Office Sector News
Blue Cross Extends Lease
Independence Blue Cross (IBC) has extended the lease for its headquarters at 1901 Market Street, the Philadelphia Business Journal reported.
The 45-story, 800,695-square-foot building has been occupied in its entirety by IBC for the past 25 years and its lease was due to expire in 2023, but the renewal extends the lease until 2033, the article noted.
The building is owned by Piedmont Office Realty Trust, Inc., of Johns Creek, Georgia, near Atlanta.
Office Market Remains Uninspired
Three second-quarter office market reports indicate varying degrees of sluggishness.
SSH Real Estate's 2013 Greater Philadelphia Mid-Year Office Market Report and Outlook reports that Philadelphia's Central Business District (CBD) has just over 45 million square feet of office space in 122 buildings, with rents averaging $25.85 per SF in mid-2013, compared to $25.55 in 2012. The vacancy rate rose fractionally from 10.73% in 2012 to 11.12% at midyear. The Pennsylvania suburbs have 75.1 million square feet in 1,079 buildings, with an average rent of $21.97, compared to $21.86 in 2012. The vacancy rate dipped slightly from 14.13% in 2012 to 13.46% by mid-year.
In the CBD, Public Health Management relocated from 260 South Broad to 120,207 SF at 1500 Market Street, helping to alleviate the large vacancy in Market West created by the departure of GlaxoSmithKline.
To read the report, please go to bit.ly/145mkXo [PDF].
Integra Realty Resources Real Estate Value Trends reports the vacancy rate in Philadelphia's CBD is comparable to other East Coast cities at 10.50%, with Boston and Pittsburgh also at 10.5%, Washington at 10.3%, and NYC at 9.0%. Baltimore's vacancy rate is substantially higher at 15.1%.
Asking rent in Philadelphia's CBD, at $24.33/SF, lags far behind Boston's ($51), NYC's ($57.25) and Washington's ($55.14). Baltimore's asking rent averages $23.29.
Philadelphia's suburban office vacancy rate is higher than the CBD at 12.80%, while Boston suburbs have a 17%; Pittsburgh, 7.2%; New York, 21%; and Washington, 15.1%, the report noted.
Philadelphia's suburban asking rent, at $22.42 is the second-lowest of the six major east coast cities, with Boston averaging $22; Pittsburgh, $23.50; Washington, $33.33; NYC, $23; and Baltimore, $25.81.
To read the report, please go to bit.ly/15tARQH [PDF].
Newmark Grubb Knight Frank's Philadelphia CBD Office Market Report, 2013 Second Quarter, which counts a slightly different inventory than the other two firms, notes that Second Quarter vacancy in the CBD rose from 13.51% to 13.89%, though Class A vacant space was reduced by 124,000 SF. Trophy Class vacancy dropped to 3.3% with average asking rental rates rising to $38.69/RSF. The vacancy rate in the greater Philadelphia office market was 16.6%.
Beneficial Bank's signing of a lease for 96,000 SF at 1818 Market Street and PHMC's signing for 120,000 SF at Centre Square East helped reduce Class A vacancies, a trend that is expected to continue due to the tight Trophy Class space, the report noted. The report indicates an average $25.73 SF rental rate, not including Trophy buildings.
Philadelphia 84th in Economic Growth
Philadelphia ranked 84th in economic vitality on a list of 102 major markets in July's installment of On Numbers, an economic index created by G. Scott Thomas of the Business Journals and reported by the Philadelphia Business Journal on July 22.
Philadelphia's overall score was 36.412, compared to 85.052 scored by the highest-ranking city, Provo, Utah. New Haven, Connecticut, ranked last, with an overall score of 21.288. Philadelphia's unemployment rate was 8.0%.
To read the report, please, go to bit.ly/12JHI5o.
Nonmanufacturing Steady in July
Responses to the Federal Reserve Bank of Philadelphia's survey of nonmanufacturing firms suggest near steady activity in the local economy in July.
Substantially more respondents (40.5%) reported increases in new orders than reported decreases (14.3%). Sales also were strong as more than half (54.8%) reported an increase and only 19% reported a decrease. Prices received were up for 23.8% of the reporting firms, while only 11.9% reported lower prices.
Full-time employment was up for 31% of the respondents and only 2.4% reported a decrease.
Looking ahead six months, 90.5% of the companies expected business activity in the region to increase.
In response to a question about changes inspired by the Affordable Care Act, 70.5% of the companies said they had made no changes, and 76.6% responded they would not make changes in the future.
Philadelphia Attracts Venture Capital
Philadelphia ranked 11th in the top 20 cities in the country for venture capital investment, according to a report based on data from the National Venture Capital Association and published in The Atlantic Cities. Philadelphia brought in $347 million in venture capital. San Francisco-Oakland ranked first with $6,896 million or 25.6% of the total capital invested.
The Boston-Washington corridor, however, rivaled the West Coast leader with $6.2 billion in investments, or 23% of the total. Boston accounted for just over $3 billion in venture capital investment (11.5%), followed by New York with $2.3 billion (8.4%), Washington, D.C. with nearly $500 million (1.8%), and Philadelphia accounted for 1.3%.
To read the article, please go to bit.ly/19IQXd9.
Brandywine Realty Trust presented its proposal for 1919 Market Street, a 28-story apartment building with retail on the lower two floors, to a combined meeting of the zoning boards of the Center City Residents Association and the Logan Square Neighborhood Association.
BartonPartners of Norristown has designed a sleek, narrow rectangular glass tower that will house 278 apartments and have 200 feet of frontage on Market Street.
Brandywine is seeking approval for an above-grade parking garage; entrance to the garage on 20th Street; and a minor setback issue, in order to begin construction on the project in late fall.
The parking garage, with .75 spaces per apartment, will hold about 220 cars and will have space for bicycles, car-shares and electric charging, plus parking for visitors.
The developer is striving for Silver LEED certification, and construction will take about 18 months.
SSH Real Estate's Market Report mentioned above notes that multifamily demand continues to be strong in Center City, where the vacancy rate is just 3.4%. But SSH is tracking 22 new apartment projects that could add more than 4,500 new units by 2015, if all are completed. The Granary, soon to be completed; 2116 Chestnut, now leasing, and the pre-leased The Sansom are adding 319 apartments to the Center City inventory.
To read the report, please go to bit.ly/145mkXo.
Residential Market News
Housing Prices Continue to Climb
The quality-adjusted price of single-family houses in Philadelphia increased by an average of 5.3% in the second quarter of 2013, and is up 1.8% from a year ago, according to Econsult Solutions, Inc. Philadelphia Housing Index - 2013 Q2.
There were 3,736 arms-length sales of single-family homes in the quarter, up 28% from the previous quarter, and 25% from the same quarter a year ago.
Median sale price in what Econsult calls the Central District, similar in size to Center City, was $409,900, a 3.1% increase over the previous quarter, and 6% increase over the same quarter last year.
To read the report, please go to bit.ly/1465bRI.
300 Jobs to Leave Center City
Aramark, based at 12th and Market Streets, is moving approximately 300 jobs from its headquarters in Center City to Nashville, The Philadelphia Inquirer reported. The jobs are primarily in finance and human resources, the article noted.
Aramark is building a new business services center in the Tennessee capital and expects the facility to be complete by the end of the year. About 1,000 people will be working in the new center.
To read the article, please go to bit.ly/18AEyZp.
Reading Terminal Named 'Best'
Reading Terminal Market was named "Best Tourist Attraction" in Philadelphia in the August issue of Philadelphia Magazine, which features the 40th anniversary collection of Best of Philly winners. The Market was chosen over the Barnes Foundation, the Liberty Bell, and the National Constitution Center, to name just a few.
In addition, three merchants within the Market were named "best."
Bassetts took the crown for Best Ice Cream; Beiler's won Best Doughnut; and Meltkraft at Valley Shepherd Creamery won Best Grilled Cheese.
SugarHouse Challenging Second Casino License
Local investors in SugarHouse Casino filed suit in Dauphin County on July 29 challenging the Pennsylvania Gaming Control Board's (PGCB) authority to reissue a second gaming license for Philadelphia, The Philadelphia Inquirer reported.
The suit contends that PGCB has no power to award a license to a new casino operator three years after revoking one for the failed Foxwoods Casino project, according to the article.
The PGCB on August 1 announced that it would seek dismissal of the suit. The PGCB is currently reviewing six applications for the second casino license in Philadelphia.
To read the article, please go to bit.ly/13nbRLm.
Critical Time for Pennsylvania Convention Center
In a subscription-only article on July 26, the Philadelphia Business Journal outlined why this summer is crucial for the Pennsylvania Convention Center.
Despite the $786 million expansion completed in 2011 that created 1 million square feet of exhibitor space and the largest ballroom on the east coast, the Convention Center has seen a dramatic decline in convention bookings through 2016, the article noted.
Conshohocken-based SMG, which manages convention centers in San Francisco, Chicago, and Denver, among others, will begin to manage the Center on October 1.
The article points to Chicago as a city that was able to turn around its failing Convention Center by making substantial changes with labor, combining the convention and tourism offices, and creating a committee including a labor representative to visit convention planners.
Ed Coryell Sr. of the United Brotherhood of Carpenters and Joiners of America-Local 8, attended his first board meeting July 17, replacing Pat Gillespie of the Building Trades Council.
Meanwhile, union workers at the Convention Center who belong to Local Eight of the United Brotherhood of Carpenters and Joiners of America went on strike Thursday morning and members of the International Brotherhood of Teamsters who also work at the Convention Center were picketing, too.
On Thursday night, the Pennsylvania Convention Center and the labor force agreed to a one-year collective bargaining agreement extension with a 2.5% increase, according to Jack Ferguson, President and CEO of the Philadelphia Convention & Visitors Bureau. The year will give SMG time to build relationships with the trades, enforce the current Customer Satisfaction Agreement, obtain customer feedback and evaluate what best practices need to be put in place to make the Center more effective and competitive, Ferguson noted.
Arts and Culture News
Kimmel Center Adds Film
The Perelman Theater at the Kimmel Center has been equipped with a 19-foot-by 36-foot movie screen and a high-definition digital video projection system with 3-D capability and surround sound audio.
Working in partnership with the Greater Philadelphia Film Office, the Kimmel Center plans to book major studio events, local filmmaker premieres, and film festivals, as well as various other public and private programs.
The theater seats more than 600 and is now the largest screening venue in Center City. Concessions are to be handled by Garces Catering. A schedule of forthcoming films is being planned. For more information, please go to kimmelcenter.org.
New Leadership at African American Museum
The African American Museum in Philadelphia (AAMP) on July 18 announced the appointment of Patricia Wilson Aden as its new President and CEO.
Aden has served as Interim President since December 2012, when Romona Riscoe Benson, the former President and CEO, departed.
Aden joined AAMP in 2010 as the Museum's Vice President of Operations. She previously held leadership positions in various nonprofits, including the Rhythm & Blues Foundation, Universal Companies, the National Trust for Historic Preservation, and the Preservation Alliance of Greater Philadelphia.
Franklin Museum to Reopen
The newly renovated Benjamin Franklin Museum at 317 Chestnut Street will reopen on August 24, after two years of repairs and renovations. The museum closed in fall 2011 for a $15 million makeover. Admission will be free on both August 24 and August. 25. The National Park Service has scheduled the official grand opening celebration for September 19, and the museum will be open year-round from 9:00 a.m. until 5:00 p.m.
The 7,000-square-foot underground facility opened in 1976 at the location where Franklin's house once stood. The new museum features artifacts, computer animation, and interactive displays. The location also includes a ghost structure, designed by Robert Venturi, John Rauch, and Denise Brown, outlining the size of Franklin's three-story brick house.
Admission to the museum will be $5 for adults, $2 for children (16 and under). For more information, please go to 1.usa.gov/130VvV5.
SEPTA Rail Ridership Up in FY13
SEPTA set a new Regional Rail ridership record, with 36,023,000 trips taken by customers during fiscal year 2013 (FY13), which ended June 30, the agency announced on July 22.
Ridership on SEPTA's 13 Regional Rail lines increased 2.2% over the previous year.
System-wide, SEPTA recorded 337.3 million trips during the year on its trains, buses and trolleys, down slightly from the 339.3 million trips in FY 2012. The decline was attributed in part to a two-day shutdown of service, after Hurricane Sandy hit the Northeast.
SEPTA has an average weekday ridership of approximately one million trips.
Over the last 15 years, Regional Rail ridership has increased 50%, with annual ridership up from 24 million to 36 million trips.
To read the press release, please go to bit.ly/1dT8RYo.
Meanwhile, the SEPTA board on July 25 approved a six-month, $640 million operating budget to maintain service while waiting for the state legislature to address a transportation bill that would include more money for SEPTA, The Philadelphia Inquirer reported. The board also approved a $308 million capital budget for the full year.
SEPTA officials postponed voting on a 12-month budget because they expect to be short $38 million for the full fiscal year if the legislature does not provide additional funding, the article noted.
SEPTA's New Payment Technology to Arrive Next Summer
SEPTA is behind schedule on implementing its new payment technology (NPT), which was to launch this fall, according to PlanPhilly. The current schedule calls for NPT equipment to be installed on buses, trolleys and subways by summer 2014. At that time, tokens will no longer be accepted. The payment system should be fully functional on SEPTA regional rail by fall 2014, the article noted.
The NPT system will allow users to pay with "new media," including SEPTA-issued cards and NFC-chip-equipped devices such as phones and bank cards.
SEPTA's system does not store information on the card. Information is kept in a computer at SEPTA's Market Street headquarters, so if a card is lost information can be transferred to a new card.
In addition, there are $20 million in infrastructure investments tied to NPT. They include new fencing, emergency gates, and power upgrades.
To read the PlanPhilly article, please go to bit.ly/13CDtYr.
State Transportation Committee Aims for More Funding
The state Senate Transportation Committee held a public hearing on July 31 on SB1, the transportation funding bill that passed the Senate and failed to pass in the state House, according to a report in Capitol Recap, a subscription news service that reports on legislative action.
State Senator John Rafferty (R., Montgomery) wants to revive the bill in the fall with the same level of funding, $2.5 billion.
Barry Schoch, Secretary of the Department of Transportation (PennDOT), testified that the state had lost about 12,000 jobs and an entire construction season by not passing the bill before the summer recess. Schoch also told the committee that his department would be adding weight restrictions to all or some portion of 2,200 bridges that are currently being examined, beginning this month. In addition, he noted that Connecticut has the most conservative allowable weight standards on bridges and should the Commonwealth adopt those standards, there would be 14,000 weight-restricted bridges in the state.
Schoch also said that four of 10 public transportation lines will be closed in August or mid-September, due to lack of funds, and at a time when more people are choosing public transit, adding "the subsidy per ride in Philadelphia is much, much lower than subsidy per ride in any of the rural counties."
To read SB1, please go to bit.ly/17JuR6T.
To read an op-ed article by Senator Rafferty that appeared in the Patriot-News, which circulates in central Pennsylvania, please go to bit.ly/11wv8c4.
Streets to be Resurfaced in Southwest Center City
The Philadelphia Streets Department announced on August 2 that street closures and parking restrictions will begin today, August 5, in Center City and will continue over the next two months as the City resurfaces streets.
Streets to be resurfaced are: 8th, 9th, 11th, and 12th Streets, from Market to South Streets; Locust Street, from Broad Street to Washington Square; and Lombard Street, from Front to 2nd, 9th, and 13th Streets.
Operations for milling and paving work will be performed during the evening hours between the hours of 7:00 p.m. and 3:00 a.m. Work for adjusting and resetting of utility boxes will be scheduled during the day between the hours of 9:00 a.m. through 6:00 p.m.
Residents should expect parking restrictions along the streets. Temporary "No Parking" signs will be posted in advance of each scheduled activity. To check for alerts, please go to philadelphiastreets.com.
Parks and Open Space News
'Best Park' in the City
The August issue of Philadelphia Magazine named Sister Cities Park, 18th Street and Benjamin Franklin Parkway, "Best Park" in the city.
The magazine cited the park's water geysers, green space, café, and boat pond.
The Center City District's $5.2 million renovation of Sister Cities Park was completed in 2012. Throughout the year, the park is programmed with activities for children and adults alike.
For more information, please go to SisterCitiesPark.org.
City Tax Revenues Up in June and Fiscal Year
City of Philadelphia tax revenues for June totaled $184.3 million, a 4.6% increase over the same month last year, according to the Office of the City Controller.
Wage, earnings, and net profits tax collected in June totaled $129 million, a 5% increase over the same month last year. Monthly sales tax collections totaled $22.2 million, a 6% increase over June of last year.
Tax revenues for fiscal year 2013 (FY13) totaled $2,748,226,130, an 8% increase over FY12. Wage tax collections were up 4% in FY13 to $1,214,092,357. Real estate transfer tax for FY13 totaled $146,858,361, a vigorous 23.5% increase over FY12.
To read the report, please go to bit.ly/13pMZiz [PDF].
PICA Postpones Vote on Five-Year Plan
The Pennsylvania Intergovernmental Cooperation Authority (PICA) board has postponed a vote on whether to approve the City of Philadelphia's five-year financial plan, KYW Newsradio reported.
One major issue is how much the City has set aside for unresolved municipal labor contracts. Other questions centered on reforming the pension system and funding for the Philadelphia School District.
The board is expected to vote on August 20. If PICA were to not approve the plan, the City would lose $350 million in state funding, KYW noted.
RFQ Issued for Sale of PGW
The City of Philadelphia on August 2 issued a request for qualifications (RFQ) to identify a qualified buyer for the Philadelphia Gas Works (PGW).
Interested buyers are asked to show financial ability and operational expertise to buy, own, and manage the system. Other requirements include maintaining the senior citizen discount program in its current form as well as all Pennsylvania Public Utility Commission (PUC) mandated discount programs and honoring the collective bargaining agreement in place at the time of sale closing.
Responses to the RFQ are due by 5:00 p.m. on August 23, 2013.
To read the RFQ, please go to 1.usa.gov/138yLmi [PDF].
Three-Day Festival at Reading Terminal Market
The Reading Terminal Market will host the 24th Annual Pennsylvania Dutch Festival on Thursday, August 8, through Saturday, August 10 in the Market's Center Court, from 8:00 a.m. to 5:00 p.m., and will feature crafts and a variety of traditional Amish foods.
On Saturday, August 10, the festival will move outdoors onto the 1100 block of Filbert Street with Amish buggy rides, horse-drawn wagon rides, a petting zoo, and bluegrass music.
Reduced-price customer parking is available with merchant validation for $4 at the Hilton Garden Inn garage, located at 11th and Arch Streets, and the Parkway Garage at 12th and Filbert Streets.
For more information, please go to readingterminalmarket.org.
Forum on High Cost of Construction in City
The Urban Land Institute (ULI) Philadelphia will present "Inviting Real Estate Growth: The True Costs of Development," on Thursday, September 19, from 8:00 a.m. to 10:30 a.m., at the Union League, 140 South Broad Street.
Moderator Stephen P. Mullin, Principal with Econsult Solutions, will officially release at this conference the results of a new study comparing Philadelphia building costs to those in comparable cities, including entitlements, permits, land, labor, materials, and more.
Panelists will include John J. Connors, Vice President, The Brickstone Companies; Daniel Keating, III, CEO, The Keating Companies; Anthony Wigglesworth, Executive Director, Philadelphia Area Labor Management founded by the AFL-CIO and the Greater Philadelphia Chamber of Commerce; and Alan Greenberger, Philadelphia Deputy Mayor.
To register, please go to bit.ly/1csuile.