Office Sector News
Strong Interest in CBD, Record Asking Rents
At the end of the second quarter of 2016, the occupancy rate in Philadelphia’s central business district (CBD) was 90.0%, compared to 88.3% in the Pennsylvania suburbs, according to SSH Real Estate’s 2016 Greater Philadelphia MidYear Office Market Report and Outlook. Average asking rent for the CBD was $28.03/psf, with the suburbs averaging $25.16/psf.
University City and Market Street West had strong Class A rental rates of $41.59 and $30.37/psf, respectively, while Market Street East averaged $29.67, with rental rates expected to rise as new developments on Market and Chestnut Streets are completed.
Outside investors are showing greater interest in Center City, while out-of-market businesses are increasing their presence downtown. Since the beginning of 2015, at least 21 companies representing approximately 400,000 sf have established their offices in the City of Philadelphia, the report noted, bit.ly/29TYNns [PDF].
CBRE, using a slightly different geography, notes in its Greater Philadelphia Office Marketview, Q2 2016, that the second quarter of 2016 was historic for downtown Class A assets, as it marked the first time asking rents surpassed the $30 threshold, at $30.98/psf. CBRE calculates the overall occupancy rate at 89% in the downtown and 82.8% in the suburbs, with asking rents for Class A space there averaging $27.91. To read the report, please go to bit.ly/29QQQUx (requires registration).
Architectural Firm to Relocate in East Market
The architectural firm Bohlin Cywinski Jackson will move its Philadelphia office from 123 South Broad Street to 18,525 square feet on the sixth floor of 34 South 11th Street, part of the $500 million East Market development, The Philadelphia Inquirer reported on July 13.
Other leases in the building include MOM's Organic Market and the Design Center interior-design showrooms. The first phase of East Market is expected to be completed in spring 2017.
To read the article, please go to bit.ly/29EeVJJ.
Mayor Intercedes on Behalf of Family Court Developer
Mayor Jim Kenney has requested to meet with U.S. Interior Secretary Sally Jewell to ask for reconsideration of the National Park Service’s decision to reject developer Peebles Corporation’s plans to convert the city-owned former Family Court building at 1801 Vine Street into a hotel, The Philadelphia Inquirer reported on July 14.
The $85 million plan envisioned 199 guest rooms, a 3,500-square-foot ballroom, meeting and board rooms, a spa and fitness center, and a restaurant and bar. The city awarded the project to Peebles, which is now facing deadlines to have permits and funding in place for the renovation. To read the article, please go to bit.ly/2abyxKJ.
The DNC Committee, in partnership with the Knight Foundation, on July 14 announced plans for the Broad Street Arts Activation project, funded by an $80,000 grant from the John S. and James L. Knight Foundation, which now has transformed Broad Street, through a combination of paint, light, art and performance, into an inviting outdoor gallery of color and creativity stretching from Arch Street to Washington Avenue, through Thursday, July 28, bit.ly/2a9Txy1. For a complete list of venues and performers, please go to bit.ly/29K6TTO.
With funding from the DNC, CCD, in collaboration with The Lighting Practice, has developed a dynamic color-changing lighting installation for Philadelphia’s City Hall especially for the convention gathering. The South facade of City Hall’s tower is lit by color-changing LEDs and theatrical gobos. City Hall’s patriotic lighting will be synchronized with the permanent color-changing façade lighting of 12 historic buildings along five blocks of the Avenue of the Arts that links with Dilworth Park.
A bill to grant Philadelphia-area hotels, restaurants, bars, and other venues a four-day special permit to stay open until 4:00 a.m. during the convention was signed into law by Governor Tom Wolf on July 13, The Philadelphia Inquirer reported. A full list of bars staying open late will be posted on the Pennsylvania Liquor Control Board’s website, The Philadelphia Inquirer reported, bit.ly/29AvUAW.
The Reading Terminal Market has replaced its decade-old Wi-Fi system, the Philadelphia Business Journal reported on July 18. The Wi-Fi service is from Comcast Corporation, and the hardware is from manufacturer Ruckus. The market will open its doors at 7:00 a.m., an hour earlier than usual, during the convention, bit.ly/29YhwRZ.
A new app, Food Connect, has been developed for DNC party hosts and restaurants to donate extra food, KYW reported. The app matches those who have excess food with food pantries and shelters, cbsloc.al/2a6H6DE, and can be downloaded on iTunes or on an Android device. To sign up to be a donor, please go to http://bit.ly/29JngM6.
Curalate will capture content from social media and compile it into galleries, which users will be able to scroll and click through on the DNC’s website and Instagram, tapping the photo to receive more information, bit.ly/29NxYU9.
Governor Tom Wolf on July 14 announced that PennDOT has launched 511pa.com/DNC to assist residents and visitors during the DNC. The site, accessible from desktop and mobile interfaces, offers information about real-time traffic conditions on highways and street closures around the Wells Fargo Center, bit.ly/2a6GM7S.
Jefferson Health was named the official healthcare provider of the DNC and will offer medical services on-site at the Wells Fargo Center, Pennsylvania Convention Center, and other locations where there are official convention-associated events, Philadelphia Business Journal, bit.ly/2a2zdAr.
The city's Office of Risk Management is paying a total of $1.2 million for primary liability and excess coverage for up to $5 million in potential claims against police officers during the Democratic National Convention, Newsworks reported on July 11. In addition, the DNC Host Committee has paid $2.5 million for general liability insurance that will protect the city for $250 million in claims. All policies are being paid with monies from the U.S. Department of Justice’s $43 million security grant to the city, bit.ly/29zmYqE.
First of Four Targets Opens
A ribbon-cutting ceremony for the new Target store at 1128 Chestnut Street was held on July 19 in anticipation of the store’s soft opening on July 20 and grand opening yesterday, The Philadelphia Inquirer reported.
Approximately 19,000 square feet in size, the new store is the first and smallest of Target's four new flexible-format stores to open in Philadelphia and will offer groceries, health and beauty items, men's and women's clothing, tech products and accessories, a CVS Pharmacy, and Starbucks.
To read the article, which includes store hours, please go to bit.ly/29SQ47R.
Parks and Open Space News
Events at Dilworth Park During Convention Week
To encourage workers and residents to enjoy Center City and to welcome convention guests this week, Dilworth Park will be hosting more than a dozen pop-up arts performances from local cultural groups; live music showcasing Philadelphia’s finest talents; popular local DJs; a play day for children from recreation centers across the city; and festive happy hours for workers and visitors Tuesday through Thursday, with the DNC Center City District Sips celebration on Wednesday, July 27, from 5:00 p.m. to 9:00 p.m. In addition, the CCD will host an art installation event, as well as events sponsored by others to promote clean energy, mental health and substance use reform.
For complete information on all the events in Dilworth Park, please go to DilworthPark.org.
Silverliner V Updates and SEPTA Key
The cost to SEPTA for leasing replacements for the 115 Silverliner V Regional Rail cars taken out of service on July 1 is approximately $257,035 per month, Philly.com reported. The Authority is leasing 18 railcars and three locomotives from Amtrak, NJ Transit and the Maryland Area Regional Commuter (MARC) to provide an additional 1,700 seats. SEPTA continues to encourage customers to switch to trolleys, subways, and buses, bit.ly/29BAY3Y.
SEPTA will replace instead of repair the damaged equalizer beams on its Silverliner V cars, currently out of service, KYW reported. The transit agency simultaneously is pursuing two replacement options to speed up production of these components in order to resume full service as soon as possible, cbsloc.al/29Y7VqB.
Beginning August 1, SEPTA will sell weekly and monthly TransPasses loaded on Key Cards at SEPTA sales offices at 15th Street Station and SEPTA's headquarters at 1234 Market Street, bit.ly/29ZLV4U.
Comcast Offers Expanded Access at Regional Rail Stations
Comcast Corporation has announced it will allow access to its XFINITY WiFi hotspots to everyone at Regional Rail stations, not just Comcast customers, as long as SEPTA is operating on a modified schedule, KYW reported on July 13. The expanded access will end when all SEPTA cars are back in service and the schedule is back to normal, the article noted, cbsloc.al/29YsOpf.
New CEO for Port of Philadelphia
The Philadelphia Regional Port Authority (PRPA) Board has named Jeff Theobald the new CEO of the Port of Philadelphia, effective next month, the Philadelphia Business Journal reported on July 20. He replaces James T. McDermott, Jr., who retired in April.
Theobald most recently served as president and CEO of the Ports America Outer Harbor Terminal, which included the container terminal in San Francisco.
Philadelphia’s port is one of the top 10 fastest-growing ports accessible for worldwide imports, the article noted. To read the article, please go to bit.ly/29WlMP4.
Free Streets Celebration Planned for September
On September 24, City officials will temporarily close city streets from South Street to Fairmount Park for the first Philly Free Streets event, The Philadelphia Inquirer reported on July 13.
Open Streets PHL, the nonprofit working to have select streets closed to vehicular traffic for recreational events, is working with the City on the event. The day will include fun and educational programming, physical activity, history, arts, culture, and sustainability.
To read the article, please go to bit.ly/29zOvs7.
Spirit to Add Nonstop to Orlando
Spirit Airlines will begin daily nonstop flights from Philadelphia to Orlando, beginning October 7, bringing to four the number of carriers offering the nonstop service, The Philadelphia Inquirer reported on July 21. The other three are American, Frontier and Southwest. To read the article, please go to bit.ly/29Zepc3.
New York City to Invest in Transit Shelters, Subway
As Philadelphia begins to deploy its new transit shelters, it is worth looking, for comparison purposes, at what New York City has done and what they are proposing. Note the subway street entries with open sides, on.nyc.gov/29TUKHD.
On July 18, New York Governor Andrew Cuomo unveiled a five-year, $27-billion redesign plan for the city’s aging subway system, which adds 1,025 new subway cars with updated features such as wider doors, LED headlights, digital signage, USB chargers, seats that flip up, and Wi-Fi. In addition, 750 cars will have an “open gangway” design that allows commuters to move freely among the cars, with the goal of accommodating more passengers and reducing wait times. To view renderings and read about the second part of the plan that would remake 31 stations, please go to bit.ly/2aiUYub.
SugarHouse Casino Revenue Up in FY16
Revenue from slot machines and table games at SugarHouse Casino on the Delaware River increased 4.3% in fiscal year 2016 (FY16), compared to FY15, according to the Pennsylvania Gaming Control Board.
In FY16, the casino took in $281,792,087, compared to $270,225,990 in FY15. The Commonwealth’s share of taxes was $73,081,179, compared to the previous fiscal year’s $71,484,388. The City of Philadelphia received $9,176,552 in FY16, compared to $8,922,207 in the previous fiscal year.
To see all casino revenues, please go to bit.ly/1I0aqlt.
Manufacturing Down Slightly in July
Manufacturing activity in the region fell slightly in July, according to firms responding to July’s Manufacturing Business Outlook Survey, conducted by the Federal Reserve Bank of Philadelphia, with new orders up for 27.6% of the companies, down for 15.8%, and remaining the same for more than half, 52.7%.
The number of full-time employees was static for more than three quarters, 76.9%, increased for 9.4%, and decreased for 11.0%.
Looking ahead six months, 45.5% anticipated business conditions to improve, while 11.8% expected business to worsen, and 32.2% responded they expected no change.
To read the report, please go to bit.ly/29X34Mh.
Working-Age Population Increases
While 98 larger counties (more than 100,000 residents) in the U.S. have lost at least 5% of their prime working-age population (25 to 54 years old), Philadelphia County’s has grown by 5.9%, according to an analysis published in Governing magazine. Philadelphia’s population grew by 34,291 between 2000 and 2014 and millennials represent 40% of the downtown’s population (centercityphila.org/docs/CCR16_housing.pdf [PDF]).
Denver, which, like Philadelphia is both city and county, saw a 17.7% increase in its working-age population. On July 20, a New York Times article explored why Denver attracts so many millennials, counting the highest millennial net annual migration gain of any metropolitan area in the U.S., with 18- to 34-year-olds contributing 35% of the city’s population growth from 2010 to 2014.
The article notes plentiful jobs, outdoor recreation, a progressive mind-set and its walkability, among other positives.
To read the Governing article, please go to bit.ly/2aeTAcq. To read the New York Times article, please go to nyti.ms/2ajtTa3.
State Revenue Bill Passed and Signed
The Pennsylvania General Assembly on July 13 passed and Governor Tom Wolf signed HB 1198, the bill that completed funding for the $31.5 billion state spending plan for fiscal year 2016-2017, Penn Live reported. The vote in the House was 116-75, and in the Senate, 28-22.
The final revenue package is expected to raise nearly $1.3 billion through a $1.00-per-pack tax increase on cigarettes, an expansion of gambling, liquor reforms and applying the personal income tax on Pennsylvania Lottery winnings, the article noted.
To read the article, please go to bit.ly/29xv9sj. To read HB 1198, please go to bit.ly/2a6Cf6i.
New Name for Office of Supportive Housing
The City’s Office of Supportive Housing (OSH) has changed its name to the Office of Homeless Services (OHS), KYW reported on July 18.
The name change reflects the office’s new mission, which goes beyond addressing homelessness to include prevention, early intervention, street outreach, and emergency assistance, and comes as the city is in the early stages of a 100- day challenge to reduce youth and chronic street homelessness.
To read the article, please go to cbsloc.al/29SPQxo.
‘The Right Kind of Tax?’
ICYMI: The Philadelphia Citizen requested permission to reprint Paul R. Levy’s opening column in the CCD/CPDC 2016 Summer Digest and published it on July 19, retitled “The Right Kind of Tax?,” which discusses the recent decisive, bipartisan passage of HB 1871 by the Pennsylvania General Assembly. The bill would amend the Pennsylvania constitution to enable Philadelphia to assess properties used for business purposes at a 15% higher rate than residential, so long as incremental revenues are dedicated 100% to wage and business tax reduction. The bill must pass again in the 2017 legislative session and then be placed on the ballot for voter consideration. To read the article, which includes hyperlinks to the bill and the Philadelphia Growth Coalition, please go to thephiladelphiacitizen.org/right-kind-tax/.
Best of Philly Summer Soiree Raffle Benefits CCDF
Philadelphia magazine’s Best of Philly Summer Soiree will be held August 4 at Dilworth Park. Guests can taste food from the city’s best restaurants, enjoy live entertainment, and take part in some of the ‘best’ things Philly has to offer.
In addition to rental fees paid to CCD for the event, Philadelphia magazine will make a donation to the Center City District Foundation (CCDF) and create an opportunity for CCDF to raffle off a variety of items and retain 100% of all proceeds from the raffle.
Tickets: general admission, $99 (for entrance at 6:30 p.m.); VIP, $165 (entrance at 5:00 p.m.); and $80 general admission tickets available when purchased for groups of five or more.
For more information and to purchase tickets, please go to bit.ly/1pZQOWg.
Reinventing Our Communities
The seventh biennial Reinventing Our Communities conference, hosted by the Federal Reserve Bank of Philadelphia and cosponsors, will be held Wednesday, September 21, through Friday, September 23, at the Hilton Philadelphia, Penn's Landing, 201 South Christopher Columbus Boulevard.
The conference will examine strategies on how communities can connect people, places, and capital to transform local and regional economies in an inclusive way.
Keynote speakers will be Patrick T. Harker, President and CEO, Federal Reserve Bank of Philadelphia; Dennis P. Lockhart, President, Federal Reserve Bank of Atlanta; and Loretta J. Mester, President, Federal Reserve Bank of Cleveland.
For more information and to register, please go to bit.ly/29Ej81g.