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July 11, 2016 • Volume 19 • Issue 14 • A bi-weekly email news service

Office Sector News
City and Suburban Office Trends
Occupancy levels are at 90.6% in the combined inventory of 44,757,010 square feet (sf) of office space in Philadelphia’s central business district (CBD) and University City. An additional 2,165,400 sf is under construction with average asking rent of $29.75, representing a 5.5% 12-month increase, according to JLL’s Office Insight, Q2 2016. But with movement from older inventory to new, year-to-date absorption has been -159,192 sf. The FMC Tower on the west side of the Schuylkill River is attaining the highest rents at more than $50 psf, but Market East is seeing the highest percentage of rent growth, 12.9%. To read the CBD report, please go to bit.ly/29zp27d [PDF].

The Pennsylvania suburbs still have more office space, 53,039,115 sf, with an additional 455,064 sf under construction, but a lower occupancy rate, 85.8%; much lower average asking rent, $25.46; and smaller 12-month growth, 2.7%. Still, year-to-date absorption has been positive at 544,694 sf. Conshohocken and Malvern-Exton are the submarkets with the most projected growth. To read the suburban report, please go to bit.ly/29iLl0t [PDF].

PNC Names New Regional President
Paula Fryland, president of PNC for the Philadelphia, Delaware and Southern New Jersey region, has retired, effective July 8, and has been replaced by Joseph G. Meterchick, who led PNC’s Western Florida region, the Philadelphia Business Journal reported on July 5.

Meterchick, a Philadelphia native, spent 30 years at PNC in Philadelphia and South Jersey before relocating to Tampa, Florida, in 2011 after PNC acquired 19 branches from BankAtlantic in 2011.

To read the article, please go to bit.ly/29h1MXx.

Development News
Yards Brewing to Move to SoNo
Yards Brewing Company, currently located at 901 North Delaware Avenue, will move its brewery into 80,000 square feet of the SoNo development at the former Destination Maternity headquarters in the 500 block of Spring Garden Street in Northern Liberties, Philadelphia magazine reported on June 28.

With the new additional space, Yards will be able to double its production to 100,000 barrels a year. Grain storage tanks will be stationed outside the building footprint, in the loading dock area and along the Fifth Street side of the building. A brewpub also will be included. SoNo will need a variance to accommodate manufacturing, the article noted.

To read the article, please go to bit.ly/290U0jr.

Midwood Management Buys South Street Properties
Midwood Management of New York City, which recently developed the Cheesecake Factory at 1430 Walnut Street, has bought seven properties on South Street for $8.8 million: 306, 308, 524, 526, 530, 538, and 700-702 South Street, and is expected to purchase other buildings on the street, the Philadelphia Business Journal reported on July 1.

Midwood also is proposing to construct a five-story, mixed-use development that would include 70 apartments and 18,000 square feet of retail at Ninth Street and Washington Avenue. To read the article, please go to bit.ly/29mnf20.

Residential Market News
Delta Associates: Caution Signs in City’s Class A Rental Market
While metro area Class A rent growth was weak as vacancy rates remained unchanged in the City of Philadelphia, the vacancy rate increased from 1.6% to 2.9% year over year while rents also increased (1.4%), according to Delta Associates’ Philadelphia Class A Apartment Market Report, Second Quarter 2016.

Rents averaged $2,258 ($2.47 psf) for high-rise space in the city and $1,525 ($1.51 psf) for low-rise in the suburbs. In the City of Philadelphia over the next 36 months, 5,000 units are expected to be delivered.

In the short run, the Philadelphia metro area apartment market will experience some pressure on occupancy and rent growth, but in the intermediate- and long-term, Delta expects the renter share of Philadelphia-area households to continue to rise, supporting demand for Class A apartments.

Hospitality News
DNC Round-Up
The Center City District will host a POLITICAL MOVIEFEST at Dilworth Park, Wednesday, July 20, through Saturday, July 23, with four free political-themed movies selected by popular vote. For details, please see the first item under Upcoming Events.

The City’s Office of Supportive Housing (OSH) is surveying people living on the streets and offering them other options, including more than 100 additional beds in emergency housing facilities. In addition, about 20 OSH staff members will work as outreach workers, ambassadors to visitors and helping with individuals in need of social services, cbsloc.al/29AcU4K, CBS Philly.

The U.S. Secret Service on July 7 announced its security plan, which is largely confined to the area around the Wells Fargo Center, quite unlike the expansive security imposed for the pope’s visit. All major highways, including I-95, will remain open to passenger vehicles throughout the convention. However, some exit ramps on I-95 and I-76 will be closed beginning Friday, July 22. SEPTA’s Broad Street Line will have additional service to AT&T Station, bit.ly/29wiPHt, The Philadelphia Inquirer.

For Frequently Asked Questions (FAQ) about “Conducting Business During the Democratic National Convention,” please go to bit.ly/29C3Ei6.

A FAQ for the public, “What You Need to Know for the Democratic National Convention,” is available at bit.ly/29Akkoq.

A pop-up shop at the Comcast Center, 1701 John F. Kennedy Boulevard, is now open for official DNC 2016 souvenirs such as apparel, buttons, drinkware, and accessories. Additional pop-up stores will be opened at the Pennsylvania Convention Center and 30th Street Station, bit.ly/29GNV0N, Philadelphia 2016 Host Committee.

Renovations at Amtrak’s 30th Street Station will be completed in time for the DNC, including improvements to the restrooms in the retail area and restoration of the entrance doors on the east portico, Amtrak announced on July 7. In addition, “living walls” of vertical and horizontal planters have been placed throughout the station and beginning July 23rd, red, white and blue lights will illuminate the 29th Street façade, bit.ly/29mJTdk.

An exhibit showcasing Philadelphia's previous 11 presidential conventions, beginning in 1848, was unveiled on June 30 by former Governor Ed Rendell, at Philadelphia International Airport's Terminal A-East. Photographs, campaign buttons and other memorabilia documenting the city's political conventions will be on display for a year, bit.ly/29VrGko, The Philadelphia Inquirer.

Eds and Meds News
Jefferson and Aria Health Complete Merger
Jefferson and Aria Health on July 6 announced they have completed their merger, following up on the Letter of Intent they signed in October 2015.

Aria will add the Jefferson Health brand to complement its legacy name, moving forward as Aria – Jefferson Health. Sandra Gomberg, who formerly served as Chief Operating Officer of Aria, has been named President of Aria.

With the new merger, Thomas Jefferson University and Jefferson Health now have 23,000 employees. Jefferson’s board has equal representation from Jefferson, Abington and Aria.

To read the press release, please go to bit.ly/29pWriA.

New President for University of the Sciences
Paul Katz, the founding dean of Cooper Medical School, has been named president of the University of the Sciences, effective September 1, the Philadelphia Business Journal reported on June 27. Cooper Medical School has an academic partnership with the college.

Prior to joining Cooper Medical School in 2010, Katz was senior vice president and chief medical officer at Mount Sinai Medical Center in Miami Beach.

To read the article, please go to bit.ly/29loyOo.

Parks and Open Space News
Lantern Festival Drew 90,000 Visitors
More than 90,000 visitors attended the seven-week Chinese Lantern Festival that took place in Franklin Square from April 22 to June 12, The Philadelphia Inquirer reported on June 25. Historic Philadelphia, the private nonprofit that leases Franklin Square from the City and operates the park, contracted with a Chinese company based in Zigong, Sichuan province to create the festival, which attracted visitors from all 50 states and more than 10 countries, the article noted. The amount of revenue the festival raised has not been announced.

To read the article, please go to bit.ly/291GBK8.

Transportation News
Getting to Work: Transit, Density & Opportunity
On June 28, the Center City District and Central Philadelphia Development Corporation presented the new, 16-page Center City Reports: Getting to Work: Transit, Density & Opportunity, based on original research and analyses by the CCD, with colorful charts and high-quality photographs.

The report shows how reinvesting in existing infrastructure and concentrating development around transit-oriented nodes can decrease congestion and air pollution, reinforce the competitiveness of employment centers and create new opportunities for disadvantaged workers. Transit is not just a convenience; it is essential to the density that enables Center City to provide 42% of all jobs in Philadelphia.

To download the report or read online, please go to centercityphila.org/transportation2016/.

Flaws in 115 Silverliner V Cars and Other SEPTA News
SEPTA engineers on July 1 discovered cracks on the equalizer bar, which prevents the train from tipping over during turns, on 115 of its Silverliner V Regional Rail cars and immediately took them out of service. The Authority is leasing 18 railcars and three locomotives from Amtrak, NJ Transit and the Maryland Area Regional Commuter to provide 1,700 seats beginning today, July 11, and new schedules were to be posted yesterday, PlanPhilly reported on Friday, bit.ly/29thmkV.

The DNC host committee expects little impact on the convention as organizers are planning to use chartered buses to transport delegates, bit.ly/29hjmL5.

SEPTA is encouraging Regional Rail customers, especially those closer to Center City, to use subway, buses, the Market-Frankford Line and trolleys to commute, septa.org/stations/rail/stations.shtml.

SEPTA will change the name of the 5th Street stop on the Market-Frankford Line to the 5th Street/Independence Hall Station, to help newcomers and out-of-towners identify it as part of the Historic District, PlanPhilly reported on June 30.

SEPTA is expecting to spend approximately $13 million to renovate and reopen the station, with construction beginning in 2017 and finishing in 2019. The anticipated improvements were given final approval by the Art Commission, which asked to revisit two segments of the plan that weren’t in final form for the meeting on July 6: artwork to be included in the project ($141,000 allocated) and a design detail for the glass headhouses. To see the list of enhancements and renderings presented by Erica Antoine of Burns Engineering, Inc., please go to http://bit.ly/29wIz6q.

Also on July 6, the Art Commission did not approve SEPTA’s public-private proposal for Digital Urban Panels with 55-inch LCD screens at 42 transit locations in the city.

To find out more about the renovation of the 5th Street/Independence Hall station, please go to bit.ly/299HIXT. To read the PlanPhilly article, please go to bit.ly/29uErlE.

SEPTA’s approved $548.63 million FY17 Capital Budget, which includes $77.1 million for the new SEPTA Key fare system, and the $7.3 billion FY2017-2028 Capital Program, are now available at bit.ly/29rStDx [PDF].

City and U.S. DOT to Explore Vine Street Expressway Fix
U.S. Transportation Secretary Anthony Foxx, in a visit to Philadelphia on June 27, announced that Philadelphia is one of four cities to win the department’s “Every Place Counts” design challenge that will enable a two-day planning session hosted by U.S. DOT to imagine the Chinatown and Callowhill neighborhoods without the Vine Street Expressway’s interruption, PlanPhilly reported.

The design initiative was created to inspire more cities to plan creative fixes for disruptive highway designs of the past. Boston, Dallas, New York City, and Milwaukee, among others, have capped or removed highways to lessen their negative impact, the article noted. To read the article, please go to bit.ly/297Xg06.

I-676 Detours for Bridge Construction
I-676 will be closed and detoured in both directions between the I-76 and Broad Street (Route 611) interchanges today, Monday, July 11, through Thursday, July 14, from 11:00 p.m. to 5:00 a.m. the following morning for overhead bridge construction, PennDOT announced on Thursday.

The overnight operation is part of the four-year, $64.8 million project to replace seven structurally deficient bridges over I-676 between 22nd and 18th Streets, and to make landscaping and streetscape improvements above the expressway. Construction began in April 2015 and will finish in fall 2019.

For more information on the I-676 project, please go to bridgesover676.com. For detours and other information, please go to 511PA.com.

Government News
General Assembly Passes HB 1871
On June 27, the Pennsylvania House of Representatives approved HB 1871 with a decisive, bi-partisan vote of 170-25. On July 1, the Senate followed with a margin of 49-2 to amend the Pennsylvania constitution to enable Philadelphia to assess properties used for business purposes at a 15% higher rate than residential, so long as incremental revenues are dedicated 100% to wage and business tax reduction (bit.ly/29cX6Rn). The bill must pass again in the 2017 legislative session and then be placed on the ballot for voter consideration.

HB 1871 was sponsored by Representative John Taylor (R., Philadelphia) and State Representative William Keller (D., Philadelphia).

A broad coalition of business, labor and civic groups, along with the Tax Commissions of both 2003 and 2009, have concluded that in order to grow the number of jobs in Philadelphia, the city must reduce wage and business taxes and shift to greater reliance on the real estate tax for businesses, Representative Taylor’s press release noted. To visit the Philadelphia Growth Coalition’s website, please go to philadelphiagrowthcoalition.com.

To read an explanation of how the amendment will work for Philadelphia, please go to bit.ly/290YHhr [PDF]. To read Econsult’s evaluation of the economic impact of the plan, please go to bit.ly/28Zhhbk [PDF].

Assessment Trends
Report: Land Value Increase Will Raise Property Taxes for Some
While the City’s Office of Property Assessment has not been routinely reassessing property for the last three years, as was the intent following the Actual Value Initiative, it is recalculating relationships between the values assigned to land and improvements. According to a new study by The Pew Charitable Trusts, this will result in larger bills for 23,157 of the city’s 579,447 parcels in FY17. Increases are happening for two reasons: (1) while for the vast majority of properties, building values are being reduced by an equal amount, for 16,395 properties higher land valuation is not offset by a lower building valuation; (2) 6,762 of the 15,118 parcels that are currently benefitting from the 10-year tax abatements will receive a larger tax bill because the unabated portion of their value is increasing.

The net result will be an increase in tax revenue for the city government and the School District of Philadelphia of $13.3 million, approximately 1% of the total revenue produced by the property tax. To read the report, please go to bit.ly/29a6fzb.

But an analysis by the CCD shows a larger issue: because the OPA has been focused almost entirely on appeals for the last two years, there will only be a 0.1% proposed increase in the value of taxable real estate citywide and that follows on reduction in value of 1.2% between 2014 and 2015, producing an overall reduction in value of citywide real estate from 2014 to 2016 of 1.1% in the midst of one of the strongest real estate markets in decades.

City Announces Plan to Recover Delinquent Property Taxes
City Councilman Allan Domb, Mayor Jim Kenney and Council President Darrell L. Clarke announced plans to recover an estimated $492 million in unpaid property taxes and the city’s intention to issue a Request for Proposals to continue the sale of property tax liens begun in 2015, The Philadelphia Inquirer reported on July 7.

The RFP will seek vendors to propose a methodology for continued tax lien sales and to carry out those sales in conjunction with the City’s Revenue Department.

The National Tax Lien Association conducted a study that found Philadelphia could bring in $90 million to $120 million in one-time revenue and about $30 million a year in new delinquent taxes, the article noted. To read the article, please go to bit.ly/29x6DVy.

Ban on Outdoor Feeding Withdrawn
The Kenney Administration on July 5 announced that the regulation banning the public serving of food in parks administered by the City’s Department of Parks & Recreation had been withdrawn. The ban was first proposed by the Nutter Administration in March 2012, as a response to group feeding on the Benjamin Franklin Parkway. It prompted a federal civil rights lawsuit that led to a court injunction blocking the ban. The plaintiffs were religious organizations who asserted that their mission is to feed homeless people outside, even though organizations like Broad Street Ministries provide food and access to services at an indoor site.

At the time, the City proposed to create an alternative, off-street location that would include social services, but no progress was made on that plan. Both the City and the plaintiffs have asked that the federal injunction now be dismissed.
To read the press release, please go to bit.ly/29kEim5.

State Budget Deadline Is Tonight
Governor Tom Wolf and the state legislature have until midnight tonight (July 11) to reach consensus on how to pay for the $31.5 billion spending plan that lawmakers passed and sent to the governor on June 28. If there is no agreement by the deadline, Wolf can partially or fully veto the proposed plan, The Philadelphia Inquirer reported, however, on Sunday, Wolf said he would allow the legislation to become law without his signature, bit.ly/29z5oF6.

The new fiscal year began July 1, and all sides are trying to avoid a repeat of last year's budget stalemate that held up funds to public schools and nonprofit organizations, among other problems.

To read the 2016-17 Budget in Brief, please go to bit.ly/29oIVZa [PDF]. For all information on the state budget, please go to budget.pa.gov.

Upcoming Events
POLITICAL MOVIEFEST at Dilworth Park
The Center City District will host a free POLITICAL MOVIEFEST at Dilworth Park, Wednesday, July 20, through Saturday, July 23, just before the Democratic National Convention arrives in Philadelphia.

In the spirit of this year’s political primaries, the Center City District offered the public a slate of 12 movies with political themes, so voters on-line could choose their favorite four films. The winning candidates were: All the President's Men, 50.7%; Selma, 47.4%; The American President, 39.6%; and The Manchurian Candidate, 37.0%.

POLITICAL MOVIEFEST will debut Wednesday, July 20, with Selma, PG13, 2015, 127 minutes; followed by:
Thursday, July 21: The Manchurian Candidate, PG13, 1962, 126 minutes;
Friday, July 22: The American President, PG13, 1995, 114 minutes; and
Saturday, July 23: All the President’s Men, PG, 1976, 138 minutes.

To read the press release, please go to bit.ly/29brQ8Z.

Best of Philly Summer Soiree Raffle Benefits CCDF
Philadelphia magazine’s Best of Philly Summer Soiree will be August 4 at Dilworth Park. Guests can taste food from the city’s best restaurants, enjoy live entertainment, and take part in some of the ‘best’ things Philly has to offer.

In addition to rental fees paid to CCD for the event, Philadelphia magazine will make a donation to the Center City District Foundation (CCDF) and create an opportunity for CCDF to raffle off a variety of items and retain 100% of all proceeds from the raffle.

Tickets: general admission, $99 (for entrance at 6:30 p.m.); VIP, $165 (entrance at 5:00 p.m.); and $80 general admission tickets available when purchased for groups of five or more.

For more information and to purchase tickets, please go to phillymag.com/bestofphilly/.