Office Sector News
Brandywine Realty Trust Will Move Headquarters
Brandywine Realty Trust, Center City’s largest commercial property owner, this fall will move its headquarters from Radnor to 46,000 sf in the FMC Tower at Cira Centre South, which then will be 97% occupied, the Philadelphia Business Journal reported on July 21.
Brandywine has 363 employees and a third of those will work at the FMC Tower. The company will maintain a satellite office in Radnor.
To read the article, please go to bit.ly/2uJHLpu (requires subscription).
Downtown Occupancy at 91.1%
Philadelphia’s central business district (CBD) has a 91.1% occupancy rate and $31.18/sf asking rent, with 2,179,000 sf under construction, according to JLL’s Philadelphia Skyline report published on July 21. The Skyline data are based on core Trophy and Class A office buildings of 250,000 sf and greater in the CBD, which is defined to include University City, and covers the period January 2016 through the first quarter of 2017. Net absorption was negative at -2.6%.
Limited quality blocks of space and abundant lease expirations are creating competition in the CBD, the report noted. “Suburban tenants are dipping their toes in the city, CBD companies are growing, and established firms are looking to differentiate in new or renovated spaces.”
To read the report, please go to bit.ly/2uiyPqt [PDF] (requires registration).
Vanguard Opens Innovation Studio
Vanguard on July 18 held a ribbon-cutting ceremony for its new 16,000-square-foot Innovation Studio in the Philadelphia Design Building at 2300 Chestnut, Technical.ly Philly reported.
The office can house up to 100 employees who will focus on research and development. Vanguard is based in Malvern, but wanted a satellite office in downtown Philadelphia to enable the company to recruit creative talent who prefer to live and work in the city.
To read the article, please go to bit.ly/2uf9UnE.
3737 Chestnut Sells for $118 Million
The Radnor Property Group has sold 3737 Chestnut, a 26-story apartment tower completed in October 2015 in University City, to Korman Residential Properties and The Carlyle Group for $118 million ($544/sf), Curbed Philadelphia reported on July 12. The building’s 276 units are leased.
Radnor Property Group is completing construction on the 16-story University City tower Vue32. At Logan Square, the company has broken ground for the Hamilton, a multi-phase residential project.
To read the article, please go to bit.ly/2tjQZV0.
Development Opportunity on South Broad Street
PIDC, on behalf of the City of Philadelphia and the Philadelphia Authority for Industrial Development (PAID), announced it is offering an RFQ for acquiring and developing or redeveloping the City- and PAID-owned parcels at 500-510 South Broad Street.
A mandatory pre-proposal meeting and site tour is scheduled for Wednesday, August 16, at 10 a.m. Register in advance by sending an email to email@example.com no later than 2:00 p.m. on Friday, August 11. Proposals are due by 12:00 p.m. on Friday, September 22.
To access the RFQ, please go to bit.ly/2vzxp8O.
Residential Market News
Home Sales Break Three Records in Second Quarter
The median house price in Philadelphia, not including condominiums, increased nearly 15% to a new high of $158,000 in the second quarter (Q2) of 2017, while the average house price grew 13.2% to $198,150, also a new high, according to Kevin C. Gillen, senior research fellow at Drexel University's Lindy Institute for Urban Innovation, in a report released on July 20. The number of million-dollar sales, 41, broke the previous record of 37, set in 2016 Q3.
Philadelphia is currently outperforming most other large U.S. cities, with prices here appreciating at 9% per year, compared to 4.8% in the top 10 largest U.S. cities (excluding Philadelphia).
Among neighborhoods with the largest percentage increases were Center City/Fairmount (Gillen’s geography), 4.7%; West Philadelphia, 4.8%; North Philadelphia, 5.2%; and South Philadelphia, 7.4%.
There were 5,613 arms-length sales in Q2, up 28.3% from Q1, and 17.6% more than in Q2 of last year.
To read the report, please go to bit.ly/1qntloS.
Reports: Multifamily Demand Strong
The Philadelphia metro area will need an additional 38,407 apartments between 2017 and 2030, with the 65+ age cohort expected to be the primary growth generator, according to a new report, U.S. Apartment Demand – A Forward Look, produced by the National Multifamily Housing Council and the National Apartment Association. At the current average annual construction rate, Philadelphia is projected to build 32,930 apartments by 2030. Nationally, the U.S. will need 4.6 million new apartments by 2030. To read the report, please go to nmhc.org.
In a related report, Delta Associates notes that the number of occupied Class A apartments increased by 57% over the year to 1,437 units, compared to 914 units during the same period last year, with rents in the 12-month period ending June 2017 increasing 1.0%, according to the Q2 Philadelphia Class A Apartment Market Report.
Only three construction starts occurred in the past 12 months, and there were none in the second quarter. As of June 2017, 4,144 units were in the 36-month development pipeline, a decrease of 18% from a year ago.
Market conditions in Q2 2017 point to a more competitive environment in the months ahead, the report noted.
Westin Philadelphia Sold
Philadelphia-based Hersha Hospitality Trust has acquired the 294-room Westin Philadelphia at Liberty Place for $135 million and will renovate the hotel's meeting spaces, the Philadelphia Business Journal reported on July 21.
The hotel will be managed by HHM, which operates six hotels in the Philadelphia region. Hersha owns two other hotels in Center City, The Rittenhouse and the Hampton Inn Convention Center.
To read the article, please go to bit.ly/2txq1hG.
A Shift in Philadelphia’s Retail Pipeline
Since 2015, Philadelphia’s retail market has added more than 3 million square feet (sf) to its inventory and will add even more next year, according to CBRE’s Greater Philadelphia Retail, Q2 2017.
Redevelopment, which will deliver over 1 million sf in 2018 representing 38% of total retail completions, plus the nascent trend of suburban shopping center retailers opening in the downtown, should stave off supply oversaturation, the report noted.
Suburban retailer A.C. Moore opened its first-ever urban store earlier this year at Broad and Chestnut, and PetSmart will open at 1112 Chestnut Street this summer.
In the Philadelphia MSA, retail sales crested $110 billion in the first quarter of 2017, a 5% increase over the same period last year.
To read the report, please go to bit.ly/2unpRsq.
Parks and Open Space News
Summer in the City: Dilworth Park
From 12 noon to 1:30 p.m. on Wednesday, July 26, PNC presents Live @ Lunch will offer its final showcase of rising stars of local music, with Laura Lizcano closing out the series. PNC presents Live @ Lunch will take off during the month of August and return on Wednesday, September 6.
Also, on Fridays continuing through August 25, at 8:30 p.m., Dilworth Park will host Pictures in the Park. Have a cocktail or beer while watching movies on the big screen al fresco. Be sure to bring your own blanket or chair. Here’s the lineup: July 28, Central Intelligence; August 4, Jurassic World; August 11, Trainwreck; August 18, Avengers: Age of Ultron; and August 25, Fantastic Beasts and Where to Find Them. More than 1,000 people turned out for opening movie night last Friday night in Dilworth Park.
For information on all the summer activities in Dilworth Park, please go to dilworthpark.org.
Summer in the City: John F. Collins Park
The Center City District Foundation (CCDF) and Chaddsford Winery have partnered to present downtown Philadelphia's newest summer pop-up, the Wine Garden at Collins Park. Conveniently located at 1707 Chestnut Street, the Wine Garden at Collins Park will be open on consecutive Fridays through Friday, September 1, from 4:00 p.m. to 9:00 p.m., offering Chaddsford wines and hard cider, by the glass ($5 to $9), or by the bottle ($10.49 to $21.99). Buy three bottles and save 10%!
The Wine Garden at Collins Park will help support the CCDF, which owns and maintains the park for public enjoyment. To learn more about CCDF, please go to supportccdf.org. Visit johnfcollinspark.org and follow @CCDParks on Twitter for more information and updates.
Shakespeare Park Opens
City officials cut the ribbon July 20 on the newly renovated Shakespeare Park in front of the Central Branch of the Free Library of Philadelphia along Vine Street at 19th Street, Metro Philadelphia reported.
The improvements were part of the $65 million Bridges Over 676 project, which includes improvements to public spaces along the Benjamin Franklin Parkway and construction on pedestrian bridges over 1-676.
To read the article, please go to bit.ly/2uNCn5u.
PennDOT Adds Chestnut Street to Construction Projects
PennDOT on July 11 introduced three District 6-0 construction projects that will be taking place concurrently in Center City: the Vine Street Expressway Bridges Replacement Project with an estimated completion in fall 2018; John F. Kennedy Boulevard Bridges Replacement Project targeted for completion in September 2018; and the Chestnut Street Bridges Rehabilitation Project, estimated to be finished by November 2020.
Preparation for the Chestnut Street Project is now underway and will continue until the end of this year. Detours will be established, southbound Schuylkill Avenue West (SAW) will be closed from Chestnut Street to Walnut Street, and northbound SAW will be closed from Chestnut Street to Market Street.
Sidewalks will remain partially open and PPA parking on pertinent streets will be eliminated.
New Elevators Coming to Six PATCO Stations
The board of the Delaware River Port Authority (DRPA) on July 19 authorized a $31 million, four-year project to install eight elevators in six PATCO stations, including the 12th/13th and Locust Streets location in Center City during Phase 3, PlanPhilly reported.
The project will make all PATCO stations wheelchair accessible and each of the Phase 3 stations will get two new elevators: one from street level to the concourse, and another beyond the concourse’s fare gates to the train platforms. These stations will also see new street-level entrances.
To read the article, please go to bit.ly/2u8GeHv.
Ride-Sharing Services Affecting SEPTA Ridership
SEPTA's bus and trolley routes have experienced a 2.7% decrease in ridership from 2014 to 2016, attributable in part at least, according to the transit agency, to the convenience of ride-sharing services like Uber and Lyft.
SEPTA says they are launching a major review to win back travelers, retaining an outside consultant to help them rethink bus routes and services.
To read the article, please go to bit.ly/2uVwPpF.
Indego Offers Corporate Pass Programs
Indego, the City’s bike-share program, offers three options for employers to contribute to their staffs’ monthly passes. Corporate Pass Programs are discounted by $3/month, making the monthly rate for a pass $12.
Corporate plans require a minimum monthly commitment of 10 employees per month for 12 months. With the Gold Plan, employers pay the full $12; the Silver Plan, employers, $9, employees, $3; and the Bronze Plan is split evenly between employer and employee, $6 each.
For details on the Corporate Pass Programs, please go to bit.ly/2u90wAk.
PGCB to Hold Hearing on Second Casino in Philadelphia
The Pennsylvania Gaming Control Board (PGCB) on July 13 announced it has scheduled a public hearing on Monday, July 31, to gather additional evidence about ownership of Stadium Casino LLC, previously selected by the Board to be awarded the second Philadelphia casino license.
The hearing is in response to a June 20th opinion handed down by the Pennsylvania Supreme Court in response to appeals of the Board’s licensing decision. The Court agreed that additional evidence was needed to determine whether Stadium Casino, LLC principal Watche Manoukian, who holds a controlling interest in the license for Parx Casino, possesses a financial interest that would exceed the 33% ownership cap in the proposed Stadium Casino, LLC project.
The hearing at 2:00 p.m. will be in the Board’s Public Hearing Room on the second floor of Strawberry Square in Harrisburg. The hearing will be streamed live on the Board’s web site, gamingcontrolboard.pa.gov.
To read the announcement, please go to bit.ly/2uWLCxa.
Annual Revenue Up at SugarHouse Casino
Fiscal Year 2017 (FY17) revenue at SugarHouse Casino on the Delaware River increased 5.6% to $297,552,522 over FY16’s $281,792,087, according to the Pennsylvania Gaming Control Board. The commonwealth’s share in FY17 was $77,589,155, and Philadelphia collected $8,916,705.
In June, the final month of FY17, the casino took in $23,914,821 million, compared to $26,974,684 in May, with the commonwealth collecting $6,162,587, compared to May’s $6,922,286. Philadelphia collected $198,003 in June, compared to $798,077 in May. June was the first month the City collected no local share of slots revenue, due to a Supreme Court decision.
To view all casino revenues, please go to bit.ly/2bkEjIO.
Regional Manufacturing Sees Sluggish Growth
Manufacturing activity in the Philadelphia region continued to grow in July, although at a slower pace, according to responses to the Federal Reserve Bank of Philadelphia’s Manufacturing Business Outlook Survey, with new orders up for 30.5%, down for 28.4%, and remaining the same for 41.1%.
The number of full-time employees increased for 16.5% of the firms, decreased for 5.6%, and was unchanged for 74.6%.
Looking ahead six months, 51.3% expected business conditions to improve, 14.4% foresaw a downturn, and 27.1% predicted no change.
To read the report, please go to bit.ly/2tKQMuo [PDF].
PICA Approves City’s Five-Year Financial Plan
The Pennsylvania Intergovernmental Cooperation Authority (PICA) has approved the City of Philadelphia’s FY2018-FY2022 Five Year Financial Plan.
PICA anticipates continued economic expansion and reports that unemployment has reached prerecession levels; median income has recovered; and city debt as a percentage of personal income has declined below prerecession levels.
PICA identified some risks: labor costs that may exceed the reserve; the possibility of a decline in economic growth over the five-year period; rising costs for pensions and health benefits; and business income and receipts tax (BIRT) volatility.
To read the report, please go to bit.ly/2tH3rOP [PDF].
Soda Tax Appealed to State Supreme Court
Local merchants and the American Beverage Association have filed an appeal to the state Supreme Court of the June Commonwealth Court ruling that upheld the City’s soda tax, The Philadelphia Inquirer reported.
The appeal was filed on July 13 and argues that the tax is unlawful because the tax is levied on distributors, who then pass it on to consumers, which amounts to a double tax. The lower courts have ruled twice in favor of the City.
To read the article, please go to bit.ly/2tDpZA2.
CCD Holds Hearing for Plan and Budget
As required by law for reauthorizing the Center City District, the CCD on Tuesday, July 18, held a public hearing on the 2018-2022 Plan and Budget. A broad cross section of representatives from the office, hotel, retail, civic and education sectors testified along with representatives from two Center City residential civic associations.
Twenty-two individuals testified in favor of the proposed plan and budget; no one testified in opposition. The CCD would like to thank those who took time out of their busy schedules to support the reauthorization: Leo Addimando, Alterra Property Group, LLC; Maureen Anastasi, CBRE Global Workplace Solutions; John Connors, Brickstone Realty; Joseph Coradino, PREIT; Gregory DeShields, PHL Diversity; Julie Coker Graham, PHLCVB; Ed Grose, Greater Philadelphia Hotel Association; Mary Dougherty, MKD and Associates; Carrie Harrington, Hilton Garden Inn; George Johnstone, Brandywine Realty Trust; Sarah McEneaney, Callowhill Neighbors Association; Erica Martin, Union League; Corie Moskow, Rittenhouse Row; Drew Murray, Logan Square Neighbors; Charles B. Norman, National Real Estate Development; William E. Parshall, Temple University Center City; Randall Scott, Core Trust; Lisa Silveri, Agency Real Estate Partners; Keli Wallace, BOMA/AccessoServices; Garth Weldon, Prime Rib; Joanne Wszolek, Independence Visitor Center; and Joseph Zuritsky, Parkway Corporation.
Information Session for Rebuild Contractors
On Thursday, July 27, from 4:30 p.m. to 6:00 p.m., at the Athletic Recreation Center, 1400 North 26th Street, the City of Philadelphia will be hosting an information session for local contractors interested in working on Rebuild, the seven-year, $500 million investment in Philadelphia's parks, recreation centers, playgrounds and libraries.
City staff will be on site to discuss the rebuilding process and to provide information on supports available to help small businesses grow. No RSVP required.
Save the Date
Philadelphia Hospitality, Inc. will honor Paul R. Levy, President and CEO of the Center City District, with its 2017 Vision for Philadelphia Award on Monday, October 23. The reception begins at 6:00 p.m., with the dinner and program following at 7:00 p.m., at the Union League, 140 South Broad Street.
The evening will pay tribute to the CCD’s role in the ongoing revitalization of Center City. To purchase tickets, please go to philahospitality.org/annual-gala/.