Office Sector News
Report: Philadelphia CBD Narrows Gap With Suburban Office Sales
While office sales in Philadelphia have historically been out-performed by the suburbs, the gap is narrowing, according to a new JLL analysis.
In its review of 58 Class A offices sales in Philadelphia and the Pennsylvania suburbs, JLL found that “the suburbs are gradually losing their pricing lead as more sophisticated out-of-market buyers make increasingly bigger bets on CBD real estate.”
New York Firm Buys 2000 Market
Nahla Capital, a New York-based real estate private equity firm, has partnered with the merchant banking division of Goldman Sachs to buy 2000 Market St. for $126.4 million ($190/sf). The 29-story, 665,649-square-foot office building was sold by Gemini Rosemont Realty of Santa Fe, N.M., which bought the tower in March 2013 for around $110 million.
Nahla’s first acquisition in Philadelphia, the building was developed in 1972 and is more than 90% occupied with long-term tenants including the Board of Pensions of the Presbyterian Church, Aetna and accounting firm Shechtman Marks Devor.
ASI Management Buys 1650 Arch
ASI Management Corp. has purchased 1650 Arch St., a 553,000-square-foot office building, for $77 million ($139/sf). The seller was CBRE Global Investors, which bought the building in 2015 for about $70 million.
The tower is 93% occupied and has been the long-term home of the Environmental Protection Agency -- its biggest tenant, occupying 307,847 square feet. The agency recently sought to shrink its space by 222,000 square feet but eventually decided to sign a short-term lease at 1650 Arch until 2020.
10 Startups Picked For Comcast's First Tech Accelerator Cohort
Ten early-stage startups from around the world are calling Philadelphia home for the next three months as part of the new Comcast NBCUniversal’s LIFT Labs Accelerator.
The intensive program is designed to fit 18 to 24 months of work and growth in 13 weeks, with the help of mentors from Comcast’s ranks, the Philadelphia tech community and the global accelerator Techstars. Comcast and Techstars chose the 10 finalists -- who are working on the 48th floor of Comcast’s headquarters in Center City -- from a pool of several hundred applications from 38 countries.
Eds and Meds News
J&J Chooses Philadelphia For Its First U.S. Networking Hub
Johnson & Johnson has chosen Philadelphia as the home of its first U.S.-based “JPOD,” a networking hub that aims to create a bridge between J&J researchers and the local life sciences community.
Opening this fall in the University of Pennsylvania’s Pennovation Center, JPOD’s goal is to identify early-stage healthcare ventures from the Philadelphia region and fast-track development of medical devices, pharmaceuticals, and consumer health tools. The first JPOD was launched in Alberta, Canada, to connect the Western Canada province to J&J’s incubator in Toronto.
Evoke Group Buys S.F. Firm For $72.2m
Center City-based health and wellness marketing company Evoke Group has acquired Giant Creative Strategy, a San Francisco-based agency focused on healthcare professional and multichannel marketing. Evoke Group purchased the agency from Los Angeles-based investment firm Shamrock Capital for $72.2 million.
The acquisition of Giant Creative, which has 150 employees, brings Evoke Group's total workforce to 550 people. Evoke has 200 employees in Philadelphia and another 200 at its offices in New York, Chicago, Los Angeles and London.
DRWC Seeks Developer For Lot Near Benjamin Franklin Bridge
The Delaware River Waterfront Corporation (DRWC) is seeking a developer to turn a parking lot it owns on the west side of Christopher Columbus Boulevard into a pocket of businesses and dwellings. The agency has set a deadline of Aug. 20 for developers to submit proposals for the 1.6-acre Vine Street Lot between Vine and Callowhill streets, just north of the Benjamin Franklin Bridge.
The lot is just three blocks south of the DRWC-owned Festival Pier, which is in the early stages of development by Jefferson Apartment Group and Haverford Properties into a complex of apartment buildings surrounded by open public space.
EB Realty Retires Construction Debt For North Broad Projects
EB Realty Management Corp. has secured $70 million in financing to retire maturing construction debt at three of its North Broad Street redevelopment projects: the Divine Lorraine, the Studebaker and Head House Flats. It will also provide money for tenant fit-out costs as well as future funding for the construction of 10 more apartment units in an annex building at the Divine Lorraine.
D2 Capital Advisors, which arranged the deal, said the funding was provided by Guggenheim CREF, Susquehanna Investment Group and the Philadelphia Redevelopment Authority. The money consisted of a mix of senior, mezzanine and structured credit financing.
Developer Says Plans Moving Forward For Hotel At Old Family Court
Plans to turn the former Family Court building at 1801 Vine St. into a luxury hotel are back on track following setbacks in the pursuit of federal historic tax credits for the project, according to the head of the company behind the proposal.
Peebles Corp. chief executive R. Donahue Peebles said his company is still about $8.5 million short of the funding it needs to start the project at the 77-year-old Beaux Arts building, but that it is working with city and state officials to secure the financial support. Work could begin as soon as early next year. The completion of this project would be an important part of CPDC’s long-term goal of adding more commercial and evening vitality to the Parkway.
For CPDC’s long-term vision, see centercityphila.org/news/video-parkway-100-envisioning-the-future
Garces Group Acquired For $8M, Two Restaurants Close
The sale of most of Jose Garces’ restaurant empire has been approved by U.S. Bankruptcy Court for about $8 million in cash and assumed liabilities. A partnership between Louisiana-based Ballard Brands and investor David Maser — will assume control of Amada, Tinto, Village Whiskey, Olde Bar, JG Domestic, Volvér, and Garces Events. It also will control management contracts that operate restaurants in Atlantic City, Lafayette Hill, and New York City.
Garces will remain chief culinary officer. His restaurants 24 and Garces Trading Company have closed and the company will relocate its corporate headquarters and test kitchen within the city. Distrito and Buena Onda, both in Philadelphia, will remain open and will not be operated by 3BM1.
Parks and Open Space News
2018 Is Made In America Fest’s Final Year On The Parkway
Discussions continue as to whether the music festival Made in America will remain on the Benjamin Franklin Parkway after this year. Since 2012, the ticketed Labor Day weekend festival curated by superstar Jay-Z has attracted as many as 50,000 people on each of its two days to a gated, admission-only area around Eakins Oval. The original RFP to which Roc Nation responded was time-limited.
Jay-Z’s entertainment company, Roc Nation, which presents the festival along with promoter Live Nation, initially said it has no plans to leave Philadelphia. Made In America lost its key sponsor, but as reported by The Philadelphia Inquirer on July 21, other cities apparently have been making overtures to attract the event.
The festival, which takes place this year on Sept. 1-2, has drawn criticism over the years from neighbors and businesses along the Parkway about noise and damage caused by the event and has figured large in discussions about the appropriate number of mega-events on the Parkway that also close access to cultural institutions.
SEPTA OKs FY2019 Operating, Capital Budgets
SEPTA’s Board of Directors has approved the transit authority’s Operating and Capital budgets for Fiscal Year 2019, putting in place spending plans to cover everyday costs and improvement projects.
The $1.45 billion Operating Budget maintains current service levels with no fare increases. SEPTA said its newer fuel efficient buses have led to reduced fuel consumption overall and costs for injuries and damages have decreased largely due to the role of video evidence from new surveillance cameras.
Under the $749.62 million FY2019 Capital Budget, SEPTA will advance initiatives to renew critical infrastructure, replace aging vehicles and make technology improvements. SEPTA’s FY2019 Capital Budget and 2019-2030 Capital Program advance SEPTA's "Rebuilding the System" initiative to reinvest in the transit network throughout the region.
New Regional Rail Locomotives Debut
SEPTA has introduced a new electric locomotive to power trains on its Regional Rail network. The 15 ACS-64 locomotives manufactured by Siemens in Sacramento, Calif., will enable SEPTA to expand its fleet, replacing eight aging locomotives in the process.
Funding for the new locomotives comes from Pennsylvania Act 89, the transportation bill that provides resources for road projects, bridge repairs and public transit. The locomotives will start out in service with SEPTA's existing rail coach cars and eventually be paired with a fleet of multilevel trains projected to debut next year. A $137.5 million deal with Chinese-owned CCRC MA Corporation will bring 45 of the double-decker trains to the busiest Regional Rail lines by the end of 2020.
SEPTA Key Turnstiles Arrive At Suburban, 30th Street Stations
Two years after SEPTA Key launched to modernize Philadelphia's transit fare collection, Regional Rail riders are coming on board for the next phase of a system-wide rollout. Center City’s two busiest stations — Suburban Station and 30th Street Station — now have SEPTA Key turnstiles for Regional Rail commuters.
The reloadable fare card has already replaced tokens and TransPasses on Philadelphia's subways, buses and trolleys. About 70% of Regional Rail riders currently use daily, weekly and monthly passes for their commutes.
PennDOT Awards Philadelphia $9M To Improve Traffic Signals
Philadelphia has received $9 million in state funding to improve its traffic signals. The money will go toward three projects: modernizing signals along Oregon Avenue, from Passyunk to Front; modernizing signals along North 2nd from Callowhill to Lehigh; and installing wireless communication in order to connect 60 traffic signals with the traffic operation’s center.
The money was given as part of the state’s “Green Light Go” program, which awarded a total of 70 cities and towns around Pennsylvania with $31 million in grants for signal improvements and upgrades to increase safety and mobility along select corridors.
Economic and Employment News
Article Examines Philadelphia’s Slowing “Millennial Surge”
An article in the Philadelphia Business Journal examines the slowing growth of millennials in U.S. cities including Philadelphia, where growth rates have fallen from the highs of the early 2010s when the largest share of millennials were entering the workforce.
As CPDC executive director, Paul R. Levy states in the piece, the “millennial surge” has been important for Center City but that surge will continue to flatten in coming years. He notes that to attract and retain younger generations, Philadelphia needs to create more dynamic job growth and invest in amenities that will continue to be of value to this generation as its members get older.
NYT: Leaving New York to Find the American Dream in Philadelphia
An article in The New York Times on Sunday, July 22, examined the diverse groups that are leaving New York City for Philadelphia and why they are doing so.
The article notes that the “New York-Philadelphia migration, fueled by a quest for cheaper living, has long existed. But this is not just the same story of young artisans priced out of Chelsea. There’s another kind of New York transplant spreading out into Philadelphia … a quiet wave of immigrants who stop for a few months or several years in New York before finding a more manageable city an hour and 45 minutes down the New Jersey Turnpike. These foreign-born ex-New Yorkers are enlivening Philadelphia’s businesses, restaurants and neighborhoods with a diversity only now beginning to come into focus.”
City Controller Launches New Audit Of PPA
City Controller Rebecca Rhynhart has initiated a performance audit of the Philadelphia Parking Authority (PPA) to examine whether the agency could provide more funding to Philadelphia schools. It will be the first city audit of the PPA since 2009, and is expected to take seven to 10 months.
Rhynhart’s audit is intended to study the expenses of the PPA’s operations, looking at staffing levels, salaries and other expenses. All “on-street parking revenue” collected by the PPA, from parking meters and parking fines, is split between the city and the School District after the agency’s expenses are paid, so lower expenses would mean more money for schools.
Report: Philadelphia Municipal Hiring Practices Need Improvement
The hiring practices of Philadelphia municipal government are excessively cumbersome with antiquated rules that limit worker opportunities and restrict managers’ flexibility in choosing candidates, according to a new report by The Pew Charitable Trusts.
As the report does not offer recommendations, city officials who requested the study are reviewing it with an eye toward modernizing the hiring and employment system. A plan to modify civil service regulations could require a change to the city Charter. Philadelphia employs more than 30,000 full-time, part-time, and seasonal employees.
Army Passes On Philadelphia For Future Command Center
Philadelphia will not be the home of the Army Futures Command center. Army officials chose Austin, Texas, has the new home of the center.
Boston, Minneapolis and Raleigh, N.C., rounded out short list of five finalists for the 500-job facility. The Army describes the Futures Command as “the most significant Army reorganization effort since 1973.” The Futures Command will help the military branch evolve its operations to address new threats.