Office Sector News
Office Vacancies Edge Upward
The Philadelphia office vacancy rate rose slightly in the third quarter of 2012 over the previous quarter, edging up to 14.4% from 14.3%, according to Newmark Knight Frank Smith Mack's Third Quarter 2012 Office Market Trends. Year over year, the results were similar in the third quarter, when the vacancy rate was about the same and unoccupied space increased by a scant 37,800 square feet.
In the central business district's Market West submarket, the vacancy rate remained stable at 15.3%, with 56,000 square feet of office space opening up at One Commerce Square after The Pew Charitable Trusts downsized from three floors to one.
The Market East submarket lost 43,760 square feet of occupied office space and ended the quarter with a 15.5% vacancy rate. Chestnut/Walnut rate was slightly higher at 17.2%.
Among the larger deals, Cozen O'Connor leased 200,000 square feet at One Liberty Place, and Ballard Spahr LLP renewed for 189,481 square feet at 1735 Market Street.
Nonmanufacturing Business Activity Stronger
The general index of nonmanufacturing business activity increased from October to November, the Federal Reserve Bank of Philadelphia reported on December 4.
More respondents to the survey reported increases in new orders (34.8%) than reported decreases (21.7%) and more saw an increase in sales revenues (43.5%) than saw decreases (17.4%).
An equal number of firms reported increases and decreases in full-time employment (26.1%), but 30.4% said they were hiring more part-time workers, while 17.4% said they were hiring fewer.
Respondents were optimistic about the next six months, with 60.9% expecting an increase in business activity in the region, while 21.7% were expecting a downturn.
Toll Brothers Partnering in Whole Foods Project
Developer Neal Rodin will team up with Toll Brothers Inc. on a mixed-use project at the Best Western site in Center City that will include an expanded Whole Foods, the Philadelphia Business Journal reported Friday. The reported $100 million project, at 22nd Street and Pennsylvania Avenue, is expected to have 300 rental units as well as an expanded version of the high-end grocery store, the article noted.
Logan Circle Properties on the Market
The Archdiocese of Philadelphia has put up for sale for the first time in 150 years a one-acre property at 277 North 18th Street, next to the Cathedral Basilica of Saints Peter and Paul across the street from Sister Cities Park at 18th Street and the Benjamin Franklin Parkway, the Philadelphia Business Journal reported on December 7. Holliday Fenoglio Fowler is marketing the property. Redevelopment of this site with an active use could have a very positive impact on the vitality of Logan Square, especially when combined with the redevelopment of the Family Court building to the north.
Another property of eight acres at North 23rd Street and John F. Kennedy Boulevard is being sold by Garrison Investment Group of New York and Jones Lang LaSalle is handling the sale. The prime segment of this L-shaped parcel is at 60 North 23rd Street. In 2006, a $3.5 billion planned community was proposed for this property, the article noted, but was never built.
Eds and Meds News
Gates Foundation Awards $2.5 Million to Philadelphia Schools
The Bill and Melinda Gates Foundation on December 5 awarded Philadelphia $2.5 million to bolster collaboration between public, charter and Archdiocesan schools and to boost teacher training and principal leadership, among other things.
Philadelphia was one of seven cities nationwide to be awarded the grants from the Foundation. The money will be managed by the nonprofit Philadelphia Schools Partnership and will fund three specific projects: an Urban Leadership Academy for principals; a "teacher effectiveness" program; and the creation of benchmark tests to align with standards adopted by schools around the country.
Other cities receiving the Gates Foundation grants were Boston, Denver, New Orleans, New York, Hartford, Connecticut, and Spring Branch, Texas.
Report Documents Thriving Center City Retail
Center City retailers benefit from a downtown residential population approaching 180,000, the third largest residential downtown in the country, with an average household income in the core of Center City of $93,126, and in the extended boundaries of Center City between Girard and Tasker Streets, an average household income of $74,587, according to a new report issued by the Center City District (CCD).
Within one mile of City Hall, Center City has more than 8.5 times the number of workers as King of Prussia Mall and more than 18.5 times the number of workers as Cherry Hill Mall.
Also within one mile of City Hall, the CCD estimates that total demand for shoppers' goods is more than $750 million. Approximately 46% of this demand is driven by tourists, 25% by office workers, and 24% by residents within this area, the report notes. The report was made available for the recent International Council of Shopping Centers meeting in New York City, which was attended by CCD staff.
To download the report, Center City Reports: Retail, please go to
Arts and Culture News
William Penn Foundation Launches Search for New President
The William Penn Foundation on November 28 announced it would initiate a search for a new president to oversee the Foundation and lead the implementation of its strategic plan.
The new leader will replace Jeremy Nowak, who served as president from June 2011.
New Chairman at Constitution Center
The National Constitution Center on December 6 announced that former Florida Governor Jeb Bush had been elected chairman of its board of trustees.
Bush's term will begin on January 1, 2013, and he will succeed Bill Clinton, who has served as Chairman since January 2009. Governor Bush's father, George H.W. Bush, served as Chairman prior to President Clinton.
To read the announcement, please go to tinyurl.com/agltf5t.
Call for Vendors for Arts Street Fair
The Philadelphia International Festival of the Arts (PIFA) is seeking vendors for its 2013 "If you had a Time Machine…" street fair on the last day of the month-long festival that runs from March 28 through April 27.
In 2011, more than 250,000 people came out for the PIFA street fair celebration along Broad Street. Applications for vending are due February 1. Cost of vendor space ranges from $300 to $2,000.
For more information, please go to pifa.org, or you can email them at email@example.com, or call 215-670-2325.
Parks and Open Space News
Winterfest at Sister Cities Park
On Saturday, December 15, the Center City District will host Winterfest, a free festival for families with children, from 11:00 a.m. to 2:00 p.m., at Sister Cities Park, 18th Street and Benjamin Franklin Parkway.
For more information, please call 215.440.5500 or visit SisterCitiesPark.org.
Funding Restored to Parks & Recreation
Philadelphia City Council on November 29 approved Bill #120818 that restored $2.6 million for the Department of Parks & Recreation.
The money comes from the city's fund balance, which was $49 million larger than anticipated at the end of the fiscal year that ended June 30, The Philadelphia Inquirer reported.
To read the bill, please go to tinyurl.com/bpwhuhp.
Residential Market News
Stronger Center City Housing Market
Building upon the 10.2% population growth in the last decade, the Center City housing market has grown stronger, according to a new report from the Center City District. The volume and price of housing units sold in 2012 increased, days on market decreased, the inventory of condo units left unsold from 2008-2009's severe recession steadily decreased, and the rental market is expanding, the report noted.
This report, Center City Housing: The Rebound Continues, released on November 27, offers detailed information about the location and number of units in residential developments under construction and the number of condo units remaining to be sold in Center City. The report also provides a neighborhood-by-neighborhood analysis of the number of renters and homeowners, their ages, household sizes, educational levels, income, and when the majority of homeowners moved into each downtown neighborhood. This information can be helpful to both City Council and the Nutter Administration as they consider how they might "buffer" long-term residents from the impact of the actual value real estate reassessment initiative.
To read the report, please go to centercityphila.org/docs/CCR12_housing.pdf.
City House Prices Continue to Outpace Suburbs
Third-quarter housing sales were more tepid than the previous quarter in the Philadelphia region, but a significant divergence continues between the city and the suburbs, according to Philadelphia Regional House Price Indices: 2012 Q3, from Kevin Gillen of the Fels Institute of Government. Prices of houses declined by only 0.6% in Philadelphia, while house prices in the suburban counties fell by an average of 1.3%; more than double the decline of the city's.
From their peak in 2007, citywide house prices in Philadelphia have fallen by an average of 18%, compared to a 22% decline in Philadelphia's suburbs. Also, suburban house prices increased an average of 5% this past spring compared to a 7.6% increase in city house prices.
To read the update, please go to tinyurl.com/br57adk [PDF]. To view the charts, please go to tinyurl.com/chqobfk [PDF].
Report Examines Real Estate Taxes in City
One key reason why property assessments in Philadelphia have gotten so far out of line with market values—in addition to a history of local inaction—is that the state of Pennsylvania has not regulated the assessment system, according to a new report from The Pew Charitable Trusts' Philadelphia Research Initiative.
The report, The Actual Value Initiative: Overhauling Property Taxes in Philadelphia, looks at how Philadelphia's assessments often have little relation to the properties' true value and how other cities have dealt with this situation. The report also analyzes the current city proposals designed to mitigate the big spikes in property taxes that Mayor Nutter's Actual Value Initiative would likely bring to some residents.
To read the report, please go to tinyurl.com/cnfzjv7 [PDF].
Council Approval for CCD Reauthorization Advances
Bill #120800, approving the plan, estimated costs and proposed method of assessment and charges of the Center City District for the period 2013-2017 was favorably reported out of committee on December 6th and had its first reading in full City Council session. Second reading is scheduled for this Thursday, before it goes to the Mayor for signature.
Last summer the CCD held a formal public hearing on the plan and at the end of the 45-day comment period, only two properties out of 1550, representing less than 1% of the assessed value of the District, formally objected. The new plan enables the District at the request of owners, to expand its boundaries to add the block on South Broad Street from Pine to Lombard Streets, to refinance existing debt and reduce by 50% charges on residential owner occupants. The plan and budget can be downloaded from the CCD's website at centercityphila.org/docs/CCDPlanBudget2013_17.pdf.
Special thanks go to Rules Committee Chair William Greenlee for moving the bill through the process and Councilman Mark Squilla who co-sponsored the bill, along with Council President Darrell Clarke.
'Complete Streets' Bill Passes
Philadelphia City Council on December 6 passed Bill #12053201, known as "Complete Streets," introduced May 31 by Councilman Mark Squilla. The bill creates an overall policy that defines a traffic code for bicycles and cars and includes fines for cars that block bicycle lanes and for bicyclists who block traffic by riding more than two abreast.
To read the bill, please go to tinyurl.com/azqodyy.
Tax Credit for Providing Healthcare to Same Sex Couples
Councilman James Kenney on November 29 introduced Bill #120956, which would authorize a tax credit for employers who provide healthcare benefits for gay and lesbian couples that is comparable to those benefits provided heterosexual couples. The bill is in the Committee on Labor and Civil Service.
To read the bill, please go to tinyurl.com/b5k5w7d.
State's Tax Revenue Exceeds Estimates at Midyear
General Fund revenues for the Commonwealth of Pennsylvania for Fiscal Year 2013 (FY13) were $59 million above estimate midyear, according to state Budget Secretary Charles Zogby, who held the annual mid-year budget briefing on December 4. The Commonwealth is expected to end the fiscal year with more than $80 million above estimate, with an ending balance of $478 million, revised upward from $293 million. Corporate tax collections were up, but sales tax collections were declining, he noted.
Looking toward the next fiscal year, agencies are to propose their budgets by February 5, 2013, and they have been advised to maintain level funding.
To view a PDF of the budget briefing, please go to tinyurl.com/bskpdsw [PDF].
Tomorrow! CPDC General Membership Meeting
The next Central Philadelphia Development Corporation (CPDC) Membership Meeting will be tomorrow, Tuesday, December 11, from 8:15 a.m. to 9:45 a.m. at the Union League, 140 South Broad Street.
As Philadelphia continues to diversify its office district, retain start-up firms and as we seek to develop a major destination retail and entertainment district on East Market Street, what can we learn from New York City? Come hear two dynamic leaders who head organizations similar to the Center City District speak about how they are addressing these challenges and opportunities in their city: Elizabeth Berger, President of the Alliance for Downtown New York; and Tim Tompkins, President of the Times Square Alliance.
Ms. Berger will focus on efforts to continue to attract and retain office tenants to the Wall Street and World Trade Center area while continuing to diversify land-use through residential and retail development.
Mr. Tompkins will focus on their large digital signs, efforts to attract and retain both office and entertainment uses to Times Square, while creating new pedestrian spaces and plazas in the midst of Broadway.
Public Hearing on Zoning Changes
The Rules Committee public hearings on Bill #120916, which adds a new commercial, mixed-used district to the newly-adopted zoning code, tinyurl.com/b79vmjq, and Bill #120917, which revises the allowed uses and dimensional standards in commercial districts, further altering the new zoning code, tinyurl.com/cmdsy6b, were recessed. The new hearing date is Thursday, December 13, at 9:00 a.m., Room 400, City Hall.
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