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January 12, 2015 • Volume 18 • Issue 1 • A bi-weekly email news service

Office Sector News
CBRE: Office Vacancy Down
The vacancy rate for the Philadelphia office market ended the year at 13.4%, down from 14.7% at the same time last year, according to CBRE’s Greater Philadelphia MarketView Office report for the fourth quarter. CBRE’s definition of downtown includes University City.

Within that larger geography, they count 892,226 square feet (SF) being absorbed and 1.9 million SF of office space under construction. The average lease rate was $27.18/SF for all classes and $28.89/SF for Class A space. Market West led Center City absorption with 86,112 SF. In their calculations, Center City remains the regional submarket experiencing the strongest demand. Among major leases signed, Stradley Ronon renewed 92,000 SF at Two Commerce Square.

Sales of office buildings were also strong in the downtown, with 1835 Market Street selling for $100 million and 1515 Market Street trading for $85 million, the report noted.

In suburban Philadelphia, the vacancy rate was 19.8% and 836,330 SF of space was absorbed. The average overall lease rate was $24.56/SF, with Class A space averaging $26.06/SF.

The outlook for office job growth remains positive with the main driver continuing to be the professional and business services sector, the report noted. This jobs sector is expected to lead the regional economy over the year by adding more than 15,000 jobs through the end of 2015.

To read the report, please go to bit.ly/1s9RaRn [PDF].

Google Leading Move to Cities for Operations
Since 2000, Google Inc., has been in the vanguard for creating an expanding urban campus for its workforce in New York City, according to an article in the Wall Street Journal, published on December 25.

Google has expanded from a single executive working out of a Starbucks to 4,000 employees and 3.5 million square feet of working space, with further expansion under way.

Google’s accumulation of property is indicative of a shift taking place nationwide as fast-growing technology companies concentrate their operations in cities to be near the younger workers they wish to attract, Millennials who prefer the live-work lifestyle of the urban centers, the article noted.

To read the article, please go to on.wsj.com/1x8tTiY.

Economic News
Exploring the On-Demand Economy and Its Workers
In an article published on January 3, The Economist outlines the many businesses that have been created following the Uber model, employing a smart-phone app and part-time workers.

Start-up businesses with names like Handy for handyman jobs, Homejoy for housecleaning, Instacart for grocery delivery (available in Philadelphia), Washio for clothes washing, are just a few of the jobs built around systems that match jobs with independent contractors.

Businesses such as Axiom, which employs 650 lawyers, span the professional spectrum, with millions of dollars in income and hundreds of employees. Even doctors are available through an app.

Long-term, these businesses may encounter difficulties such as regulations, lack of employee loyalty, and inability to expand, the article noted, but already they are contributing to a more footloose and flexible labor force.

To read the article, “There’s an app for that,” please go to econ.st/1y4UrmY.

Technology's Influence on Commercial Real Estate In 2015
Colliers International's Insights offers some predictions about developing trends in commercial real estate for 2015, and all of them center on technology and the changing attitudes of Millennials entering the workforce.

Among the predictions are: fast-growing tech firms will remain in the urban central business districts even if they are more expensive than lower-cost suburban markets; new local tech hubs will attract firms priced out of the leading tech markets; Millennials will make recruitment and retention a struggle for the real estate labor pool outside of the highly compensated positions; and the speed of tech progress will remain at a breakneck pace.

To read the article, please go to bit.ly/1tQXbDC.

Employment News
A Chance to Pitch Your Start-Up
First Round Capital 's Josh Kopelman, who also runs the StartUp PHL early-stage investment fund, is holding office hours on Monday, February 2, to meet Philadelphia companies that could be a good fit for StartUp PHL’s portfolio, Technical.ly Philly reported on January 8. Selected companies will get 15 minutes to pitch either Kopelman or First Round partner Chris Fralic.

The office hours are being held to broaden the applicant pool, the article noted.

Entrepreneurs can get funded through the StartUp PHL seed fund, which makes investments of about $200,000-$400,000 and is backed by money from First Round Capital and the Philadelphia Industrial Development Corporation (PIDC) or the new angel fund, which makes investments of about $100,000 and is backed by City money and angel money, to which Kopelman contributes, the article noted.

Potential candidates must apply by Sunday, January 21.

To read the Technical.ly Philly article, please go to bit.ly/1Iz1bKk.

To apply, please go to bit.ly/1seoTcB.

Retail News
Organic Market to Open in East Market
Mom's Organic Market, a Maryland-based chain, will open a new grocery store at 34 South 11th Street in the new East Market development, The Philadelphia Inquirer reported on January 6.

The store will fill a 16,000-square-foot space in the $230 million East Market mixed-use development. The project will include 150,000 square feet of office space and 44,000 square feet of ground-floor and second-floor retail space. The first phase of development also includes 107,000 square feet of new retail with frontage on Market Street and a 322-unit apartment building above the retail space.

Mom’s Organic Market will have a lunch counter serving fresh juices, kale and spinach salads, and vegetarian dishes. A garage will accommodate 55 free shopper parking spaces. The grocery is expected to open in approximately one year.

The owners of the development are National Real Estate Advisors, JOSS Realty Partners LLC, Young Capital LLC and SSH Real Estate. Groundbreaking for the development was held on October 2.

To read the article, please go to bit.ly/1tGapNT.

Target Scouting Locations in Center City
The Target Corporation is looking at locations for as many as four Target Express stores in Center City and University City, The Philadelphia Inquirer reported on January 8. A Target Express is approximately one-sixth the size of a typical suburban Target store.

The company has tested the 20,000-square-foot format within the past year near the University of Minnesota. Target Express will offer sandwiches and fresh food, plus a curated selection of their usual offerings.

To read the article, please go to bit.ly/14DRy0l.

CCD Restaurant Week
Center City District Restaurant Week begins Sunday, January 18, and continues through Friday, January 23, and Sunday, January 25, through Friday, January 30.

More than 120 participating restaurants throughout Center City will offer three-course dinners for only $35, and 56 of those restaurants will serve three-course lunches for $20.

For complete information, please visit CenterCityPhila.org/RestaurantWeek. On the site, you can make online reservations through OpenTable and enter a contest to win 52 gift certificates from Center City restaurants.

Use m.CenterCityPhila.org to search for participating restaurants, check menus and make reservations on your phone!

Thanks to Celebrity Cruises, parking is free at four garages on Thursday, January 22, and Thursday, January 29. Limited tickets are available. The garages are Curtis Center (Seventh and Sansom Streets); 12th and Walnut Streets; 12th and Filbert Streets; and Liberty Place, 16th and Market/Chestnut Streets). To obtain a parking voucher, please go to bit.ly/1xFoQXF. For up-to-date news, follow Restaurant Week on Twitter: @PhilaRestWeek.

To view the list of participating restaurants, please go to centercityphila.org/life/RWRestaurants.php.

Arts and Culture News
New Leader for Barnes Foundation
Thomas Collins, head of the Pérez Art Museum in Miami (PAMM), will become the new Executive Director and President of the Barnes Foundation, the museum announced on January 7.

Collins will begin his work at the museum in March and succeeds Derek Gillman, who led the Barnes from 2006 to 2013, and opened the new Barnes Foundation on the Benjamin Franklin Parkway in May 2012.

At PAMM, Collins oversaw construction of a new building in downtown Miami, which opened to great acclaim in December 2013; increased membership, annual giving, attendance, and major gifts; and accomplished many other things, the press release noted.

Gillman, who resigned a year ago and has been teaching at Drexel University, has accepted a position as chairman of impressionist and modern art at Christie's New York, according to an article in The Philadelphia Inquirer.

Collins is interested in developing the educational program offered by the Barnes, rethinking the special exhibition programs and exploring various digital strategies, the article noted.

To read the Inquirer article, please go to bit.ly/1FplbTl.

To read the Barnes’ press release, please go to bit.ly/1wZVcHD.

Rodin Museum Will Showcase New Installation
The Rodin Museum temporarily closed on January 8 to create a new installation at the museum on the Benjamin Franklin Parkway and will reopen on February 7, the Associated Press reported.

The new exhibit will include about three dozen pieces that haven't been publicly displayed in years, including busts of author Victor Hugo, composer Gustav Mahler and newspaper mogul Joseph Pulitzer.

The museum was founded by local movie theater magnate Jules Mastbaum and opened in 1929.

To read the article, please go to bit.ly/1tJU76L.

Hospitality News
Dilworth Park Leads NY Times Reasons to Visit Philadelphia
Philadelphia was named the #3 place in the world to visit in 2015, on the New York Times list of "52 Places to Go in 2015," published Friday, January 9, and the first reason cited was Dilworth Park.

"A series of projects has transformed Philadelphia into a hive of outdoor urban activity.” the article begins. “Dilworth Park, formerly a hideous slab of concrete adjoining City Hall, reopened this past autumn as a green, pedestrian-friendly public space with a winter ice-skating rink (and a cafe by the indefatigable chef Jose Garces)."

Milan, Italy, was listed as #1 and Cuba was the #2 place to visit.

To read the article, please go to nyti.ms/1BUYYXs.

Hotel Occupancy at Historic Highs
Center City's hotel occupancy is projected to be 76% for 2014 — the highest rate since 1949, when it was also 76%, with Friday and Saturday occupancy numbers hitting a record high of 82% and 89%, respectively, the Philadelphia Business Journal reported on December 26. Wednesday’s occupancy was close behind at 81.3%.

Group and convention travelers accounted for 33% of the occupancy; leisure travelers, 31%; business travelers, 31%; airlines, 3%; and government, 2%.

Travelers from all segments — leisure, business and group — are projected to fill 3.1 million rooms, the article noted.

To read the article, please go to bit.ly/1AbcqXg.

30 Under 30 to Return to Philadelphia
Forbes, which debuted its 30 Under 30 Summit in Philadelphia in October, announced it would make the gathering an annual affair and keep it here permanently, The Philadelphia Inquirer reported on January 5.

Many of the summit's invitation-only attendees were impressed with the city's fast-growing population of twentysomethings, proximity to New York and Washington, and emerging image as hip, young, and resurgent.

About 2,000 people attended the inaugural summit and it reached 750 million people over social media, the article noted.

The next 30 Under 30 Summit will take place October 4 through October 7 at the Pennsylvania Convention Center, where the first one was held.

To read the article, please go to bit.ly/1HyGK1e.

Hyatt Regency to Become a Hilton Hotel
The Hyatt Regency at Penn's Landing will undergo extensive renovations and become a full-service Hilton hotel, managed by the Pyramid Hotel Group, the Philadelphia Business Journal reported on January 2.

The turnover is expected to take place by the end of January, and the renovation plan is expected to be completed by the end of March. All staff and management positions will remain in place during the transition, the article noted.

The hotel will retain its 340 rooms.

To read the article, please go to bit.ly/1DqZP39.

Transportation News
Refurbished PATCO Cars to Return
The first of PATCO's refurbished rail cars have passed final tests and eight rebuilt cars will be put into service in February, running on nights and weekends, The Philadelphia Inquirer reported on January 7. The cars passed 500-mile tests with full loads and did not experience any equipment failures.

The eight cars are part of a 120-car fleet that PATCO is refurbishing through a $194 million contract with Alstom Transport Inc.

Alstom is incorporating new computer technology into the operational systems of the 45-year-old train cars, but the stainless steel PATCO bodies are the originals, and the cars have their old wheel assemblies and traction motors, the article noted.

Alstom plans to rebuild at least four cars a month, and the project is expected to be completed in 2017.

To read the article, please go to bit.ly/1AG9BPz.

Parks and Open Space News
Lunchtime Skating Exhibitions at Rothman Institute Ice Rink
In addition to offering ice skating every day through February 22, the Rothman Rink on Fridays in January also is offering a series of exhibitions by Philadelphia-area expert skaters. The show begins at 12:30 p.m. on January 9, 16, 23, and 30. Stop by and watch these skilled performers and have lunch at the Rosa Blanca Café!

If you want to polish your own skills, The Rothman Institute Ice Rink is open to the public Monday through Thursday, 3:00 p.m. to 9:00 p.m.; Friday, 3:00 p.m. to 11:00 p.m.; Saturday, 11:00 a.m. to 11:00 p.m.; and Sunday 11:00 a.m. to 8:00 p.m. Admission is $3 for children, ages 10 and under, and $4 for adults. Skate rental is $8.

The Rothman Institute Ice Rink will offer extended hours on Martin Luther King Day, Monday, January 19, and will be open 11:00 a.m. – 9:00 p.m.

A four-week Learn-to-Skate program is available on Sunday mornings at 9:30 a.m. and 10:15 a.m. Group rates are available for parties of 10 or more. Please email Groups@RinkManagement.com.

The Rothman Institute Ice Rink at Dilworth Park is operated and managed professionally by Rink Management Services Corporation of Mechanicsville, Virginia. For more information about the rink, please go to ccdparks.org/dilworth-park/rothmanicerink.

Residential Market News
Report: Apartment Market Strong in 2014
The apartment market in Center City continued to show signs of strength in 2014, with Class A apartments rising by 3.7% to $2,128 a month, or $2.23 per square foot, and vacancy increasing slightly from 5.5% to 5.7%, the Philadelphia Business Journal reported on January 6.

The article cited research by Delta Associates, which noted that supply is increasing, especially in Center City, and the rental landscape could be more competitive in 2015. However, the increase of Class A apartments and the growing appetite for quality space has helped bolster rent growth in the city, the article noted.

Delta Associates count a total of 4,104 units either under construction now or on the boards and expected to come to market in the next three years. Whether this increase will translate into a rising vacancy rate and slowing rent growth depends on the strength of the trend of Millennials and Empty Nesters to prefer the city and living in rental space, according to the article.

To read the article, please go to bit.ly/1xG3OIv.

Government News
High Percentage of City Expenditures Go to City Firms
More than $4 billion, or 70%, of the city's $5.7 billion total expenditures since the beginning of Fiscal Year 2015 (FY15) went to businesses with offices in Philadelphia, the Philadelphia Business Journal reported on December 31, and most went to businesses in Center City and West Philadelphia.

Community Behavioral Health (CBH) at 801 Market Street received $1.2 billion, the highest payout. CBH is a not-for-profit 501c (3) corporation contracted by the City to provide mental health and substance abuse services for city Medicaid recipients.

Businesses in Far Northeast neighborhoods with ZIP codes 19116 and 19154, plus Hunting Park and Germantown neighborhoods, also ranked high for being paid by the City.

More than $650 million went to businesses in Pennsylvania, while $1 billion was spent domestically and internationally, the article noted.

To read the article, please go to bit.ly/1Hh24s7.

City Firefighters Have New Contract
The City of Philadelphia and the Firefighters and Paramedics Union Local 22 reached a contract agreement that will provide the city's firefighters with a 9.25% raise over the life of the four-year contract, The Philadelphia Inquirer reported on January 9.

The new contract was reached through arbitration and will cost the City about $70 million, the article noted. The contract also contains changes in how the union's health-care costs are managed, which should result in some long-term savings for the City.

The contract is retroactive to July 1, 2013, when the union's last labor agreement expired, and will run until June 30, 2017.

To read the article, please go to bit.ly/1xRIjF5.

Los Angeles Looking for Options on Sidewalk Repairs
The City of Los Angeles estimates that 4,500 of its total 10,750 sidewalk miles are in disrepair, impeding pedestrians and creating expensive lawsuits, according to an article in Next City. Since 1973, the City has been responsible for sidewalk repair, but now facing $1.5 billion worth of repairs and the need to make sidewalks ADA compliant, the city is exploring options for sharing the burden of the cost of the repairs.

Much of the damage is caused by the fast-growing ficus tree, which was generously planted in the 1950s and 1960s and has a wide and disruptive root system, once matured.

Among the funding options the City is considering are: assessing property buyers at the point of sale; requiring property owners to repair the sidewalk with a 50% reimbursement from the City; and creating beautification districts that would tax themselves in exchange for repairs of sidewalks throughout the district.

To read the article, please go to bit.ly/1AqxYz8.

New Committee Leaders in the State House
The Pennsylvania House of Representatives on January 6 opened its new session and confirmed new committee chairs, Pennsylvania Legislative Services, a subscription news service, reported.

Among the notable changes from last session, former House Majority Whip Stan Saylor (R., York) will lead the House Education Committee, following the retirement of former chairman Representative Paul Clymer (R., Bucks). Representative James Roebuck (D., Philadelphia) continues his role as minority leader on the committee.

Representative Bernie O’Neill (R., Bucks) takes over for Representative Kerry Benninghoff (R., Centre) as Republican chair of House Finance after Benninghoff was elected to Republican leadership. Representative Jake Wheatley (D., Allegheny) takes over for the retired Representative Phyllis Mundy (D., Luzerne) on the same committee.

The House Tourism and Recreational Development Committee will have a new Republican chairman in Representative Dave Hickernell (R., Lancaster), who replaces the retired Representative Jerry Stern (R., Blair). Democrat Thaddeus Kirkland (D., Chester) remains the minority chairman of the committee.

Other key committee chairs include Transportation’s Representative John Taylor (R., Philadelphia) and Representative William Keller (D., Philadelphia); and Urban Affairs’ Representative Scott Petri (R., Bucks) and Representative Thomas Caltagirone (D., Berks).

Wolf Fills Two Cabinet Positions
Governor-elect Tom Wolf on January 5 announced two of his cabinet selections.

For the Department of Community and Economic Development, Wolf has chosen Dennis M. Davin, director of Allegheny County Economic Development. Davin led revitalization efforts in Pittsburgh and Allegheny County, the Governor-elect's announcement noted.

Eileen H. McNulty, the former secretary of the Department of Revenue and former quality assurance director in the Office of Comptroller Operations in the Office of the Budget, will serve as secretary of the Department of Revenue. McNulty served as secretary of the Department of Revenue under Governor Robert P. Casey, executive deputy secretary of the Department of Revenue under Governor Edward G. Rendell, and worked in a variety of finance roles with the Pennsylvania House of Representatives.

To read the full announcement, please go to bit.ly/1AwYl85.

Upcoming Events
SEPTA Open House to Address FY16 Budget
The Southeastern Pennsylvania Transportation Authority (SEPTA) on Wednesday, January 14, is hosting an open house at the SEPTA Board Room – Mezzanine Level, 1234 Market Street, to discuss the development of the Fiscal Year 2016 (FY16) Capital Budget and 12-Year Capital Program. Staff will provide an update on the progress of the “Rebuilding SEPTA for the Future” Capital Program. All are invited to attend, including elected officials, representatives of citizen groups, public agencies, and interested individuals. SEPTA welcomes your input.

If you cannot attend the open house, but wish to submit comments in writing, you may do so by sending them to SEPTA’s Capital Budget and Grant Development Department, 1234 Market Street, Ninth Floor, Philadelphia, PA 19107.

If you wish to submit comments by email, you may do so on SEPTA’s website at septa.org, click on news, then public notices. A form to submit comments appears at the end of the meeting invitation.

Public hearings on the FY16 Capital Budget and 12-Year Capital Program will be scheduled in April.

Celebrating Progress of Philadelphia 2035 Plan
On Tuesday, January 20, the Philadelphia City Planning Commission will celebrate “The Power of the Plan – For All!” and the work accomplished on Philadelphia 2035, at the Independence Visitor Center, Liberty Ballroom, Sixth and Market Streets, beginning at 5:30 p.m. Program is at 6:15 p.m. The Philadelphia 2035 Progress Report / 2015 Calendar will be distributed.

Refreshments will be served and there will be a cash bar.

The event is free, but seating is limited. To register, please go to power-of-the-plan-for-all-2015.eventbrite.com.

Offer Ideas on JFK Plaza/LOVE Park Makeover
On Tuesday, January 20, from 5:30 p.m. to 8:00 p.m. at the Free Library of Philadelphia, Central Branch, 1901 Vine Street – Skyline Room, Philadelphia Parks & Recreation, the Fairmount Park Conservancy, and PennPraxis will hold a final civic-engagement meeting for stakeholders to discuss new ideas and those previously presented for the makeover of JFK Plaza/LOVE Park.

InterPark, owner of the garage beneath LOVE Park, and the City of Philadelphia have selected through a competitive-bidding process a project team led by Hargreaves Associates to design the new JFK Plaza/LOVE Park.

Other members of the project team are KieranTimberlake, architecture; Pentagram, graphics/wayfinding systems; JMT Engineers, mechanical, electrical and plumbing engineering consultant; Hunt Engineering, civil and structural engineering; Commercial Aquatic Engineers, water feature mechanical, electrical and plumbing design and engineering; The Lighting Practice, lighting; Northern Designs, irrigation design; and VJ Associates, cost estimating.

To register for the meeting, please go to pennpraxis.ticketleap.com/love-park2/.

Hearing on Bill to Lower Wage and Net Profit Taxes
City Council’s Finance Committee will hold a public hearing on Wednesday, January 28, at 10:00 a.m., to hear testimony on Bill #140081, introduced on February 6, 2014, by Councilman David Oh, which would lower the City Wage Tax.

To read the bill, please go to bit.ly/1dY5sqO.