Office Sector News
Office Ownership Shifting to REITs
The significant change in ownership of trophy and Class A downtown office buildings that has occurred over the past 10 years is highlighted in a report issued by CBRE titled The New Landlords of the City. Among buildings in the Market West submarket, ownership by REITS has increased from 50% to 61%, led by Brandywine Realty Trust and Liberty Property Trust as they have shifted from suburban to downtown office properties.
Focusing on trophy buildings, the shift is even more dramatic. In 2005, 56% were owned by REITs and 44% by non-REITs; in 2015, 88% were owned by REITs and 12% by non-REITs.
To read the report, please go to bit.ly/1LrvvxH.
Coworking Space in CBD Almost Tripled
The amount of coworking space in the central business district (CBD) that is operational or in development is 610,000 square feet (SF) as of late February, up from 228,000 SF in the same period last year, according to JLL’s Chart of the Week for February 29.
Newcomers include Joynture, which will move into 417 South Street, formerly the home of Pearl Arts, while We Work has leased 40,000 square feet in 1601 Market Street.
To view the chart, please go to bit.ly/1MnTEDp. To read CPDC’s September 2015 report on this trend, please go to centercityphila.org/IndyEcon/.
Schuylkill Yards Partnership Announced
Following a national search, Drexel University has chosen its neighbor, Brandywine Realty Trust, as partner in a 20-year plan for developing Schuylkill Yards, a $3.5 billion, 14-acre planned community. The project seeks to accommodate a wide variety of uses including office, retail, educational, and cultural facilities in five million square feet of mixed-use development next to Drexel’s main campus and adjacent to Amtrak’s 30th Street Station and Brandywine’s Cira Centre.
The plan is to create a major innovation hub linked to the train station and the airport and also serving as a gateway to University City. The first phase will create Drexel Square, a 1.3-acre park at 30th and Market Streets, and will include the transformation of the historic former Bulletin Building.
To read the announcement and view a rendering, please go to bit.ly/1oZabWS. To read The Philadelphia Inquirer’s article, please go to bit.ly/1L5BTek.
To read Friday’s op-ed article in The Philadelphia Inquirer, “Giant Step in Philly Growth,” co-written by John Fry, President of Drexel University, and Jerry Sweeney, President and CEO of Brandywine Realty Trust, please go to bit.ly/24FPj75.
Design Within Reach to Open in East Market
Design Within Reach plans to lease 15,000 square feet in the 1100 Market Street portion of East Market and open a store in 2017, The Philadelphia Inquirer reported on March 2. The retailer was attracted to the location after the Marketplace Design Center on West Market announced it would close and its retailers would reopen in the former Family Court building at 34 South 11th Street.
Design Within Reach previously had a store at 17th and Walnut Streets, but it was closed in 2010 as the company down-sized. The new store will be much larger, the article noted.
To read the article, please go to bit.ly/1WUQV79.
Residential Market News
Boom in Residential Building Permits
The City of Philadelphia in 2015 issued building permits for 3,666 units of new housing, 822 single-family homes; 521 units in two-, three-, or four-family buildings; and 2,323 units in 65 larger structures, with an estimated construction value of $691 million, The Pew Charitable Trusts’ Philadelphia Research Initiative reported, based on information from the U.S. Census Bureau. The 2015 total is the second-highest in Philadelphia since at least 1996, the report noted.
To read the report, please go to bit.ly/1Quu8ia. To read CPDC’s report on downtown housing trends, please go to centercityphila.org/docs/CCR16_housing.pdf [PDF].
Eds and Meds News
Jefferson to Create Stem Cell Center
The Farber Institute for Neuroscience at Jefferson has received a $500,000 gift from the Strauss Foundation and will use the funds to create the Stem Cell Center at Jefferson, the Philadelphia Business Journal reported on March 3.
The gift was made in honor of the late Robert Perry Strauss, co-founder of the Pep Boys Auto Stores. Jefferson has renamed the lobby of the Health Professions Academic Building at 901 Walnut Street in his honor.
To read the article, please go to bit.ly/21KL1Zy.
School District Ends FY15 with Surplus
The Philadelphia School District ended the 2015 fiscal year (FY15) with an $88 million surplus (3.0%), attributable to new revenue including the recently-adopted cigarette tax, The Philadelphia Inquirer reported. At the end of the previous fiscal year, the School District still owed $14.8 million.
The District received $50 million from the first full year of the $2 tax on cigarette packs and $120 million as its share from extension of the 2% city sales tax, the article noted. However, the continuing budget stalemate and rising pension and healthcare costs pose continuing threats and there is uncertainty whether the schools can stay open through June. The district has borrowed $525 million and received a partial payment of $770 million from the state.
To read the article, please go to bit.ly/1SdDZdm. To read the School District’s Comprehensive Annual Financial Report, please go to bit.ly/1OJBf0K [PDF].
Russell Byers Charter School Approved for Additional Grades
The Russell Byers Charter School (RBCS) at 1911 Arch Street on February 16 received approval from the School Reform Commission (SRC) to expand its educational offering by adding a 7th and 8th grade to the school’s current 4k (kindergarten for 4-year-olds) through 6th grade, the school announced.
RBCS plans to open 6th grade and 7th grade classes in the 2017-2018 school year, followed by 8th grade in the 2018-2019 school year.
To read the announcement, please go to bit.ly/21H22Y3.
Updates for the Hyatt at the Bellevue
The Hyatt at the Bellevue this spring will undergo a multimillion-dollar renovation designed by Marguerite Rodgers Interior Design and led by the hotel’s new General Manager, Pina Purpero, the Philadelphia Business Journal reported on February 25.
The 172 guest rooms and suites, along with the public spaces, will be decorated with Philadelphia themes featuring art from local painters and photographers and themes derived from the archives of Opera Philadelphia, Walnut Street Theatre and Pennsylvania Ballet.
To read the article, please go to bit.ly/1pduShy.
Additional Staff for DNC
With the convention here in a little over four months, the 2016 Democratic National Convention Committee announced five additional staff for the convention that will take place this summer, July 25 through July 28, PoliticsPA reported on February 25.
To read the article, please go to bit.ly/1VHFHTl.
Revenue Increase at SugarHouse in January
Revenue rose again, by 8.6% in January, at SugarHouse Casino on the Delaware River, according to the Pennsylvania Gaming Control Board.
In January, the casino took in $24,345,848 compared to $22,422,886 in December. The Commonwealth’s share of taxes was $5,956,118, compared to $5,746,279 in December. The City of Philadelphia collected $761,101 in January and $724,020 in December.
To see all casino revenues, please go to bit.ly/1I0aqlt.
Arts and Culture News
City Hall's Portal Gates Win Preservation Award
City Hall's four new portal gates, designed 146 years ago by City Hall architect John McArthur, Jr. and installed last year by the CCD with funding from the City of Philadelphia, have been honored with a Grand Jury Award by the Preservation Alliance for Greater Philadelphia.
The award named as recipients the City of Philadelphia, Center City District, Vitetta Architects, Keast & Hood Structural Engineers, Robinson Iron, Plan B Engineering, George Young Group of Properties, and Torrado Construction Company, Inc., all of whom participated in the effort to bring the gates to City Hall.
The award will be presented on June 8 at the Union League.
To read the announcement, please go to bit.ly/1QOR4Ev.
Art Museum Receives Major Gift
The Philadelphia Museum of Art has received a gift of more than 50 works of art, including those of Cy Twombly, Horace Pippin, Agnes Martin, Philip Guston, and Edward Hopper, from the estate of Daniel Dietrich, a longtime supporter of the museum, Newsworks reported on February 26.
The museum owns a large collection of Hopper prints and drawings, but until now had no paintings, the article noted. The gift also includes a large collection of drawings, photographs and documents from Thomas Eakins.
To read the article, please go to bit.ly/1XQ8GWq.
Please Touch Museum to Exit Bankruptcy
The City of Philadelphia has agreed to give the Please Touch Museum a $550,000 grant toward general operating expenses and a break on its $638,477 parking-tax claim, reducing it by 16%, to $538,022, both effective when the museum exits bankruptcy, expected this month, The Philadelphia Inquirer reported on February 29.
The museum in Fairmount Park filed for bankruptcy protection last fall and bondholders settled for $8.25 million of the $61 million owed. Please Touch has paid $2.5 million and has raised most of the remaining debt through donor pledges, the article noted.
To read the article, please go to bit.ly/1pmRNa3.
Philadelphia Transit Use in Top 10
Philadelphia ranked 9th in the top 10 cities for public transportation in the United States (of 136 total cities), according to a study based on U.S. Census data, conducted by SmartAsset and published on February 23. Ratings were based on average commute times, percentage of and total population using transit, and the relative income of transit users to the general population.
Approximately 171,000 workers within Philadelphia use public transportation, the fourth largest number of any U.S. city. The number doesn’t include those who commute from outside the city.
Washington, D.C. ranked first, followed by San Francisco, Boston, Chicago, New York, Seattle, Jersey City, Pittsburgh, Philadelphia and Oakland.
To read the report, please go to bit.ly/1OuRSNy.
I-676 to Close Two Nights
I-676 will be closed in both directions between the I-76 and Broad Street interchanges on Wednesday, March 9, and Thursday, March 10, from 11:00 p.m. to 5:00 a.m. the following morning, for overhead bridge construction, PennDOT announced on Friday.
The overnight operation is part of the four-year, $64.8 million project to replace seven structurally deficient bridges over I-676 between 22nd and 18th Streets, and to make landscaping and streetscape improvements above the expressway. Construction began in April 2015 and will finish in fall 2019.
For more information and for detours, please go to 511PA.com or penndot.gov.
Parks and Open Space News
LOVE Sculpture Moved to Dilworth Park
To prepare for the $16.5 million transformation of JFK Plaza/LOVE Park, the internationally renowned LOVE sculpture on February 23 was transported to the northwest corner of Dilworth Park, where it was positioned to maintain its alignment with the Benjamin Franklin Parkway axis. The sculpture will remain at Dilworth until later this year when it will be moved again for restoration and repainting in preparation for its return to the renovated park in early 2017.
The City of Philadelphia’s Office of Arts, Culture and the Creative Economy will oversee the restoration of the sculpture and its temporary display at Dilworth Park.
To read an article from Philly.com, please go to bit.ly/1SlNUxz.
Kenney Aims to Improve Parks, Recreation Centers, Libraries
Mayor Jim Kenney wants the City to sell $300 million in bonds, and obtain an additional $200 million from the Commonwealth, the federal government and philanthropic foundations to improve parks, recreation centers and libraries across the city, PlanPhilly reported on February 25.
The Philadelphia Industrial Development Corporation (PIDC) already has applied for and received a planning grant from the William Penn Foundation to study the issue, including the state of upkeep and deferred maintenances at the various facilities.
Bonds would likely be sold in three phases and would require voters to approve the initiative via a ballot question, or they could be sold through one of the municipal authorities, such as PIDC or the Philadelphia Authority for Industrial Development.
To read the article, please go to bit.ly/1R4j1J1.
Factors That Influence City Land Values
A presentation last week by Kevin Gillen, chief economist of Meyers Research, and Guy Thigpen, director of analytic services for the Philadelphia Land Bank, highlighted those factors that most influence land values.
In Center City, large lots and those closest to City Hall have the highest land values. Proximity to SEPTA, commercial corridors, parks, rivers, restaurants dry cleaners are also major factors. Zoning had no correlation with land value, PlanPhilly reported on March 4.
One-fourth of city land transactions in 2015 sold for $25 a square foot or less, while the top 25% sold at a price of $130 a square foot or more. By comparison in 1980, the citywide median price for land in Philadelphia averaged $2.50 a square foot.
To read the article, please go to bit.ly/1VVz0gl.
Slow Growth for Service Sector
Nonmanufacturing business activity in the region grew slowly in February, according to firms responding to the month's Nonmanufacturing Business Outlook Survey conducted by the Federal Reserve Bank of Philadelphia, with new orders up for 35.5% of respondents, down for 20.9%, and unchanged for 26.0%.
The number of full-time employees was up for 17.9% of the firms, down for 5.8%, and remained the same for more than half (57.0%).
Looking ahead six months, 38.1% of the firms anticipated improved business activity, while 24.3% expected a downturn and 31.6% foresaw no change.
To read the report, please go to bit.ly/1VWOOPY.
Kenney Delivers First Budget Address to City Council
In his first budget address to City Council, Mayor Jim Kenney on March 3 introduced his more than $4 billion spending plan and called for wage tax relief, from the current rate for residents from 3.91% to 3.73% and for non-residents, from 3.48% to 3.33% by 2021. Also, to reform Business Income and Receipts Tax (BIRT) taxes, the Mayor asked for a new exemption of the first $100,000 in revenues, single sales factor apportionment, and a drop in the net income portion of the BIRT (from 6.41% to 6.15% by 2021).
Other initiatives: the Commerce Department will coordinate a Talent Development Collaborative focusing on workforce development in technology industries and manufacturing; plus Pre-K and supporting StartupPHL.com are priorities. To fund his initiatives, Kenney is proposing a three-cents-per-ounce soda tax. Bill #160176 was introduced Thursday to create the tax, bit.ly/1R0fivB.
For details on the budget, please go to phila.gov/finance/reports-BudgetDetail.html.
To read a summary of targeted support for business, please go to 1.usa.gov/1TW9dFT.
To read the Mayor’s prepared remarks, please go to 1.usa.gov/1njXWT0.
Philadelphia Growth Coalition Gains Bipartisan Support
Mayor Jim Kenney, along with a bipartisan group of state legislators including Representatives John Taylor, Bill Keller, and Dwight Evans and state Senator Anthony Williams, on February 26 gathered in City Hall to join members of the Philadelphia Growth Coalition and to announce their support of plans to introduce legislation in Harrisburg aimed at reforming the City’s tax code by amending the uniformity clause in the state constitution.
A bill, sponsored by Taylor (R., Philadelphia) and Keller (D., Philadelphia), will be introduced later this month to allow the City to increase commercial real estate taxes by 15% above residential, while requiring that the incremental revenue be dedicated to reducing city wage and business-privilege taxes. To read a summary of how the amendment will work and the language of the proposed amendment, please go to bit.ly/1OXwII5 [PDF].
To read The Philadelphia Inquirer’s coverage, please go to bit.ly/1UFxgcS.
Writing in the March 4th issue of The Philadelphia Citizen, Jeremy Nowak called the Philadelphia Growth Coalition’s plan “a blueprint for change.” The Coalition has built a sound, data-informed strategy; included diverse constituencies in framing the issues and owning the solutions, and made the future the primary customer and beneficiary, the article noted, bit.ly/21ObBRL.
City Files Brief in Support of School Districts’ Suit
The City of Philadelphia on February 16 filed a “friend of the court” brief in support of the six school districts, parents and associations statewide asking the Pennsylvania Supreme Court to rule in favor of a full trial to determine if the state legislature has violated its constitutional responsibility to maintain and support “a thorough and efficient system of public education.”
The brief details how the state’s current funding plan creates gross disparities between school districts in low and high wealth areas and fails to support poorer school districts like Philadelphia, which have less capacity to raise local revenue.
To read the brief, please go to bit.ly/1niovYE [PDF].
PHA Has Sold 500 Properties at Auction
The Philadelphia Housing Authority has raised $9.5 million by auctioning off nearly 500 surplus properties, returning more than $25 million in formerly tax-exempt properties to the City’s tax rolls, according to a new report from the University of Pennsylvania, PlanPhilly reported on February 19.
The Housing Authority began selling surplus properties at auction in 2011, and buyers were required to develop or renovate the property within three to five years or relinquish ownership back to the Authority. Most of the properties sold for under $15,000, and approximately 70% of the buyers live in Philadelphia, the article noted.
To read the article, please go to bit.ly/20XoHd3. To read the report, please go to bit.ly/1oKvivX [PDF].
San Francisco Struggles with Homeless Problem
An order by the San Francisco authorities to vacate a sidewalk tent camp in a commercial district has rekindled passions over the city’s longstanding homeless problem, the New York Times reported on February 26.
The city, which has sought gentler methods to deal with homelessness, is struggling for answers to what many describe as a worsening problem.
To read the article, please go to nyti.ms/1oWcER1.
Vision Zero Mini-Conference
A Vision Zero Mini-Conference on Thursday, March 24, hosted by the Bicycle Coalition of Greater Philadelphia and Thomas Jefferson University, will bring together traffic safety experts to speak about automatic enforcement options in Philadelphia.
A panel discussion will take place from 8:30 a.m. to 10:00 a.m. at Jefferson’s Alumni Hall. Panel members are Wen Hu, Institute of Highway Safety; Jonathan M. Rogers, project manager, Vision Zero, District Department of Transportation; Francis T. Healy, special legal advisor to the Philadelphia Police Commissioner; State Representative John Taylor (R., Philadelphia); and Gus Scheerbaum, Office of Transportation and Infrastructure. The panel will be moderated by Councilman Al Taubenberger.
A Facebook invitation can be found at on.fb.me/1L7zPCv.