Office Sector News
Four Reports Show Strong Leasing in Downtown
Though each report counts a slightly different inventory, four major year-end summaries have highlighted the improving downtown Philadelphia office market with its shrinking vacancy rates and rising rental rates. Newmark Grubb Knight Frank's (NGKF) Philadelphia 4Q15 Office Market notes the overall vacancy rate in the central business district (CBD) fell from 11.5% to 10.9%, with average rent of $27.52, while the suburban vacancy rate hit 16.3%, with an average rent of $25.49. NGKF also noted more than a half million square feet of leasing from companies new to the Philadelphia CBD, bit.ly/20lq1Ig [PDF].
Strong leasing activity during 2015 has lowered availability across the CBD, including University City and the Navy Yard, with the exception of Market East, where Dow’s announced departure from 100 South Independence Mall West returned a large block of office space to the market, according to JLL’s Chart of the Week for January 11. Market East’s vacancy rate rose from 12.7% to 13.9%, while Market West’s fell dramatically from 15.7% to 11.7%. The Navy Yard’s availability moved slightly from 3.2% down to 3.0% and University City’s from 3.9% to 2.3%, bit.ly/1S9TWQI.
In its Philadelphia Office MarketView Q4 2015, CBRE counts 43,235,869 square feet (SF) of office space in the downtown, compared to 60,524,564 SF in the Philadelphia suburbs. Downtown’s vacancy rate was calculated at 10.5%, with an average asking rent of $27.88, while the suburbs’ rate was 18.8%, with rent averaging $25.48. Downtown’s year-to-date net absorption was 537,262 SF, compared to 305,854 SF in the suburbs.
For the year, the CBD accounted for nearly half of the region’s occupancy gains, continuing the trend noted by all reports of Center City outperforming nearly all suburban markets, bit.ly/23k0Fgi [PDF].
SSH Real Estate counts the CBD vacancy rate as 9.79%, with average rents at $27.80, a 3.3% increase over the previous year, in its 2015 Greater Philadelphia Year-End Office Market Report and Outlook. SSH expects rental rates to increase and vacancy rates to decrease during 2016. SSH also notes that the amount of trophy office space under construction has remained relatively constant at approximately 2,000,000 square feet in Center City, with the FMC Tower and the Comcast Innovation and Technology Center making up the majority of the office space in the pipeline, bit.ly/1RG6wsz [PDF].
iPipeline Commits to Center City Office Space
After a few years of occupying temporary space at 1818 Market Street, iPipeline’s satellite Center City office has moved into its own quarters on the fourth floor of 2300 Chestnut Street, where 15 employees will work, Technical.ly Philly reported on January 18.
The company has approximately 200 people in its Exton headquarters, but needed a Center City location to attract university students who don’t like to commute to the suburbs, the article noted.
To read the article, please go to bit.ly/1Ourd6R.
Benjamin’s Desk Expands East of Broad
Benjamin’s Desk, the coworking space that opened at 1701 Walnut Street in 2012, has expanded to a second Center City location, 20,000 square-feet on the 11th and 12th floors of 601 Walnut Street, the former Curtis Center, the Philadelphia Business Journal reported on January 12.
The multi-floor setup is similar to the company’s arrangement at 1701 Walnut, where it occupies space on the seventh and eighth floors.
To read the article, please go to bit.ly/1OJitYw.
Residential Market News
Demand on the Rise for Luxury Housing Near Universities
An article published in the New York Times on January 19 uses the new 28-story 3601 Market Street, one block from Drexel University and developed by Southern Land Company with Redwood Capital Investments and the University City Science Center, to illustrate an emerging national trend of developers building luxury housing near college campuses for staff, not students, mirroring the live-work dynamic that has emerged in downtown office districts.
About half of University City’s 50,600 residents are between the ages of 20 and 34, and of the 75,000 jobs in the area, three-quarters of them are in healthcare and education, jobs that tend to command high salaries, the article noted. Rents at 3601 Market range from $1,525/month for a studio to a minimum of $2,749/month for a two bedroom. Median rent in the area is $1,450/month.
To read the article, please go to nyti.ms/1Vc6Ayb.
Drexel Building Specialty Housing for Students
Cross Properties is partnering with Drexel University on a $20 million housing project, Good Food Flats at 4030 Baring Street, which will cater to students attending the school’s hospitality and sports management program, the Philadelphia Business Journal reported on January 19.
Amenities will include a food lab and commercial kitchen, a pop-up restaurant and incubator space on the ground floor and a space to grow herbs, vegetables and other plants on the roof and in the back yard.
Construction is underway on the 44 units and is expected to be open for students this fall. To read the article, please go to bit.ly/1n8rTW5.
Developer Buys Church in Graduate Hospital
The First African Baptist Church at 1606-1608 Christian Street in the Graduate Hospital neighborhood was sold for $2.05 million to an unnamed development group and includes an adjacent parking lot that is eligible for new construction, while the church’s structure must be maintained due to its historical status, the Philadelphia Business Journal reported on January 11.
The developer has not yet finalized plans and will address structural issues first, the article noted. To read the article, please go to bit.ly/1KgaPTC.
Eds and Meds News
Jefferson and Kennedy Health to Merge
The leaders of Thomas Jefferson University Hospital and Kennedy Health in Voorhees, N.J., signed a letter of intent on January 22 to pursue the potential integration of the two healthcare institutions.
Kennedy Health operates hospitals in Cherry Hill, Stratford and Washington Township, with a total of 607 licensed beds and is the third health system in the region to join with Jefferson. Abington Health and Jefferson completed a merger deal early last year and Aria Health and Jefferson signed a merger agreement earlier this month, the article noted.
To read the article, please go to bit.ly/1NpUUSz.
New CFO for Philadelphia School District
Uri Monson, currently the top finance official for Montgomery County, has been named Chief Financial Officer for the Philadelphia School District, where he will manage the District’s $3.2 billion budget, The Philadelphia Inquirer reported on January 12. He replaces Matt Stanski, who left at the end of the last school year.
Monson previously served as Executive Director of the Pennsylvania Intergovernmental Cooperation Authority.
To read the article, please go to bit.ly/1Q93X0v.
Gift to Jefferson for Scholarships
Nancy and Jim Baxter have given $2 million to Thomas Jefferson University to provide scholarships to underrepresented students in medicine and to support diversity programs at the Sidney Kimmel Medical College, the Philadelphia Business Journal reported on January 19.
The Baxter Family Scholarships will award full tuition to four students in each of the incoming classes of 2020 and 2021. The goal is to help reduce the significant healthcare disparities that exist in Philadelphia, the article noted.
To read the article, please go to bit.ly/1KpuGj6.
Ramsey to Join Drexel University
Drexel University on January 14 announced that former Philadelphia Police Commissioner Charles H. Ramsey will serve as the inaugural Distinguished Visiting Fellow of the Lindy Institute for Urban Innovation, a new initiative that aligns Drexel’s academic work with urban revitalization.
Ramsey will serve as an advisor for the Criminology and Justice Studies Department and help develop a new multi-disciplinary master’s program in urban strategy. His two-year appointment at Drexel will begin today.
To read the press release, please go to bit.ly/1PtEpql.
CBRE Report: Center City Rents Show Second-Highest Growth
With an 88% increase in prime retail rents since the first quarter of 2008, Philadelphia is second only to Miami (141%) in rent growth through the fourth quarter of 2014, as rates averaged $225 per square foot (SF), according to CBRE’s Philadelphia Retail Marketview Q4 2015.
Population growth in Greater Center City over the past three decades has helped create and sustain enough amenities, public space improvements (e.g., Dilworth Park), and a level of safety that the urban core has become a first choice in the region for potential residents, the report noted.
To read the report, please go to bit.ly/1kZL8R7.
Tracking Millennials and Their Spending Habits
Millennials account for approximately one-quarter of the U.S. population and, in a recent Nielsen survey, only 25% of millennial respondents said they plan to continue to live in the same area, while 75% plan to relocate, mainly to large cities and college towns.
The report suggests that retailers and manufacturers should focus on millennials’ food consumption habits, noting the trend of grocery stores that offer prepared meals to take out with the option of in-store dining for the cost-conscious, as opposed to restaurants for dining out of home.
To read the report, please go to bit.ly/1KcY2RP.
At Economic Conference, Cautious Optimism
While cautiously upbeat, both William Hankowsky, CEO of Liberty Property Trust, and Gerard Sweeney, CEO of Brandywine Realty Trust, speaking at the Philadelphia Business Journal’s Economic Conference 2016, suggested the Greater Philadelphia economy was continuing to expand, but faces serious constraints that could limit future growth, citing uncertain political conditions with annual tax increases in City Council and an unresolved state budget resulting in both uncertain tax rates and a continuing school funding crisis.
At the conference, held January 14, Drexel University President John Fry announced that he is approximately two months away from unveiling the final plans for Drexel’s multibillion-dollar Innovation District, the Journal reported on January 22.
Among the positive trends noted were the 71, 587 new residents added to the city since 2006, and the 26.5% millennial generation share of the city’s population.
To read the article, please go to bit.ly/1UgBnJP (requires subscription).
New Leaders at Federal Reserve Bank
The Federal Reserve Bank of Philadelphia on January 14 announced the appointment of Michael J. Angelakis, former Comcast Corporation executive, as chairman of the board of directors, succeeding James E. Nevels, who retired from the board on December 31.
Brian McNeill, President and CEO of TouchPoint, Inc., will serve as deputy chairman. Both appointments are for one year. To read the announcement, please go to bit.ly/23cr5AK.
Manufacturing Slows in Region
Manufacturing conditions in the region contracted slightly during January, according to firms responding to the Federal Reserve Bank of Philadelphia’s first Manufacturing Business Outlook Survey of 2016.
New orders were up for 29.3% of the respondents, down for 30.7%, and remained the same for 39.3%. The number of employees remained the same for more than two-thirds (68.6%), was higher for 13.7% of the firms and lower for 15.7%.
Looking ahead six months, 43.4% of the respondents anticipated better conditions, 24.3% expected worse, and 27.8% foresaw no change.
To read the report, please go to bit.ly/1RWg2Ih.
In other news on the Manufacturing sector, the Federal Reserve Bank of Philadelphia has made its annual revisions to historical data for the Manufacturing Business Outlook Survey after calculating new seasonal adjustment factors, the Bank announced on January 14.
The current general activity index was revised upward over the first five months of the year, and revised down from June through August, and for the last three months of 2015. For December 2015, the six-month future activity index was revised upward.
To read the report, please go to bit.ly/1Kpkjfj.
Revenue Increase at SugarHouse in December
Revenue rose by 4.7% in December at SugarHouse Casino on the Delaware River, according to the Pennsylvania Gaming Control Board.
In December, the casino took in $22,422,886, compared to $21,414,008 in November. The Commonwealth’s share of taxes in December was $5,746,279, compared to $5,509,937 in November. The City of Philadelphia collected $724,020 in December and $693,738 in November.
To see all casino revenues, please go to bit.ly/1I0aqlt.
Arts and Culture News
PIFA Arrives in April
The Philadelphia International Festival of the Arts (PIFA), produced by The Kimmel Center, begins on Friday, April 8, and continues through Saturday, April 23, when Broad Street between South and Chestnut Streets will be closed for the PIFA Street Fair, 11:00 to 7:00 p.m.
This year’s theme is “We Are What We Make.” More than 100,000 people attended the 2013 PIFA Street Fair.
The Kimmel Center is holding two identical informational meetings about the street fair. The first one is tonight, from 6:00 p.m. to 8:00 p.m., in the Rendell Room, Tier 1, Kimmel Center, 300 South Broad Street. The second is Thursday, January 28, 9:00 a.m. to 11:00 a.m. Please RSVP to Amy Harting at firstname.lastname@example.org.
For more information on PIFA, please go to bit.ly/1K0cstC [PDF] or visit pifa.org.
FRA Forum on Future of Amtrak’s Northeast Corridor
Officials from the Federal Railroad Administration (FRA) held a public meeting on January 11 at SEPTA headquarters to discuss the FRA’s Tier 1 Environmental Impact Study (EIS), which provides three alternative plans for the future of Amtrak’s Northeast Corridor (NEC).
Costs for the plans range from $64 billion to $308 billion, to be spent between now and 2040. Only the most expensive alternative, “Transform,” with an estimated cost of $267 to $308 billion, would provide for full high-speed rail along the entire NEC, which would reduce travel times between Boston and Washington, D.C. by nearly three hours. Costs would be shared by eight states and the District of Columbia over a period of more than 20 years.
The public can submit feedback on the draft EIS until January 30th at necfuture.com. The FRA will release a final development plan in spring 2017. To read the draft EIS, please go to necfuture.com/tier1_eis/deis/.
New SEPTA Board Member
Mayor Jim Kenney has appointed Deputy Managing Director for Infrastructure Clarena Tolson to fill a seat on the SEPTA board, which was vacant for eight months after Rina Cutler departed for a position with Amtrak, Philly.com reported on January 20.
Tolson will join City Representative Beverly Coleman, who has been re-appointed to another five-year term (with pending City Council approval), on the 15-member board.
To read the article, please go to bit.ly/1PHhnfH.
Frontier Adds Two More Destinations
Frontier Airlines on January 12 announced it will begin nonstop flights from Philadelphia International Airport (PHL) to San Antonio, Texas, beginning May 13, and to Columbus, Ohio, beginning June 2.
The two new destinations are in addition to 10 previously announced new destinations from PHL.
To read the article, please go to bit.ly/1P3bKMC.
Parks and Open Space News
Sweetheart Skate at Rothman Rink at Dilworth Park
The Rothman Institute Ice Rink and the Rothman Cabin will continue to be open through February 28.
On Sunday, February 14, Valentine’s Day, the Rothman Institute Ice Rink will host the Sweetheart Skate, featuring favorite love songs presented by a live DJ. Enjoy complimentary hot chocolate and flowers, plus free photo keepsakes in the Lovers Photo Booth. The cost is $20 per person and includes admission, skate rental, hot chocolate and giveaways.
For advance tickets, please go to bit.ly/1ZSHV8C.
Councilman’s Resolution Addresses CCD/CPDC Jobs Report
Councilman Kenyatta Johnson on January 21 introduced a Resolution that would authorize the Committee on Commerce and Economic Development to hold hearings regarding the Pathways to Job Growth report produced by the Center City District (CCD) and Central Philadelphia Development Corporation (CPDC).
The Resolution highlights some of the report’s findings, for example, since 1970, every county in the region has added jobs to its 1970 base except for Philadelphia, and Philadelphia has 25% fewer jobs than it did in 1970.
Also, Boston, New York and Washington, D.C. experienced manufacturing job losses similar to Philadelphia’s, but have compensated by creating post-industrial replacement jobs, and Philadelphia has not.
To read the CCD/CPDC report, Pathways to Job Growth, please go to centercityphila.org/docs/CCR14_employment.pdf [PDF].
To read the Resolution, please go to bit.ly/1SBZlS6 [PDF].
Endorsing Change in Tax Policy
In an editorial published on January 22, Craig Ey, Editor-in-Chief of the Philadelphia Business Journal, urged the business community to advocate with the state legislature, new Mayor Jim Kenney and City Council to enact the changes advocated by the Philadelphia Growth Coalition to restructure taxes by raising taxes on commercial real estate and lowering wage and profits taxes.
Ey noted the Econsult Solutions study, commissioned by the Coalition, which showed that Philadelphia could gain 80,000 jobs over the next 10 years if the tax structure were changed.
“Our city is doing relatively well,” Ey wrote. “But it could soar if we make the right policy choices.
To read the editorial, “It’s time to cut wage and profits taxes,” please go to bit.ly/1NpO7sb (requires subscription). A summary of the plan and the Econsult report can be found at philadelphiagrowthcoalition.com.
Bill Would Require Tracking of Tax Subsidies
On January 21, newly elected Councilwoman-at-Large Helen Gym introduced Bill #160015, the Subsidy Accountability Bill, which would require the City to annually disclose information about companies receiving tax subsidies, including their value, and the number and quality of jobs created or sustained, PlanPhilly reported.
Gym’s press release noted that the primary recommendation of the 2013 Philadelphia Jobs Commission was for the City to use annual reporting to better assess job creation as a product of economic development strategy.
To read the PlanPhilly article, please go to bit.ly/1nEkSNx. To read Bill #160015, please go to bit.ly/1OD0mWb.
CCD Restaurant Week
Center City District Restaurant Week continues through Friday, January 29, with participating restaurants offering three-course dinners for only $35 and three-course lunches for $20.
To view a full list of restaurants along with their menus and to make online reservations, please go to centercityphila.org/life/RestaurantWeek.php. While you are there, take a moment to enter the contest for 52 gift certificates from Center City restaurants.
Also, during Center City District Restaurant Week, you can take your Restaurant Week receipt to the Rothman Institute Ice Rink in Dilworth Park and receive $1 off admission. Skaters can also enter to win gift certificates from participating restaurants.
For complete information on the Rothman Institute Ice Rink, please go to dilworthpark.org/rothmanicerink.
Bacon Brothers to Play Special Benefit Concert for Viaduct Rail Park
The Bacon Brothers, Philadelphia natives Michael and Kevin Bacon, will play a special benefit concert to support the construction of the Viaduct Rail Park, Phase 1, on Thursday, February 4, at 8:00 p.m. at Union Transfer, 1026 Spring Garden Street. Rob Grote of The Districts will perform a solo opening act. Pierre Robert of 93.3FM WMMR will emcee the show. Proceeds of the first concert the Bacon Brothers have played here in recent years will go to the CCD-managed project, carried out in partnership with the City of Philadelphia and the Friends of the Rail Park.
Final plans and renderings by Studio |Bryan Hanes and Urban Engineers can be viewed at bit.ly/1Z9GvpV.
Tickets are $35 for General Admission and $125 for the VIP package, which includes open bar, hors d’oeuvres, parking and exclusive mezzanine viewing section. To purchase tickets, please go to utphilly.com or baconbros.com.
Jan Gehl to Receive Bacon Prize
On Thursday, February 25, from 5:15 p.m. to 8:30 p.m., at Drexel University, Gerri C. LeBow Hall, 3220 Market Street, the Philadelphia Center for Architecture will honor architect Jan Gehl with the 2016 Edmund N. Bacon Prize for his career spent advocating for the design of active, healthy, inclusive places. Gehl is founding partner of Gehl Architects in Copenhagen, which also has offices in San Francisco and New York.
Also honored at the ceremony will be the winners of the 2016 Better Philadelphia Challenge, which this year focused on the Mantua and Belmont neighborhoods. Early bird tickets are $15 until February 11, and VIP tickets are $150. To register, please go to bit.ly/1Sv8ZpO.
Save the Date!
In 2016, we will celebrate the 25th anniversary of the Center City District as well as the 60th anniversary of the founding of the Central Philadelphia Development Corporation and the launch of the Center City District Foundation. We are planning a special evening event in Dilworth Park on May 5, 2016. To become a sponsor and reserve your table, please contact Nancy Goldenberg at 215.440.5523 or email@example.com.