Office Sector News
Jefferson to replace Aramark as 1101 Market anchor tenant
Thomas Jefferson University and its hospital network will replace Aramark Corp. as the anchor tenant at 1101 Market St. Under terms of the 16-year lease, Jefferson will occupy 237,000 square feet spread over 14 floors effective Jan. 1, 2019, with an option to expand to another six floors. Jefferson’s name will replace Aramark’s atop the 32-story building.
The deal comes amid a period of growth both for Center City’s burgeoning Market East corridor and for Jefferson, which since 2013 has expanded from a three- to a 13-hospital system and merged with Philadelphia University.
For more, go to philly.com/philly/business/real_estate/commercial/jefferson-replacing-aramark-on-east-market-street-philadelphia-20171215.html.
Toll Bros. Gets Permit To Demo Jewelers Row Properties For Tower
Toll Bros. has received a zoning permit to combine six parcels on the Jewelers Row shopping street into a single property to accommodate a 24-story condominium tower.
The Department of Licenses and Inspections granted the permit for the Horsham-based developer to consolidate 702, 704, 706-08, 710 and 712-14 Sansom St., and 128 S. 7th St. into a single parcel. All but 712-14 Sansom would be demolished under the plan. The tower replacing the demolished buildings would house 85 residential units and a single commercial space facing Sansom Street.
For more, go to li.phila.gov/#details?entity=permits&eid=808740&key=524967&address=702+sansom.
Groundbreaking For 1911 Walnut Moved To 2019
The developer of Rittenhouse Square’s last prime development site has moved back its groundbreaking due to design refinements. In 2015, Southern Land Co. paid $30 million for the 0.83-acre property at 1911 Walnut St. Tim Downey, CEO and founder of the Nashville-based real estate company told the Philadelphia Business Journal that extra care is being taken in designing the proposed 48- to 49-story tower because of its prominent location.
Plans for the $300 million development include 200 rentals and 60 to 75 condominium units. Southern Land expects to open a sales center next spring, break ground in 2019 and have the project completed by 2021.
For more, go to bizjournals.com/philadelphia/news/2017/12/14/southern-land-co-seeks-to-set-the-market-with.html.
City Won't Appeal Removal Of 1020 Market’s Historic Designation
Philadelphia officials will not appeal a decision to remove the former Robinson department store at 1020 Market St. from the city’s historic register. City planning and development director Anne Fadullon said the public interest in redeveloping the site outweighs the public interest in preserving the mid-20th century modernist façade that has no windows above the first floor.
Paul Steinke, president of the Preservation Alliance of Greater Philadelphia, said his group is consulting with lawyers to potentially challenge the Board of License and Inspection Review’s jurisdiction in deciding an appeal of a historic designation.
For more, go to philly.com/philly/business/real_estate/commercial/philly-wont-appeal-decision-to-strip-robinson-building-of-historic-designation-planning-director-says-20171219.html.
Residential Market News
City Urged To Change Tack In Battle For Economic, Housing Reform
In an examination of Philadelphia’s affordable housing challenges, the managing director of Penn’s Fels Policy Research Initiative has suggested that city officials would be better served by focusing on creating more jobs and boosting income levels so more residents can afford the ample supply of lower cost housing in the city.
An editorial in The Philadelphia Citizen by Diana Lind notes that outside of a few zip codes, there is abundant housing for sale for under $200,000. “But that means that one would need an income of about $40,000 to make the mortgage payment. Sadly, too few Philadelphians have a steady household income of $40,000 to make this homeownership model work.”
For more, go to thephiladelphiacitizen.org/will-jobs-solve-phillys-housing-problem/.
Wawa Plans Massive Store Near Independence Hall
Wawa’s proposed convenience store in the Public Ledger Building at the corner of Sixth and Chestnut streets would be its largest Center City location to date. The Media-based chain’s proposed lease in the historic high rise covers more than 7,600 square feet on its ground floor, directly across from Independence Hall.
The 90-year-old Georgian Revival-style building was acquired in 2015 by Carlyle Development Group of Purchase, N.Y. (Full disclosure: the Center City District occupies the balance of the first floor.)
For more, go to philly.com/philly/columnists/jacob_adelman/wawa-plans-massive-store-sixth-chestnut-philadelphia-20171212.html.
Philadelphia To Upgrade Bike Lanes Near South Street Bridge
Bicycle lanes near the South Street Bridge will be protected with flexible delineator posts by mid-2018, city officials announced.
The painted bike lanes currently on 27th Street between Lombard and South streets and on South Street between the bridge and 21st Street will be repainted and have plastic divider poles installed. The protected lanes are funded through a grant from Pennsylvania’s Department of Community and Economic Development’s Multimodal Transportation Fund.
The Kenney administration is facing criticism from advocates of the Vision Zero traffic safety initiative, who say the city is moving too slowly on implementing protected lanes. That criticism has intensified after one cyclist was killed and another was seriously injured in Center City within the past month.
For more, go to planphilly.com/articles/2017/12/13/after-cyclist-s-death-philadelphia-to-upgrade-bike-lanes-on-south-27th-streets.
Philadelphia Fed Finds Continued Progress For Banking Markets
Third District community banks continue to display improving financial conditions, according to a new report by the Federal Reserve Bank of Philadelphia. Capital ratios continue to increase primarily due to earnings accretion, and Third District asset quality metrics continue to improve as the level of noncurrent loans declined to 2008 levels.
The Philadelphia Fed also noted that the number of problem banks in the region fell to 104 as of 3Q 2017. This represents the lowest number of problem banks since 2008, declining significantly from the peak of 888 problem banks in 1Q 2011.
For more, go to philadelphiafed.org/newsroom/economy-and-banking?tab=2.
Survey: 59% Of Philadelphia Firms Expect To Add Workers In 2018
The percentage of Philadelphia firms expecting to increase employment over the next 12 months rose to the highest point (59%) in the history of the survey question (asked since January 2011), according to a special labor market survey conducted last month by the Federal Reserve Bank of Philadelphia. The percentage of firms expecting to decrease employment fell to 9%.
The top three factors that firms gave for increasing employment continue to be: high expected growth of sales; skills not possessed by current staff are needed; and current staff is overworked.
For more, go to philadelphiafed.org/research-and-data.
PICA: Philadelphia Sees Double-Digit Tax Growth in November
The City of Philadelphia collected $185.4 million in General Fund tax revenue in October 2017, the fifth month of FY2018, compared to $166.1 million in November 2016, an increase of 11.7%, according to the Pennsylvania Intergovernmental Cooperation Authority (PICA).
Increases in wages, earnings, and net profit and realty transfer taxes drove growth in overall collections for the month. While real estate and parking taxes fell through November, the strong month also ensured the continued double-digit increase in total year-to-date collections.
Through November, the business income and receipts tax (BIRT) increased by 16.2%, compared to a projected growth of 8.3%; the real estate tax decreased by 4.3%, compared to a projected growth of 11.0%; the realty transfer tax increased by 41.7%, compared to a projected 3.4% growth rate; and the City sales tax collections increased by 7.2%, compared to a projected growth of 5.2%.
For more, go to picapa.org/2017/12/just-released-picas-november-tax-revenue-report/.
Report: DROP Costs Philadelphia Pension Fund $62M Since 2010
The City of Philadelphia’s Deferred Retirement Option Plan (DROP) has cost upwards of $62 million since 2010.
The study by the Center for Retirement Research at Boston College found that total estimated costs for the DROP program since the last study was conducted in 2010, based on three different pension fund investment return assumptions, are $41 million at a rate of 7.7%, $42.1 million at a rate of 6%, and $62.2 million at a rate of 3%.
Total estimated costs for the DROP program since it was established 1999 are $277.2 million at a rate of 7.7%, $252.6 million at a rate of 6%, and $236.9 million at a rate of 3%.
The DROP program has increased the retirement age by 1.7 years, on average, across all City of Philadelphia Municipal Retirement System employees.
For more, go to picapa.org/2017/12/pica-issues-study-on-cost-of-drop-program/.
Parks and Open Space News
Local Developers Come Together For Holocaust Memorial Project
David Adelman, CEO of Campus Apartments and chair of the Philadelphia Holocaust Remembrance Foundation board, is spearheading a campaign to raise $7 million to complete the expanded Holocaust Memorial now under construction on the Benjamin Franklin Parkway. Adelman said about 65% of the total has been raised from public sources and private donations.
To assist in raising the funds, Adelman reached out to fellow developers and property managers through the Jewish Federation Real Estate organization. Those who responded include Post Brothers President Matt Pestronk, Parkway Corporation President Robert Zuritsky, Korman Communities co-CEO Brad Korman and Verde Capital President Jake Reiter.
Construction is to start in January and the project is expected to be completed in October 2018.
For more, go to
CCD and CPDC News
City Council Approves CCD Reauthorization
Philadelphia City Council and Mayor Jim Kenney have officially given full approval to the Center City District’s Five-Year Plan and Budget.
For 2018 to 2022, CCD’s supplementary assessments will be devoted to clean and safe seven days a week; to market research and the promotion of restaurants and shops; to landscaping, lighting, signs, trees and new streetscape enhancements; to ongoing improvements and programming in four CCD-managed parks; and to leveraging grants and contributions to create the new Rail Park.
For more, go to centercityphila.org/uploads/attachments/cj3vqd0ou0040slqd7gg093pr-ccd-plan-budget-2017-final.pdf.
What’s Next For The Benjamin Franklin Parkway?
To commemorate the 100th anniversary of the Benjamin Franklin Parkway, the Central Philadelphia Development Corporation (CPDC) and History Making Productions have produced a video preview of a forthcoming documentary examining the history and development of the Parkway and setting the stage for a discussion of challenges, opportunities and recommendations.
The video is part of what will be a yearlong discussion among businesses, residents, and other stakeholders about how to make the Parkway better.
For more, go to centercityphila.org/news/video-parkway-100-envisioning-the-future.