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January 8, 2018 • Volume 21 • Issue 1 • A bi-weekly email news service

Office Sector News
1700 Market Signs Seven New Tenants Including HFF, Tierney
San Francisco-based Shorenstein Properties has leased 85,000 of the 845,000 square feet of office space at 1700 Market St. to a collection of seven new tenants including investment sales brokerage HFF, Tierney, CH2M, IHS Markit and the Center for Applied Research. The leases bring the building to 90% occupancy.

Shorenstein purchased 1700 Market from Nightingale Properties for $33 million in January 2016 and is currently renovating the building. HFF moved from its previous location in Conshohocken into its new Philadelphia headquarters in late November.

For more, go to
bisnow.com/philadelphia/news/office/1700-market-seven-new-tenants-jll-83211.

Development News
Developer: Family Court Rehab 'On Life Support' After Tax Change
A planned transformation of the historic Family Court Building on the Benjamin Franklin Parkway into a hotel has become uncertain, with the developer citing the new federal tax law changes.

The new legislation reduces the upfront advantage of the Federal Historic Preservation Tax Incentives program by requiring users to spread their savings from the tax credits over five years. Current rules allow write-offs to be used in their entirety in a single year.

Coral Gables, Fla.-based developer R. Donahue Peebles told The Philadelphia Inquirer that the project “is on life support.” Peebles said he is working with the Philadelphia Industrial Development Corp. “to explore options to save the project.”

For more, go to philly.com/philly/business/real_estate/commercial/historic-center-city-court-rehab-on-life-support-after-tax-law-change-developer-says-20171228.html.

Union Transfer And Adjacent Properties Sell In $5.5M Deal
Arts & Crafts Holdings is expanding its portfolio in the Spring Garden area of Philadelphia with the purchase of the Union Transfer building and two neighboring properties. The $5.5 million deal includes 1002-1036 Spring Garden St. and 501-505 N. 11th St. as well as a parking lot.

Plans include revamping 12,000 square feet, along with an adjacent former Jiffy Lube franchise, into retail space and other uses. The square footage had been used for a day care center and storage. Arts & Crafts said it has extended the lease for Union Transfer, a popular music venue at 1026 Spring Garden St.

For more, go to bizjournals.com/philadelphia/news/2018/01/04/arts-crafts-holdings-union-transfer-venue-shopping.html.

Dranoff, PAFA, Walnut St. Theatre Among Redevelopment Grantees
Pennsylvania has earmarked $35.6 million from its Redevelopment Assistance Capital Program for more than two dozen projects in Philadelphia.

In Center City, Dranoff Properties received $1.4 million for its SLS International Hotel & Residences project for 110 hotel rooms and 100 condominiums at Broad and Spruce streets. The Pennsylvania Academy of the Fine Arts received $500,000 for development of a campus master plan, Walnut Street Theatre received $1 million for an expansion project and Arts & Crafts Holdings received $1.5 million for redevelopment of 915 Spring Garden St.

For more, go to bizjournals.com/philadelphia/news/2017/12/22/wolf-redevelopment-dollars-mission-first-sls-hotel.html.

Tower Investments Sells Portion Of Waterfront Property
Bart Blatstein’s Tower Investments has sold half of a parcel that the real estate company owns fronting the Delaware River. U.S. Construction Inc. bought eight acres of the 16-acre property at 1401 S. Columbus Blvd. with plans to develop the residential portion of a proposed mixed-use project.

Plans for the property include a 75,000 square foot “retail village” with a Wawa convenience store and a 35,000-square-foot Lidl grocery store as anchors along with additional retail space. The land fronting the Delaware River would have 670 residential units.

For more, go to bizjournals.com/philadelphia/news/2018/01/02/blatstein-columbus-boulevard-wawa-lidl-cre.html.

19th Century Industrial Site added to National Historic Register
The former Frankford Chocolate Factory has been added to the National Register of Historic Places. The designation does not protect the c.1865 building at 2101 Washington Ave. from demolition but means that its future development would qualify for a federal tax credit.

The factory’s owners have been meeting with local residents to discuss redevelopment of the site. Suggestions have included apartments, townhouses and retail.

For more, go to philly.curbed.com/2018/1/3/16840994/frankford-chocolate-factory-historic-designation.

Eds and Meds News
After Aria Health Merger, Three Hospitals Take Jefferson Name
Jefferson Health has dropped the Aria name from three hospitals that joined the health system in the 2016 merger of Jefferson and Aria Health.

Aria operates medical centers in the Torresdale and Frankford sections of Philadelphia and in Langhorne, Bucks County. The hospitals are now being operated as Jefferson Torresdale Hospital, Jefferson Frankford Hospital and Jefferson Bucks Hospital.

For more, go to bizjournals.com/philadelphia/news/2018/01/02/aria-hospital-rebrand-new-name-jefferson-health.html.

Residential Market News
Judge OKs Post Bros. Warehouse Conversion Project
The Post Brothers property group has received zoning clearance to convert a long-vacant North Philadelphia warehouse into a 350-unit apartment building with lower-floor retail and office space. The city’s Zoning Board of Adjustment voted against allowing residences at the 900 N. Ninth St. building but a Common Pleas Court judge reversed the board’s ruling on appeal.

The six- and 10-story Quaker Building warehouse was built in 1918 for Strawbridge & Clothier. The Post Bros. plan for the site also calls for a new parking structure to be built on an adjacent lot with space for about 135 vehicles.

For more, go to philly.com/philly/business/real_estate/commercial/post-bros-north-philly-warehouse-cleared-to-become-apartments-20171229.html.

Report: Philadelphia Residential Rent 15th Most Expensive In U.S.
A new report by real estate website Zumper finds that month-over-month rental rates are up nearly 5% in the nation’s largest cities, with Philadelphia listed as the 15th most expensive rental market.

Nationally, a one bedroom goes for about $1,233 — an increase of 4.9% from the previous month. Two-bedroom units remained flat at $1,392. San Francisco, New York, San Jose, Washington, D.C., and Boston continue to top the list for most expensive rentals.

In Philadelphia, monthly rent for a one-bedroom apartment edged up less than 1% to $1,410 and two-bedroom units held steady at $1,600.

For more, go to philly.com/philly/business/real_estate/philadelphia-apartment-rent-one-two-bedroom-20171227.html.

Retail News
Suburban Station Rebrands With Retail & Dining Focus
Suburban Station is being rebranded with a new logo and signage to launch its development as a dining and shopping destination. Efforts are also underway to change the Center City commuter station’s retail mix.

Philadelphia real estate services company AthenianRazak and architecture firms Strada and Brett Webber Architects are collaborating on the project’s design phase. Construction is set to begin in Q2 2018 and be complete no later than Q4.

For more, go to bizjournals.com/philadelphia/news/2017/12/26/suburban-station-new-logo-heads-state-food-dining.html.

Wills Eye Plans Third Retail Store At Fashion District Of Philadelphia
Wills Eye Hospital will open its third retail location at the Fashion District Philadelphia in fall 2018. The first Wills Eyewear shop opened inside the hospital in June 2016 and a second debuted a month ago at 800 Arch St. Landlords and brokers cite increasing demand for health-and-wellness retailers in malls and shopping centers.

The Fashion District’s Wills Eyewear store will measure 2,200 square feet at the concourse main level between retailers Hollister and Famous Footwear. Nearby will be H&M, Columbia Sportswear, Bath & Body Works, American Eagle and Abercrombie & Fitch.

For more, go to philly.com/philly/business/retail/wills-eye-retail-stores-malls-fashion-district-philadelphia-20171220.html.

Chicago-Based Men's Store Coming To Walnut Street
The Tie Bar, a Chicago-based men’s accessory shop, plans to open a Philadelphia location on the ground floor of the Beacon apartment building at 1527 Walnut St.

The 900-square-foot shop will fill part of a retail space at the former site of a Lululemon athletic clothing store, which has been combined with the six-story property next door to accommodate the recently completed Beacon apartment building. The Tie Bar has stores in Chicago, Boston and New York.

For more, go to philly.com/philly/columnists/jacob_adelman/the-tie-bar-lululemon-site-walnut-st-shopping-men-20180103.html.

D.C.’s District Taco Joining East Market Retail Corridor
District Taco has been announced as the latest tenant to sign on at East Market. The fast-casual Mexican restaurant from Washington, D.C. joins a lineup at the forthcoming mixed-use development that will include Wawa, Iron Hill Brewery, Little Baby’s Ice Cream, and Mom’s Organic Market, along with apartments and offices. It is slated to open this summer on Market Street between 11th and 12th.

The under-construction East Market project will encompass 4.3 acres of residential, entertainment and shopping amenities in tandem with the emergence of Fashion District Philadelphia and two residential towers with about 560 apartments in total.

For more, go to philly.eater.com/2018/1/4/16849744/district-taco-mexican-restaurant-east-market-philadelphia.

Transportation News
Toll Increase Takes Effect On Pennsylvania Turnpike
Effective January 5, tolls on the Pennsylvania Turnpike rose 6% for both cash and E-ZPass customers. Officials said the increase is needed to pay for the Pennsylvania Turnpike Commission's funding and annual improvements.

The most basic tolls will increase from $1.23 to $1.30 for E-ZPass customers and from $1.95 to $2.10 for cash customers. For most tractor-trailer drivers, the increase will be from $10.17 to 10.78 for E-ZPass and from $14.45 to $15.35 for cash.

For more, go to paturnpike.com/press/2018/20180104134041.htm.

White House Slated To Release $1T Infrastructure Plan This Month
The Trump administration is expected to release details by the end of January on its $1 trillion infrastructure proposal. The plan is expected to provide $200 billion in federal funds, and seek out the other $800 billion from states, cities and the private sector.
DJ Gribbin, an infrastructure-policy adviser to President Trump, described the new plan as an incentive program that will lay out “clear, measurable, objective criteria” for how cities and states would secure funding.

Adie Tomer, a fellow at the Brookings Institution’s Metropolitan Policy Program, told The Atlantic that the draft plan he has seen places less emphasis on the nature of the projects it would fund, and more on who would be paying for them. Compared to what other DOT discretionary grant programs like TIGER and New Starts have provided, he said, states and cities would foot larger shares of the bills of their infrastructure projects, given that the proposed ratio is 20% federal and 80% local or private.

For more, go to theatlantic.com/business/archive/2017/12/trump-infrastructure-plan-cities/549320/.

Economic and Employment News
Manufacturing, Service Industries Continue Expansion in December
Manufacturing activity showed solid growth in the region in December, according to responses to the Manufacturing Business Outlook Survey conducted by the Federal Reserve Bank of Philadelphia, with new orders up for 41.5% of firms, down for 11.7%, and remaining the same for 45.2%.

The number of full-time employees increased for 29.4% of the companies, decreased for 11.3%, and was unchanged for 59.3%.

Looking ahead six months, 63.2% of the firms expected conditions to improve, 9.6% anticipated a downturn, and 23.1% predicted no change.

Business activity continued to grow at a modest pace in the region’s service sector in December, according to responses to the Nonmanufacturing Business Outlook Survey, with new orders up for 25.6% of firms, down for 16.9%, and remaining the same for 31.6%.

The number of full-time employees increased for 21.5% of the companies, decreased for 13.5%, and was unchanged for 59.8%.

Looking ahead six months, 56.1% of the firms expected conditions to improve for their firms, 10.5% anticipated a downturn, and 29.9% predicted no change.

For the Manufacturing report, go to philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2017/bos1217.

For the Nonmanufacturing report, go to philadelphiafed.org/research-and-data/regional-economy/nonmanufacturing-business-outlook-survey/2017/nbos1217.

Port Of Philadelphia Prepares For More Growth In 2018
The Port of Philadelphia is preparing for another busy year on the heels of a successful 2017, which saw more containerized freight, more cars, more cargoes and the purchase of cranes capable of unloading larger ships. The changes began in earnest after the Wolf administration announced an unprecedented $300 million for terminal improvements, wharves, warehouses, and cranes.

PhilaPort, which leases and manages the piers and terminals, spent $10 million in June to buy the former Produce and Seafood Terminal from Philadelphia Industrial Development Corp. The 29-acre parcel will be used to relocate warehouses and increase container capacity. The improvements are expected to create nearly 7,000 jobs for truckers, rail workers, suppliers, and port-related businesses over the next decade.

For more, go to philly.com/philly/columnists/linda-loyd/phillys-port-prepares-for-further-growth-bigger-ships-expanded-cargoes-new-cranes-more-jobs-20171228.html.

Government News
WHYY Program Discusses “Philly's Affordable Housing Stalemate”
WHYY-FM’s Newsworks Tonight program on January 4 focused on Philadelphia’s proposed “inclusionary zoning” legislation, which after several revisions remains strongly contested by some developers and builders as well as neighborhood groups.

Under the latest version of the bill, developers building more than nine units of housing in Center City and other high-density development areas would be required to set aside 10% of the project as affordable housing, or pay into the city’s Housing Trust Fund.

Persistent disagreements over the bill suggest that a final vote is unlikely when City Council reconvenes January 25. Discussion is underway regarding entirely new legislation in the form of a broad-based impact fee on development across the city.

For more, go to planphilly.com/articles/2018/01/04/the-politics-behind-philly-s-affordable-housing-stalemate.

To read the bill, go to phila.legistar.com/LegislationDetail.aspx?ID=3088278&GUID=1CD43D48-21EC-413B-9886-37159739FE87.

One Year In, Positive Results For Program Combating Homelessness
A one-year-old program is seeing encouraging results in tackling chronic homelessness in Philadelphia by simultaneously addressing long-term opioid addiction. Christine Simiriglia, President and CEO of Pathways to Housing, said the size of the pilot program launched in late 2016 may seem small but “the impact is tremendous, scalable, and replicable.”

Based on the “housing first” model of “harm reduction” and immediately providing housing, even to active drug users, the program has placed 75 chronically homeless opioid addicts in permanent scattered-site housing and has brought services directly to them. To date, all of the participants remained in housing throughout the first year. The initiative is funded by the U.S. Department of Housing and Urban Development, the Philadelphia Department of Behavioral Health, Community Behavioral Health, and the Office of Homeless Services.

For more, go to endhomelessness.org/using-scattered-site-housing-first-model-combat-opioid-epidemic/.

CCD and CPDC News
Dilworth Park Marks Record-Breaking December Attendance
For the second December in a row, more than 1 million people visited Dilworth Park at City Hall. Despite daily sub-freezing temperatures during the holiday week at the end of the month, visitation to the park in December 2017 was 1,272,590, an increase of 14% from the park’s 1,115,548 visitors in December 2016.

An average of 41,051 people each day entered or stayed in Dilworth Park during December 2017, up from an average of 35,985 daily visitors in December 2016. The park also set a one-day attendance record on Saturday, December 2, 2017, when 72,342 people visited Dilworth.

The Rothman Institute Ice Rink, Rothman Cabin, and America’s Garden Capital Maze will remain open through February 26 with a full schedule of activities.

For more, go to dilworthpark.org.