Office Sector News
Strong Sales in Center City Office Market
Buyers have shown renewed interest in Center City’s office buildings, with 1835 Market Street, 1515 Market Street, and 1635 Market Street all traded in the last six months, according to SSH Real Estate’s 2014 Greater Philadelphia Year-End Office Market Report And Outlook.
Nightingale Properties now owns almost 3 million square feet of office space in Center City after purchasing 1835 Market Street and 1635 Market Street for $153 and $136 per square foot, respectively, the report noted.
1515 Market Street was purchased by Accesso Partners for $169 per square foot, and is the Florida investor’s first acquisition in the area.
The report notes that the trend should continue this year as 1818 Market Street, United Plaza, 1650 Arch Street, 833 Chestnut Street, the Public Ledger Building, 1760 Market, 230 South Broad, and 125 South Ninth Street are all being marketed for sale.
Counting 44,516,984 square feet of office space, SSH puts the overall vacancy rate in the Philadelphia office market at 11.10%, with the overall average rental rate at $26.90 per square foot.
In the Philadelphia suburbs, there are 79,353,039 square feet of office space, with a 13.15% vacancy rate and average rent of $24.64.
To read the report, please go to bit.ly/1LW9YdG.
Citizens Bank Exits Comcast Center
Citizens Bank has moved its local headquarters out of the Comcast Center and across the street to One Logan Square at 18th and Cherry Streets, with some employees transferring to the bank's existing office space at 1234 Market Street and others to Plymouth Meeting, the Philadelphia Business Journal reported on January 28. Comcast Corporation has taken over the 48,000 square of office space previously occupied by Citizens Bank.
The bank will keep its Comcast Center branch and the ATMs in the food court. Comcast needed the additional space as it continues to expand, and Citizens Bank was amenable to moving before its lease expired, the article noted.
To read the article, please go to bit.ly/1ykbkpt.
American Bible Society Moving Headquarters to Philadelphia
After 199 years in New York City, the American Bible Society will move to 401 Market Street in Philadelphia and bring approximately 200 jobs to the city, The Philadelphia Inquirer reported on January 27. The Society will lease nearly 100,000 square feet on the eighth and ninth floors of the Wells Fargo building. The lease is for 25 years with a 25-year renewal option, the article noted.
The company is moving because New York is no longer affordable on a nonprofit salary and employees were commuting long distances in order to find housing. The transfer is expected to be completed by this summer.
The company cited Philadelphia's livability, walkability, and convenient public transportation as reasons it chose to move here.
To read the article, please go to bit.ly/1zVhdPl.
International Design Firm Opening Office in City
HOK, an international design, architecture, and engineering firm, is establishing a Philadelphia office with 40 professionals at One Logan Square, and anticipates adding more employees in the future, Mayor Michael A. Nutter announced on January 30.
The firm has 25 offices on three continents and 2,000 employees. The Philadelphia office is a part of HOK’s broader northeast strategy and is a reaction to the growth and potential of the greater Philadelphia marketplace, the press release noted.
To read the press release, please go to bit.ly/1Kimf8F.
Resource America to Form REIT for ‘Creative Class’ Offices
Resource America Inc. has registered with the U.S. Securities and Exchange Commission to form a $1.1 billion real estate investment trust, Resource Real Estate Innovation Office REIT Inc., which will focus on investing in creative office spaces, the Philadelphia Business Journal reported on February 5. The common stock was priced at $10 a share.
The nature of work and how people work is changing, the filed documents note: “A 'creative class' of young and educated workers has emerged and is growing." The new REIT will invest in office buildings throughout the country that are designed as creative work spaces, the article noted, and add improvements when necessary.
To read the article, please go to bit.ly/1Ic3Gas.
In related news, on February 2, the Center City District hosted a daylong forum, “The Growth of the Independent and Freelance Economy,” as part of a Knight Foundation-funded effort to analyze the growing independent and freelance economy. Participants in the forum included managers of co-working spaces, developers, and leaders of business organizations from Charlotte, Milwaukee, and Philadelphia. For an overview of national trends, with somewhat different findings from media reports, view Paul R. Levy’s presentation at bit.ly/1zpGLm6 [PDF].
Construction to Begin on East Market
Demolition is almost complete in the Girard Square block bound by Market, 11th, 12th and Chestnut Streets, and construction is expected to begin in mid-February on the $230 million first phase of East Market, the Philadelphia Business Journal reported on January 28.
The first phase includes a 17-story tower with the first two levels dedicated to 160,000 square feet of retail space and the remainder an apartment structure with 322 units. In addition, the 200,000-square-foot Family Court building will be renovated for retail space on the street level and office space above.
East Market is being developed by National Real Estate Development, Young Capital, Joss Realty, and SSH Real Estate.
To read the article, please go to bit.ly/1EW4N8V.
1900 Walnut Street Has Buyer
Southern Land Company has a contract with Castleway Properties of Ireland to buy 1900 Walnut Street for approximately $30 million, the Philadelphia Business Journal reported on February 2.
If Southern Land is able to rezone the property for denser development than is currently allowed, the company will pay an additional $10 million, the article noted.
If the property isn’t rezoned, Southern Land will construct a mixed-use tower with 220 apartments, 50 condos, and 27,500 square feet of retail space and parking. If rezoning is successful, the company will build 360 apartments, 65 condos, and 27,500 square feet of retail space.
Settlement on the property is expected possibly this week. The Center City Residents Association has viewed the project, but not taken a position on it, the article noted.
To read the article, please go to bit.ly/1LNsp45.
Eds and Meds News
Education Center Opens at Perelman School of Medicine
The Perelman School of Medicine at the University of Pennsylvania has opened the three-story, 55,000-square-foot $38 million Henry A. Jordan Medical Education Center at 3400 Civic Center Boulevard, the Philadelphia Business Journal reported on February 3.
The education center is designed to have students share space with faculty researchers and clinicians in a course of study that follows an integrated and multidisciplinary curriculum emphasizing small-group instruction and self-directed learning.
The center features high-tech recording and simulcast capabilities designed to support global conferences, telemedicine, and the creation of online courses and lectures to be made available to people across the globe.
To read the article, please go to bit.ly/1BVcAjK.
Nonprofit Offers $35 Million Gift to Add New Charter Schools
With a deadline looming for the approval or rejection on new charter schools, the nonprofit Philadelphia School Partnership has offered up to $35 million to the School District of Philadelphia to enroll up to 15,000 more students in new charter schools, The Philadelphia Inquirer reported on February 5. The one-time gift, to be given over three years, would consist of up to $25 million for the district's charter costs and a separate $10 million to pay for in-house turnaround efforts. The gift would pay for three years of the district's stranded costs, which include debt service, transportation, and other centralized costs that occur when students leave district schools for charters. However, public school advocates questioned whether the nonprofit’s offer would cover all of the stranded costs (see below).
The School Reform Commission (SRC) currently has applications for 39 charter schools, which it may vote on this week, though it has asked the applicants if they would consent to extensions of the deadline.
House Speaker Mike Turzai (R., Allegheny) has made a number of recent trips to Philadelphia and said publicly he expects the commission to approve between 16 and 27 new charters, the article noted.
The district now has 67,000 students enrolled in 84 charters in Philadelphia.
To read the article, please go to bit.ly/16CnrYj.
A follow-up article in The Philadelphia Inquirer notes that the School District believes it would cost as much as $500 million to enroll 15,000 more students in new charter schools.
To read that article, please go to bit.ly/1LVq3QL.
Suggestions of a Framework for Compromise
With Speaker Turzai pushing one way and Governor Wolf another, Jeremy Nowak argues in The Philadelphia Citizen for a compromise in which the School Reform Commission (SRC) approves high-performing charters without harming the School District of Philadelphia.
“We need a smart compromise that adds to the long-term sustainability of the District and the city, while building on the success of the best charter operators,” Nowak notes.
The SRC should approve high-quality charters, and then join with those charters to advocate for a weighted student funding formula and improvements to the policies that govern charter funding, while doing more to push centralized resources into the classroom of District schools, he writes in “We Need a Smart Charter Compromise.”
To read the article, please go to bit.ly/16AIJF5.
Bookings at Convention Center Substantially Increased in 2014
The Philadelphia Convention & Visitors Bureau (PHLCVB) on February 2 announced that it had posted its strongest convention booking year in over a decade. PHLCVB attributed the strong performance to the change in work rules and customer rights that were implemented in May 2014 at the Pennsylvania Convention Center.
PHLCVB achieved 91% of its 2014 booking goal or 846,357 room nights, with 79% of that business slated to take place at the Convention Center and the rest at regional hotels.
Bookings of large conventions, known as “citywides,” were 47% higher than the same period in fiscal year 2013. In total, more than $870 million in new business for future years has been booked into the Pennsylvania Convention Center by the PHLCVB since May 2014, including the American College of Emergency Physicians ($29.6 million in economic impact), the American Heart Association ($67 million in economic impact), the American Association for Cancer Research ($41 million in economic impact), and the National Black MBA Association ($19.5 million in economic impact).
To read the press release, please go to bit.ly/1CCameJ.
Residential Market News
House Prices Up in Center City and Nearby Neighborhoods
There were 3,455 arms-length sales citywide in the fourth quarter of 2014, with nearly 80% of the homes sold costing $200,000 or less, according to Philadelphia Housing Index, 2014 Q4 from Econsult Solutions, Inc.
House prices at the end of the year were slightly higher than they were at the end of 2013, the index indicated. Over the last 12 years, the neighborhoods immediately north and south of Center City have seen rising prices, as demand in Center City contributed to a substantial increase in prices, sending buyers into adjacent and more affordable neighborhoods, the report noted.
House prices in Center City increased 4.9% in 2014, dipped -3.8% in University City, and grew by 10% in South Philadelphia. Lower North Philadelphia had the highest price increase, at 13.4%. Citywide, house prices increased 0.5%.
To read or download the report, please go to econsultsolutions.com/experience/reports/.
Condo Prices Expected to Rise in 2015
Philadelphia's condominium market is expected to grow in 2015 and prices are expected to increase, The Philadelphia Inquirer reported on February 1, based on data from Trend Multiple Listing Service. For-sale condo inventory has risen slightly compared with 2013's levels, but is well below the October 2006 peak of 1,971.
In January 2014, for-sale condo inventory totaled 703 units, climbed to 897 in September and fell to 730 units by December. MLS data show that the last time inventory was this small was in May 2005, the article noted, with a 6.8-month supply available.
Median settled price was $287,000 in December, slightly higher than the $275,000 in December 2013, and substantially above the $211,000 of December 2005.
To read the article, please go to bit.ly/1ypDfUS.
Dranoff to Market Two Liberty Place Condos
Developer Carl Dranoff is marketing and selling on behalf of iStar Financial the remaining 73 condominiums at the Residences at Two Liberty Place, an arrangement similar to the one that was successful at 10 Rittenhouse Square, The Philadelphia Inquirer reported on February 4. The condos are on the 42nd through 57th floors of the 58-story skyscraper at 50 South 16th Street.
A brokers’ open house on February 4 attracted 150 area agents, and a shortage of luxury condo inventory was cited as the reason for the enthusiastic response, the article noted.
The median price for the remaining condos should be in the $750-per-square-foot range, and iStar will fund a renovation of the Residences at Two Liberty Place lobby and creation of an amenities' floor on the 37th level.
To read the article, please go to bit.ly/1BVqGSm.
Arts and Culture News
Nézet-Séguin to Lead Orchestra Through 2022
The Philadelphia Orchestra on January 30 announced that Music Director Yannick Nézet-Séguin had renewed his contract and his tenure now will extend through the 2021-22 season. Nézet-Séguin became the orchestra's eighth music director in September 2012.
In addition, the Board of Directors of The Philadelphia Orchestra Association renewed Richard B. Worley as Chairman and Allison Vulgamore as President and CEO.
Also, the Miller-Worley Foundation of Leslie Anne Miller and Richard Worley has made a $10 million gift to the orchestra as the lead gift for the orchestra’s Comprehensive Campaign.
To read the press release, please go to bit.ly/1BID4rc.
Two Gifts Add Five Paintings to Art Museum Collection
The Philadelphia Museum of Art has acquired five major French paintings through gifts from the late, long-time museum supporter Helen Tyson Madeira and Yolande Candel, daughter of Marcel Duchamp’s lifelong friend Gustave Candel, The Philadelphia Inquirer reported on February 2.
Madeira’s gift included paintings by Cézanne, Manet, and Pissarro.
To read the article, please go to bit.ly/1C9XBCI.
Transit Hub Beneath Dilworth Park to Be Renovated in 2016
SEPTA’s $150 million renovation of the subway complex beneath City Hall and Dilworth Park will begin in early 2016, The Philadelphia Inquirer reported on January 29. The transportation hub includes the 15th Street Station on the Market-Frankford Line and the City Hall Station on the Broad Street Line.
The makeover will create a roomier, brighter, and cleaner subway complex with 13 elevators.
Construction will begin in spring 2016 on the 15th Street Station and is expected to be completed in 2018. The City Hall renovation will begin later in 2016 and be completed by 2020, the article noted.
The 15th Street Station will remain open during construction, but City Hall Station may be closed for part of the work.
To read the article, please go to bit.ly/1y6Ns8G.
PATCO Resumes Track Repairs
PATCO has announced it will begin the next stage of its $103 million track rehabilitation project on Thursday, February 12, after the morning rush hour, and the Thursday-Friday schedule will be revised at least through the end of March.
Work will include updating the electronic signal and communications systems for the train track on the south side of the Benjamin Franklin Bridge. All trains will run on the north side track from 10:00 a.m. Thursday through Sunday night. As a result of eastbound and westbound trains sharing a single track, there will be periodic scheduled service gaps of up to 26 minutes on Thursday afternoons and all day Friday. Some rush-hour trains will continue to run as frequently as every two minutes toward Philadelphia on Friday mornings and toward New Jersey on Thursday and Friday evenings.
Express trains will be temporarily suspended on Friday mornings.
To view the revised schedules, please visit ridepatco.org/schedules/schedules.asp. To read the press release, please go to bit.ly/1BXXR7L.
In other PATCO news, PATCO will install new electronic signs in 13 stations to provide updated train schedules and other information, though the signs won’t provide real-time information on train arrivals until the overhaul of PATCO's 120-car fleet is completed, which is expected to be in 2017, The Philadelphia Inquirer reported on February 5.
To read the article, please go to bit.ly/1zUbERM.
Eighth and Filbert Garage Renovations Underway
The Philadelphia Parking Authority (PPA) has begun work on the $28 million transformation of its garage at Eighth and Filbert Streets, the Philadelphia Business Journal reported on February 4.
The 1,222-space garage contains 27,000 square feet of ground-floor retail space that flanks both sides of the street, where new sidewalks and lighting will be installed along with other streetscaping, including benches. In addition, an outdoor exhibit space will be created.
The garage will have a clear facade on the Arch Street side and a wavy metallic façade was designed for the Eighth and Filbert side, the article noted. The renovation will reduce the number of parking spaces to 1,100 and is expected to be completed by July.
To read the article, please go to bit.ly/1Kvuezk.
Parks and Open Space News
Special Activities at Rothman Institute Ice Rink
In addition to offering ice skating every day through February 22, the Rothman Rink at Dilworth Park will offer special programs throughout the month. The rink will have special hours on Presidents’ Day, Monday, February 16, and will be open from 11:00 a.m. to 9:00 p.m. On Closing Day, Sunday, February 22, the rink will be open from 11:00 a.m. to 8:00 p.m.
On Fridays through February 20, at 12:30 p.m., Lunchtime Skating Exhibitions will showcase Philadelphia-area skaters demonstrating their skills on the ice.
On Thursday, February 12, from 6:00 to 9:00 p.m., it’s Visit Philly Skate Night with free skating, thanks to Visit Philadelphia. For reservations (required), please go to visitphilly.ticketleap.com/visitphillyskatenight/.
On Friday, February 13, is Zombie Skate from 7:00 p.m. to 10:00 p.m., hosted by Terror Behind the Walls at Eastern State Penitentiary. On Saturday, February 14, is Sweetheart Skate, from 7:00 p.m. to 10:00 p.m., with complimentary flowers and a photo booth.
Also on February 14, from 11:00 a.m. to 1:00 p.m., the Smith Memorial Playground will make an appearance in the park with their fun and engaging outdoor Playwagon.
The Rothman Institute Ice Rink is open to the public Monday through Thursday, 3:00 p.m. to 9:00 p.m.; Friday, 3:00 p.m. to 11:00 p.m.; Saturday, 11:00 a.m. to 11:00 p.m.; and Sunday 11:00 a.m. to 8:00 p.m. Admission is $3 for children, ages 10 and under, and $4 for adults. Skate rental is $8.
Group rates are available for parties of 10 or more. Please email Groups@RinkManagement.com.
For more information about the rink, please go to ccdparks.org/dilworth-park/rothmanicerink.
Mandatory Sick Leave Bill Goes to Full Council
After a three-hour hearing on January 27 for Bill #141026, City Council’s Committee on Public Health and Human Services unanimously voted the bill out of committee, and it is now on the schedule for a final vote on February 12.
About 120,000 Philadelphia workers would be eligible for mandatory sick pay if the bill were passed. An employee would accrue one hour of sick leave for every 40 hours worked under provisions of the bill. Mayor Michael A. Nutter twice vetoed sick-leave legislation, but reversed his stance after a task-force report on the issue recommended that employers with 15 or more employees be required to provide paid sick leave. However, Bill #141026 sets the number of employees at 10.
The Greater Philadelphia Chamber of Commerce (GPCC) testified against the bill citing the issue of competitiveness and suggested some amendments to the present wording of the bill. GPCC was successful in including a clause that ensures that businesses already providing paid sick leave to their employees will not have to change any policy or procedure to further respond to the law.
To read the GPCC’s testimony on the bill, please go to bit.ly/16sAprw. To read the testimony of GPCC board member Dan Calista, who also served as 2014 Co-lead of the Mayor’s Task Force on Paid Sick Leave, please go to bit.ly/1Ko7jrp.
To read the bill, introduced on December 11 by Councilman William K. Greenlee, please go to bit.ly/1AuxYx6.
Mayor's Final Annual Address to GPCC
Mayor Michael A. Nutter addressed the Greater Philadelphia Chamber of Commerce at its annual Mayoral Luncheon and President’s Circle Reception on January 29.
Among the accomplishments the Mayor cited were the growth by 53,000 in the city's population, lowering of the unemployment rate to 6.4%, the 1,300 new hotel rooms in the city, and the growing start-up movement in the downtown.
The Mayor noted that he would be leaving office soon and he identified three of the important challenges that the next mayor must address: education and funding, poverty, and the epidemic of violence affecting young men and boys of color.
To read the Mayor's prepared remarks, please go to http://bit.ly/1JUv4XT.
Council Forms Committee to Focus on PGW
Three months after refusing to hold hearings on the proposed $1.86 billion sale of Philadelphia Gas Works (PGW), effectively killing the deal, Philadelphia City Council on January 29 voted to create a committee that will explore how PGW can expand, The Philadelphia Inquirer reported. The committee is broadly charged with exploring energy opportunities in the city.
Council President Darrell L. Clarke has indicated he favors a public-private partnership, and Liberty Energy Trust has been lobbying members of Council to consider alternatives to an outright sale.
Councilman Bobby Henon and Councilwoman Marian B. Tasco are co-chairs of the committee. They will issue a report, but no deadline has been announced.
To read the article, please go to bit.ly/1Byalmi.