Office Sector News
IBC Moving Suburban Offices to Center City
Independence Blue Cross (IBC) will lease 112,000 square feet (SF) on two floors of the 456,922-SF Stock Exchange building at 1900 Market Street, owned by Brandywine Realty Trust, and transfer its AmeriHealth Administrators offices from Horsham and Fort Washington into Center City, the Philadelphia Business Journal reported on April 15. The move is expected to be completed in early 2016.
IBC headquarters occupy a 50-story, 760,000-SF building at 1901 Market Street, the company maintains an innovation center in 5,000 SF at 1700 Market Street and has leased 24,000 SF at 1919 Market Street, a 29-story mixed-use building under construction, the article noted.
By consolidating operations, IBC anticipates creating an environment of collaboration that will enable future growth.
To read the article, please go to bit.ly/1cwEVrH.
CBD’s Vacancy Rate Lower Than Suburbs’
The vacancy rate in the central business district (CBD) as calculated by Newmark Grubb Knight Frank (NGKF) and reported in their Philadelphia 1Q15 Office Market report was 12.4%, with 198,155 square feet (SF) of absorption during the quarter. The vacancy rate in the Pennsylvania suburbs was 15.4%, with 233,014 square feet of absorption.
Class A asking rent in the CBD was $30.80/SF, with an overall asking rent in all categories of $28.13/SF. In the suburbs, Class A was $29.37/SF and the overall was $26.05.
During the quarter, NGKF reported 1,956,000 SF under construction in the CBD, and 2,001,400 SF under construction in the suburbs.
The largest lease in the CBD was 90,000 SF for the American Bible Society at 401 Market Street in Independence Square.
To read the report, please go to bit.ly/1OIkcyO [PDF].
Manufacturing Improves in April
Manufacturing activity in the region increased modestly in April, with employment rising, according to firms responding to the Federal Reserve Bank of Philadelphia’s Manufacturing Business Outlook Survey.
The number of full-time employees rose for 20.6% of the responding firms, decreased for 9.1% and remained the same for more than three-quarters (76.3%) of the companies.
New orders increased for 32.1% of the respondents, decreased for 31.4%, and remained the same for 36.5%.
Looking ahead six months, 44.5% of the companies expected business activity to increase, 9.0% foresaw a decrease, and 44.4% responded that they did not expect any change.
To read the report, please go to bit.ly/1CQfaJ1 [PDF].
The Gallery to Be Redeveloped and Rebranded
Pennsylvania Real Estate Investment Trust (PREIT) and Macerich Company announced their $575 million plan for The Gallery that will transform the inward facing mall into a glass-enclosed, light-infused Fashion Outlets of Philadelphia with shops from discounted high-end retailers such as Saks OFF 5th and Neiman-Marcus Last Call, mixed with affordable brands such as H&M, The Philadelphia Inquirer reported on April 15.
The City of Philadelphia will invest about $113 million in the project, including tax increment financing that has to be signed off by City Council, following approvals by the School Reform Commission and Philadelphia Redevelopment Authority (see below).
The Commonwealth of Pennsylvania is being asked to contribute $35.5 million, of which $15.5 million is already committed.
The City will agree to pay $58 million on a net present value basis for repairs and maintenance it was obligated to pay under the 1970s agreement for common areas that lead to trains and subways, the Philadelphia Business Journal reported.
The redevelopment of the 1.5-million-square-foot space will accommodate 125 stores and will take two years to complete.
To read The Philadelphia Inquirer article and view renderings, please go to bit.ly/1EEzbXH.
To read the Philadelphia Business Journal article, please go to bit.ly/1axviY6.
To read the press release, please go to prn.to/1DjZb8u.
On April 16, the Philadelphia Redevelopment Authority (PRA) unanimously approved a 69-year lease of The Gallery for PREIT and the Macerich Company, the Philadelphia Daily News reported. At the end of the $575 million renovation by the two companies, the PRA will sell the mall to PREIT for a nominal fee of $1, the article noted. In exchange, the PRA will no longer have any liabilities that PREIT said it has been owed in capital improvements over the years.
To read the article, please go to bit.ly/1CUnV4O.
Brandywine Realty Trust Buys Key Property in Historic District
Brandywine Realty Trust has purchased from Richard Basciano a five-story parking garage at 618-34 Market Street, across the street from the U.S. Courthouse in the historic district, the Philadelphia Business Journal reported on April 10. The sale price was not made public.
The property has street-level retail partially occupied by Dunkin Donuts, Shirt Corner and Geator Gold Radio and is adjacent to the Dow Building. The zoning is CMX-5, which allows for dense mixed-use development.
Plans for the site have not been announced but it occupies a key position between Independence Mall and an improving Market Street East. See CPDC’s Planning for Growth for renderings that envisioned the position in 2007 at centercityphila.org/docs/SOCC-Plan07-EastMarket.pdf [PDF].
To read the article, please go to bit.ly/1FM09Oz.
Convention Center Decision Reversed
Jack E. Marino, the Pennsylvania Labor Relations Board (PLRB) hearing examiner overseeing the unfair labor charges between the Pennsylvania Convention Center and two of its unions on Friday reversed his prior decision and will be scheduling future hearings, the Philadelphia Business Journal reported.
Marino earlier this year dismissed the unfair labor charges against the Convention Center ruling that PLRB did not have jurisdiction in the matter. On Friday, he denied the Pennsylvania Convention Center Authority’s motion to dismiss the charges.
Since the new rules were put in place last year, the Convention Center has booked 28 major new show and conventions, slated to bring in hundreds of thousands of attendees, filling more than 560,000 hotel room nights and creating more than $872 million in economic impact, the article noted.
To read the article, please go to bit.ly/1G2a283.
Philadelphia Lags Significantly in Tech and STEM Job Growth
Joel Kotkin and Mark Schill ranked the 52 largest U.S. metropolitan statistical areas by the growth in tech and STEM (science, technology, engineering and mathematics) jobs from 2004 to 2014, and found that Austin, Texas, had the strongest expansion in tech- sector employment from 2004 to 2014, at 73.9%, and enjoyed a 36.4% growth in STEM jobs, the fourth-highest growth rate in the country.
By contrast, Philadelphia ranked 48th and experienced 10% growth in tech jobs during the same period, and only a 0.6% increase in STEM employment.
Raleigh, N.C., part of the Research Triangle region, posted a 39% increase in STEM jobs from 2004 to 2014, the fastest growth in the nation, and a 62.3% increase in tech jobs.
San Jose, California ranked third with 70.2% growth in tech sector employment since 2004 and a 25.8% increase in STEM employment.
Baltimore ranked 27th, New York 35th, and Washington, D.C. was #50 on the list.
To read the article, “The Valley and the Upstarts: The Cities Creating the Most Tech Jobs,” which first appeared in Forbes and was published in New Geography on April 15, please go to bit.ly/1FYt7rQ.
On a more optimistic note, the Philadelphia region is the leader for gender diversity in the technology industry, according to a new CBRE Group research report, “Scoring Tech Talent,” which ranked 50 U.S. markets according to their ability to attract and grow tech talent, the Philadelphia Business Journal reported. Philadelphia was first in gender diversity, with 31% of the tech occupations in the market being held by women.
To read the article, please go to bit.ly/1GQiBWw.
To read the report, please go to bit.ly/1OiRAKn.
Eds and Meds News
TUCC Bookstore Opens
Temple University Center City (TUCC) on April 7 cut the ribbon on its new coffee shop and bookstore at its campus at 1515 Market Street, across the street from Dilworth Park, KYW reported.
On the floors above, there is the Fox School of Business, which has created a new collaborative learning center. Temple has further plans to renovate classrooms and upgrade the school’s technology on location.
To read the article, please go to cbsloc.al/1OJ56Jv.
More Penn Students Working in Philadelphia After Graduation
More students are choosing to stay and work in Philadelphia after graduation, The Daily Pennsylvanian reported on April 14, with 17% of the Class of 2014 reporting that they were graduating into work in the Philadelphia area, up 3% from the Class of 2013.
Depending on their career interests, some students may focus their search in New York City or other areas, but that is not because they are less-satisfied with Philadelphia, the article noted.
To read the article, please go to bit.ly/1J8BhhH.
Arts and Culture News
Music Venue Coming to Delaware River Waterfront
The former Ajax Metal Company building at Frankford and Delaware Avenues in Fishtown will be transformed into The Fillmore Philadelphia, a music and entertainment venue on the Delaware River waterfront, Mayor Michael A. Nutter and Live Nation executives announced on April 16.
The 2,500-capacity venue, scheduled to open in the fall, will showcase state-of-the-art production for concerts, vintage poster art, and VIP amenities.
The Fillmore Philadelphia also will feature a bar that serves food, and a second, smaller live music club, The Foundry, with a capacity for 450 people.
To read the Mayor’s press release, please go to bit.ly/1cAklqr.
Transportation Rally Draws Hundreds to Dilworth Park
Hundreds of people attended the Stand Up 4 Transportation rally at Dilworth Park on April 9, one of 140 similar events held across the country to garner support for an Obama administration proposal to raise $478 billion over six years for transit needs, The Philadelphia Inquirer reported. The Grow America Act, if passed, would be the first long-term transportation funding bill since 2005.
The national Highway Trust Fund will run out of money this summer if Congress does not pass a funding bill, which would stall transportation projects, including the more than $460 million in improvements and expansion underway on I-95 near Cottman and Girard Avenues, the article noted.
Also, more than 42% of Pennsylvania's bridges need repair and that work would likely slow.
To read the article and see the photos, please go to bit.ly/1OwZr9b.
To see a video of the event made by Urban Engineers using time-lapse photography, please go to bit.ly/1DfjXpK.
City Ranks 4th in Walk Score Rankings
Philadelphia ranked #4 on Walk Score’s most walkable cities of 2015, with an overall Walk Score of 76.5, Philly.com reported. Philadelphia saw an increase of two points since 2011.
Philadelphia ranked ahead of Chicago (74.8), Washington, D.C. (74.1), Seattle (70.8) and Baltimore (66.2). New York City is considered the most walkable city with a score of 87.6, followed by San Francisco (83.9) and Boston (79.5).
To calculate the rankings, Walk Score analyzed over 10 million locations and computed more than 2 billion walking routes for 2,500 U.S. cities.
To read the article, please go to bit.ly/1IavIz1.
To see all the Walk Score rankings and to find out your own neighborhood’s ranking, please go to redf.in/1GLOm2S.
Parks and Open Space News
Spring Activities Enliven Center City District Parks
Spring Training at Dilworth Park, which includes a fitness Boot Camp, Yoga, Gracie Jiu-Jitsu, Zumba, and much, much more, continues through April 30. Boot Camp (photo) has proved especially popular, with more than 80 people showing up for the weekly evening workout sessions.
In May, a variety of weekly events debut at Dilworth Park.
On Tuesday, May 5, the Pictures in the Park presented by Wyncote Foundation series begins at dusk with The Hobbit: The Battle of the Five Armies (PG-13). The series continues through June 30.
On Wednesday, May 6, from Noon to 1:30 p.m., WXPN Welcomes Live @ Lunch presented by PNC begins and showcases Milton, whose music draws from genres including jazz, pop, hiphop and electronic groove music. Each Wednesday will bring a new style of music to Dilworth Park and the series continues through June 24.
On Thursday, May 7, from 5:00 p.m. to 7:00 p.m., a new program begins: DJs & Drinks at Dilworth Park presented by The Graham Building. The debut features Urban Oldies with DJ Cutmaster and MC Mimi Brown of WDAS. The series continues through June 18, then begins anew on July 2 and continues through August 27 (except on August 6).
In addition, the Philly Photo Day Exhibit will be in the park during May and June, the Farmers’ Market at Dilworth Park begins every Wednesday on May 27, from 11:00 a.m. to 2:00 p.m., and Sips at Dilworth Park will be the happiest of hours every Wednesday from 5:00 p.m. to 7:00 p.m., beginning June 3.
At Sister Cities Park, 18th Street and Benjamin Franklin Parkway, the park’s Boat Pond officially opens on Friday, May 1, and Rita’s Water Ice will begin its warm-weather season at the park, as will the Independence Visitor Center, which offers a rich variety of information. The Sister Cities Fountain is already making a splash and the Logan Square Café is ready to serve you.
Pairings on the Parkway begins on Thursday, May 7, from 5:00 p.m. to 8:00 p.m., with live music by Jeffrey Gaines and Amy Faden, from 5:30 p.m. to 7:30 p.m. BYOB, pick up something delicious from the Logan Square Café, and enjoy an evening out of doors! The popular evening out continues through September 10.
For more information, please visit CCDParks.org.
Residential Market News
Additional Information on Center City Housing
The Center City District/Central Philadelphia Development Corporation has published online an Appendix February's Center City Reports: Housing, Sustaining Momentum.
With extensive charts, the eight-page Appendix amplifies and supports the report, providing additional detail on the neighborhoods that comprise the downtown housing market. For example, the Appendix notes that single-person households are the most common type in nearly every Greater Center City neighborhood, with an even higher concentration in the core where ownership rates are also lower than in the extended neighborhoods.
To read the housing report, please go to centercityphila.org/docs/CCR15_housing.pdf. To view the Appendix, please go to centercityphila.org/docs/CCR15_housingappendix.pdf.
Apartment Vacancy Rises but Rents Also Increase
The Philadelphia metro area stabilized Class A apartment vacancy rate rose to 5.5% in the first quarter 2015, compared to 4.6% at this time last year, due in part to increased deliveries, especially in Center City, according to First Quarter 2015 Delta Associates Philadelphia Class A Apartment Market Report, a subscription report released on March 31.
Vacancy rose in the City of Philadelphia from 4.0% a year ago to 6.3% during this year’s first quarter.
The vacancy rate in the Pennsylvania suburbs also increased from 4.5% during last year’s first quarter to 5.8% in the same period this year.
Metro-wide, effective rents rose 3.6% from last year to $1,669 or $1.67 per SF in the first quarter of 2015, the report noted, with effective rents averaging $2,139 ($2.24 per SF) for high-rise space in Center City versus $1,452 ($1.43 per SF) for low-rise product in the suburbs.
Bill Would Sell Commercial Property Tax Liens to Fund Schools
City Councilman Bobby Henon on behalf of Council President Darrell L. Clarke and Councilman Mark Squilla on April 9 introduced Bill #150265 that would package delinquent commercial property tax liens and sell them off to private-collections firms to raise funds, possibly millions, for city schools.
The proposal was intended to counter Mayor Michael A. Nutter’s proposed 9.34% property tax increase meant to close an $84 million gap in the Philadelphia School District’s budget for the coming fiscal year. Clarke has indicated that Council has little appetite for raising property taxes again after last year’s implementation of the Actual Value Initiative created increases for many city residents.
To read the bill, please go to bit.ly/1IIRUDI.
Council Passes Bill Regulating Billboards
City Council on April 16 passed Bill #130656-A, introduced on September 26, 2013, by Councilman Bobby Henon, that changes billboard regulations, allows companies to remove two regular billboards for each billboard they want to convert to digital form, and regulates the lighting of the digital signs, The Philadelphia Inquirer reported. The measure passed 15-0.
The bill requires companies to pay a higher licensing fee that could bring in an extra $350,000 annually to the city, the article noted, billboard owners can construct and modify their signs without going through the City first and increase the height of their signs in certain cases if they become obstructed.
The law also sets standards for the amount of time between messages flashed over the digital billboards and establishes limits on where the signs can be erected.
To read the Inquirer article, please go to bit.ly/1zpN8Tn.
To read Bill #130656-A, please go to bit.ly/1HgdwFI.
State Budget Secretary Outlines Budget for GPCC
Pennsylvania Budget Secretary Randy Albright on May 7 provided Governor Tom Wolf’s budget proposal for FY2015-16 to members of the Greater Philadelphia Chamber of Commerce (GPCC). The Governor's vision, as outlined by Secretary Albright, includes a nearly $30 billion spending plan that would raise the state income and sales taxes to pay for property-tax and business-tax cuts.
As the GPCC considers the impact of the Governor’s budget, it is circulating a survey to find out what others think of the proposed fiscal plan. To take the survey, please go to svy.mk/1CKLo7i.
To view a copy of the Budget Secretary’s presentation, please go to bit.ly/1PIJgXV [PDF].
State Senate Approves Bill That Would Invalidate Sick Pay
The state Senate on April 14 approved by 37-12 Senate Bill (SB) 333 that would invalidate Philadelphia's new mandatory paid sick-leave law, passed by City Council and signed by Mayor Michael A. Nutter on February 12, The Philadelphia Inquirer reported.
State Senator John Eichelberger (R., Blair) introduced the bill on the same day it was made law in Philadelphia, suggesting that it is necessary to have uniform rules across the state for businesses.
Some members of the Philadelphia delegation to the Pennsylvania General Assembly were critical of the bill, saying it denies the City of Philadelphia the right to govern itself and hurts low-income employees, the article noted.
The bill now goes to the state House of Representatives.
To read The Philadelphia Inquirer article, please go to bit.ly/1IPHh2f.
To read SB 333, please go to bit.ly/1PU7M8o.
‘State of Center City’ Release at CPDC Membership Meeting
TOMORROW! On Tuesday, April 21, at 4:00 p.m. at the Four Seasons Hotel Philadelphia, One Logan Square, the Center City District/Central Philadelphia Development Corporation will present its 74-page State of Center City, 2015, followed by a panel discussion on pathways to a more dynamic and inclusive growth.
The discussion will be moderated by Paul R. Levy, CPDC Executive Director, and President and CEO of the CCD.
Panelists include Gerard H. Sweeney, President and CEO, Brandywine Realty Trust; Steven S. Bradley, Chairman, African American Chamber of Commerce, and President, Bradley and Bradley Associates, Inc.; and Brent Martin, General Manager, Four Seasons Hotel Philadelphia.
CPDC members are encouraged to invite both young professionals and other members of their firms to attend this meeting.