Office Sector News
Class A Office Buildings Continue to Fill
Class A occupancy in the Central Business District (CBD) increased by 35,112 square feet (sf) in the second quarter, while Class B vacancies increased by 31,913 sf and Class C vacancies increased by 22,023 square feet, according to Newmark Grubb Knight Frank's Philadelphia CBD Office Market Report 2Q 2012.
The trend of firms moving into trophy buildings to upgrade their space should soon stabilize, the report noted, as those buildings are now approaching single-digit vacancy. As space has contracted in the most desirable spaces, prices have slowly risen, with Class A buildings commanding $29.08 per square foot during the quarter.
Walnut/South Broad led the submarkets in positive absorption with 45,943 square feet and East Market led the negative absorption, losing 57,450 square feet of occupied space, even though Interstate General Media relocated to 801 Market Street during the period.
The report notes that Philadelphia's office market has lagged behind other peer cities in rebounding from the recent downturn because it has only recovered 39% of the lost jobs, while New York City, Pittsburgh, and Washington, D.C. have regained more than 100% of their lost jobs. As a consequence, overall vacancy in the CBD increased slightly from 14.97% to 15.02%.
The report anticipates a stronger recovery in late 2013 or early 2014.
Five Leases at 1608 Walnut Street
Five leases totaling 18,283 square feet were arranged at 1608 Walnut Street, the Philadelphia Business Journal reported on August 28.
Two of the new tenants moved from 1616 Walnut Street, which is being converted to apartments. E&A Therapy, Inc., a physical therapy and rehabilitation company, leased 8,725 square feet and the Preservation Alliance took 3,558 square feet.
Connolly, Grady & Cha, an accounting firm, renewed on 2,935 square feet; Jae Barnes Beauty Bar, a professional beautician and skin-care specialist, took 1,130 square feet, and a general dentistry practice renewed for 1,935 square feet. The deals had a total rent value of more than $1.6 million, the article noted.
Nonmanufacturing Report Mixed
The most recent Federal Reserve Bank of Philadelphia's Business Outlook Survey of nonmanufacturing firms suggests continued weakness in the local economy, but with some encouraging notes.
Capital expenditures were up for only 24.2% of the firms surveyed, while spending on the physical plants were down for 9.1% and 15.2% in the equipment and software category.
Also the number of employees increased at 27.3% of the companies and decreased at only 18.2%.
Respondents remained optimistic about the next six months on both the regional and company level.
Philadelphia Vital Statistics
For a snapshot of Philadelphia's static employment situation as well as other trend data, please see this month's Vital Statistics, compiled by CCD/CPDC staff: centercityphila.org/docs/CCRVitalStats0912.pdf [PDF].
Eds and Meds News
Universities Awarded Grants for Medical Studies
U.S. Representative Chaka Fattah (D., Pennsylvania), announced on August 24 that the University of Pennsylvania, Drexel University, Children's Hospital of Philadelphia (CHOP) and University of the Sciences have been awarded $3,517,518 in seven grants for research in neuroscience and other fields.
Three grants for neuroscience research will go to Penn for a total of $2,713,695 from the National Institutes of Health.
CHOP will be awarded $215,044 for research on the effects of poverty on neural and cognitive development in an infant's first year.
In addition, the National Science Foundation awarded $175,000 to the University of the Sciences for a study of MRIs and $413,779 to Drexel University for technical research.
To read the press release, please go to tinyurl.com/8dhnxzq.
Hotels' Occupancy and Rates Increase
Center City hotels enjoyed a 4.5% increase in average occupancy, to 74.9%, through the first six months of the year, while the average rate per room gained 6.5%, to $171 a night, the Philadelphia Business Journal reported, quoting a new report from PKF Consulting. Through the first half of the year, the average occupancy rate was the highest in the 12 years, the article noted.
Gains were attributed to the rise in meetings-and-convention business and the expanded Pennsylvania Convention Center, which opened in March 2011. Attendance at the center totaled 801,791 for the first six months of the year, up 14.5% from the comparable period a year ago. Convention attendance totaled 176,804 through June 30, a gain of 42.4%.
Philadelphia's increase in hotel occupancy was the highest in the Northeast Corridor. New York City saw a 4.2% rise (to 84.8%), Boston was up 2.8% (to 76.6%), Baltimore's increase was 0.3% (to 62.5%), and Washington, D.C. remained unchanged at 76.4%.
Arts and Culture News
Parkway Light Exhibit Opens September 20
The opening night celebration for the world premiere of Open Air by Mexican-Canadian artist Rafael Lozano-Hemmer will be on Thursday, September 20, from 7:30 p.m. to 11:00 p.m., and the inner drive of the Benjamin Franklin Parkway will be closed during the festivities.
Open Air combines public art with mobile technology, creating a canopy of light along the Benjamin Franklin Parkway from 21st to 24th Streets, during the evening hours from 8 p.m. to 11 p.m. from September 20 through October 14. The artwork was commissioned by the Association for Public Art (APA), and is being presented in conjunction with the 2012 Philadelphia Live Arts Festival and the 2012 DesignPhiladelphia Festival, and in partnership with Philadelphia Parks & Recreation.
A Project Information Center, equipped with the app download, free mobile loan stations and seating areas for watching the lights, will be set up at Eakins Oval. In addition, an Information Outpost will be set up at Sister Cities Park.
For more details on how the artwork will use lights to relay messages, please go to openairphilly.net.
16 Days of Cutting Edge Art
The 16th annual Philadelphia Live Arts Festival & Philly Fringe will run from September 7 through September 22 at venues throughout the city.
The 16-day celebration of the arts features cutting-edge dance, theater and multidisciplinary works by renowned artists from the city, as well as national and international artists. On some days, more than 60 events are scheduled.
Prices vary for events but a pass to everything is available for $400. To view the calendar, please go to livearts-fringe.ticketleap.com. For more information, call 215.413.1318, or go to livearts-fringe.org.
Transportation and Infrastructure News
New Yorkers Like Their Bike Lanes
A recent New York Times poll indicates that 66% of New Yorkers approve of the 255 miles of bicycle lanes created in the city by the Bloomberg administration, the newspaper reported on August 21.
In every borough, a majority of those polled said they thought the lanes were a good idea, with highest support in Manhattan.
Those who approved of the bike lanes cited environmental, health and safety benefits. Some respondents said they liked the lanes because they were helping to keep bicyclists off the sidewalks.
To read the article, please go to tinyurl.com/clww2cq.
Non-Stop Flights Important
Sixty-five percent of business air travelers in the Philadelphia area say that non-stop flights are extremely important, according to an air travel survey released on August 20 and conducted by Select Greater Philadelphia and the CEO Council for Growth.
Those surveyed indicated the top priorities for new non-stop service for business travel would be Tokyo, Japan, and Orange County, California. Other desired domestic destinations were Austin, Texas, and Honolulu, Hawaii, followed by San Jose, California; and San Antonio, Texas. Included in the top five sought-after international destinations for business travel were Shanghai and Beijing in China; Mumbai, India; and Milan, Italy.
To read the press release, please go to tinyurl.com/8qlpm4v.
Parks and Open Space News
Drexel to Sponsor Outdoor Concert Series
Drexel University will sponsor the Center City Campus Lunchtime Concert Series, a series of four outdoor concerts organized by the Center City District that will take place on September 12 and 19, and October 3 and 10, from noon to 1:30 p.m., at Three Parkway Plaza, 16th Street and the Benjamin Franklin Parkway. The concerts will feature music in a variety of genres.
For complete information, please go to centercityphila.org/life/three_parkway.php.
In related news, Café Cret at Three Parkway Plaza will be celebrating its fourth anniversary September 24 through September 28. For more information, please go to capricciocafe.com.
Number of Homeless on the Street Down in Center City
Mayor Nutter announced on August 21 that the city's quarterly count of homeless persons living outside throughout the city was 588, compared to last summer's 601 persons, a 2% decrease citywide. In Center City, the reduction was even more pronounced, with a 7% decline. The count of the homeless is conducted by volunteers organized by Project Home.
To read the mayor's press release, please go to tinyurl.com/948mn8v.
Planning Commission Has New Website
The Philadelphia City Planning Commission (PCPC) on August 22 announced that it had activated its new website, phila.gov/cityplanning. The website will be updated with new material and Commission meeting information on a regular basis. The PCPC also will be transitioning to a new agency e-mail address at firstname.lastname@example.org. The PCPC staff will be maintaining a blog at philadelphiaplaneto.com and invites contributions.
Workshops for the Civic-Minded
The Citizen's Planning Institute (CPI), a new education and outreach arm of the Philadelphia City Planning Commission, announced it will accept applications until Thursday, September 20, for classes and workshops. CPI will select 30 students from the applicants.
CPI is a program designed to educate residents active in civic organizations about planning, zoning, and development issues so they can be more effective in their communities.
Classes, including a core curriculum and electives, will be held on Wednesday evenings from 6:00 p.m. to 9:00 p.m., October 10 to November 14, in Center City. Many of this year's classes will focus on the new zoning code.
The core course of three sessions costs $30; for individual sessions, the cost is $20. A buffet dinner is served at each session. To apply, please go to citizensplanninginstitute.org. For more information, visit the website or contact Donna Carney at 215.683.4640 or email@example.com.
City's July Tax Revenues Show Double-Digit Increase
Tax revenues for July totaled $183.5 million, an 11% increase from July 2011, and the highest amount recorded since just before the recent economic downturn, according to the Office of the City Controller's Financial Forecast & Snapshot. The last time July collections were near this year's amount was July 2007, with $181.2 million, the report noted.
Wage, earnings and net profit tax collections for the month totaled $133.9 million, a 15% increase over the same period last year. Monthly sales tax collections were $20.96 million, an 8% increase from last July. This is the fourth straight month that sales tax collections have been at or above $20 million, according to the report.
The report also looked at the number of jobs in the city. In July 2011, there were 653,900 total jobs re¬corded in Philadelphia, compared to 648,400 in July 2012. The loss of 5,500 jobs represents a decline of1%, but at the same time the U.S. employment increased by 1.4%.
To read the entire report, please go to tinyurl.com/8azwmvx [PDF].
In other news from his office, City Controller Alan Butkovitz on August 23 announced that he endorsed the City's Revised Five Year Budget Plan after rejecting the original plan. To read this report, please go to philadelphiacontroller.org/publications/audits/PICA-Report_8-23-2012.pdf [PDF].
Homestead Exemption Applications Mailed
Mayor Nutter on August 28 announced that applications for the Philadelphia Homestead Exemption were being mailed to all Philadelphia homeowners. The Homestead Exemption, which is available to all regardless of income or housing value, could reduce the taxable portion of homeowners' property assessments by up to $30,000, based on the number City Council and the Administration ultimately agree upon. The deadline to return the application is November 15, in order to have the exemption reflected on the Tax Year 2014 Assessment Change Notice. Forms were pre-filled with the account number, address and owner's name and also are available online at opa.phila.gov.
Currently, the Administration is saying that final Actual Value Property Assessment Notices will not be mailed to homeowners until February 2013.
If you have already applied for the exemption, it is not necessary to reapply, according to the mayor's press release. To read the entire release, please go to tinyurl.com/8fec2fn.
Love Park Garage May Be Sold
The Nutter administration announced last week that it had issued a request for proposals (RFP) for a broker to oversee the potential sale of the 810-space parking garage beneath Love Park, the Philadelphia Daily News reported on August 27.
The RFP, which has not yet been posted on the City's website, states that the successful bidder must manage the sale process and conduct "financial analysis related to a potential sale and its benefit to the city," according to the Daily News article.
A separate bidding process occurred last year for design teams to redesign the surface park and has not yet resulted in a final selection.
To read the article, please go to http://tinyurl.com/9m3zp2a.
Monetizing Public Assets Topic of CPDC Meeting
On Tuesday, September 11, at 4:00 p.m., the Central Philadelphia Development Corporation will hold a Membership Meeting, at the Hotel Sofitel, 17th and Sansom Streets.
The topic will be "Monetizing Public Assets & P3 Transactions: What Works, What Doesn't." While the sale or long-term leasing of public assets to finance other improvements, relieve debt obligations, or make capital improvements to existing infrastructure is normal in Europe and Australia, American experience is more limited. Two national practitioners who have directly handled transactions in the U.S. will discuss do's and don'ts. Which assets make the most sense to monetize? How to structure the transaction both to achieve revenue objectives and protect the public interest? What are appropriate and inappropriate uses of proceeds?
Speakers will be:
Dana Levenson, Chief Financial Officer for the Massachusetts Department of Transportation, where he also oversees their Real Estate and Asset Development initiatives. Levenson served previously as the City of Chicago's chief financial officer, where he was responsible for the long-term leases of both the Chicago Skyway in 2005 and the Chicago Downtown Parking System in 2006;
Thomas Lanctot, partner in William Blair & Company, a Chicago-based investment banking and asset management firm, where he leads the Infrastructure Investment Banking Group. He played an active role in innovative P3 financial advisory assignments and financing transactions for clients in the public, nonprofit and private sectors;
Joseph McLaughlin, director of Temple University's Center on Regional Politics, will serve as the local respondent.
CPDC members are welcome to extend an invitation to one colleague from their company/organization. When replying, please include the guest's name and title for proper admittance.
A reception will follow the program. Please RSVP no later than tomorrow, Wednesday, September 5, to Carol Raffa, firstname.lastname@example.org or 215.440.5500.
The Hotel Sofitel is generously sponsoring this meeting.
Panel Will Discuss Delaware River Waterfront
Lambda Alpha will hold a breakfast meeting featuring a panel discussion on September 18, at the Greater Philadelphia Chamber of Commerce, Bellevue at the Hyatt, 7th Floor, 200 South Broad Street.
The topic is "The Central Delaware River Waterfront and Working Port: A Blueprint for Balanced Development." A Continental breakfast will be served at 8:00 a.m., with panel discussion to begin at 8:30 a.m. sharp.
In 2009, the Delaware River Waterfront Corporation developed a master plan, adopted by the Philadelphia City Planning Commission in March 2011, for six miles of the Central Delaware River waterfront. The panel will be moderated by Alan Greenberger, Deputy Mayor for Economic Development, City of Philadelphia.
Panel members will be Thomas Corcoran, President, Delaware River Waterfront Corporation; Nick Walsh, Director, Strategic Planning and Development, Philadelphia Regional Port Authority; Eric Blumenfeld, Developer, EB Realty Management Corporation.
The event is free for members, $10.00 for non-members. Please RSVP by September 14 to email@example.com.
Workshop on Callowhill-Chinatown Plan
The Philadelphia City Planning Commission will host a Community Planning Workshop for the Callowhill-Chinatown North Strategic Plan on Tuesday, September 25, from 6:00 p.m. to 8:00 p.m. at Holy Redeemer School, 915 Vine Street.
For more information, please contact Marian Hull at 215.940.9270 or Marian.Hull@urs.com, or Laura Spina at 215.683.4638 or Laura.Spina@phila.gov.