Office Sector News
WeWork Discounting Wage and Business Taxes
WeWork, an international company providing coworking space at four locations in downtown Philadelphia, has earmarked $1 million to discount Philadelphia’s wage tax and business and income receipts tax (BIRT) for suburban-based firms interested in moving employees into its office spaces, representatives of the company announced on February 22nd in the space they now operate in 1900 Market Street.
The one-year experiment is intended to alleviate the tax burden specific to working in the city, as the company’s Philadelphia branch is underperforming relative to other markets, according to Dave McLaughlin, general manager for the company’s Eastern United States and Canadian locations.
The subsidy would be provided via rent reductions and is expected to bring 800 new workers to the downtown, the article noted.
To read The Philadelphia Inquirer report on the event, please go to bit.ly/2lUMEHo.
Colliers: Market Favors Landlords in Early 2017
Philadelphia’s central business district (CBD) has 42,554,692 square feet (sf) of office space with average asking rent of $29.13, compared to the Pennsylvania suburbs’ 58,497,483 sf with average asking rent of $25.25, according to the Collier’s International 2016 Year-End Office Research & Forecast Report.
After falling during the first six months of 2016, the occupancy rate in the CBD rose to 90.4%, while the perception of a strengthening market has pushed lease negotiations in favor of the landlord. Suburban occupancy was 87.5%.
To read the report, please go to bit.ly/2mnaZql [PDF].
Second Tower Coming at East Market
National Real Estate Development LLC has secured a $57-million loan from Wells Fargo & Company to finance construction of a second residential tower at its East Market development, The Philadelphia Inquirer reported on March 1.
Work has now begun on the 20-story tower housing 240 residential units and ground-floor retail, which will include Wilmington-based Iron Hill Brewery & Restaurant’s first Center City location.
To read the article, please go to bit.ly/2lxlqDf.
Industrial Callowhill Neighborhood in Transition
The former industrial neighborhood between Spring Garden and Callowhill Streets and Second and Ninth Streets, has been rezoned over the past two years to allow for mixed-use development and is expected to spawn a new residential district, Bisnow reported on March 1.
The 444 Lofts at 444 North Fourth Street, one of the first mixed-use projects in the neighborhood, required a zoning variance to convert the former Acme headquarters into lofts with retail.
On the edge of the neighborhood is One Water Street, 250 North Columbus Boulevard, an upscale apartment building completed in 2016 and now 90% leased.
To read the article, please go to bit.ly/2lEzegt.
Bill Encourages Development Near Transit
Bill #170162, introduced on February 23 by Councilwoman Blondell Reynolds Brown and Councilman William K. Greenlee, aims to boost population along transit lines in an effort to fight vehicle congestion and aid the environment by increasing ridership, The Philadelphia Inquirer reported. The legislation simplifies an existing ordinance with the same goals.
The new proposal allows for the establishment of Transit-Oriented Development Overlay Districts within 500 feet of selected transit stations, where developers would be permitted to build higher structures with less parking than otherwise permitted.
To read the article, please go to bit.ly/2mnje62. To read Bill #170162, please go to bit.ly/2mkjfHx.
Residential Market News
Regional House Prices Flat in Fourth Quarter of 2016
House prices in Philadelphia and its suburbs declined by 0.8%, a statistically insignificant dip, in the fourth quarter of 2016, according to Kevin Gillen, senior research fellow at Drexel University's Lindy Institute for Urban Innovation. From the third to fourth quarter, the median house price in Philadelphia fell from $149,900 to $140,000, while the median suburban house price dropped from $247,000 to $231,000. Philadelphia County’s housing market, however, is still outperforming its suburbs and most other large metro areas, appreciating at an average annual rate of more than 10% in the past year.
Exceptions to the flat-to-negative change in house values in the fourth quarter were Montgomery County (+0.6%), Bucks County (+1.3%), Delaware County (+1.6%) and Salem County, N.J. (+8.3%).
Arms-length sales increased 4% in Philadelphia County, from 3,687 to 3,835 year over year in the fourth quarter. Suburban sales increased nearly 12%, from 12,239 to 13,699, during the same period.
To read the report, please go to bit.ly/1qntloS.
Pew: 25% of Philadelphia Immigrants Are Unauthorized
Philadelphia’s foreign-born resident population increased in the last decade, reaching about 200,000, or 13% of the city’s population, and approximately 25% of these foreign born were unauthorized immigrants, according to a new analysis by The Pew Charitable Trusts’ Philadelphia Research Initiative.
A decade earlier, in 2005, unauthorized immigrants had accounted for about 27% of the city’s 170,000 foreign-born residents, the report noted.
Without new foreign-born residents, Philadelphia would have not shown the strong population growth it recently has enjoyed, according to the CCD/CPDC report, Philadelphia: An Incomplete Revival. Between 2010 and 2015, the city’s population grew by an average of 8.3% each year, attributable to births outpacing deaths and foreign-born immigrants replacing domestic out-migration from the city (please see Figure 7, page 7).
To read the Pew research, please go to bit.ly/2lTrUhA. To read the CCD/CPDC report, please go to bit.ly/2m9UkH1 [PDF].
Revenue from Hotel Tax Rises
Philadelphia’s 8.5% hotel tax generated $58.6 million in fiscal year 2016 (FY16) and, over the past five fiscal years, has brought in $264 million, according to Philadelphia’s Office of the Controller, in a report issued on March 1. The average annual increase has been approximately $2.9 million, or 6.25%, over the five-year period.
The FY17 tax revenues through January have totaled almost $41 million, the report noted, higher than collections for the same period in previous years.
To read the report, please go to bit.ly/2mVL6dS.
Record Success for Center City District Restaurant Week
The 2017 Center City District Restaurant Week, from January 22 to January 27 and January 29 to February 3, was the most successful Restaurant Week in the promotion’s 14-year history. The 130 participating restaurants generated $12.8 million in revenue.
The 251,075 diners who enjoyed this year’s promotion represent a 22% increase over January 2016’s CCD Restaurant Week. OpenTable, the CCD’s presenting partner, reported a 15% increase in online reservations over January 2016’s CCD Restaurant Week.
In a survey completed after CCD Restaurant Week ended, 95% of restaurants reported they viewed the promotion as successful, an increase of 5% over September 2016’s CCD Restaurant Week.
In addition, 84% of restaurants surveyed indicated they enjoyed an increase in revenue compared to an average, non-promotion week in January and early February, typically a slow time for restaurants in Philadelphia. More than half saw revenues jump by 26%.
Center City District Restaurant Week was presented by TD Bank, OpenTable, Cardiology Consultants of Philadelphia, Basil Hayden, Jim Beam Double Oak, Philadelphia Parking Authority, Philadelphia Parking Association, and PHLCVB.
To read the press release, please go to bit.ly/2mpwlnz. To learn more about Center City District Restaurant Week, please go to bit.ly/2lSVDHJ.
Retail Properties Becoming More Attractive Investments
With consumer confidence reaching a 15-year high in December 2016, nationally, the retail sector has become a more attractive investment after previously lagging other property types, according to Integra Realty Resources’ Viewpoint 2017, Commercial Real Estate Trends.
Retail property sales volume was down 12% year over year, nationally, in the 12 months ending September 2016, due in large part to a shortage of “megadeals.”
While Philadelphia is in the first phase of expansion in the retail market cycle, the city is predicted to experience some valuation correction over the next 12 months.
To read the report, please go to bit.ly/2muz5Ah.
Arts and Culture News
McCaney Named Executive Director of William Penn Foundation
The William Penn Foundation on February 22 announced it had named Shawn McCaney, who served as interim executive director since November, as executive director, effective March 1.
Shawn oversees the Foundation’s operations, investments, and $112 million annual grant-making and evaluation budget, focused on increasing high-quality educational opportunities for economically disadvantaged children; protecting the Delaware River watershed; and supporting arts, culture and the development of accessible and vibrant public spaces.
To read the announcement, please go to bit.ly/2l97oZs.
Constitution Center Mounts Digital Collection of Rare Documents
The National Constitution Center has partnered with Google to bring images of rare documents online in a digital collection, Preserve, Protect and Defend: A Selection of Presidential Artifacts, the Philadelphia Business Journal reported on February 21.
The collection features presidential vetoes, controversial executive orders, tickets from impeachment trials, and George Washington’s personal copy of the U.S. Constitution, among many other items.
The Center’s website now ranks third in museum websites, behind only the Smithsonian’s (Washington, D.C.) and the Metropolitan Museum of Art’s (New York).
To read the article, please go to bit.ly/2m8Elco. To visit the museum’s presidential artifacts website, please go to bit.ly/2lw2hDG.
Governor Announces $2.1 Billion for PennDOT Capital Projects
Governor Tom Wolf on February 28 announced plans for PennDOT to invest $2.1 billion in roadway maintenance and highway and bridge capital projects over the next 10 years through its new Road Maintenance and Preservation (Road MaP) program.
Road MaP investments include $500 million for Interstate preservation and reconstruction. Half of the state’s Interstates are out of cycle for reconstruction (every 40 years) and 40% of 2,691 Interstate bridges have exceeded their original 50-year design life.
More information on Road MaP is available at penndot.gov on the "Act 89 Transportation Plan" page. To read the Governor’s press release, please go to bit.ly/2lcUWMm.
In related news, Governor Wolf on February 23 announced that Philadelphia International Airport would receive $800,000 to leverage Federal Aviation Administration funds to extend a runway, as part of a $5.8 million grant to be distributed to four airports for facility upgrades.
The investments are funded by the state Multimodal Fund, created by Act 89. To read the announcement, please go to bit.ly/2ma8S94.
Record Month at Port of Philadelphia
The Port of Philadelphia saw record traffic in January when cargoes increased by 20% and the volume of containerized freight rose by 34%, The Philadelphia Inquirer reported on February 20.
The increase is due in part to the completion of the Panama Canal expansion, which allows larger ships to pass, and a strong dollar, the article noted. The biggest increases were in goods from Chile, Panama, and Peru.
To read the article, please go to bit.ly/2lBJzMT.
Philly PHLASH to Return March 23
The Philly PHLASH Downtown Loop returns for the 2017 season beginning Thursday, March 23, when free rides will be offered all day.
Tickets are $2 per ride, $5 for an all-day pass. Riders can purchase tickets onboard with exact change (cash only); at any Visitor Center location; or online. Children 4 and under, senior citizens, and SEPTA Pass and Key Card holders ride free.
Service is every 15 minutes, from 10:00 a.m. to 6:00 p.m., with a seasonally adjusted schedule:
March 24 – April 30, Friday through Sunday;
May 1 – September 4, daily;
September 8 – November 19, Friday through Sunday; and
November 24 – December 31, daily.
For more information, please visit, PHLvisitorcenter.com/PHLASH.
SEPTA Begins Construction
SEPTA has reported that construction on the 15th Street station of the Market-Frankford Line has begun, effective Sunday, March 5, at 6:00 p.m. The alternate location for boarding is 16th and Market Sreets.
Also, while the work is being done, commuters will have to use the 16th Street entrance stairways to access the station, but only during the below listed hours, or use the Dilworth Park Transit entrance to make their connections. Construction is expected to last through October, 2017. 16th Street entrance hours: Eastbound – 5:30 a.m. to 10:30 p.m. daily. Westbound – 6:00 a.m. to 6:30 p.m., weekdays, closed Saturday and Sunday.
For complete information, please go to septa.org.
Regional Service Industry Shows Growth
Responses to February’s Nonmanufacturing Business Outlook Survey suggest that the regional service industry continued to expand during the month, according to the Federal Reserve Bank of Philadelphia, with 32.7% of the firms reporting an increase, 7.4% a decrease, and 38.7% indicating no change.
Full-time employment increased for 27.0%, fell for 14.6%, and continued the same for 53.0%.
Looking ahead six months, 54.2% expected business conditions to improve, 5.9% predicted a downturn, and 35.8% foresaw no change.
To read the report, please go to bit.ly/2mM7mqy.
New Program Provides Incentives for Moving Employees to City
The City of Philadelphia’s Department of Commerce on March 1 announced a new incentive program, Gateway Philly, to attract suburban companies and other enterprises outside of Philadelphia to set up satellite offices in the city.
Companies are invited to sign a one-year commitment for office space, coworking or traditional, for a minimum of 20 employees and the Department of Commerce will reimburse $1,000 per seat up to $30,000 when the year ends.
To read the announcement, please go to bit.ly/2m4xmA7.
Fitch Upgrades PICA Bonds to AAA
Fitch Ratings on February 28 announced it had upgraded the Pennsylvania Intergovernmental Cooperation Authority special tax revenue refunding bonds to AAA from AA+.
The outstanding bonds are limited obligations payable from pledged revenues from a 1.5% tax on wages, as well as the net profits earned in business, professions, and other activities.
The AAA rating reflects solid economic underpinnings, the report noted. To read the report, please go to bit.ly/2lvKDip [PDF].
Mayor Introduces $4.4 Billion Budget
Mayor Jim Kenney on March 2 released his $4.4 billion fiscal year 2017-18 (FY18) budget and Five-Year Plan, with no increase in taxes and an emphasis on health and human service investments, job-creating initiatives, and a $90 million commitment to build a park over I-95.
The Mayor’s plans include reducing the City’s wage and business taxes, with the goal of reducing the resident wage tax to less than 3.7% by FY22. He also is asking City Council to partner on a plan that would bring the City’s pension fund to 80% funded in 13 years.
The budget includes just over $1 million dollars for 83 units of rapid rehousing for families and housing for people with substance abuse or mental health issues. (An updated “Suburban Station Concourse How to Respond Guide” has been issued by the Office of Homeless Services and can be found at bit.ly/2lEPH3T [PDF].)
Before the full budget was released, the Mayor announced a $90 million commitment from the City to build an 11-acre park between Walnut and Chestnut Streets on a capped I-95 stretching to Penn’s Landing, PlanPhilly reported on February 27. The project is expected to cost $225 million, improve the connection between Center City and the waterfront, and spur private investment in the surrounding area. The city’s $90 million investment would be spread over six years. To read the article and view the renderings, please go to bit.ly/2m02XmS.
On March 2, the William Penn Foundation announced a commitment of up to $15 million to the project, and PennDOT is contributing $100 million, CBS 3 reported, cbsloc.al/2mB33Cs.
To view the Operating Budget in Brief, the FY18 Capital Budget, and the Five-Year Financial and Strategic Plan for Fiscal Years 2018-2022, please go to bit.ly/2lyRQNL. To read the prepared text of the Mayor’s address, please go to bit.ly/2m19n32.
PICA: Tax Revenues Higher in January
The City of Philadelphia in January showed a year-over-year increase of 6.9% in wage and earnings tax revenues, compared to a projected growth of 3.5%, according to the Pennsylvania Intergovernmental Cooperation Authority (PICA).
The City’s share of sales tax revenue increased 12.5% through January, compared to a projected 10.2% growth. Real estate transfer tax increased 0.8%, while the real estate tax declined 0.2%.
The business income and receipts tax revenue declined 4.2%, compared to an anticipated decline of 1.9%.
To read the report, please go to bit.ly/2mpDC2w [PDF].
City Council Introduces Legislation for Rebuild Initiative
Councilwoman Cindy Bass and Council President Darrell L. Clarke, on behalf of the Kenney Administration, on March 2 introduced two ordinances to authorize $300 million in borrowing (Bill #170206) and create a governance structure for Rebuild (Bill #170207), the Mayor’s multi-year initiative to revitalize neighborhood parks, recreation centers, playgrounds, and libraries across the city. The City will move forward with the program this summer with existing capital funds. The bonds are pending Council approval and will not be issued until the Philadelphia Beverage Tax litigation is fully resolved.
Bills #170206 and #170207 will be available on the City Council website Monday afternoon at bit.ly/1UN0BSI.
Parks and Open Space News
Dilworth Park Prepares for Spring
At Dilworth Park, preparations are underway to turn on the fountain on Saturday, April 1. During the month of March, the 6,400-square-foot Greenfield Lawn will be resodded, 44 trees will be pruned and decorated with new, white LED lighting, and 5,500 bulbs that were planted in the fall should begin to bloom.
On April 1, the Air Stream Grille will move back next to Dilworth Park Café, umbrellas again will provide shade for the tables, and the fountain will resume its playful water show. On April 4, Spring Training at Dilworth Park presented by Rothman Institute begins, offering a variety of free activities on Tuesdays through Thursdays, April 4 through May 25, featuring tips and tricks from experts at Rothman Institute and top-notch trainers leading free classes:
Tuesdays, it’s yoga at noon and boot camp at 6:00 p.m.;
Wednesdays, at 1:00 p.m., Silver Sneakers, a fitness program for boomers and beyond, and at 6:30 p.m., City Fit Girls Running Club;
Thursdays at 6:00 p.m., Zumba with music powered by Live Nation.
Spring Training at Dilworth Park is presented by Rothman Institute, with program partners Optimal Sport Health Clubs and City Fit Girls. For complete information on all activities at the park, please go to dilworthpark.org.