Far West Market Positioned for Change
In quick succession, a series of announcements have signaled that Richard Basciano’s holdings on West Market Street are being freed up for development. Last week, The Philadelphia Inquirer reported Brandywine Realty Trust had bought 37,000 square feet of property on the south side of the 2100 block of Market Street, adjacent to the site of the deadly collapse of the Salvation Army thrift store in 2013. To read the article, please go to bit.ly/1dOtKun.
Brandywine plans to redevelop two three-story buildings into rental lofts, offices and retail space, and use another 30,000 square feet for parking and future development. The transaction did not include the space where a memorial to the six victims of the collapse is being planned. Basciano also has recently sold parcels on the south side of the 2200 block to Parkway Corporation.
On Saturday, The Philadelphia Inquirer reported that PMC Property Group and Lubert-Adler have bought the three-story 2324 Market Street for $3.25 million from Basciano, bit.ly/1CA94lR. This building is immediately next to the Marketplace Design Center, which PMC Property Group is in the process of redeveloping. Collectively, these transactions create a major opportunity to link together the western edge of Center City and University City.
Office Sector News
JLL: Rents, Occupancy Up in Second Quarter in CBD
Office inventory in Philadelphia’s central business district (CBD) reached 44,846,712 square feet (SF) with a 90.1% occupancy rate, with average rental rates of $27.19, according to JLL’s Office Insight for the second quarter of 2015. JLL includes University City in its definition of the CBD. Absorption was positive with 60,766 SF of additional space leased.
CBD rents were up 0.4% over the first quarter and down just slightly (0.1%), from last year, but Class A rents in Market East climbed 4.1% during the second quarter, the report noted.
In the Philadelphia suburbs, with 52,119,731 SF of office space, the occupancy rate was 83.4%, and average rent was $24.80 during the quarter, with a negative absorption of 154,592 SF.
During the second quarter, there were 2.1 million SF of office construction underway in the CBD, 80% of which was preleased, and 836,500 SF underway in the suburbs, 53% of which was preleased.
Large blocks of office space remained scarce across the CBD as Independence Blue Cross signed for 112,000 SF at 1900 Market Street, one of the few large spaces that remained. A trio of tech startups expanded into the Biddle Building at 1217 Sansom Street after a high-end fit out of the eighth floor. (To read a Technical.ly Philly article and see photos of the new offices of the three start-ups, Lamps.com, Payroll Shopping and PerPay, please go to bit.ly/1LOlQ1R.)
To read the JLL reports, please go to bit.ly/1KPlUxz [PDF].
Public Ledger Building Sold
The 12-story Public Ledger building in the 600 block of Chestnut Street was sold on July 2 by LNR Partners, LLC of Miami Beach, Florida, for $58 million to the Carlyle Development Group of New York, The Philadelphia Inquirer reported on July 7.
Carlyle seeks to redevelop the 534,000-square-foot building. However, the building is currently 88% leased, with the U.S. General Services Administration as the main office tenant, along with several design firms and the Center City District (bit.ly/1UwnxF4).
More than a dozen investors were seriously interested in buying the building, the Philadelphia Business Journal reported on July 9 (bit.ly/1fsNTry).
AT&T Mobility Leases on Walnut Street
PREIT on June 30 announced that AT&T Mobility has leased almost 5,000 square feet on the first and second floors of 1501 Walnut Street and will open in November 2015. The property is also home to Club Monaco and Cameo Water Wear, and an office tenant, PREIT announced in a press release. PREIT acquired the building in 2014.
To read the press release, please go to prn.to/1g7W1xT.
Residential Market News
Roosevelt Apartments Sold
The Roosevelt apartments at 2216-2222 Walnut Street have been sold for $15.7 million by the Roosevelt Partners of Lawrenceville, New Jersey, to an unnamed buyer represented by the Post Brothers, the Philadelphia Business Journal reported on July 1.
The larger of the two buildings is a nine-story building that totals 64,628 square feet and has the Roosevelt's 99 apartments. The second building had been home to a restaurant that closed last year.
To read the article, please go to bit.ly/1U93Q67.
Class A Apartment Market Is Robust
Vacancy in the Class A apartment market in Philadelphia was 1.6% in the second quarter of 2015, down from 5.0% during the same period last year, according to Delta Associates’ Q2-2015 Philadelphia Class A Market Report (subscription only). The suburban vacancy rate fell from 4.5% last year to 2.5% in 2015’s second quarter.
Rents in Center City high-rises averaged $2,226 ($2.33 per SF) compared to $1,517 ($1.50 per SF) in suburban low-rise apartments, the highest rents recorded in both areas, the report noted. For the 12 months ending June 2015, Center City rents were up 4.0%.
Delta Associates counts 3,845 apartment units under construction in the city that are planned for delivery in the next 36 months and suggests that vacancy will edge up slightly and rent growth likely stabilize over the next 24 months, with the outlook for Center City to remain a healthy market.
Schedule Announced for Pope’s Visit
Pope Francis is scheduled to arrive in Philadelphia at 9:30 a.m. on Saturday, September 26, and will visit Independence Mall in the afternoon and the Festival of Families gathering on the Benjamin Franklin Parkway that evening, The Philadelphia Inquirer reported.
On Sunday, September 27, he will go to the Curran-Fromhold Correctional Facility in the morning and conduct a mass at 4:00 p.m. on the Benjamin Franklin Parkway, before leaving for Rome later that evening.
To read about the pope’s schedule, please go to bit.ly/1CecgDx.
To view the pope’s entire official U.S. schedule, on the United States Conference of Catholic Bishops’ website, please go to bit.ly/1g6p44W.
Philadelphia Poised for World Heritage Designation
The Organization of World Heritage Cities, created by UNESCO in 1993 and scheduled to meet in early November in Arequipa, Peru, is expected to vote in favor of designating Philadelphia as a World Heritage City, the first in the U.S., the Philadelphia Business Journal reported on July 9. There are approximately 270 such cities but none are in the United States. The United Nations designated Independence Hall a World Heritage Site in 1979.
The Philadelphia Orchestra is meeting with representatives in six World Heritage cities during July, the article noted, and the University of Pennsylvania is developing a World Heritage curriculum.
To read the article, please go to bit.ly/1HlXWEK.
NAACP Convention Brings 8,000 to City
The NAACP's annual conference began Saturday and runs through Wednesday at the Pennsylvania Convention Center, where President Barack Obama is expected to address the assembly, The Philadelphia Inquirer reported on July 9. Also speaking is U.S. Attorney General Loretta Lynch, and former President Bill Clinton is expected to attend.
About 8,000 people are attending, bringing a $10.5 million economic benefit to the city. Activities will include a retail expo, health pavilion, and career fair.
To read the article, please go to bit.ly/1ULcEzp.
New Wireless Network for Convention Center
The Pennsylvania Convention Center has installed a new WiFi network from Xirrus Inc. of Thousand Oaks, California, which allows more people to connect at one time and makes the Convention Center more competitive nationally, the Philadelphia Business Journal reported on July 3. The cost of the system was not disclosed.
Xirrus was chosen because it can accommodate at least 1,000 users at one time while using fewer access points, the article noted.
To read the article, please go to bit.ly/1S3076b.
Commuting Implications of City Job Decline
In a page one story, The Philadelphia Inquirer explicates the transportation impacts of long-term employment trends in which the city has lost 23% of its jobs since 1970, while the suburbs have experienced 108% growth. With transit infrastructure based on a hub and spokes model of suburban living/urban working, auto drivers are spending an increasing amount of time commuting from city to suburb and from suburb to suburb. DVRPC estimates that the region needs $47.8 billion to finance needed rail and road improvements. In that light, tax reform that would grow urban jobs and make better use of existing transit assets certainly looks like a more affordable alternative.
To read Sunday’s article, please go to bit.ly/1CyCQad.
City Signs Five-Year Airport Lease
Mayor Michael A. Nutter on June 30 signed a five-year lease between Philadelphia International Airport and the airlines that use the City-owned facility, the Philadelphia Daily News reported.
Under the agreement, effective July 1, airline subcontractors must pay $12 an hour to about 2,000 airport workers.
Airlines that fly through Philadelphia will pay as much as $2.1 billion in new rates and charges over the lifetime of the lease, with the money to be reinvested in operating costs and capital-improvement projects. The agreement, with options for two one-year extensions, is valued between $2.8 billion and $4 billion, the article noted.
To read the article, please go to bit.ly/1ISpwKQ.
American Airlines to Transfer Bookings This Weekend
American Airlines will transfer US Airways passenger bookings to the American reservations system this weekend (July 18), for travel beginning on October 17, The Philadelphia Inquirer reported on Friday.
Airport check-in kiosks, gates, and ticket counters will get new American signage, and the US Airways website will disappear on that date, under a merger agreement reached in 2013. US Airways flights will change their letter code to AA; however, departure times and flight schedules will remain the same. The repainting of planes should be completed in late 2016.
To read the article, please go to bit.ly/1KVwXH3.
PATCO Has New Single-Track Schedule
PATCO on July 5 initiated a new schedule to accommodate work on tracks on the north side of the Benjamin Franklin Bridge. PATCO trains traveling in both directions will share the single set of tracks on the south side of the bridge for the two months that the project is expected to last. The current single-track service schedule has fewer and shorter service gaps than the previous one-track service.
PATCO now is expecting the project to be completed in December 2015, instead of April 2016.
New timetables are available at station timetable racks or at ridepatco.org.
PennDOT Resurfacing Streets Throughout Summer
PennDOT is resurfacing 22 miles of interstate highways in Philadelphia at a cost of $13.4 million, with work that began on July 6, PlanPhilly reported.
Included in the work will be resurfacing of Christopher Columbus Boulevard between Race and Spring Garden Streets; Arch Street between Front and Broad Streets; and 33rd Street between 34th and Market Streets.
Each project is expected to take two weeks, with all of the work to be completed in October.
To read the article, please go to bit.ly/1H3enc6.
In other PennDOT news, the right lane of I-76 east is scheduled to close between the South Street and University Avenue/Grays Ferry Avenue interchanges on Wednesday, July 15, and Thursday, July 16, from 9:00 a.m. to 3:00 p.m., for deck repairs, weather permitting.
For more information, please go to 511PA.com.
Also, beginning tonight, Monday, July 13, James J. Anderson Construction will be repaving South Broad Street from Washington Avenue to City Hall, and Market Street between 30th Street and City Hall. The work is expected to take three weeks. Travel restrictions will be in place Mondays through Fridays from 7:00 p.m. to 5:00 a.m. the following morning. For complete information, please go to dot.state.pa.us.
SEPTA to Expand Bike Parking
SEPTA will install or expand covered bike parking at 14 Regional Rail stations beginning in 2016 and is considering stations on the Market-Frankford and Broad Street Lines, the SEPTA Sustainability blog reported earlier this month.
The Regional Rail stations include the Jefferson, Suburban, and University City Stations. To see the complete list, please go to bit.ly/1f2czqR.
SEPTA will need approval from the City for racks at street level at the Market-Frankford and Broad Street Line stations, as the City owns the sidewalks surrounding those properties. On the Broad Street Line, four stations are under consideration, including Tasker-Morris and Spring Garden. On the Market-Frankford Line, Girard Station is one of four being considered. For the complete list, please go to bit.ly/1HhIAkF.
In other SEPTA news, SEPTA will be reducing the number of cars on its Regional Rail lines through November in order to install equipment for a mandated train control system, Philly.com reported on July 8. The safety system is designed to automatically stop a train before accidents, such as derailment, caused by human error occur. The deadline for the system to be installed is December 31.
To read the article, please go to bit.ly/1Mff57o.
State Budget Unresolved
On June 30, the Pennsylvania General Assembly passed a 2015-2016 state budget plan to authorize nearly $30.1 billion in spending, an increase of about $1.15 billion, or 4%, over the fiscal year 2014-2015’s budget, with the majority of the new spending going to pension payments, rising healthcare for low-income residents, and a $100 million increase (nearly 2%) in funding for public schools, and without any increase in broad-based taxes.
However, later on the same day, Governor Tom Wolf vetoed the entire budget bill.
On July 7, the subscription news service Pennsylvania Legislative Services reported that Wolf had been meeting informally with Republican leaders in a “shuttle diplomacy” effort to resolve differences on the budget, but they were still about $2 billion apart.
The Republican plan included pension reform and privatization of liquor sales, but the governor vetoed the liquor bill as well. Then, on July 9, Wolf vetoed the pension reform plan, suggesting that the legislation provided no immediate or long-term cost savings to taxpayers, The Philadelphia Inquirer reported (bit.ly/1ULeu30).
Philadelphia School District Update
The Philadelphia School Reform Commission (SRC) on June 30 adopted a $2.6 billion budget for the Philadelphia School District, however, no spending will be authorized until the Commonwealth passes its budget, The Philadelphia Inquirer reported.
The new budget assumes $70 million in new money from the City, which already has promised $45 million and will add $25 million if the District meets certain conditions, and $18 million in new cash from the Commonwealth of Pennsylvania.
Governor Tom Wolf has proposed $159 million in new funds for the District, but the House spending plan would give City schools just $18 million more, the article noted.
To read the article, please go to bit.ly/1U9yTOV.
The Philadelphia School District will spend $30 million on literacy, including $10.5 million in donations from the William Penn and Lenfest Foundations and $12.7 million from the District to ensure that students are reading on grade-level by fourth grade, the Philadelphia Daily News reported. To read the article, please go to bit.ly/1JPvthm.
The new cigarette tax implemented for the benefit of the School District has yielded an average of $5.6 million each month since it was implemented in October 2014, for a total thus far of $45 million, according to the Office of the City Controller’s report, Financial Forecast & Snapshot for May (bit.ly/1LKZcIN [PDF]).
In addition, revenue from the sales tax redirected to the District and collected from September 2014 through May 2015 has totaled almost $101 million, the report noted.
In other School District news, Deputy Superintendent Paul Kihn, Superintendent William R. Hite Jr.'s second-in-command, has resigned to move to Washington, D.C. with his family, The Philadelphia Inquirer reported on July 1. Kihn’s position will not be filled, the article noted, as the District is shifting resources into groups of schools organized by geography, needs, or innovation.
Also leaving is Chief Financial Officer Matthew Stanski, who has taken a similar school finance job with the Montgomery County, Maryland, public schools.
To read the article, please go to bit.ly/1LGcUf7.
Tax Lien Sale Nets $2.1 Million
An online sale of 865 liens on tax-delinquent properties in the City of Philadelphia resulted in 240 sales that netted the City $2.1 million, The Philadelphia Inquirer reported on July 1.
After the City announced its intent to sell the liens, owners of an additional 1,414 delinquent properties paid $5.5 million to clear back taxes, and 506 property owners enrolled in payment plans to cover $2.2 million in unpaid taxes, the article noted.
Indianapolis-based SRI Inc. completed the auction on June 30 as the first of several intended to resolve delinquencies on 98,000 properties. Tax lien purchasers can foreclose on properties if the debts are not paid.
To read the article, please go to bit.ly/1NMyv4I.
City Controller Criticizes City's Five-Year Budget Plan
Philadelphia's City Controller on Friday called on the Pennsylvania Intergovernmental Cooperation Authority to reject the City's recently passed five-year budget, suggesting it over-estimates tax revenues and could lead to a deficit, The Philadelphia Inquirer reported.
The Controller was especially critical of estimates for fiscal years 2016 and 2017, when economic conditions are predicted to be less favorable than the City's projections.
To read the article, please go to bit.ly/1HSFha9.
To read the Controller's report, please go to bit.ly/1TqJ9RK.
Center City District Restaurant Week
Center City District Restaurant Week arrives early this year with two weeks, August 2-7 and 9-14, of excellent dining at participating Center City restaurants offering three-course dinners for only $35 per person. In addition, many participating restaurants will also offer a three-course lunch for $20.
Use m.CenterCityPhila.org to check menus and make reservations on your phone.
Park for $9 or less at participating Philadelphia Parking Association and Philadelphia Parking Authority facilities from 5:00 p.m. to 1:00 a.m. with a voucher from participating restaurants.
For more information, please visit centercityphila.org/life/RestaurantWeek.php.
Parks and Open Space News
A Variety of Activities at Dilworth Park
Summer is the perfect time to visit Dilworth Park! Rosa Blanca Café is open Monday through Friday, 8:00 a.m. to 9:00 p.m.; and Saturday and Sunday, 11:00 a.m. to 7:00 p.m. Also, Capogiro Gelato Artisans, a family-owned gelateria, has its colorful custom-made cart open seven days a week from 11:00 a.m. to 10:00 p.m. on the north side of the park. Capogiro offers sorbetto and gelato in a wide array of flavors.
Plus, there are lots of activities for you to enjoy.
Pictures in the Park – Tuesday, July 14, at 8:30 p.m., the 2014 version of Annie, which was rained out on its previously scheduled date, June 30.
Sips at Dilworth – Every Wednesday through September 16, from 5:00 p.m. to 7:00 p.m., Rosa Blanca Café hosts Center City District Sips. DJs provide music from 6:00 p.m. to 8:00 p.m.
Farmers’ Market at Dilworth Park – Every Wednesday through November 18, 11:00 a.m. to 2:00 p.m., McCann’s Farm of Elk Township, New Jersey, offers an array of fresh fruits and vegetables, from asparagus to blueberries to zucchini. PetAl Plants & Flowers of New Jersey stocks a wide variety of houseplants and flowers, and Philly Bread brings freshly baked breads.
Major League Bocce – Every Wednesday, July 15 through September 16, 6:00 p.m. to 9:00 p.m., on the Albert M. Greenfield Lawn. Pre-registration required.
Rhythms at Rosa Blanca – Every Thursday, from 5:30 p.m. to 7:30 p.m. through September 17, with no program on August 6. Live music features duos and trios playing summer-style and Latin music.
Here’s the lineup:
July 16, 23, 30, and August 13 & 27 – Trinidelphia;
August 20 – Rafael Pondé;
September 3 – El Caribefunk;
September 10 & 17 – De Tierra Caliente.
For complete information on Dilworth Park, please visit dilworthpark.org.
Pairings on the Parkway
Every Thursday, from 5:00 p.m. to 8:00 p.m., Sister Cities Park at 18th Street and the Benjamin Franklin Parkway hosts Pairings on the Parkway. BYO favorite bottle and take a seat at one of the tables outside the cafe or bring a blanket and find a spot under a tree or on the grass. Logan Square Café is offering a special summer grilling menu. Bring the whole family and enjoy the Children's Discovery Garden; plus there's live music every week! On July 16, Matt Santry will perform, and on July 23, Ernie Halter. Music is from 5:30 p.m. to 7:30 p.m.
For more information, please visit sistercitiespark.org.