Office Sector News
Neumann Finance Moving To Center City, Will Add 200+ Jobs
Neumann Finance Co., an equipment leasing subsidiary of Beneficial Bank that was formed in November, has leased space at 123 South Broad St. and plans to add more than 200 jobs over the next two to three years.
Neumann looked at 20 different locations and debated between South Jersey and Center City before signing a 10-year lease on 21,695 square feet on the 17th floor of the South Broad Street building, which is owned by SSH Real Estate. Neumann expects to occupy its new office space in July.
Five Below Moves Into New Market Street Headquarters
Philadelphia-based teen retailer Five Below has moved into its new headquarters at 701 Market St. owned by Brickstone Realty. The company will occupy the first floor, mezzanine and sixth floor of the former Lit Bros. building, including the 12,000 square foot retail space on ground level for an initial 117,000 square feet commitment. It has rights to more than 200,000 square feet, or almost a third of the 700,000-square-foot building.
Five Below has 375 total employees in its new home office and 10,000 nationally. There are 625 Five Below stores nationwide, with 125 new ones to open this year.
Amazon Reps Visit Philadelphia To Scout HQ2 Sites
A site-selection team from Amazon recently spent about a day and a half in Philadelphia, where they met with officials involved with the city’s HQ2 proposal to the company. Mayor Jim Kenney told The Philadelphia Inquirer that no elected officials, including him, met directly with the team. He declined to share details about the visit, including its timing.
The visits are part of the second phase of Amazon’s site search that began with its selection in January of 20 locations it planned to consider for the headquarters project after reviewing 238 proposals from throughout North America. A decision is expected this year.
For more, go to philly.com/philly/business/real_estate/commercial/amazon-hq2-philadelphia-visit-university-city-navy-yard-20180314.html.
Report: Entercom Plans Move to Center City
Citing multiple sources in radio and real estate, The Philadelphia Inquirer reports that Entercom Communications Corp. plans to relocate its corporate headquarters from suburban Bala Cynwyd to the western edge of Center City along the Schuylkill River waterfront.
Entercom, the nation’s No. 2 radio station group owner, is expected to take a floor, or about 60,000 square feet, in the new Aramark headquarters at 2400 Market St., the Inquirer reported. In 2016, Aramark announced plans to relocate there from 1101 Market St.
For more, go to philly.com/philly/business/comcast/entercom-radio-philly-waterfront-hq-bala-cynwyd-20180314.html.
PMC Closes On West Market Street Buildings
PMC Property Group has closed on two properties at the western edges of Market Street, giving it control of nearly a block, across from the PECO Building and adjacent to the former Market Place Design Center, which they are redeveloping as the headquarters for Aramark. The Philadelphia real estate company paid $6 million for 2300-12 Market St. and $4 million for 2314-22 Market St., according to city property records.
The fashion and culinary divisions of the Art Institute of Philadelphia occupy space in 2300 Market, which totals 50,637 square feet. The building at 2314 Market totals 40,900 square feet and the Children's Literacy Initiative is a tenant.
For more, go to bizjournals.com/philadelphia/news/2018/03/06/pmc-property-23rd-market-armory-art-institute.html.
Schuylkill Trail Receives $12M In Federal Funding
Philadelphia has received the final $12 million it needs to complete the $36 million Schuylkill River Trail expansion. Pennsylvania senators Bob Casey and Pat Toomey announced that the city had received a U.S. Department of Transportation TIGER grant to connect the trail with the Grays Ferry Crescent Trail, slated to undergo construction in 2020.
The state, the city, the William Penn Foundation, and other funders will cover remaining project costs. In November, Conrail donated the Schuylkill swing bridge to be repurposed as a pedestrian and bicycle bridge connecting Grays Ferry Crescent and Bartram’s Mile.
For more, go to bicyclecoalition.org/circuit-wins-third-tiger-grant-close-key-schuylkill-river-trail-gap/.
Brandywine Picks CDC Partner For Schuylkill Yards
Centennial Parkside Community Development Corp. has been selected by Brandywine Realty Trust as a community partner in the initial phase of Schuylkill Yards, which will include the development of Drexel Square, a 1.3 acre community park at the corner of 30th and Market streets, and the reimagining of the Bulletin Building.
The 20-year, $3.5 billion mixed-use project is being developed by Brandywine on land owned by both Brandywine and Drexel University.
CCD Releases New Report On Housing In Greater Center City
The Center City District (CCD) and Central Philadelphia Development Corp. (CPDC) have released Housing Development in Perspective: 2018, examining housing development in Greater Center City, the balance between supply and demand, and potential constraints to Philadelphia’s ongoing revival.
Greater Center City experienced another record-setting year in 2017 with the construction of 2,650 new apartments, single-family homes and condominiums. Philadelphia has expanded from a 3% share of regional housing permits in the early 1990s to a 25% share from 2010 to 2017 with Greater Center City counting for more than half of all new units in the city.
The report suggests that instead of ending the 10-year tax abatement, or passing an impact tax or mandatory inclusionary zoning, the city should simply pledge as part of its budgeting process the new revenues coming from expiring abatements to help fund affordable housing programs.
For the Housing Development in Perspective: 2018 report, go to centercityphila.org/research-reports/housing-development-in-perspective-2018.
City Controller Mulling Changes To 10-Year Tax Abatement
City Controller Rebecca Rhynhart is analyzing the impact of adjusting or ending the city’s 10-year tax abatement on new construction, which is credited with creating and sustaining the city’s building boom. The announcement comes as Mayor Jim Kenney’s new budget proposal calls for another increase in property taxes and a slowdown of the wage tax decrease.
A 2017 report compiled for the Building Industry Association by Kevin Gillen, senior research fellow at Drexel University’s Lindy Institute for Urban Innovation, credited the abatement for a 376% increase in home building within Philadelphia, compared with an average decline of 11.3% in the suburbs.
For more, go to phillymag.com/news/2018/03/09/rhynhart-property-tax-abatement/.
Eds and Meds News
Temple Looks To Bring Business Research Into The Boardroom
Temple University’s Fox School of Business has launched what it describes as a first-of-its-kind Center for Translational Research in Business — a concept usually reserved for the STEM fields — that is designed to increase the chances discoveries on campus influence decisions in the boardroom.
Charles Dhanaraj, the H.F. “Gerry” Lenfest Professor of Strategy at the school, said many CEOs see business schools “as an MBA factory producing graduates they absorb, but they don’t see them as research labs that are going to produce actionable insight for the business.”
For more, go to bizjournals.com/philadelphia/news/2018/03/13/temple-university-center-translational-research.html.
PIDC Taps Ben Franklin Technologies To Oversee StartUp PHL
The Philadelphia Industrial Development Corp. (PIDC) has tapped Ben Franklin Technology Partners to manage StartUp PHL’s second seed fund, which will set out to deploy up to $5 million to Philadelphia-based companies. The initiative is a project of the City of Philadelphia’s Department of Commerce and PIDC, and initially drew on the expertise of First Round Capital, which managed the first investment fund from the city’s startup-boosting investment vehicle.
Ben Franklin will look to deploy angel and early-stage investments from $50,000 to $100,000. PIDC is putting up $1.75 million with funds being matched 1:1 or higher by Ben Franklin.
For more, go to technical.ly/philly/2018/03/15/ben-franklin-startup-phl-second-seed-fund.
Cambria Adds New Hotel in Philadelphia
Choice Hotels International’s Cambria brand is opening a hotel in late March at Broad and Locust streets. It will feature the largest rooftop restaurant/bar on the Avenue of the Arts. The 15-story, 223-room boutique hotel was developed by Pearl Properties and designed by DAS Architects.
The 174,000 square foot building will feature nine suites and 214 guestrooms. Other amenities will include a fitness center, a boardroom for small meetings and a conference room that can seat 112. The ground floor will be home to a Del Frisco’s Grille in October 2018.
For more, go to hotelbusiness.com/cambria-adds-properties-in-dallas-philadelphia/.
Shakespeare & Co. to Open in Rittenhouse Square
The iconic Shakespeare & Co. bookstore in New York is opening its first outpost this summer at 1632 Walnut St. on Rittenhouse Row. Two more New York stores will follow, on the Upper West Side and in Greenwich Village.
Like the flagship store, the new Shakespeare bookstores in Philadelphia and Manhattan will be about 3,000 square feet and will feature locally curated inventory, a café with Wi-Fi, as well as a book machine. Shakespeare & Co. CEO Dane Neller said each store will also have a different look to fit in with the community.
For more, go to publishersweekly.com/pw/by-topic/industry-news/bookselling/article/76300-shakespeare-co-to-open-three-stores-this-year.html.
GoPuff, Hershey Partner On VR Shopping Initiative
Center City on-demand delivery company goPuff and The Hershey Co. are working together on a virtual reality shopping project, which the companies recently debuted at the South by Southwest conference in Austin, Texas.
The VR initiative, in development for about a year, shows customers how they can shop for Hershey’s products in stores and from home. Officials from goPuff said the companies are laying the foundation for what the future of retail might look like. Companies have started implementing VR into their operations for marketing purposes but it is a nascent technology for retailers.
For more, go to bizjournals.com/philadelphia/news/2018/03/12/hershey-gopuff-virtual-reality-shop-retail-sxsw-vr.html.
Economic and Employment News
PICA: Philadelphia Continues Double-Digit Tax Growth in February
The City of Philadelphia collected $511.6 million in General Fund tax revenue in February, compared to $433.4 million in February 2017, an increase of 18%, according to the Pennsylvania Intergovernmental Cooperation Authority (PICA).
Increases in most major tax categories drove the growth in overall city collections for the month. Large increases in the real estate and realty transfer taxes, as well as strong wage, earnings, and net profits tax collections, ensured the continued double-digit increase in total year-to-date collections, with four months remaining in the fiscal year.
Through February, the Business Income and Receipts Tax (BIRT) rose 18.4%, compared to a projected decline of -1.0%; the real estate tax increased by 25.9%, compared to a projected growth of 10.1%; the realty transfer tax increased by 46.6%, compared to a projected 16.1% growth rate; and the Philadelphia sales tax collections fell by 6.6%, compared to a projected growth of 8.5%.
For more, go to picapa.org/2018/03/just-released-picas-january-tax-revenue-report-3/.
Philadelphia wage growth slightly outpaces U.S. average
The hot American economy is not translating into wage growth for workers, according to a new study by jobs site Glassdoor. Nationwide, wages were up about 1% from February 2017 to February 2018. The growth was slightly higher in Philadelphia at 1.2%.
Of the country's 10 largest metro areas, Philadelphia ranked sixth in wage growth – far behind first place San Francisco (3.1%) but ahead of the innovation hubs Boston and Seattle and the large metro regions of Los Angeles and Chicago.
For more, go to glassdoor.com/research/local-pay-reports/philadelphia/.
Councilman, Citing CCD Report, Calls For Hearings On Congestion
Philadelphia City Councilman Kenyatta Johnson is calling for public hearings to examine strategies to address traffic congestion in Center City. He cited CCD’s new report, Keep Philadelphia Moving, which found up to 40% longer travel times for cars and buses moving between 23rd and Broad streets, when compared with 2013.
For more, go to philasun.com/local/councilman-kenyatta-johnson-calls-for-hearings-and-input-on-philadelphias-traffic-congestion.
For the Keep Philadelphia Moving report, go to centercityphila.org/research-reports/2018congestion.
City Announces Protected Bike Lanes on JFK, Market
Mayor Kenney has announced a nine-month pilot program that will change traffic patterns on Market Street and JFK Boulevard between 15th and 20th streets by reducing traffic lanes from four to three. That lane reduction will create space for parking-protected bike lanes, and parked cars will act as a barrier between the bike lanes and traffic.
The announcement, made Saturday at the Vision Zero Conference hosted by the Bicycle Coalition of Greater Philadelphia, follows a March 9 meeting that CPDC helped organize to bring together the city and West Market Street and JFK Boulevard office building owners and managers. The plan is based on research and recommendations first advanced by CCD a decade ago.
For more, go to bicyclecoalition.org/breaking-kenney-announces-protected-bike-lanes-jfk-market.
American Airlines Adding Daily PHL - Mexico City Flights
American Airlines announced that it will add daily year-round service to Mexico City from Philadelphia International Airport starting this summer. The airline, which has the most nonstop destinations through PHL, will begin daily evening flights as well as morning return flights beginning July 5.
American previously announced it will begin service June 7 to Des Moines, Iowa; Fort Wayne, Ind.; Madison, Wis.; Oklahoma City; Omaha, Neb.; Pensacola, Fla.; and San Antonio, as well as nonstop flights to Budapest, Hungary, and to Prague that will begin in May. Philadelphia is the airline’s trans-Atlantic gateway, and its fourth largest hub in terms of departures.
For more, go to phillyvoice.com/american-airlines-will-offer-new-direct-flight-mexico-phl/.
Major Upgrade For PHL Airport Surroundings
Philadelphia International Airport officials are reviewing submissions from four landscape design teams to revamp the land around the airport — both directly outside and along I-95 leading up to the terminals. Airport officials said PHL has pledged an initial $5 million to oversee the completion of this project. Once a winning design is chosen, PHL will also look for additional sponsors.
The four finalists, selected from a total of 203 entries, were presented by James Corner Field Operations, Mathews Nielsen Landscape Architects, OLIN and Phyto. The airport will likely announce a winner in April. The redesign project is expected to take several years.
For more, go to billypenn.com/2018/03/09/flowers-forests-bike-lanes-major-upgrade-coming-to-phl-airport-surroundings/.
Government News: Tax Policy
Inquirer Editorial Board Calls On City To Examine Other Tax Options
In response to Controller Rhynhart’s consideration of modifying the tax abatement and Mayor Kenney’s proposals to raise city’s taxes, The Philadelphia Inquirer’s editorial board urged city officials to examine how to raise revenues in “a more fair, efficient, and fiscally sound way.”
The piece noted, “Center City District president Paul Levy and Brandywine Realty Trust president Gerard Sweeney have long advocated increasing property taxes on commercial real estate, while lowering the job-killing business and wage taxes. Likewise, as a mayoral candidate, Kenney often talked about his plan to do zero-based budgeting to find savings. … Both of those ideas deserve serious consideration.”
For more, go to philly.com/philly/opinion/editorials/time-for-philly-to-study-how-and-who-it-taxes-editorial-20180314.html.
Public hearings on Mayor Kenney’s budget proposal begin on Monday, March 26 at 10 a.m. For a complete schedule and agenda, go to centercityphila.org/uploads/attachments/cjey9yomf0067opqdxrotwmuv-fy2019budgethearing-schedule.pdf.