Office Sector News
Companies Moving Offices to Downtowns: Minor or Major Trend?
Tell Us What You Think.
On December 5, the Wall Street Journal reported that Motorola Mobility, a subsidiary of Google Inc., will be moving its offices in February from Libertyville, Illinois, a suburb about 35 miles from Chicago, to the Merchandise Mart on the banks of the Chicago River.
United Continental Holdings Inc., Hillshire Brands Company and other corporate giants are moving to the downtown because the young, educated workers these companies want to hire prefer to live in the city, the article noted.
The article also highlighted digital companies leaving Silicon Valley for San Francisco and Coca-Cola opening a 2,000-person information-technology office near its headquarters in downtown Atlanta.
In Philadelphia, Brand.com, a tech company, moved its headquarters and about 120 employees from West Chester to the Curtis Center, and Fiberlink, Bentley Systems, SevOne and Bulogics have opened offices in the city in the last year. Do you see this as a minor phenomenon limited to certain types of firms or a major trend that Philadelphia can capitalize on? Let us know what you think before tomorrow's CPDC meeting on trends for 2014: surveymonkey.com/s/officetrends.
Nonmanufacturing Activity Up in November
Responses to the Federal Reserve Bank of Philadelphia's survey of nonmanufacturing suggest that general activity in the region increased in November with 40% of respondents reporting an increase in new orders and only 19% reporting decreases.
Firms reporting an increase in permanent full-time employees (30.2%) substantially outpaced the percentage reporting a decrease (11.6%).
Looking ahead six months, 86% of the reporting firms expected business activity to increase, and none reported an expected decrease.
Dow Building to Be Developed
Keystone Property Group, Mack-Cali Realty Corporation, and Parkway Corporation have created a partnership to invest more than $20 million in the 350,000-square-foot Dow building at Sixth and Market Streets, as part of an overall plan to create a new destination on Independence Mall, the Philadelphia Business Journal reported Saturday. The partnership bought the building in October for $40.5 million.
In addition to the current building tenants, Dow and the General Services Administration, the development will include a 3,000-square-foot restaurant at ground level that could help activate the corner of Sixth and Market Streets, immediately across the street from the Liberty Bell Pavilion, President's House and Independence Visitors Center. Parkway Corporation will convert 55,000 square feet of basement space in the office building into a parking garage with about 135 spaces.
To read the article, please go to bit.ly/1kpNGAu.
PHA to Develop Property on Chestnut Street
The Philadelphia Housing Authority (PHA) is seeking proposals for the potential redevelopment of three prime properties along Chestnut Street, the Philadelphia Business Journal reported on December 5.
The properties are an 18,400 SF office building at 2012 Chestnut Street, plus a site on three parcels – 2013, 2014 and 2016 Chestnut Street.
A pre-bid conference will be held at 10:00 a.m. on Wednesday, December 11, at 3100 Penrose Ferry Road.
Proposals are due Friday, February 7, 2014. A developer will be picked in May, according to the Philadelphia Business Journal article.
For complete information, please go to the PHA website at 1.usa.gov/1f4jfzr.
Construction Spending Down, Though Residential Building Is Up
Construction spending throughout the Philadelphia region is off by 5% compared with last year, according to year-to-date data from McGraw Hill Construction, the Philadelphia Business Journal reported on November 26.
Slightly more than $3.3 billion has been spent so far this year on both non-residential and residential construction projects, compared to last year's $3.5 billion, the article noted.
Non-residential building, which includes office, retail, hotels, and other commercial properties, is off by 20%, and totaled $1.8 billion, compared with $2.2 billion last year, but residential building, single- and multi-family construction, is up by 21% to $1.5 billion from $1.2 billion.
The data cover the Metropolitan Statistical Area, which includes Philadelphia, Camden and Wilmington.
City's Job Sustainability Ranking Slips
Philadelphia's economy and job sustainability ranked 109th among all U.S. cities, according to the 2013 Milken Institute Best-Performing Cities Index, as reported in the Philadelphia Business Journal. That's down from a 2012 rank of 90th overall. Milken uses jobs, wages and salaries, and technology growth to calculate its rankings.
Boston ranked 46th and was unchanged from 2012. Washington, D.C., fell from fifth in 2012 to 45th this year. Similarly, New York ranked 11th last year and fell to 34th this year.
Philadelphia did best in high-tech GDP, where it ranked 42nd, the article noted.
The top five cities were: Austin, Texas; Provo, Utah; San Francisco and San Jose in California; and Salt Lake City, Utah.
To view the rankings, please go to best-cities.org/large-cities-rankings.html.
New CPDC/CCD Report Documents Retail Trends
On December 6, CPDC and CCD released Center City Reports: Retail 2013, a look at downtown Philadelphia retail market trends, including an analysis of retail demand, the results of CCD's annual retail survey, as well as updated pedestrian traffic counts.
The growth of the hospitality and entertainment industries in the last two decades has significantly strengthened daytime and evening retail demand in Center City, building on traditional worker demand. Now, with more than 175,000 people calling Center City home, Philadelphia has the third largest residential downtown in the country, contributing significantly to its purchasing power. The combined impact of these new residents, high-wage office workers, and visitors with substantial disposable income have increased demand for high-end national retailers such as Theory, Stuart Weitzman, Barney's, and Intermix.
To download the full report, please go to bit.ly/1jvodrD [PDF 1.1 MB].
Sign Up to Receive CCD Reports
The CCD releases timely research reports on a variety of topics pertinent to living, working, and investing in downtown. Keep up to date on the latest market conditions, policy issues, and trends affecting Center City by signing up to receive our research reports in your inbox five to seven times a year. If you'd like to sign up for our free reports, please fill out the form at centercityphila.org/about/Publications_signup.php.
Restaurant Week Arrives in January
The next Center City District Restaurant Week will take place January 19 – 24 and January 26 – 31, 2014. More than 100 restaurants will offer a three-course dinner for only $35, and some of the restaurants also will offer a three-course lunch for $20.
For a complete list of restaurants, please visit centercityphila.org/RestaurantWeek, where you can make a reservation using OpenTable.com. Also you can use the mobile website m.centercityphila.org to browse menus, get maps and make online reservations from any smartphone. Keep up with the latest Restaurant Week news on Twitter @PhilaRestWeek. Make your reservations early!
PGCB Extends Deadline for Commenting on Casino
The Pennsylvania Gaming Control Board (PGCB)has extended the deadline to provide written public comment on the Philadelphia Category 2 casino license from November 28 to December 31.
Information on all five casino applicants and their plans can be viewed at gamingcontrolboard.pa.gov, where there also are directions for filing comments.
PGCB will hold Suitability Hearings at the Pennsylvania Convention Center on January 28, 2014 (9:00 a.m. to 6:00 p.m.), January 29, 2014 (9:00 a.m. to 6:00 p.m.), and January 30, 2014 (9:00 a.m. to 1:00 p.m.). The hearings are open to the public.
Arts & Culture News
Derek Gillman Leaving The Barnes
Derek Gillman, executive director and president of the Barnes Foundation, announced on December 3 that he is leaving the leadership post at the end of this year to become a visiting professor at Drexel University's Westphal College of Media Arts & Design. He will teach in a new museum leadership program and in the art history department.
Gillman joined the Barnes in 2006, and oversaw the completion of a $200 million capital and endowment campaign and construction of the new $150 million gallery on the Benjamin Franklin Parkway, according to an article in The Philadelphia Inquirer.
Barnes trustees have formed a search committee and hired an outside consultant to find Gillman's successor, the article noted. Margaret Zminda, the foundation's executive vice president and chief financial officer, will serve as interim chief executive.
To read the Inquirer article, please go to bit.ly/1eZZjOa.
PAFA Sells Hopper Painting
An Edward Hopper painting, East Wind Over Weehawken, owned by the Pennsylvania Academy of the Fine Arts (PAFA), was sold to an anonymous private buyer on December 4 for $40.5 million at Christie's in New York, The Philadelphia Inquirer reported.
The Academy will receive $36 million, which it will use to establish an endowment for the purchase of contemporary artwork, the article noted. The painting was acquired in 1952. The Academy owns another Hopper work, Apartment Houses, painted in 1923 and purchased in 1924.
To read the Inquirer article, please go to bit.ly/1gSIwx8.
DRPA Projects Slightly Higher Spending in 2014
The Delaware River Port Authority's (DRPA) operating budget for 2014 will be $278 million, an increase of 8% over this year's $258 million, The Philadelphia Inquirer reported.
About half of the agency's spending will be in principal and interest and related costs on its $1.6 billion in debt, the article noted.
The capital budget for 2014 will be $163 million, up from $119 million in 2013.
The agency expects to collect $290 million in tolls on its four bridges in 2104, and about $26 million in PATCO fares, a 2% decline, according to the article.
To read the article, please go to bit.ly/18wGiOl.
Parks & Open Space News
Sister Cities Park Winterfest
Sister Cities Park Winterfest, which began on Saturday, continues for two more Saturdays, December 14, and 21, from 11 a.m. to 2 p.m., at the park at 18th Street and Benjamin Franklin Parkway.
The celebration will include visits with Santa, holiday food and drink, seasonal arts and crafts, holiday gift shopping for kids from Whole Foods Market, Callowhill, and festive performances and music.
The Center City District's partners are Walnut Street Theatre, Academy of Natural Sciences of Drexel University, and the Franklin Institute.
Sister Cities Park is maintained in cooperation with the City's Department of Parks & Recreation and programmed by the Center City District. For complete details on the park's events and schedules, please visit SisterCitiesPark.org.
Substantial Increase in City Tax Revenue
Tax revenues for October totaled $215.3 million, a 21.5% increase over the same month last year, according to the Office of the City Controller's Financial Forecast & Snapshot.
Wage, Earnings, and Net Profit Taxes for October totaled almost $150.3 million, a 20% increase compared to the same month last year. Monthly sales tax collections totaled $21.2 million, a 7% increase over October 2012.
To read the report, please go to bit.ly/IfS6hq [PDF].
In a similar report from the Pennsylvania Intergovernmental Cooperation Authority (PICA), the agency noted that General Fund tax collections through the first four months of fiscal year 2014 (FY14) totaled $662.8 million, an increase of $63.9 million (10.7%) over the same period in FY13. The growth through October represents increases in most major General Fund taxes, including: wage and earnings ($31.5 million), business income and receipts ($21.7 million), real estate transfer ($8.8 million), real estate ($3.4 million), and sales ($2.8 million).
To read this report, please go to bit.ly/19fkWoR [PDF].
City Tax Collection Improves
PlanPhilly reports that nine months after the city changed its tax enforcement and collection processes, the Nutter administration is making modest gains in the collection of taxes.
The article notes that City Revenue Department is on track to meet new collection goals adopted for the 2013-2014 budget, including an additional $28 million for the financially strapped School District of Philadelphia.
The Nutter administration has stepped up the pace of sheriff sales of tax delinquent properties, among other things, the article noted.
To read the article, please go to bit.ly/J7cJgo.
Land Bank Bill Expected to Pass This Week
Barring some unforeseen roadblock, City Council will give final approval Thursday to what will be known as the Philadelphia Land Bank, according to the Committee of Seventy. The land bank's purpose is to expedite the process for turning over 40,000 abandoned properties (10,000 of which are publicly-owned) to responsible tax-paying owners.
To read the Committee of Seventy's report, please go to http://bit.ly/1969vmX [PDF].
To read bill #13015601, introduced by Councilwoman Maria Quiñones-Sanchez on March 7, please go to bit.ly/1cr5NoL.
Report Analyzes City's Management of Its Facilities
The Mayor's Task Force on City-Owned Facilities presented its report to Mayor Michael A. Nutter on Friday.
The report noted the lack of systematic and coordinated data tracking by the City with regard to facilities management. Currently, there are multiple systems in place to record work orders for repairs but no way to share the information between departments. Also, there is no single, comprehensive database on the City's entire portfolio of facilities including: square footage, age of systems, expected useful life of systems, use, occupancy, and repair history.
By implementing the changes suggested in the report, such as adopting a comprehensive asset management program, the City could save between $66.1 million and $121.8 million, according to the report.
To read the report, please go to 1.usa.gov/18JsAgZ [PDF].
Chicago Looks at Options for Unfunded Pension Liability
State legislators in Illinois on December 3 passed a landmark bill to trim retirement benefits for state workers, and Chicago may attempt to follow suit by November 2014, as it faces a contribution of $1.4 billion in 2015, according to an article in the New York Times.
Fitch Ratings estimated that if there is no deal to reduce pension benefits for Chicago city workers and no cuts in services, the city will have to increase property taxes by 35%.
A deal reached for Chicago parks workers may serve as a template for solving the pension liabilities of other groups of workers. The unfunded pension liability for the parks workers grew from $77 million in 2003 to $550 million in 2012, a 615% increase, the article noted. Under the new deal, parks workers will work until they are 58 years old, instead of 50, to get full benefits after 30 years of service. Those who will be 45 or older on Jan. 1, 2015, will remain with the original plan. Annual cost-of-living increases will be limited, and the city will issue one-time pension bonds in 2015. If all goes well, the pension fund for parks workers will be 90% funded by 2049 and 100% by 2053, according to the article.
To read the article, please go to nyti.ms/1bmem35.
CPDC Meeting Tomorrow
The Central Philadelphia Development Corporation's (CPDC) Membership Meeting will be held Tuesday, December 10, at 8:30 a.m., in the Grant Room at the Union League, 140 South Broad Street.
The program will be "Projects in the Pipeline — Looking Forward to 2014."
A panel discussion will focus on the state of the downtown office residential and retail markets. Will there be new office construction in 2014? Will there be a resurgence of retail on East Chestnut and East Market? Who are the new home buyers?
Panelists will focus both on current projects and look into their crystal balls for 2014: Wayne Fisher, Executive Managing Director, Newmark Grubb Knight Frank; John Connors, Managing Partner Brickstone Realty; and John Mangano, Regional President, Toll Brothers, Inc.
Business casual attire required.
CPDC members are encouraged to invite both young professionals and other members of their firms to attend this meeting.
CBD Forecast and Panel Discussion
Newmark Grubb Knight Frank's 19th Annual Center City Real Estate Forecast will be Thursday, January 16, 2014, at The Union League, Lincoln Hall, 2nd Floor, (Broad Street Entrance), 140 South Broad Street.
Breakfast and networking begins at 7:30 a.m., with the program beginning at 8:30 a.m.
Robert Clements, Executive Vice President and Managing Director of Newmark Grubb Knight Frank, will present the CBD Market Forecast. A panel discussion, Downtown Rebirth, will follow. The moderator will be Paul R. Levy, President and CEO, Center City District.
Panelists will be Daniel K. Fitzpatrick, CFA Regional President of Citizens Bank of PA/NJ/DE Mid-Atlantic Regional Executive of RBS Citizens; Michael C. Carbone, Regional President/Metro PA/NJ Market TD Bank; and Stephen Mullin, President & Principal, Econsult Corporation.
Please register by Friday, January 10, 2014, by contacting Joni Zarro at 215.246.2720 or email@example.com.