Office Sector News
Centre Square Sold
Centre Square, a 36-story east tower and 43-story west tower at 1500 Market Street, was sold by Chicago-based Equity Commonwealth to New York-based Nightingale Properties for $328 million, The Philadelphia Inquirer reported on July 25.
Nightingale Properties has plans to extensively renovate the property, which was built in 1974. The two towers constitute the highest assessed value property in Center City.
To read the article, please go to bit.ly/2tXx4Ri.
Asking Rent Higher in CBD in Second Quarter of 2017
The Philadelphia central business district (CBD) office occupancy was 89.92% in Q2 2017, with average asking rent of $29.39, compared to 90.04% and $28.03 in Q2 2016, according to SSH Real Estate’s 2017 Mid-Year Greater Philadelphia Office Market Report and Outlook. SSH includes University City in the CBD and notes that average asking rent there was $44.25, and $30.90 in Market East.
Children’s Hospital of Philadelphia (CHOP) will vacate 226,000 sf at 3535 Market Street in early 2018 for its new facility by the South Street bridge, the report noted.
The overall occupancy rate in suburban Philadelphia was 88.3%, with average asking rent for Class A and B space at $25.77, an increase of 2.4% from the end of Q2 2016, at $25.16.
To read the report, please go to http://bit.ly/2uWsYWP [PDF].
Another report, Colliers International 2017 Mid-Year Research & Forecast Reports, calculates the occupancy rate in the CBD as 91.5% in Q2 2017, down just slightly from the same period last year when it was 91.6%. Average asking rent at the end of Q2 2017 was $30.51.
The CBD continued to attract tenants from suburban markets and there was organic growth from existing tenants, the report noted, as tenant requirements shifted to non-traditional locations that provide space and timing flexibility.
To read the report, please go to bit.ly/2v4JQNV.
2017 Office Sales Prices Crest 10-Year Average
Although regional office sales lag behind 2016, assets are selling $19/sf above the 10-year average of $139/sf, according to JLL’s Snapshot of July 25. Regionally, year-to-date sales activity is up 58% year-over-year ($905.6 million), but the remaining properties up for sale suggest that 2017 transactions may not eclipse 2015 totals.
With the ongoing renovations of older assets across the region, JLL anticipates average sale prices to remain on an upward trajectory.
To read the Snapshot, please go to bit.ly/2uaY67Q.
CBRE: Real Estate Taxes in CBD Still a Relative Bargain
CBRE has analyzed new and historical assessed market values for Center City’s 25 most prominent office properties and determined that, on average, due to the recent reassessment, real estate taxes will increase 33.8% from 2017 to 2018, to an average of $2.66/sf, a significant jump, though market values assessed for 2018 are more in line with actual sales transactions from the past two years than they were for tax year 2017, according to a CBRE Market Flash published on August 4.
CBRE also notes that even with the increase in taxes for 2018, Philadelphia is still a relative bargain compared to other Northeast neighbors.
To read the report, please go to bit.ly/2v6VpkL.
Funding Announced for Eastern Tower Community Center
Governor Tom Wolf on July 26 announced that Commonwealth Cornerstone Group (CCG) had completed a $9 million New Markets Tax Credit (NMTC) financing transaction that will help fund development of commercial and community portions of the Eastern Tower Community Center, a mixed-use development at the northwest corner of 10th and Vine Streets.
The project was envisioned more than a decade ago by the Philadelphia Chinatown Development Corporation (PCDC) as a community, event and public recreation space, planned in collaboration with co-developer JNA Capital.
The project is expected to support 371 full-time jobs during the construction phase. To read the press release, please go to bit.ly/2hkPS79.
Parkway Assembles Development Site
Parkway Corporation has purchased a surface parking lot next to the Mütter Museum at 19 South 22nd Street for $9.4 million from The College of Physicians of Philadelphia, the Philadelphia Business Journal reported on August 3.
Parkway also owns another lot adjacent to the newly purchased one and will combine the two parcels to create a site that is viable for development, the article noted.
To read the article, please go to bit.ly/2urKpwu (requires subscription).
Blatstein Completes Purchase at Broad and Washington
Bart Blatstein has settled litigation involving the 195,000-square-foot development site at South Broad Street and Washington Avenue and purchased the property for an estimated $20 million, the Philadelphia Business Journal reported on July 28.
With lawsuits settled, Blatstein announced plans to move forward with his proposed project, which calls for a tower with 1,000 apartments, office space and 160,000 sf of retail space, about half of which will be on the ground floor and the remainder on a rooftop platform.
To read the article, please go to bit.ly/2vq108u.
Residential Market News
How Today’s Luxury Becomes Tomorrow’s Affordable Housing
In an article in City Observatory, author Joe Cortright recounts how new housing is almost always built for and sold to the high end of the marketplace, but as it ages, the housing depreciates and moves down market. The luxury apartments of two or three decades ago have lost most of their luster, and command relatively lower rents. The report notes examples of properties built in the early 20th century that have now filtered down from luxury to affordable and suggests the creation of new luxury units is an important way to create more affordable availability elsewhere in the market.
To read the article, please go to bit.ly/2weO1UP.
New Management for Warwick Hotel
The 301-room Warwick Hotel Rittenhouse Square will have new management under the Dallas-based Aimbridge Hospitality Group, the Philadelphia Business Journal reported on August 1.
After a $17 million renovation in 2013, San Francisco-based Chartres Lodging Group acquired the hotel in 2014 and placed its management under the company’s Kokua Hospitality. No reason was announced for the change.
To read the article, please go to bit.ly/2ukaLR2.
Arts and Culture News
New Stars to Be Added to Walk of Fame
The Avenue of the Arts’ Walk of Fame will formally induct new honorees on October 4, among them Jill Scott, Sister Sledge, and Patti LaBelle, The Philadelphia Tribune reported on August 4. In addition, Kimmel Center CEO Anne Ewers will be honored with the Platinum Award.
An evening gala at The Fillmore Philadelphia will follow the afternoon ceremony. To read the article, please go to bit.ly/2u9639l.
U.S. Congress Moves to Preserve Transportation Programs
Appropriations committees in both the U.S. House and the U.S. Senate debated and approved a bill preserving funding for federal transportation programs in FY18, rejecting President Donald Trump’s request to eliminate the TIGER grant program, halt all new federally supported transit construction, and slash passenger rail service, Transportation for America News reported on August 2. The House, however, approved a 27% cut to transit. The Senate proposed increasing TIGER grant funding by $50 million.
To read the article, please go to bit.ly/2vmCzZA.
To view a comparison of the House’s and Senate’s funding proposals for FY18, please go to bit.ly/2vp3p36.
NYC Sees Strong Growth in Bicycling
Bicycle routes in New York City have been expanded and 10,000 Citi Bikes have been deployed at more than 600 locations, supporting more than 450,000 daily bike trips in the city, up from 170,000 in 2005, an increase that has outpaced population and employment growth, the New York Times reported on July 30. Biking helps avoid trains that have gotten more expensive, plus it helps commuters get to work faster, the article noted.
To read the article, please go to nyti.ms/2vfBF10.
New DVRPC Board Officers Named for 2018
The Delaware Valley Regional Planning Commission (DVRPC) announced that on June 22 it held elections for Fiscal Year 2018 board officers.
They are: Chair, Richard T. Hammer, Commissioner of the New Jersey Department of Transportation (NJDOT); Vice Chair, Mark Squilla, Councilman, First District, Philadelphia City Council; Treasurer, Gina Burritt, appointed in October 2016 by Pennsylvania Governor Tom Wolf to serve on DVRPC's Board; and Secretary, Theresa Ziegler, Gloucester County (N.J.) Planning Division.
To read the announcement and see other DVRPC news, please go to bit.ly/2w6UWPL.
Taxis to Increase Rates
The Philadelphia Parking Authority Board has approved an increase of the basic cab meter rate from 23 cents to 25 cents, beginning September 1, the Philadelphia Business Journal reported on August 2.
The increase will help compensate taxi cab drivers who are losing three fares a day to about 20,000 Ubers and Lyfts citywide, the article noted. The two-penny hike will add up to $5 to $7 a day, making up for one of the missed fares.
To read the article, please go to bit.ly/2hvTJhq.
In other news from the PPA, the combination of 22,000 additional vehicles from Uber and Lyft and a loss of jobs at the PPA, due to attrition, has left the agency in regulatory disarray, as alleged violations pile up and the agency is unable to address the volume of complaints, The Philadelphia Inquirer reported on August 4. To read the article, please go to bit.ly/2udKEMq.
Regional Service Industry Expanding Slowly
Business activity in the regional service industry continued to grow during July but at a slower pace, according to responses to the Nonmanufacturing Business Outlook Survey conducted by the Federal Reserve Bank of Philadelphia, with new orders up for 25.8%, down for 26.0%, and remaining the same for 24.1%.
The number of full-time employees increased for 30.9% of the firms, decreased for 12.0%, and was unchanged for 56.3%.
Looking ahead six months, 44.7% expected business conditions to improve, 10.2% foresaw a downturn, and 41.1% predicted no change.
To read the report, please go to bit.ly/2ffFhcJ [PDF].
Net Income Tax Troublesome for City
An article in the Philadelphia Business Journal offers insight into how unusual and damaging the City’s net income tax is and cites an analysis by The Pew Charitable Trusts that shows Philadelphia is the only city in the nation’s 30 largest to impose both a net income and gross receipts tax.
Drawing on the CCD/CPDC report, Philadelphia: An Incomplete Revival, the article also notes that Philadelphia trails well behind 25 of the nation’s largest metros in annual growth in private wage and salary jobs.
To read the article, published on July 27, please go bit.ly/2hukoLE. To read the CCD/CPDC report, please go to bit.ly/2m9UkH1 [PDF].
City Tax Collections Increase in FY17
The City of Philadelphia General Fund Taxes through the end of Fiscal Year 2017 (FY17) totaled $3.103 billion, 3.4% more than in FY16, according to the Pennsylvania Intergovernmental Cooperation Authority (PICA).
Growth was driven by a 4.8% increase in the City’s portion of the wage, earnings, and net profits taxes, which totaled $1.475 billion. BIRT tax collection, however, was down by 8.2%, to $458.6 million.
Preliminary totals show $591.9 million in real estate taxes were collected, a 1.7% increase; and $242.8 million in real estate transfer taxes, a 2.8% increase.
To read the report, please go to bit.ly/2huCGfF [PDF].
New Leadership at Planning Commission
The City of Philadelphia has named Eleanor Sharpe deputy director for planning and zoning at the Department of Planning and she will also serve as Executive Director of the Philadelphia City Planning Commission, The Philadelphia Tribune reported on July 29.
Sharpe will be responsible for coordinating the efforts of each of the commissions within the Planning Department, including the Historical Commission, Art Commission and Zoning Board of Adjustment.
To read the article, please go to bit.ly/2uNhuWS.
City Computer System Upgrades Lagging
Almost four years ago, the City announced it would spend $4 million to create a new computerized licensing and inspection system that would create a more convenient and transparent process for applicants and inspectors, and create upgrades for computer programs in other departments. Expected to be completed by 2015, the initiative is now halfway finished and costs have exceeded $10 million, The Philadelphia Inquirer reported on August 6. To read the article, please go to bit.ly/2vEeLAU.
In response to similar problems at the Office of Property Assessments (OPA), the Kenney Administration recognized the technology deficiencies and, in response to suggestions made by Councilman Allan Domb, outsourced the appraisal process for 2017-2018, getting the latest technologies through their contractor, rather than through a significant capital investment that could quickly become outdated.
Parks and Open Space News
Summer in the City: Dilworth Park
On Fridays continuing through August 25, at 8:30 p.m., Dilworth Park will host Pictures in the Park. Have a cocktail or beer while watching movies on the big screen al fresco. Be sure to bring your own blanket or chair. Here’s the lineup: August 11, Fantastic Beasts and Where to Find Them; August 18, Avengers: Age of Ultron; and August 25, Guardians of the Galaxy Vol. 2.
For information on all the summer activities in Dilworth Park, please go to dilworthpark.org.
Summer in the City: John F. Collins Park
The Center City District Foundation (CCDF) and Chaddsford Winery have partnered to present downtown Philadelphia's newest summer pop-up, the Wine Garden at Collins Park. Conveniently located at 1707 Chestnut Street, the Wine Garden at Collins Park will be open on consecutive Fridays through September 1, from 4:00 p.m. to 9:00 p.m., offering Chaddsford wines and hard cider, by the glass ($5 to $9), or by the bottle ($10.49 to $21.99). Buy three bottles and save 10%!
The Wine Garden at Collins Park will help support the CCDF, which owns and maintains the park for public enjoyment. To learn more about CCDF, please go to supportccdf.org. Visit johnfcollinspark.org and follow @CCDParks on Twitter for more information and updates.
CCD Restaurant Week Returns in September
Center City District Restaurant Week, sponsored by TD Bank and OpenTable, is back this September and will run 10 consecutive days, including Saturday, for most of the 120 participating restaurants offering a variety of culinary delights. Beginning Sunday, September 10, and continuing through Tuesday, September 19, restaurants will offer signature three-course dinners for only $35 per person, with select restaurants featuring a three-course lunch for $20 per guest, not including tax, gratuity, or alcohol. Restaurants will feature signature cocktails from partners Maker’s Mark and Maker’s 46.
City-wide social media contests and activations will be announced soon, in which diners will be able to participate for a chance to win various prizes, including free dinners and a $1,000 shopping spree for sharing a favorite “fashion plate.” For more information, please follow @PhilaRestWeek on Twitter and Instagram.
Reduced parking rates for guests of Center City District Restaurant Week are available at various Philadelphia parking facilities through a partnership with the Philadelphia Parking Authority and Philadelphia Parking Association. A full list of restaurants is available at centercityphila.org/restaurantweek/. Lyft is the official rideshare partner for Center City District Restaurant Week. Diners, who are new users, can enter the code CCDRW17 to unlock ride credit. Diners who already have Lyft accounts can check social media to find discount codes throughout Restaurant Week.
PHLCVB is proud to support Center City District Restaurant Week, which showcases Philadelphia’s nationally recognized culinary scene. Reservations can be made through OpenTable.
BF Parkway Centennial Year Celebration to Begin
Parkway 100, the centennial celebration of the Benjamin Franklin Parkway, debuts with the Parkway 100 We are Connected Festival on Friday, September 8, from 4:00 p.m. to 10:00 p.m. Presented by the Parkway Council, in partnership with PECO, the cultural district open house offers 100 family-friendly activities throughout the Parkway Museums District, including extended hours and free or pay-what-you-wish museum admission. Other programs include inside and outside entertainment, giant dot-to-dot puzzles of the Parkway attractions to celebrate the “We are Connected” celebration theme, and a nighttime hot air balloon glow to visually define the Parkway Museums District destination after dark.
For more information, please visit parkway100.org/Events/113/.