square residential communities.
New Luxury Housing Under Way at 24th and South
Toll Brothers on December 12 broke ground for a new housing development at 2400 South Street, near the recently renovated South Street Bridge and the area into which Children�s Hospital is expanding. Expected to be completed by the end of 2013, the mixed-use, luxury-housing complex will have 68 town homes, 59 condominiums, onsite parking and retail facing 24th Street.
For details on 2400 South Street, please go to www.2400south.com.
First Phase of Penn Treaty Village
Core Realty, Inc. will begin construction early this year on the first phase of a $600 million mixed-use development, Penn Treaty Village, on North Delaware Avenue near SugarHouse Casino, the Philadelphia Business Journal reported.
Core Realty will convert the former 160,000-square-foot Ajax Metal building and another 14,000-square-foot structure, which will be expanded by 6,000 square feet, to an entertainment destination with a distillery, 18-lane bowling alley, Live Nation concert venue, country-western bar, sports theater and an Italian restaurant, the article noted. This phase is expected to be completed in spring 2014.
The approval process for the next phase will begin in February. That portion of the project will include an Imax movie theater, retail, and a 126-unit apartment complex.
To see maps and renderings presented by the developer to the Northern Liberties neighborhood, please go to tinyurl.com/aq2hhwr.
New Apartment Project
The University City Science Center will join with Wexford Equities LLC and Southern Land Company to construct a 27-story apartment building at 3601 Market Street, the Philadelphia Business Journal reported on January 3. Construction on the 400,000-square-foot building is expected to begin in the fall and will include 17,000 square feet of retail, 365 apartments, a rooftop pool, residents' lounge, green roof, and 200 parking spaces.
Completion of the building is expected in spring 2015.
Infill Development Increasing
Nearly three out of four large metropolitan regions saw an increased share of infill housing development during 2005-2009 compared to 2000-2004, according to a new report, Residential Construction Trends in America�s Metropolitan Regions: 2012 Edition, produced by the U.S. Environmental Protection Agency�s Office of Sustainable Communities.
Among all 209 metropolitan regions examined in the study, 21% of all new home-building occurred in previously developed areas. In the Philadelphia metropolitan area, infill development accounted for 17.1% of construction from 2000-2004 and increased to 25.5% during the period 2005-2009, substantially above the national average.
To read the report, please go to tinyurl.com/asgrjlq [PDF].
U.S. Becoming Older, More Diverse
The United States population age 65 and older is expected to more than double between 2012 and 2060, from 43.1 million to 92.0 million, according to new projections by the U.S. Census Bureau, released on December 12.
The population is expected to become more diverse, with the Hispanic population more than doubling, from 53.3 million in 2012 to 128.8 million in 2060. The black population is expected to increase from 41.2 million to 61.8 million over the same period, and the Asian population is projected to grow from 15.9 million in 2012 to 34.4 million in 2060.
By contrast, the non-Hispanic white population is expected to peak in 2024, at 199.6 million, up from 197.8 million in 2012, and then slowly decrease.
To read the press release, please go to tinyurl.com/a9dahoa.
Hotel Tax Increase to Help Promote Tourism
City Council on December 13 passed Bill #120955, which will raise about $2 million that will go to the Greater Philadelphia Tourism Marketing Corporation (GPTMC) and the Philadelphia Convention and Visitors Bureau (PCVB) to help market tourism in the city.
The new law raises the hospitality promotion tax from 1.2% to 1.5%, or about 50 cents a night, and takes effect July 1. The overall hotel tax will now be 15.5%.
To read the bill, please go to tinyurl.com/d47no4o.
Upswing in Manufacturing
Manufacturing activity in the region rebounded in December, according to a survey conducted by the Federal Reserve Bank of Philadelphia. Of the companies surveyed, 31.7% reported an increase in the number of new orders, while only 21.0% reported a decrease.
While almost two-thirds (61%) of the firms reported no change in the number of full-time employees, 19.6% said they had more employees, and 6% indicated they had fewer.
To read the report, please go to tinyurl.com/cmklw9f.
Nonmanufacturing Firms Report Third Month of Improvement
The general activity index for nonmanufacturing firms in the Philadelphia region remained positive for the third consecutive month in December, increasing 14 points, to 31.0, according to the Federal Reserve Bank of Philadelphia. (The index has a maximum value of 100 and a minimum value of -100.)
The number of companies reporting an increase in full-time employees (17.2%) was higher than the number reporting a decrease (13.8%), while 69% reported the same number of employees. In addition, 20.7% of the firms reported an increase in part-time employees, while 6.9% reported a decrease.
Nearly one-third (31%) of the reporting firms said they spent more on equipment software, while 10.3% reported spending less.
Report Quantifies Value of CDCs
Investments by Philadelphia Community Development Corporations (CDCs) have contributed billions of dollars to the local economy during the past 20 years, according to Collective Strength: The $3.3 Billion Impact of Philadelphia Community Development Corporations, a report by the Philadelphia Association of Community Development Corporations (PACDC) issued in December.
CDCs contributed $2.2 billion to the city economy in wages to workers and in contracts with area companies for materials and services used in building and renovating homes, commercial spaces, and green spaces in the city, the report noted. In addition, spending that was a result of the direct investments created an additional economic impact of $1.1 billion.
To read the report, please go to tinyurl.com/cjh45mk [PDF].
Employment Linked to Neighborhood Preference
Nearly 20% of recent movers nationally identified "convenience to job" as the most important factor in their choice of neighborhood in 2011, according to the American Housing Survey, sponsored by the Department of Housing and Urban Development (HUD) and conducted by the U.S. Census Bureau.
The Center City District�s analysis of the American Housing Survey data finds that Philadelphia has achieved more than double that number with 43% of all Center City residents living between Girard Avenue and Tasker Street working within those boundaries as well.
To view the American Housing Survey, please go to tinyurl.com/bc82gao.
Philadelphia Vital Statistics
For a snapshot of Philadelphia's static employment situation as well as other trend data, please see this month's Vital Statistics, compiled by CCD/CPDC staff:
Arts & Culture News
William Penn Foundation Implements Strategic Vision
The William Penn Foundation on December 19 announced $3.2 million in new grants, the first in the Foundation�s 10-year strategic vision.
The grants were awarded to the Philadelphia Live Arts Festival and Philly Fringe ($1.5 million); the Children's Literacy Initiative ($1 million); and a group of organizations working for environmental stewardship ($715,500 among four organizations).
The Foundation's strategic vision focuses on three principal objectives: closing the achievement gap for low-income children; protecting the region's water quality; and making Greater Philadelphia an even more vibrant and creative community.
New program guidelines and application procedures for grants under the Foundation's strategic vision will be issued in late January.
To read more about the grants awarded in December, please go to tinyurl.com/c9gykpg.
Governor Will Address Transportation Funding
Governor Tom Corbett has indicated he'll unveil his transportation funding plan in late January before his annual budget address to the Legislature on February 5th, reports the Associated Press. Corbett did not disclose any specifics, but said his proposals would embrace the concept of public-private partnerships, which he has been discussing with legislators in both houses in recent weeks.
Jet Blue to Begin Service to Boston in May
On May 23, JetBlue will begin service from Philadelphia International Airport to Boston Logan International Airport, the discount airline announced on December 13.
Jet Blue will have five daily flights on a schedule to cater to business travelers. Flights to Boston will begin at 6:40 a.m. and the last one of the day will depart at 6:10 p.m. Daily flights from Boston will begin at 8:45 a.m., with the last daily flight to Philadelphia leaving Boston at 8:25 p.m. Flight time will be approximately 90 minutes.
To read the press release, please go to tinyurl.com/cz2x7vt.
Bus Updates Increase Ridership
In Chicago, a Bus Tracker system that uses GPS to locate city buses and track their arrivals slightly increased bus ridership and is expected to continue to contribute to attracting more riders, according to a recent study. The Bus Tracker system was gradually introduced by the Chicago Transit Authority (CTA) beginning in August 2006, and the study examined monthly average weekday ridership from January 2002 through December 2010. A modest increase of about 2% was attributable to the technology, the study noted.
The Atlantic Cities reported on the study in an article titled "Do Real-Time Updates Increase Transit Ridership?"
To read the article, please go to tinyurl.com/74cgzzn. The study is available at tinyurl.com/bl26hll and costs $31.50.
Transit Benefit Up to $240 Per Month
On January 1, 2013, the �American Taxpayer Relief Act of 2012,� the so-called �fiscal cliff� bill passed by the U. S. Congress, included a provision (H.R. 8, Section 203) to raise the maximum federal transit benefit to $240 per month, up from $125 per month. The benefit was higher until the beginning of last year, when a provision in the law expired and it reset to the lower level. The current provision is set to expire on January 1, 2014.
Employees will now be able to buy monthly public transportation passes for their personal use and take advantage of tax savings by having up to $240 of the pass price deducted on a pre-tax basis.
To read the bill, please go to tinyurl.com/aw5k56l [PDF].
DRPA Approves 2013 Budget
The Delaware River Port Authority (DRPA) Board of Commissioners on December 12 approved a 2013 annual budget of $257.7 million.
The DRPA and PATCO were able to reduce total operating and debt service expenditures by $17.3 million, or 6.3%, despite a nearly 70% jump in employee pension costs.
Two bond-ratings agencies rewarded the DRPA in late November for improving its financial management. Standard & Poor's revised its outlook for outstanding DRPA bonds from "stable" to "positive." Moody's changed its outlook from "negative" to "stable."
To read the press release, please go to tinyurl.com/azhqun7.
Center City District Reauthorized
On December 21, Mayor Nutter signed Bill #120800, which reauthorizes the Center City District's (CCD) operating plan for five years, 2013-2017, extends the life of the District to 2045 to enable refinancing and additional debt capacity, reduces charges to residential owner-occupants by 50%, and expands the CCD's boundaries to include the properties that front on South Broad Street between Pine and Lombard Streets.
The bill was introduced on October 11 by Councilman Mark Squilla on behalf of City Council President Darrell L. Clarke.
The plan and budget can be downloaded at centercityphila.org/docs/CCDPlanBudget2013_17.pdf [PDF]. To read Bill #120800, please go to tinyurl.com/bltfns4.
City Tax Collections Up
General Fund tax collections for the City of Philadelphia were $157.5 million in November, an increase of $19.2 million, or 13.9%, over the previous November, according to the Pennsylvania Intergovernmental Cooperation Authority (PICA). Total collections through November totaled $637.8 million, an increase of 2.3% compared to the same period in Fiscal Year 2012 (FY12).
Wage and earnings tax revenue was $138.2 million in November, an increase of $12.0 million, or 9.5%, from the same month last year.
Real estate transfer tax collections were $11.5 million in November, an increase of $4.0 million (52.7%) over November 2011. This is the second consecutive month of increased collections in year-over-year comparisons.
To read the report, please go to tinyurl.com/abxwajy [PDF].
According to the City of Philadelphia�s Office of the City Controller, November 2012 tax revenues totaled $189.7 million, a 13% increase from the same month in 2011.
Wage, earnings and net profit tax collections for November totaled $138.4 million, a 9% increase compared to the same month in 2011. Total collections for the first five months of Fiscal Year 2013 (FY13) totaled $640.5 million, a 2% increase over FY12.
After 12 consecutive months of sales tax revenues at or above monthly collections of the previous year, November�s sales tax revenue of $20.8 million represented a 3% decline from November 2011.
To read the report, please go to tinyurl.com/bkb45ks [PDF].
City Funds Above Projections for FY12
The unaudited year-end fund balance for the City of Philadelphia's Fiscal Year 2012 is $146.8 million, an increase of $47.8 million from the Fourth Quarter Quarterly City Managers Report (Q4 QCMR), and $86.2 million from the Fiscal Year 2012-2016 Plan, according to the Pennsylvania Intergovernmental Cooperation Authority, in its report issued on December 21, 2012.
Unaudited revenues for (FY12) were $3,591.4 million, an increase of $44.8 million from the Q4 QCMR, and $88.6 million from the initial estimate in the Plan. Unaudited obligations for FY12 were $3,484.9 million, an increase of $14.5 million from the estimate in the Q4 QCMR and $14.8 million from the Plan.
Among the savings in FY12 were a $22.9 million decrease in Debt Service and $5.5 million saved due to the mild weather last winter. However, the cost of Employee Benefits increased by $43.5 million.
General Fund tax revenue for Fiscal Year 2013 is projected at $2,626.6 million in the Q1 QCMR, an increase of $12.2 million from the FY13-17 Plan estimate.
To read the report, please go to tinyurl.com/ak54ds3 [PDF].
More Tax Credits Available for Job Creation
Mayor Nutter on December 11 signed Bill #120855, which doubles the amount of money to be used for tax credits for creating new jobs. The bill was introduced on October 25 by Councilman W. Wilson Goode, Jr., and raises the amount available for credits from 1% to 2% of the previous year�s total collection of the Business Income and Receipts Tax, or about $8 million, according to Councilman Goode. For individual business owners, the maximum per new job is $5,000 for 2012 and 2013. A follow-up bill, also introduced by Goode on December 13, Bill #121039, would make the amount per job permanent.
To view Bill #120855, please go to tinyurl.com/bjaawej.
To read Bill #121039, please go to tinyurl.com/bb6ouwy.
New Equality Index Ranks City Among the Top
Philadelphia was among 11 cities out of 137 in the country with a top score of 100 in the inaugural 2O12 Municipal Equality Index: A Nationwide Evaluation of Municipal Law and Policy, created by the Human Rights Campaign Foundation.
The index looked at city services, law, and policy, and measured how inclusive they were of LGBT people. Cities included in the study were the 50 state capitals, the country�s largest cities, and cities and municipalities that have high proportions of same-sex couples.
Other peer cities with a score of 100 were New York, Boston, Los Angeles, Seattle, and Portland.
To read the report, please go to hrc.org/files/assets/resources/MEI_2012_Report.pdf [PDF].
Update on Philadelphia2035
On Thursday, January 10, from 5:30 p.m. to 7:30 p.m., at the Center for Architecture, 1218 Arch Street, �The Future is Now: Philadelphia2035 Update� will be presented by the Philadelphia City Planning Commission.
The program will include a panel discussion moderated by Marilyn Jordan Taylor, PennDesign Dean. Participants will include Alan Greenberger, Deputy Mayor for Economic Development; Michael DiBerardinis, Deputy Mayor for Environmental and Community Resources; and Andrew Stober, Chief of Staff, Mayor's Office of Transportation and Utilities.
A reception will follow. Seating is limited, so please register early at eventbrite.com/event/3704434062.
Public Hearing on Privatizing Lottery
On Monday, January 14, the state Senate Finance Committee will hold a public hearing at 10:00 a.m. in Hearing Room 1, North Office Building, 401 North Street, Harrisburg, on the privatization of the Pennsylvania Lottery.
The move to privatize the Lottery was initiated by Governor Corbett. To read the state Department of Revenue's Lottery Private Management Agreement Overview, which includes information on procurement documents and the processes to be followed, please go to tinyurl.com/agfde3c.
Public Hearings on Casino Proposals
On Tuesday, February 12, at 9:00 a.m., at the Pennsylvania Convention Center, the Pennsylvania Gaming Control Board will hold its first public forum on the six candidates for a second casino license in Philadelphia. Information on the projects will be presented, but there will be no public comment. The opportunity for the public to address their concerns or ask questions about the various proposals is scheduled for Thursday, April 11, from 9:00 a.m. to 9:00 p.m., and Friday, April 12, from 9:00 a.m. to 3:30 p.m. Registration, which begins on March 4 at gamingcontrolboard.pa.gov, will be required to address the board. In addition, written comments will be accepted during the hearings.
The six projects are: Tower Entertainment, LLC (The Provence) at 400 North Broad Street; Market East Associates, LP (Casino Philadelphia) at Eighth and Market Streets; Wynn PA, Inc. (Wynn Philadelphia) at 2001 Beach Street, and 2001 through 2005 Richmond Street; PHL Local Gaming, LLC (Casino Revolution) at 3333 South Front Street; PA Gaming Ventures, LLC (Hollywood Casino Philadelphia) at 700 Packer Avenue; and Stadium Casino, LLC (Live! Hotel and Casino) at 900 Packer Avenue.
To read the press release, please go to gamingcontrolboard.pa.gov/?pr=495.