Office Sector News
CBD Office Market Attracts Investors
Philadelphia’s Central Business District (CBD) office market experienced a 223% increase in transaction volume in 2014 over its five-year historical average, according to the Integra Realty Resources’ article, “Philadelphia’s CBD office market is drawing new investor attention,” published on March 31.
From January 2014 to present, there were 12 Class A downtown office transactions involving buildings larger than 500,000 square feet (SF), totaling $1.6 billion. The previous high point was mid-2006 through 2007, when 10 transactions totaled $1.5 billion.
Among the office buildings that traded during the current peak were 1515 Market Street, 1635 Market Street, Penn Mutual Towers, and the Curtis Center.
The average price has risen from $196/SF to $223/SF and the cap rate has fallen from 7%+ to 6.5% during the current resurgence, compared to the 2006-2007 boom.
Based on the inventory Integra counts, the occupancy rate is now 90% and Class A rents have increased from $28.60 to $29.56, a 3.4% increase in just the last four months, the article noted.
To read the article, please go to bit.ly/1NLgT9A.
Two More Office Towers Sold
CBRE Global Investors are buying the 20-story United Plaza, 30 South 17th Street, and the 27-story 1650 Arch Street for approximately $200 million, the Philadelphia Business Journal reported on March 31. The two properties total 1.17 million square feet of office space and are more than 94% occupied, the article noted.
TIER REIT, formerly known as Behringer Harvard REIT I Inc., of Dallas is the seller. Jones Lang LaSalle is handling the sale. TIER REIT also owns Three Parkway and the Wanamaker building.
To read the article, please go to bit.ly/1Fiq2Te.
Office Vacancy Down in CBD
Counting a slightly different inventory and geography than Integra, Jones Lang LaSalle (JLL) in their Office Insight Philadelphia Q1 2015, puts the office vacancy rate in the Central Business District, including University City, at 9.9% (compared to 16.3% in the suburbs) in the first quarter of 2015. They report asking rents of $27.07 ($24.87/suburbs), down slightly from the previous quarter's $27.85 ($25.68/suburbs), and calculate net absorption for the first quarter in the CBD at 142,114 SF. The vacancy rate has seen a steady trajectory downward. In 2014, it was 10.5%; in 2013, 12.2%; and in 2010, it reached a peak of 13.5%.
The report notes there are 17 coworking spaces, open or under construction, occupying 209,000 square feet (SF) of office space in Center City and University City.
There is 2,210,914 SF of office space under construction, with 80% of it preleased. While the Comcast Innovation and Technology Center is already 100% leased to Comcast, there are 220,000 SF of available space remaining in the FMC Tower, which will open in third quarter of 2016.
To view JLL's complete Office Statistics Q1 2015, please go to bit.ly/1EVB9UH [PDF].
New Coworking Space to Open
Industrious, a new shared office space at 230 South Broad Street, will open on Monday, May 4, with 21,000 SF of space on two floors. The company currently has a comparable location in Chicago (industriousoffice.com).
Members already contracted for the space include startup lawyers, web development firms, and an executive coach, Technical.ly Philly reported.
Industrious differentiates itself in the market by stressing that it has 37 private offices behind glass partitions, though substantial areas are still devoted to shared conference, meeting and kitchen space. While the workspace will be leased on a month-to-month basis, prices will be slightly higher, with coworking spaces beginning at $350/month and offices ranging from $700 to $3,900 per month. Industrious represents that it is more than 50% leased.
To read the article, please go to bit.ly/1OZWlf3.
Nonmanufacturing Activity Expands Again in March
Responses to the Federal Reserve Bank of Philadelphia’s March Nonmanufacturing Business Outlook Survey suggest that local nonmanufacturing activity continued to be vigorous in the region during the month. More than 55% of the respondents indicated increasing activity in the region.
New orders were up for 48.8% of the companies, down for only 18.6%, and remained the same for 14.0%.
The number of full-time employees increased for more than one-fourth (27.9%) of the firms, decreased for 2.3%, and remained stable for 67.4%.
Looking ahead six months, 81.4% of the respondents expected businesses to improve and only 2.3% anticipated a downturn; 7.0% foresaw no change.
To read the report, please go to bit.ly/1ykuw6z [PDF].
New Apartment Tower Proposed at Seventh and Chestnut
Roseland, an affiliate of Mack-Cali Realty Corporation, has partnered with the Parkway Corporation on a proposal to build a 32-story apartment tower at 709 Chestnut Street, presently a surface parking lot, PlanPhilly reported on March 25. The property is owned by Parkway.
Plans call for 300 high-end apartments, 11,000 square feet of indoor and outdoor amenity space, and a 125-vehicle automatic parking garage. The partnership recently made a preliminary presentation of the project to Washington Square West Civic Association and plans to apply for zoning variances, including one for the 32 stories, in the next few weeks, the article noted.
The developers also need Historical Commission review, since part of the proposed tower overhangs a historic property, and a review by the Civic Design Review Committee because of the tower’s size.
Construction is expected to begin in late 2015.
To read the article and view a rendering, please go to bit.ly/195zlu9.
To read the press release, please go to prn.to/1ykxFDD.
The 700 block of Chestnut is also experiencing strong interest by restaurants (bit.ly/1MPb1z7).
Macerich Rejects Simon’s Final Offer
Simon Property Group Inc. withdrew its unsolicited $16.8 billion proposal to acquire the Macerich Company after Macerich rejected a final $95.50-a-share offer, Bloomberg reported on April 2. Purchasing Macerich would have allowed Simon to add top-tier properties that rarely come up for sale, the article noted.
Macerich took steps in March to thwart a hostile takeover after the first public offer from Simon, including a staggered election of the board of directors.
Macerich and PREIT are partners in the transformation of The Gallery’s 1.4 million square feet.
To read the article, please go to bit.ly/1MHonxc.
Art Commission Approves City Hall Portal Gates
The Art Commission on April 1 granted final approval for portal gates at City Hall, after plans were presented by Philadelphia's Department of Public Property, Vitetta, and the Center City District (CCD). The gates were part of the original plans for the building, designed by John McArthur, but were never built.
The City of Philadelphia is funding the project through a contract with the CCD that will oversee the installation of the gates in partnership with the Department of Public Property. The gates will be stainless steel and aluminum and derived from drawings by McArthur. Installation will begin before the end of this year.
The commission also granted final approval to Public Property for Phase 1 alterations to the north apron of City Hall that will repair extensive damage to the apron, allow compliance with the Americans With Disabilities Act, extend the improvements made by the CCD at Dilworth Park, and eliminate parking on much of the north apron of City Hall.
To view a rendering of the gates, please go to centercityphila.org/docs/city_hall_gatesPAC2015.pdf [PDF].
Convention Center’s Annual Report Documents New-Found Success
The Pennsylvania Convention Center’s 2014 Year in Review, “Making It a New Day,” recounts the success of the new Customer Satisfaction Agreement (CSA) reached in May 2014, with the four unions that signed by the announced deadline. The chart on page 11 shows that bookings since the signing of the agreement outpaced those signed before the new agreement in every year beginning in 2015 and peaking in 2019.
After the CSA went into effect, 28 new shows were booked and are expected to fill 562,228 hotel nights and create an economic impact of $872 million.
To read the report, please go to bit.ly/1HnRKhn.
Arts and Culture News
Philadelphians More Positive About City
A new poll from The Pew Charitable Trusts suggests that Philadelphians have a more positive outlook about their city than at any time in the six years since Pew began conducting these polls.
Nearly half of residents surveyed said Philadelphia is heading in the right direction, one-third said it is on the wrong track, and 67% expect the city to improve in the next five years, while 18% expect it to get worse. Three times as many residents would recommend Philadelphia to a friend as a place to live as would not.
To read the poll, please go to bit.ly/1CCptm5.
To understand some of the reasons for optimism in Philadelphia, please download Pew’s Philadelphia 2014: The State of the City at pewtrusts.org/~/media/Assets/2015/03/2015-State-of-the-City_Web_FINAL.pdf [PDF].
Indego Bike Share to Launch on April 23
Mayor Michael A. Nutter on March 30 announced that the City’s Indego bike share system will launch at noon on Thursday, April 23, at Eakins Oval. The docking stations where Indego bikes will be parked will operate 24 hours a day all year at 70 locations in neighborhoods from Point Breeze, Passyunk and Center City to Yorktown, Olde Kensington, Francisville and Spruce Hill. Bike share users can access bikes at any station by using member cards or credit/debit cards and return them to any other station.
Memberships are now available at rideindego.com. Users are encouraged to sign up before the April 23 launch. Members will receive a key that allows them to access a bike at any Indego station. Indego30 is a 30-day membership plan that provides members unlimited one-hour rides for $15 per month and is available with credit card, debit card, and cash payment options.
To read the Mayor’s press release, please go to bit.ly/1Cqbv6R.
SEPTA Unveils Plans for 15th Street Station Renovations
SEPTA on March 24 released its plans for the $20 million renovation of the 15th Street Station, expected to begin in late 2016. The improvements, which expand on the enhancements made as part of the Dilworth Park renovations, include providing full access for riders with disabilities through new elevators and ramps to all levels of the station complex; reconfiguring fare lanes for better passenger flow; and creating more open areas on the mezzanine and station platforms.
In addition, SEPTA will update the station’s interiors and systems, including new architectural finishes, new signage, new lighting, additional public address systems, closed-circuit TV improvements and other passenger amenities.
SEPTA will set up information booths and hold public meetings to engage the public and hear feedback. Questions and feedback also can be directed to SEPTA City Hall Renovations, c/o Patricia Miller Evans, Government and Public Affairs, at firstname.lastname@example.org or by phone at 215.580.3609.
To read SEPTA’s press release and see a map and renderings, please go to http://bit.ly/1IJZDyG [PDF].
SEPTA Proposes $534.5 Million Capital Budget
SEPTA’s Fiscal Year 2016 (FY16) Capital Budget totals $534.5 million and the 12-year Capital Program totals $6.8 billion, compared to the amended FY 2015 Capital Budget that totaled $687.47 million and the 12-year Capital Program of $6.9 billion.
The FY16 Capital Budget includes $326.82 million(61%) in state funds; $196.79 million (37%) in federal money; and $10.93 million (2%) in local funds from Bucks, Chester, Delaware and Montgomery Counties and the City of Philadelphia.
Highlights of the budget: SEPTA Key’s new payment technologies are budgeted for $45 million; vehicle replacement and overhauls will cost $160.5 million; and $35.5 million is allocated for infrastructure repairs and maintenance. Financial obligations such as leasing programs and debt-service payments are budgeted at $85.9 million.
A public hearing on the proposed budget and capital program will be held Tuesday, April 28, at 11:30 a.m. and again at 5:00 p.m. in the SEPTA Board Room, Mezzanine Level, 1234 Market Street.
To view the complete budget and capital program, please go to bit.ly/1HsvX8g [PDF].
PPA Raises Parking Fee at City Lots
The Philadelphia Parking Authority (PPA) raised the cost of parking at PPA-owned lots at SEPTA Regional Rail stations in the city from $1 to $2, the first increase in 12 years, The Philadelphia Inquirer reported.
The parking fee at SEPTA station lots outside the city remains at $1.
To read the article, please go to bit.ly/1CXkuOp.
Parks and Open Space News
Four Conceptual Designs for LOVE Park
Four conceptual designs for the $15 million makeover of LOVE Park were presented to the public by the park’s design team led by Hargreaves Associates on March 24 at the Free Library of Philadelphia.
All four concepts were substantially greener than the existing LOVE Park and feature an expansive central lawn, tree groves, garden areas, and a smaller fountain. They also include space for festivals and performances, a food-truck zone, movable furniture, and a new elevator headhouse. The fate of the circular Welcome Center at the southwest corner of the park has not been determined.
The design team will present a single conceptual design at a public meeting on April 30, also at the library. In May, the project will go before the Art Commission for conceptual approval, with final approval sought in September.
To read the article and view the renderings, please go to bit.ly/1HH0mDb.
Get in Shape at Dilworth Park
On Tuesdays, Wednesdays and Thursdays through April 30, Dilworth Park will continue to host a variety of sports and fitness programs, from bocce to Boot Camp to Zumba, at locations throughout the park. Most of Dilworth Park’s Spring Training programs are free to the public, conducted by experts in the field of personal fitness, and presented by Rothman Institute.
For more information, please visit dilworthpark.org.
The Oval Will Host French Exhibition
Saint-Gobain, the 350-year-old French building materials company with North America headquarters in Valley Forge, is commemorating its anniversary with an exhibition, Future Sensations, that will be shown around the world and at The Oval on the Benjamin Franklin Parkway as its only tour stop in North America, from May 30 through June 6.
The exhibit has five pavilions, ranging in height from 13 feet to 32 feet, that celebrate science, storytelling, and art.
Philadelphia Parks & Recreation and the Fairmount Park Conservancy will complement the exhibit with a pop-up beer garden and a variety of food trucks.
To learn more about the exhibit, please go to futuresensations.com. For hours for the exhibit and beer garden, please go to theovalphl.org.
Wage, Earnings and Net Profit Tax Collections Up 15%
City of Philadelphia tax revenues for February totaled almost $468 million, a less than 1.0% decrease compared to February a year ago, according to the Office of the City Controller’s Financial Forecast & Snapshot for February.
Wage, earnings and net profit tax collections for February totaled $146.8 million, a 15% increase over the same month last year. Yearly collections for this tax category have totaled more than $1.1 billion.
Monthly sales tax collections for February totaled $11.4 million, slightly less than monthly collections prior to the 1.0% increase (from 7% to 8%).
To read the report, please go to bit.ly/1FafEge [PDF].
UED Signs Approved by City Council
Philadelphia City Council on March 26 voted 13-3 to approve Bill #140906-A that will allow two Urban Experiential Display (UED) signs to be installed, one at the Reading Terminal Market and the other outside the Pennsylvania Convention Center, PlanPhilly reported.
Councilman Mark Squilla introduced the bill on November 13, 2014. Voting against the bill were 2nd District Councilman Kenyatta Johnson and At-Large Councilmembers Blondell Reynolds Brown and Wilson Goode, Jr.
A companion bill, #140907 (bit.ly/1Dn7IZS), sets the annual license fee for each sign at $4,000.
Catalyst Outdoors, a Malvern advertising firm, will erect the two signs and a portion of the proceeds will go to both the adjacent building owners and nonprofit groups.
To read the PlanPhilly story, please go to bit.ly/1CEayZN.
To read Bill #140906-A, please go to bit.ly/1ExKfl8.
Council Passes Bill That Does Away with Non-profit Filing
City Council on March 26 unanimously passed Bill #150144, introduced by Councilwoman Jannie L. Blackwell, that revoked the provisions of a bill, unanimously passed in 2013, requiring nonprofits to annually provide documentation that their organizations were purely charitable and their properties used for charitable purposes.
The legislation that created the new law was Bill #130123 (bit.ly/1Gzx8CS), sponsored by then-Councilman William J. Green IV, Councilman W. Wilson W. Goode, Jr., and Councilwoman Blondell Reynolds Brown, and passed on June 13, 2013.
The goal was to make sure that properties that are exempt from taxes because of non-profit status are truly not for profit, KYW noted in an article.
The Office of Property Assessment has extended until June 1 the deadline for nonprofits to file their documentation, although Council’s new bill may make the extension moot, KYW noted.
To read the article, please go to cbsloc.al/1BYNvoM.
To read Bill #150144, please go to bit.ly/1wvwm9t.
Public School News
School District Proposes $2.9 Billion Budget
The Philadelphia School District is projecting a budget of $2.9 billion next year, and includes $264 million in new city and state money that is not assured, The Philadelphia Inquirer reported on March 26.
The School Reform Commission unanimously adopted a plan that relies on $159 million in new money from the state and $105 million from the City, sums that have been proposed but not approved.
Without the new City and state money, the district would face an $85 million deficit, due largely to fixed costs such as charter-school payments, pensions, and healthcare costs rising faster than revenues.
To read the article, please go to bit.ly/1BPBgJZ.
‘State of Center City’ Release at CPDC Membership Meeting
On Tuesday, April 21, at 4:00 p.m. at the Four Seasons Hotel Philadelphia, One Logan Square, the Center City District/Central Philadelphia Development Corporation will present its 74-page State of Center City, 2015, followed by a panel discussion on pathways to a more dynamic and inclusive growth.
The discussion will be moderated by Paul R. Levy, CPDC Executive Director, and President and CEO of the CCD.
Panelists include Gerard H. Sweeney, President and CEO, Brandywine Realty Trust; Steven S. Bradley, Chairman, African American Chamber of Commerce, and President, Bradley and Bradley Associates, Inc.; and Brent Martin, General Manager, Four Seasons Hotel Philadelphia.
CPDC members are encouraged to invite both young professionals and other members of their firms to attend this meeting. Please RSVP no later than noon on Thursday, April 16, to Carol Raffa, email@example.com or 215.440.5500.
Stand Up 4 Transportation
On Thursday, April 9, at 9:00 a.m. at Dilworth Park on the west side of City Hall, transportation advocates will join in National Transportation Infrastructure Day’s “Stand Up 4 Transportation Rally.”
The rally will be led by former Pennsylvania Governor Edward G. Rendell, U.S. House Transportation and Infrastructure Committee Chairman Bill Shuster, members of the region's Congressional delegation, PennDOT Acting Secretary Leslie Richards, and a growing coalition of businesses, labor
organizations, community groups and transportation advocates.
For complete information, please go to bit.ly/1xbuqmT.
Free Breakfast Forum for Mayoral Candidates
Members of the Central Philadelphia Development Corporation are invited to the PENJERDEL free “Breakfast Forum” of 2015 Mayoral Candidates, on Wednesday, April 15, from 7:30 a.m. to 9:30 a.m., at the WHYY Studios, 150 North Sixth Street.
Each candidate will be afforded “individual” 15-minute time slots to answer questions from WHYY’s Chris Satullo concerning the candidate’s vision for Philadelphia business and economic development during the next four years.
Please call the PENJERDEL office at 215.972.0900 by close of business on Friday, April 10, to register.