Office Sector News
One Washington Square Under Agreement
Keystone Property Group is expected to buy One Washington Square, an office building overlooking Independence Hall, under agreement for an estimated $110 million, the Philadelphia Business Journal reported on May 16.
Formerly known as Penn Mutual Towers, the three-building complex at 510-530 Walnut Street has 850,000 square feet (sf) of office space.
Although approximately 140,000 sf have been newly leased at the complex, the building still has about 130,000 sf vacant. Upon successful completion of this transaction, Keystone will own three major buildings around Independence Mall.
To read the article, please go to bit.ly/25aIwFl.
Marcus & Millichap Moving Main Philadelphia Office from Conshohocken to Center City
The California-based real estate company, Marcus & Millichap, is moving its regional Philadelphia office from Conshohocken to One Commerce Square in Center City. The company will be leasing 10,000 sf in the building, as well as opening a new 2,100-sf-office in Wynnewood. The expansion will allow the company to increase from 60 to 100 workers. The Philadelphia Inquirer reports the move was aimed at increasing the company’s local market share as Philadelphia gains popularity among international investors.
To read the article, please go to bit.ly/1szcl0g.
DiD Agency Opens Satellite Office in Center City
Ambler-based DiD Agency, an independent health and wellness advertising agency, leased 7,900 square feet on the 13th floor of the Graham Building. The Philadelphia Business Journal reports they look to use their Center City location as a place where they can attract young talent, mirroring other suburban tech and creative firms like Think Brownstone, DCCWorks, Bentley Systems, ServOne and Fiberlink, that have opened satellite offices in Center City.
To read the article, please go to bit.ly/1U8IB0w.
2016 Leasing Activity Outpacing 2015
Out-of-market and suburban tenants have comprised 27% of the 665,000 square feet of announced CBD office leasing activity thus far in 2016, according to JLL’s Chart of the Week for May 23. At the end of 2015, this category accounted for 23% of total leasing activity.
To view the chart, please go to bit.ly/249ma16.
PMC Property Group Alters Plans for 2400 Market
PMC Property Group will present plans for the former Marketplace Design Center building at 2400 Market Street to the Civic Design Review Board today that reduce the announced number of stories from 22 to 19 in order to eliminate the need for a zoning variance, the Philadelphia Inquirer reported on May 18.
The project will seek LEED Gold certification, according to the Group’s application to the Review Board, and will include an open pedestrian promenade along the western edge of the building, opening onto Schuylkill Banks and connecting to Market and Chestnut Street sidewalks.
To read the Inquirer article, please go to bit.ly/1NySjwX. To view renderings and other information to be presented to the Review Board, please go to 1.usa.gov/1TZYuJw [PDF].
Groundbreaking Set for New Hotel on South Broad Street
The Philadelphia Business Journal reports that on June 8, Pearl Properties will officially break ground on the Cambria Hotel and Suites at 219-225 South Broad Street. The 14-story boutique hotel will have 222 rooms and include 2,500 square feet of meeting space, a business center, fitness center, pool and rooftop lounge.
The hotel will be constructed on the site of a garage that is currently being demolished by the developer. The hotel is expected to open in 2017 and will be operated by Concord Hospitality Enterprises Co.
To read the article, please go to bit.ly/1U8yuck.
High-Rise Condominium Development, One Riverside, Tops Off
The first luxury condominium high-rise to break ground in Center City since the recession in 2007 had a “topping off” party last week to celebrate the concrete pour for the top floor of the building. One Riverside, the 22-story residential tower developed by Dranoff Properties, represents a $112 million investment.
Forty of the 68 units have been purchased so far, with $75 million in agreements of sale that will close as the condos are occupied. A March 2017 move-in date has been set for the lower-floor buyers, while the upper floors will be ready for occupancy in August of next year. The Philadelphia Inquirer reports that prices average around $1,000 a square foot, matching the average price-per-square-foot that space at 10 Rittenhouse was going for five years ago.
To read the article, please go to bit.ly/1WTfWnb.
Abbotts Square Expansion
Abbotts Square, a mixed-use building at 200-210 Lombard Street, will soon see a $17 million expansion by owner EB Realty Management, the Philadelphia Business Journal reports. Changes include the conversion of garage space into 47 apartments, the addition of an Ahold grocery brand and a 2,500-square-foot expansion of the building’s current Wawa.
To read the article, please go to bit.ly/22qMXGI.
Residential Market News
City House Values Reach All-Time High
The median sales price of a Philadelphia home hit an all-time high in the first quarter of 2016, rising to $143,000, a significant increase from $117,500 one year ago, as the volume of sales rose as well, according to Kevin C. Gillen, Senior Research Fellow with the Lindy Institute for Urban Innovation at Drexel University, in a report released on May 16. Philadelphia’s single-family home prices have now fully recovered from the recession and the average home in the city has reached a new all-time high in value, the report noted.
The typical Philadelphia home increased in value by 3.9% in the first quarter, and every neighborhood in the city saw an appreciation in house prices, including University City (+1.3%); Center City/Fairmount, a geographical definition used by Gillen, (+5.2%); and South Philadelphia (+7.4%).
In the first quarter, 3,915 houses changed hands in arms-length conditions, up 28% from 3,061 in the same quarter one year ago, and up 6% from 3,687 in the previous quarter, unusual as sales usually recede during the transition from fall to winter, the report noted.
To read the report, please go to bit.ly/1V82QRb.
Pew Study Examines Gentrification in City
Using an income-based definition of gentrification, only 15 of Philadelphia’s 372 residential census tracts were found to have gentrified from 2000 to 2014, and mostly in neighborhoods surrounding Center City, according to a new study from The Pew Charitable Trusts, Philadelphia’s Changing Neighborhoods - Gentrification and other shifts since 2000, released on May 19.
As the data indicate, gentrification is a relatively small part of the recent story of Philadelphia’s neighborhoods, however, the report notes that several other parts of the city underwent changes sometimes associated with gentrification—such as rising real estate prices, increases in education levels, and changing racial and ethnic composition—but without increases in income.
To read the report, please go to bit.ly/1Ts8tHE. To read an article about the report in the Philadelphia Inquirer, please go to bit.ly/1W6HSDx.
Study: High Rents Driving Millennials to Live With Parents
Of the 904,000 working-age millennials in the Philadelphia metro, 27.1% live with their mother, compared to 21.4% nationally, with the percentage increasing every year since 2007, Philly Voice reported on May 6. The article was based on a study conducted by the real estate company Zillow.
The trend is attributed to high rents and low incomes among millennials, who depend on parental support to continue their education or save for future housing options, the article noted.
To read the Zillow report, please go to bit.ly/1YJf4ib.
Eds and Meds News
Comparing Boston and Philadelphia’s Eds and Meds Jobs
The Philadelphia region has a larger total number of eds and meds jobs, compared to Boston (552,218/Philadelphia, 512,839/Boston) as well as a higher percentage of total jobs in this sector (20.9%/Philadelphia, 20.6%/Boston), according to JLL’s Chart of the Week for May 16. However, this sector has grown faster in the Boston metro area, 2.4% annually since 2001, compared to 1.8% in the Philadelphia region.
The concentration of this “recession resistant” sector could help buoy the region and real estate market in the next downturn, the chart noted.
To view the chart, please go to bit.ly/1svxd8T.
Penn Hospital Building Plan Approved
The Philadelphia City Planning Commission, in the week of May 16, approved changes to the University of Pennsylvania’s master plan to allow for the construction of the 1.1 million-square-foot New Patient Pavilion at 300 South 33rd Street. The new building, a replacement for Penn Tower, will include 500 inpatient rooms, 50 operating rooms and a 650-space parking garage. The project is designed by Foster + Partners.
To read the Philadelphia Inquirer article, please go to bit.ly/1Vk4xew.
The Independence Visitor Center to Invest $15 Million in Upgrades
The Independence Visitor Center (IVC) will invest $15 million to enlarge the gift shop and extend its outdoor terrace, in an effort to generate more revenue from operations and decrease its dependence on the National Park Service in an age of recurring federal budget cuts. Plans include increasing the gift shop, IVC’s largest source of revenue, by 50%, as well as expanding a second-floor outdoor space, which would help increase revenue from private events.
The renovation represents the largest investment at Independence Mall since the early 2000’s. IVC has raised $2.1 million of the total project cost, and has applied for a $3.5 million state redevelopment grant. Remaining funds may be raised from foundations or corporate sponsors. Construction could begin as soon as September and take about two years to complete, with a majority of the work occurring during off-seasons for tourism.
To read the Philadelphia Inquirer article and see the renderings, please go to bit.ly/27RAU9q.
Two-Year Renovation for Penn’s Landing Hilton
The Hilton Philadelphia at Penn's Landing (formerly the Hyatt on Penn's Landing) is undergoing a two-year, $15 million renovation, some of which will be completed in time for July’s Democratic National Convention. The three-phase project, headed by Philadelphia’s Floss Barber Inc., includes a redesign of the hotel’s lobby, restaurant and meeting spaces, with updates to 348 guest rooms planned for 2017. When finished, the hotel will offer 24,000 square feet of functional space.
To read the Philadelphia Business Journal article, please go to bit.ly/249nlO6.
AKA Rittenhouse Going Nightly
The Philadelphia Business Journal reports that the AKA Rittenhouse Square is making the switch from an extended stay to a nightly stay business model. Parent company Korman Communities has invested over $20 million in the property since purchasing it a decade ago. According to president Larry Korman, the decision was made based on financials and the desire to fill a luxury hotel gap left by the closure of the Four Seasons on Logan Square last year.
The company is maintaining its extended stay model at the AKA Washington Square and the AKA University City at Cira Centre South, a new property set to open this October.
To read the article, please go to bit.ly/1OPrr6M.
PREIT Marketing The Fashion Outlets of Philadelphia at Market East to National Retailers at Conference in Las Vegas
The Philadelphia Inquirer reports on PREIT’s annual pilgrimage to Las Vegas for ReCON, the nation’s largest retail real estate conference, and their marketing efforts to land national retail tenants for the redevelopment of The Fashion Outlets of Philadelphia along Market East. Every year PREIT focuses on one property to heavily market during the conference and this year chose to spotlight The Fashion Outlets, the 1.5 million-square-foot-mall that is undergoing a $325 million renovation in partnership with Macerich.
PREIT and Macerich are repositioning the mall to better interact with its urban setting by opening it up to pedestrians at street level. Half a dozen retailers have currently signed leases, with several more in talks to occupy space in the new mall, including Victoria’s Secret and various national restaurants. The development will open to the public in the spring of 2018.
To read the article, please go to bit.ly/22pazLV.
Reading Terminal Market Launches Summer Flower Market, Concierge/Valet Services
The Reading Terminal Market is partnering with the Pennsylvania Horticultural Society to create the outdoor Filbert Street Flower Market, offering plants, flowers, seeds, gardening supplies and more during the summer months, in the 1100 block of Filbert Street, the Market announced on May 16.
That block of Filbert Street will occasionally be closed to vehicular traffic and will include an outdoor seating area, live music and an information hub for gardening advice and interactive demonstrations. The Filbert Flower Market will operate 10:00 a.m. – 4:00 p.m. one Saturday a month on May 21, June 25, July 30, August 27, and September 24.
The Philadelphia Business Journal reports that the Reading Terminal Market has also instituted a free concierge service. Shoppers burdened by heavy Market purchases are now able to store their bags either in a refrigerated unit or dry shelf as they continue to shop. The service is available Saturdays and Sundays. A complementary valet service is expected to launch in the next several weeks.
To read the article, please visit bit.ly/1OSiidQ.
Discount Dinning App Launching in Greater Center City
Spotluck, a Maryland-based discount dining app, will launch in Philadelphia in June with participation from 80 local restaurants. The app has been available to dining customers in Washington, D.C., Maryland and Virginia areas, with nearly 400 restaurants in its network. Only local restaurants are allowed to join the app and at launch will include the Center City, South Street, Old City, East Passyunk, Manayunk, Graduate Hospital and Rittenhouse Square neighborhoods.
The app offers discounts of up to 35 percent at local participating restaurants by choosing a restaurant at random based on where a consumer is. For restaurants, it fills seats in what are normally slower business days and/or times, as well as increasing customer engagement and providing additional marketing for the establishment.
To read the article in the Philadelphia Business Journal, please go to bit.ly/25gVz4t.
Transportation and Utility News
SEPTA Approves 2017 Budgets, Hybrid Bus Buy
In a May 26 meeting, SEPTA’s board approved the agency’s operating and capital budgets for the 2017 fiscal year, which begins July 1. The Philadelphia Inquirer reports that the 2017 operating budget is set at $1.4 billion, a 3% increase over 2016, covering day-to-day expenses, such as, labor, fuel and power.
The board approved a $548.63 million capital budget, which will go toward SEPTA’s ongoing efforts to expand capacity and improve equipment and infrastructure. The plan includes funding from state and federal agencies, as well as matching funds from surrounding counties.
There will be no increase in fares.
Also approved was a $411.8 million, five-year contract with New Flyer of America for 525 diesel-electric hybrid buses. SEPTA expects to begin taking delivery of the new buses in 2017.
To read the article, please go to bit.ly/280Dgmx.
$30 Million Makeover for Terminal B at PHL
Philadelphia International Airport’s (PHL) Terminal B, in a collaboration between American Airlines, MarketPlace PHL, and food and beverage provider OTG Management, will be transformed over the next 18 to 24 months with a $30 million redesign of 60,000 square feet inside the security perimeter and will include 1,000 Apple iPads for public use that can also be used to order food from restaurants away from the traveler's gate, expanded retail offerings, a food hall, and menus designed by nine noted local chefs, including Top Chef winners Kevin Sbraga and Nicholas Elmi, the Philadelphia Inquirer reported on May 18.
Most of the costs will be covered by OTG. In airports that have iPads and restaurants in gate areas, revenue per each passenger is 50% higher than the average for the top 50 airports in North America, the article noted.
To read the article, please go to bit.ly/1TnSsCD.
PennDOT Announces New Bike Route Mapping Tool
PennDOT, the Department of Conservation and Natural Resources (DCNR), the Department of Health (DOH) and the Department of Labor & Industry (L&I) on May 16 announced the launch of a new interactive mapping tool, the Bike Route Map, which provides riders with detailed bike routes, traffic volumes and speed limits and includes DCNR trails, state parks and forests. The new interactive map can be found on the “Ride A Bike” page under “Travel In PA” at penndot.gov.
Center City #1 for Biking
Center City West, from Broad Street to the Schuylkill and Pine to Vine Streets, is the nation’s most bikeable downtown, with a Bike Score of 96.4 out of a possible 100, Philadelphia Magazine reported on May 17.
The criteria for determining the score are the number of bike lanes and hills, destinations and road connectivity, along with bike commuting mode share.
Others in the top five were the El Presidio neighborhood of Tucson (95.8), downtown Austin (93.4), downtown Denver (92.6), and downtown Portland (92.3).
To read the article, please go to bit.ly/25cf1Tx. To visit the Bike Score website, please go to redf.in/1TrtMdF.
SEPTA Partners with Uber on Pilot for Regional Rail Commuters
This summer SEPTA will launch a pilot program to see if Uber can mitigate the scarcity of parking at certain regional rail stations and increase ridership. Passengers boarding at 11 regional rail stations identified for parking lots that fill up by 7:30 am will qualify for a 40% discount off the cost of their Uber ride to or from the station. The discount can be no more than $10 per trip and the pilot program, for what could become a permanent arrangement, will be in effect from Memorial Day to Labor Day.
The program is not costing SEPTA anything and is designed to test whether the lack of parking is suppressing ridership and potentially increase ridership at participating stations. The Philadelphia Inquirer reports that Uber described the deal as one of the most significant partnerships between the company and a transportation agency in the country. Uber will share data on trip times and lengths with SEPTA, which used in conjunction with ridership, will allow SPETA to determine how far people are willing to travel to use public transit.
To read the article and see a list of stations which are part of the pilot program, please go to bit.ly/1WOmkLU.
Agencies Offer Commuting Tools for I-95 Construction
As PennDOT’s improvements to I-95 continue, two local agencies are offering to help affected commuters and their employers.
The Delaware Valley Regional Planning Commission (DVRPC) has launched a program and website, Commute95 (dvrpc.org/commute95), which offers information on travel alternatives. DVRPC has also created a downloadable “Employer Toolkit,” so that employers may help employees find the most efficient ways to get to work for the duration of the project.
The Clean Air Council also offers businesses affected by the I-95 construction cost-free assistance in implementing a range of customizable transportation alternatives, incentives and benefits package improvements. For more information, please contact Erika Reinhard, Sustainable Transportation Outreach Coordinator, by calling 215.567.4004 ext. 111, emailing email@example.com or visiting cleanair.org/program/transportation/sustainable_commute.
Energy Company Raises $8.5 Million
Center City-based Viridity Energy has raised $8.5 million in capital, the Philadelphia Business Journal reports. The funding, provided by energy-focused investment firm AltEnergy, will be used by Viridity to expand its reach in commercial and industrial markets, add features in its software platform and explore new domestic and international markets for its services in energy demand management, demand response and battery storage.
Viridity moved its headquarters from Conshohocken to Center City in 2011.
To read the article, please visit bit.ly/1OSh9D5.
Parks and Open Space News
City Parks to Host 14 Traveling Beer Gardens this Summer
Parks on Tap, a new partnership between Philadelphia Parks and Recreation, Fairmount Park Conservancy, and Avram Hornik of FCM Hospitality, will set up mobile pop up beer gardens at various parks throughout the city. Fourteen parks will be visited starting June 29, with most sessions running Friday through Sunday.
Parks on Tap will provide seating, restrooms and additional amenities, including entertainment. The first stop will be Schuylkill Banks at the Walnut Street Bridge, giving great views of the July 4 fireworks. Also, trucks will be outside of Aviator Park, by the Franklin Institute, at the start of the Democratic National Convention.
To read the Philadelphia Inquirer article and view the schedule, please go to bit.ly/1Vh8lgG.
Schools Budget Approved
On May 26, the School Reform Commission approved a $2.8 billion budget for the 2016-2017 academic year. This reflects a slight decrease from the previous year’s budget, which was about $3 billion, reports the Philadelphia Inquirer.
The budget includes spending increases of $121 million for charters and $35 million for employee-pension payments. Revenue increases include $56 million in basic education and special education funding from the state, $15.2 million in city real estate tax revenue and $22.2 million in pension reimbursements. Officials project a $100 million surplus for year’s end, enough for two weeks of operations.
The budget takes effect at the start of the fiscal year, July 1.
To read the article, please go to bit.ly/1sSWYkf.
New Homeless Outreach Strategy Underway
Mayor Jim Kenney and Elizabeth Hersh, Director of the Office of Supportive Housing, on May 16 announced details of a new more coordinated, homeless outreach strategy that sends teams consisting of social workers, mental-health counselors, addiction specialists, and men and women who were once homeless, to four locations in Center City: Rittenhouse Square, Avenue of the Arts, the Pennsylvania Convention Center, and Independence Hall, the Philadelphia Inquirer reported.
Teams will be deployed from 6:30 a.m. to 9:30 a.m.; 11:30 a.m. to 2:30 p.m.; and 4 p.m. to 7 p.m., and wear bright-orange T-shirts, with the phone number for the office printed on the back. The goal is to try to connect those on the street with services and housing.
In the fall 2015 issue of the CCD’s Center City Digest, Paul R. Levy offered an overview of the more comprehensive approaches that have worked in the past as well as recommendations for the current Administration.
To read the article, please go to centercityphila.org/docs/CCDigestFall15.pdf [PDF].
Alternate Proposals to Sugary Drink Tax
As the debate continued over Mayor Jim Kenney’s three-cent-per-ounce sugary drink tax, Bill #160176 (bit.ly/1WvR4Bn), Councilwoman Blondell Reynolds Brown on May 19 proposed a 15-cent container tax on beverages of 7 ounces or larger, including soda, water, teas, ready-to-drink coffee, juices, and energy drinks, with alcohol, milk, and baby formula exempt, Bill #160508 (bit.ly/25dL3OY), the Philadelphia Inquirer reported.
Reynolds Brown’s bill would raise about $64 million annually, while the Kenney plan is projected to raise $95 million a year.
In addition, Councilman William K. Greenlee, on behalf of Council President Darrell L. Clarke, introduced Bill #160509 (bit.ly/1WGJnZD), which would immediately transfer $19 million to the Philadelphia School District to launch pre-K in 2017, with fewer seats than Kenney had sought.
Public hearings on both new bills began Wednesday, May 25, before City Council’s Committee of the Whole.
To read the Inquirer article, please go to bit.ly/1qz0cY1.
Hearing on Bipartisan Legislation to Change Uniformity Clause
This Thursday, June 2, at 10:00 a.m., at the Pennsylvania Convention Center, 1101 Arch Street, Room 108 AB, the state House Finance Committee will hold a public hearing on HB 1871, introduced on March 15 by State Representative John Taylor (R., Philadelphia) and State Representative William Keller (D., Philadelphia), that would amend the state Constitution to create an ability for Philadelphia to modify the Uniformity Clause for real estate taxes to enable, but not require, Philadelphia to levy a 15% increment on properties used for business purposes so long as those revenues are used exclusively to reduce wage and business taxes.
Supported by a coalition of business, labor, and civic groups, and building on the work of the 2003 and 2009 tax commissions, the amendment would facilitate more dynamic job growth in Philadelphia.
To read Representative Taylor’s press release, please go to bit.ly/22k4hxk.
To read an explanation of how the amendment will work for Philadelphia, please go to bit.ly/1Rf4JWI [PDF].
To read Econsult’s evaluation of the economic impact of the plan, please go to bit.ly/1o1tDRh [PDF].
CPDC's Next Young Professionals Event
On June 14, from 5:30 p.m. to 7:00 p.m., at the Dilworth Park Café on the West Side of City Hall, network with other young professionals and kick off the summer season at Dilworth Park. Join us for an exclusive preview of Dilworth Park’s All-American BBQ and beer garden.
Hear from Paul R. Levy, President and Chief Executive Officer of the Center City District, on the impact Dilworth Park has had on surrounding real estate, why the organization is investing in improving public spaces in the downtown, and how you can get involved. Enjoy complimentary appetizers along with a wine and beer open bar.
Space is limited, so please RSVP to firstname.lastname@example.org by Noon, Thursday, June 9. To attend you must be an employee of a CPDC member firm. (View list of firms here: centercityphila.org/about/CPDCMembers.php) As a benefit of your CPDC membership, please forward this invitation to all young professionals in your office.