Office Sector News
Strong Investor Interest in CBD Office Market
Investors from gateway cities are increasingly interested in the Philadelphia office market, and they’re investing in volumes exceeding the previous peak of mid-2006 through 2007, according to IRR’s 2015 Mid-Year Viewpoint (Office).
From January 2014 to present, there were 12 class A, central business district (CBD) office transactions for more than 500,000 square feet (SF), totaling $1.6 billion, topping the previous peak in which 10 similar-sized transactions totaled $1.5 billion, the report noted.
The 7.2 million SF of office space that changed hands during this new peak included 1515 Market Street, 1635 Market Street, Penn Mutual Towers, and the Curtis Center. In addition, the average SF price rose to $223 and the cap rate fell below 7%, up from $196 per SF and a 7%+ cap rate during the 2006-2007 boom.
To read the report, please go to bit.ly/1gOLxUn [PDF].
Brickstone Buys Hale Building
The Brickstone Companies, which is developing 1112-1128 Chestnut Street, has bought the 51,500-square-foot Hale Building at 1326 Chestnut Street, on the southwest corner of Juniper and Chestnut, and will renovate the property, The Philadelphia Inquirer reported on July 18. The seller is 1326 Chestnut Street Associates.
Brickstone plans to revamp the upper floors of this remarkable, seven-story, historic building into offices and the ground floor will be divided between two restaurants, the article noted.
The redevelopment will continue the resurgence of East Chestnut Street and reinforce connections to both 13th Street and South Broad.
To read the article, please go to bit.ly/1TMv4y0.
205 Race Street Construction to Begin
Groundbreaking for the developer Brown Hill’s $65 million 205 Race Street project has been set for August 5, The Philadelphia Inquirer reported on July 24. The 17-story apartment building is being built across the street from the pedestrian connector beneath I-95 to the Race Street pier.
Rents will range from about $1,900 a month for a studio to $3,500 for two bedrooms, though 10% of the apartments will be discounted by about half for lower-income tenants, which allows the developer to include more units.
A completion date was not announced.
To read the article, please go to bit.ly/1CVvLB8.
Market West Sales Averaging $300 Per Square Foot
JLL’s Chart of the Week notes that the recent flurry of Market West land sales valued at $140 million are approaching a $300-per-square-foot (psf) average and unlocking challenged sites.
Among the largest sites was the large L-shaped site fronting the Schuylkill River and John F. Kennedy Boulevard, the Garrison Site, also known as River City, comprising five parcels totaling just over seven acres, which sold for just under $30 million, or $93 psf.
The sale of long-held holdings of Richard Basciano’s on West Market Street create an opportunity to develop the western edge of Center City and unify it with University City.
To view the JLL Chart of the Week published on July 20, please go to bit.ly/1MnTEDp.
Designing for Density and Light
An article in the July 20 edition of Next City suggests that cities can accommodate more density and taller buildings without sacrificing sunlight if good design is utilized and reinforced by an updated zoning code.
In New York, the Department of City Planning wants to revise its zoning code to allow more flexibility in the shape and height of buildings, making them more like they were in the early 20th century, when “wedding cake” buildings with receding upper stories were popular. The department also wants to encourage more interior courtyards, street-side gardens and airy ground-floor shops, all of which would serve to allow more light.
To read, “Do Taller Buildings Have to Mean Darker Streets?”, please go to bit.ly/1Jssoyh.
Residential Market News
Dramatic Increase in House Prices Across the City
House prices and sales surged in every neighborhood in Philadelphia during the second quarter of 2015, giving the housing market its best quarter in 10 years, according to Kevin C. Gillen, Senior Research Fellow with the Lindy Institute for Urban Innovation at Drexel University, in a report released on July 13. The median house price increased 18% to $138,600 over the previous quarter’s $117,500, and was up 20.5% over the same quarter last year.
Prices in three neighborhoods increased by double digits: University City (+10.9%), West Philadelphia (+10.8%), and North Philadelphia (+10.1%). Prices in Center City/Fairmount (Gillen’s geographical definition) were up 3.3%, and in South Philadelphia, they increased by 4.7%.
The number of house sales in the quarter grew from 3,061 in the first quarter to 4,198 transactions in the second quarter, well above the 3,466 during the same period last year.
To read the report, please go to bit.ly/1GhXPt6.
2116 Chestnut to Be Sold
The 34-story high-rise apartment building 2116 Chestnut, which opened in June 2013, is being sold by the John Buck Company of Chicago for approximately $160 million to CBRE Global Investors, The Philadelphia Inquirer reported on July 19.
HFF of Conshohocken is handling the transaction, but did not announce the closing date.
The 321-unit building cost $100 million to build and apartment rentals there have ranged from $1,790 to $3,686 monthly, the article noted.
To read the article, please go to bit.ly/1Gwi9a8.
Manufacturing and Service Sectors Positive in July
Manufacturing activity in the region increased modestly in July, while the service economy slipped, according to responses to the Manufacturing and Nonmanufacturing Business Outlook Surveys conducted by the Federal Reserve Bank of Philadelphia.
In manufacturing, the number of full-time employees rose for 12.0% of the responding firms, decreased for 12.4%, and remained the same for three-quarters (75.0%). In the service sector, the number of full-time employees increased for 16.2%, was down for 10.8%, and remained the same for 73.0%.
New orders for manufacturers were up for 31.7% of the firms, down for 24.7%, and 40.8% saw no change, while in nonmanufacturing, new orders were weaker, with 24.3% respondents seeing an increase, 29.7% a decrease, and 24.3% no change.
Looking ahead six months, respondents in manufacturing were less optimistic than those in services, with 50.0% in manufacturing expecting improved conditions compared to 81.1% in services, 8.6% anticipating a downturn compared to 0.0%, and 35.0% and 13.5%, respectively, looking for business to remain the same.
To read the manufacturing report, please go to bit.ly/1JfLDiS.
To read the nonmanufacturing report, please go to bit.ly/1Ok0PLf.
Business Services Jobs Increasing, Philadelphia Lagging
While the number of manufacturing and information jobs in the U.S. has fallen since 2004, the white collar, business services sector, including accounting, market research, public relations and technology, has grown 21% nationally, adding 3.4 million positions, according to an article published in NewGeography on July 17.
The top 10 cities for growth in the business services sector are in the West or the Sun Belt. Philadelphia ranked 55th of the 70 large cities in the U.S. with other East Coast peers much stronger: New York was 29th, Boston 45th and Washington, D.C. 65th. From 2013-2014, the number of these jobs increased by 1.9% in Philadelphia, and from 2009-14, the number increased by 10.3%.
To read “The Cities Creating the Most White-Collar Jobs,” by Joel Kotkin and Michael Shires, please go to bit.ly/1Iipu4z.
Federal Rule Change Proposed for Salaried Employees
The U.S. Department of Labor (DOL) has proposed updating rules and regulations issued under the Fair Labor Standards Act (FLSA) for exempt employees. The standard salary level required for exemption is currently $455 a week ($23,660 for a full-year worker), proposed to increase to $970 a week ($921 per week, or $47,892 annually) in 2016, with total annual compensation to equal the 90th percentile of weekly earnings of full-time salaried workers, or $122,148 annually.
DOL is accepting comments in the rulemaking process until September 4. Comments can be submitted, identified by Regulatory Information Number (RIN) 1235-AA11, at regulations.gov, or by addressing them to: Mary Ziegler, Director of the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue, N.W., Washington, D.C. 20210.
To read the DOL’s proposed rule changes, please go to 1.usa.gov/1GM8xti [PDF].
Bloomingdale’s Discount Store to Arrive in November
In November, Bloomingdale's The Outlet Store will open in a 22,700-square-foot space on the second level of The Shops at Liberty Place, The Philadelphia Inquirer reported on July 15.
The new store, which will sell a range of discounted apparel and accessories plus items for the home, will be Bloomingdale's first outlet store in the Philadelphia metropolitan area.
Bloomingdale’s Outlet joins last year’s retail newcomers to West Chestnut Street, Uniqlo and Nordstrom Rack.
To read the article, please go to bit.ly/1KgPPxs.
Two Properties on Walnut Street Sold
Pearl Properties has purchased 1527 Walnut Street, most recently home to Lululemon, for $10.5 million, or approximately $3,000 per square foot, the Philadelphia Business Journal reported on July 23. Pearl owns several other properties on the block. Plans have not been announced for the location.
Also, the 14,100-square-foot 1513 Walnut Street, which houses Brooks Brothers, is under agreement for $14 million, or $1,000 a square foot, but the buyer was not named, the article noted.
To read the article, please go to bit.ly/1LHLi8R.
SugarHouse Revenue Down in June
Revenue dipped in June for the third straight month at SugarHouse Casino on the Delaware River, according to the Pennsylvania Gaming Control Board.
In June, the casino took in $22,382,711, compared to $23,358,038 in May. The Commonwealth’s share of taxes in June was $5,724,066, compared to May’s $6,243,866. The City of Philadelphia collected $722,500, compared to $777,599 in May.
To see all casino revenues, please go to bit.ly/1KdV9QV.
Arts and Culture News
Ramos to Lead Philadelphia Foundation
The Philadelphia Foundation (TPF) on July 14 announced the appointment of Pedro A. Ramos as President and CEO, succeeding R. Andrew Swinney, who retired in June after 16 years of leading the organization.
Ramos, the first Latino to lead the organization, was selected after a national search was conducted. In July, he will leave his position as partner at Schnader Harrison Segal & Lewis, LLP and will take up his new post in August.
Ramos is a former Managing Director for the City of Philadelphia, former City Solicitor and served on the School Reform Commission.
To read TPF’s press release, please go to bit.ly/1U2h0Rg.
ArtPlace Makes Two Awards in the City
Reading Terminal Market will receive a $160,000 grant from ArtPlace for streetscaping on the 1100 block of Filbert Street, Philly.com reported on July 17.
In addition, the City of Philadelphia Mural Arts Program will be awarded a $415,000 grant for creative work at Bartram’s Garden, the article noted.
The two recipients were chosen from about 1,300 applicants nationally for the grants program.
To read the article, please go to bit.ly/1Vq1fFj.
Museum Reaches Milestone
Museum of the American Revolution supporters celebrated the new building’s “topping-off” ceremony on July 16 at Third and Chestnut Streets, where the $119 million museum will be completed by September 2016, in anticipation of opening to the public in spring 2017, The Philadelphia Inquirer reported.
The museum will house George Washington's field tent and numerous artifacts assembled by the old Valley Forge Historical Society.
The project, designed by New York's Robert A.M. Stern Architects, is on schedule and fully funded, the article noted.
To read the article, please go to bit.ly/1I87MdE.
Hotel Occupancy Hits High in June
Hotel occupancy in Philadelphia hit 89.4% in June, the highest monthly rate in more than 20 years, the Philadelphia Business Journal reported on July 13. Year-to-date occupancy was at 76.2%.
Revenue per available room (revPAR) was $190 for June, 10.7% higher than any month since last October.
June's average daily hotel room rate (ADR) was $212.95, the highest since 1993 — bringing the year-to-date ADR to $182.86, up nearly 7% year over year.
To read the article, please go to bit.ly/1Lcmt4G.
In other hotel news, the number of people employed in the hotel economy in Philadelphia fell slightly from 7,544 in 2013 to 7,525 in 2014, a 0.3% drop, the Philadelphia Business Journal reported on July 23. Philadelphia ranked 35 in a study conducted by Headlight Data of the 50 largest hotel economies.
To read the article, please go to bit.ly/1Igwrgo.
Free App Will Provide Information During Papal Visit
The World Meeting of Families in collaboration with IBM and Visit Philadelphia has created the “Go Philadelphia” mobile app, which is now available and free on the Apple App Store and Google Plus, The Philadelphia Inquirer reported on July 22. The app offers maps and information on 120 cultural and historic exhibits in the region, FAQs, and emergency information, all of which can be accessed without the Internet.
In addition, the app will provide real-time translation and captioning in eight languages during portions of the Papal Mass on Sunday, September 27.
To read the article, please go to bit.ly/1MIGQp2.
Wireless Tram Being Tested in Brazil
The first of 32 Alstom Citadis wireless streetcars have arrived in Rio de Janeiro, Brazil, and are being tested with a wire-free power supply system, Next City reported on July 14. The system transmits electricity to the trams by energizing a third rail embedded in the pavement when cars pass over it; the rail is de-energized at other times. The system is to be used during the 2016 Olympics.
Edward M D’Alba, President and CEO of Urban Engineers, summarizes comments from his team: “Similar wireless streetcars are in operation in multiple cities in Europe where they provide highly visible transit service. Any installations in older cities in the United States would probably work best using the center of the roadway where trolley tracks used to run, rather than the curb lane, where subsurface utilities tend to be located. Because of the increased track maintenance responsibilities that come with light rail, SEPTA has tended to favor using buses instead.”
To read the article in Next City, please go to bit.ly/1CGbAHa.
SEPTA Struggling With Passes for Papal Visit
SEPTA announced that it would begin selling $10, one-day Regional Rail passes on Monday, July 20, for the papal visit, and that they would be available only online, (bit.ly/1Vlj34u). However, when the site went live, 54,000 customers tried to buy tickets in the first minute. The system crashed and the transit agency said it would not resume sales until possibly this week, bit.ly/1HSDX1D.
SEPTA will decide this week whether to change vendors, but the agency has already paid CapTech $16,000 of $84,520 to handle the online sales, bit.ly/1MpnUhk.
During the visit, SEPTA trains will stop at only 21 stations, with Center City stops at 30th Street Station, Jefferson Station, and University City Station.
Parks and Open Space News
ADA 25th Anniversary Celebrated in Dilworth Park
On Saturday, about 200 people gathered in Dilworth Park to celebrate the 25th anniversary of the American With Disabilities Act (ADA), passed in 1990. Retired Senator Tom Harkin (D., Iowa), primary author of the ADA legislation, was among the speakers. To read an article about the event published in The Philadelphia Inquirer on Sunday, please go to bit.ly/1gfOmOd.
Dilworth Park is available for rental for conventions, meetings and weddings and through a Community Access Program, CCD offers charitable 501(c)3 organizations, like those participating in the ADA event, an opportunity to apply for a reduced rental for events that are free and open to the public: ccdparks.org/dilworth-park/rentals.
State Budget Update
State Representative Dan Truitt (R., Chester) on June 29 introduced HB 1410, which would authorize the state Budget Secretary to make payments to school districts, human services agencies, and other entities providing government services to ensure they receive funding should the budget stalemate continue. School districts will likely begin to be affected sometime this fall.
To read the bill, please go to bit.ly/1I0CM3F.
Also, the House Appropriations Committee on July 22 passed HB 1460, which creates a vehicle to pass a budget bill, should the legislature and Governor Tom Wolf find a compromise, according to Pennsylvania Legislative Services, a subscription news service.
House rules require a General Appropriations Bill to have a first and second reading before it can be passed, which takes about two weeks, the article noted. The bill contains the same budget that the governor vetoed, but can be amended. The budget authorized nearly $30.1 billion in spending, a 4% increase over the previous budget, with the additional money going mostly to growing pension obligations and a $100 million, or 2%, increase in funding for the state’s public schools.
To read HB 1460, please go to bit.ly/1Okpcsh.
PICA Board Approves Five–Year Plan
The Board of the Pennsylvania Intergovernmental Cooperation Authority (PICA) on July 16 approved the City of Philadelphia’s Five Year Plan for FY16-20 with a four to one vote. In its approval, the Board noted that the City continues to show signs of economic growth and expansion and unemployment levels have nearly reached pre-recession levels, with median income also recovered.
Risks noted were the instability of Philadelphia School District finances, wage increases exceeding projections, and continued uncertainty over a substantial number of unresolved property tax appeals.
In other PICA news, Suzanne Biemiller, former first deputy chief of staff to Mayor Michael A. Nutter, was chosen as chairwoman.
To read the PICA Staff Report on the Plan, please go to bit.ly/1IfyyXZ [PDF]. To read an article about the report in The Philadelphia Inquirer, please go to bit.ly/1MkN7Ky.
Wolf Appoints New Chief of Staff
Governor Tom Wolf on July 23 named Mary Isenhour as his new chief of staff one day after Katie McGinty resigned for what may be a run for the U.S. Senate, The Philadelphia Inquirer reported. Isenhour had been serving as the governor’s director of legislative affairs. She also is a former state Democratic Party leader and political strategist.
If McGinty decides to run for the U.S. Senate, she will face former Congressman Joe Sestak in the primary, and the winner will challenge Senator Pat Toomey, a Republican.
To read the article, please go to bit.ly/1GHvw7w.
A Variety of Activities at Dilworth Park
Rosa Blanca Café is open Monday through Friday, 8:00 a.m. to 9:00 p.m.; and Saturday and Sunday, 11:00 a.m. to 7:00 p.m. Also, Capogiro Gelato Artisans, a family-owned gelateria, has its colorful custom-made cart open seven days a week from 11:00 a.m. to 10:00 p.m. on the north side of the park. Capogiro offers sorbetto and gelato in a wide array of flavors.
Scheduled activities include:
Sips at Dilworth – Every Wednesday through September 16, from 5:00 p.m. to 7:00 p.m., Rosa Blanca Café hosts Center City District Sips. DJs provide music from 6:00 p.m. to 8:00 p.m. On July 29, the DJ will be Rahsaan Lucas (Reggae) and August 5, DJ Chillio Ortiz (Latin).
Farmers’ Market at Dilworth Park – Every Wednesday through November 18, 11:00 a.m. to 2:00 p.m., McCann’s Farm of Elk Township, New Jersey, offers an array of fresh fruits and vegetables, from asparagus to blueberries to zucchini. PetAl Plants & Flowers of New Jersey stocks a wide variety of houseplants and flowers, and Philly Bread brings freshly baked breads.
Rhythms at Rosa Blanca – Every Thursday, from 5:30 p.m. to 7:30 p.m. through September 17, with no program on August 6. Live music features duos and trios playing summer-style and Latin music.
Here’s the lineup:
July 30, and August 13 & 27 – Trinidelphia;
August 20 – Rafael Pondé;
September 3 – El Caribefunk;
September 10 & 17 – De Tierra Caliente.
For complete information on Dilworth Park, please visit dilworthpark.org.
Pairings on the Parkway
Every Thursday, from 5:00 p.m. to 8:00 p.m., Sister Cities Park at 18th Street and the Benjamin Franklin Parkway hosts Pairings on the Parkway. BYO favorite bottle and take a seat at one of the tables outside the cafe or bring a blanket and find a spot under a tree or on the grass. Logan Square Café is offering a special summer grilling menu. Bring the whole family and enjoy the Children's Discovery Garden; plus there's live music every week! On July 30, Minverva will perform, and on August 6, Birds Over Arkansas. Music is from 5:30 p.m. to 7:30 p.m.
For more information, please visit sistercitiespark.org.