Office Sector News
First Employees Moving Into Comcast Technology Center
The first round of workers is starting to relocate into the new Comcast Technology Center at 18th and Arch streets, a process that is expected to continue over the next several months. A steady flow of workers has been moving supplies and equipment from the back of the first Comcast Center into the adjacent Comcast Technology Center, which is not yet open to the public.
The $1.5 billion 60-story, 1,121-foot tower will become home to the cable giant’s technologists, engineers, and software architects. It also will be the operations headquarters of local broadcast television stations NBC10/WCAU and Telemundo 62/WWSI and will offer space for local tech startups.
Brandywine Picks Up Another Site In University City
Brandywine Realty Trust took another step forward on its Schuylkill Yards project by adding to its portfolio of properties with the $20.9 million purchase 3025 John F. Kennedy Blvd. In announcing its second quarter earnings results, Brandywine said it bought a leasehold interest in the 1-acre parcel and additional development rights.
Now a surface parking lot, the lot will be part of the first phase of Schuylkill Yards, a $3.5 billion new neighborhood it is developing in partnership with Drexel University.
Portion Of Public Ledger Building Sold
The owners of the Public Ledger office building have sold a section of the historic structure but retained its Independence Hall-facing portion for development into a luxury hotel, condos, or a combination of the two.
The Philadelphia Inquirer reports that an ownership entity led by Carlyle Development Group of Purchase, N.Y., sold the building’s western section to an affiliate of Brooklyn, N.Y.-based Baycrest Properties Management LLC for $32 million, according to records filed with the city. Carlyle and its partners continue to own the ground floor storefronts facing Chestnut Street, including a portion that is soon to house Center City’s largest Wawa store and the portion of which Center City District is an occupant, but Baycrest is serving as the management entity.
Southern Land Raises The Number Of Condos At The Laurel
Groundbreaking is slated in September or October for a 48-story mixed-use tower on Rittenhouse Square dubbed the Laurel. Based on updated renderings from Tennessee-based developer Southern Land, five floors that were planned for apartment rentals have been swapped for condos, upping the number of for-sale units from 54 to 74.
The high-rise at 1911 Walnut St. will add to a growing condo market in Center City that includes such projects as One Riverside, 10 Rittenhouse Square, 1706 Rittenhouse and the Residences at the Ritz Carlton.
Dranoff Downsizes Project On South Broad Street
Carl Dranoff’s plans for a condo-and-hotel hybrid tower at Broad and Spruce streets, under the SLS brand, are being downsized to include only residential units. The Philadelphia Inquirer reported that a Dranoff Properties Inc. affiliate was issued a permit for a project with 107 residential units, a shift from previous plans for 114 condos and 101 hotel rooms at the site, currently a cleared and excavated lot.
The permit also shrinks the building’s height from about 608 feet to 542 feet. A Dranoff spokeswoman told the newspaper that the developer had no immediate comment about the change.
Article Asks "Why Are Developers Only Building Luxury Housing?"
Strong Towns, a nonprofit advocacy group, takes an in-depth look at the current urban development landscape in an attempt to answer the often-asked question, "Why are developers only building luxury housing?" The article is a good primer for elected officials, noting how zoning rules often limit the supply of less-expensive housing and how other regulations, from parking minimums to materials requirements, further drive up costs.
The article urges "an approach to housing affordability focused on allowing market signals to work again in every neighborhood."
Philadelphia’s Old Homes, Poverty Impact Housing Affordability
In another recent examination of housing affordability, PlanPhilly looked at The State of the Nation’s Housing 2018, a new report from Harvard University’s Joint Center for Housing Studies, and compared Philadelphia’s challenges versus those in other cities.
The conclusion: "In cities such as Boston, New York, and San Francisco, affordable housing is increasingly scarce. … But in Philadelphia, the problem is exacerbated by the deteriorated condition of much of the city’s aging housing stock (with a median age of 93 years old) and the very low incomes of many residents with Philadelphia’s poverty rate of 25.7%, the highest of the country’s 10 largest cities."
Kevin Gillen of Drexel University’s Lindy Institute for Urban Innovation noted that Philadelphia is the most affordable city in the Northeast Corridor aside from Baltimore. For housing to be considered affordable, less than 35% of household income should go toward costs such as mortgage payments, utilities, maintenance, and property taxes, Gillen said. That figure hovers around 34% in Philadelphia, while San Francisco and New York are in the 50% to 60% range.
Report: Philadelphia’s Home Prices Flat For 2018
In marked contrast to its heated and competitive environment for the better part of a decade, the city’s housing market slowed considerably in 2018, according to a Philadelphia Inquirer report. "Whether they are skeptical about where the market and economy are heading, recovering from buyer fatigue, or simply waiting to find the right home at the right price, many Philadelphia buyers are no longer clamoring for homes the same way they did in 2016 and 2017," the article noted.
Compared with spring 2017, citywide home values remained flat in the 2018 spring season — typically the hottest market of the year. Meanwhile, the number of homes on the market in the second quarter fell to an all-time low — a trend that traditionally has pushed prices up.
Tax Policy and Government News
PlanPhilly Examines City Homeowner Tax-Aid Programs
PlanPhilly has provided a summary of the city’s suite of tax policy programs that assist lower-income homeowners:
Longtime Owner-Occupants Program stipulates that if a home’s value increases by over 300% during a single tax year, the owner cannot be taxed on the value above that mark.
Owner Occupied Payment Agreement gives eligible homeowners who have fallen behind on their property taxes an opportunity to enter into a payment plan.
Homestead Exemption shaves $40,000 off the assessed value of a house for local real estate tax purposes.
Low-Income Senior Citizen Tax Freeze allows the city to freeze the property tax bill of homeowners over the age of 65 who earn below $23,500 a year, or below $31,500 for a married couple.
Real Estate Tax Deferral allows an eligible homeowner to put off paying any year-over-year property tax increase of 15% or more until the house is sold. That deferred payment becomes a lien on the house that incurs a 2% interest rate.
Property Tax/Rent Rebate Program offers tiered tax or rent relief to those 65 and older, people 50 and older whose eligible spouses have died, and those with disabilities who are 18 or older.
Philadelphia Citizen Examines "The Abatement Debate"
In an installment of what The Philadelphia Citizen says will be "a deep-dive series into Philadelphia’s 10-year tax abatement," economist Kevin Gillen notes that 66% of houses purchased under the abatement from 2000 to 2008 are still owned by their original purchaser, compared to 70% of houses purchased during that time without the abatement.
Gillen notes, "At bare minimum, the numbers do at least indicate that there has been no major liquidation or ‘fire sale’ of abated properties once their abatement has expired. A full two-thirds remain occupied by their original buyers, even years after the tax benefits of owning these units (have) elapsed … this is also very close to the retention rate of all housing purchased in Philadelphia during the same period."
PICA: Philadelphia Tax Collections Up 11.3% In FY2018
The city collected $3.384 billion in General Fund tax revenue for FY2018, 11.3% increase in overall collections over FY2017, according to preliminary figures from the Pennsylvania Intergovernmental Cooperation Authority (PICA). Collections increased in every month except August and March compared to the same months in FY2017.
Increases in every tax category drove growth in June year-to-date collections: real estate taxes increased by 11.3%, compared to a 10.1% projected growth rate; realty transfer taxes increased by 37.2%, compared to a 26.6% projected growth rate; and the sales tax increased by 10.3%, compared to an 8.5% projected growth rate.
Coming in below projections were the total wage, earnings, and net profits tax, which increased 5.8%, compared to 6.3% projected growth; and the parking tax, which increased 1.1%, compared to projected growth of 2.0%.
Latest Stats From Pew Show Where States Get Their Money
In its most recent data analysis as part of its research on the fiscal health of all 50 states, The Pew Charitable Trusts found that taxes and federal funds together account for 80.9% of revenue for the 50 states.
Taxes are the largest revenue source in 45 states, including Pennsylvania (46.9%), while federal funds are greatest in five: Alaska, Louisiana, Mississippi, New Mexico, and Wyoming. An infographic displays a state-by-state breakdown showing each state’s revenue sources at a glance.
Economic and Employment News
National Economy Appears To Be Lifting Wages In Philadelphia
The effects of the strong national economy and falling unemployment rate are being seen in Philadelphia, where wage growth is currently outpacing the national average, higher-income households are growing, and the number of lower-income households is falling.
According to employer review site Glassdoor’s latest annual Local Pay Reports, Philadelphia saw the highest wage growth out of 10 of the largest U.S. cities in the last year. Philadelphia had the highest wage growth since July 2017 of the 10 largest cities at 2.8%, while the U.S. had 2.2% pay growth, the report found. Glassdoor attributed Philadelphia’s wage growth to a rise in senior-level hiring in the health care industry and an increase in overall demand for health care workers.
Citing newly released Labor Department figures, The New York Times reported that the unemployment rate for American workers without a high school diploma fell to 5.1% in July, the lowest since the government began collecting data on such workers in 1992. At the economy’s low point in the summer of 2009, the unemployment rate for high school dropouts hit 15.6%.
Census Bureau data show a changing income demographic in Philadelphia. From 2012 to 2016, high income households (annual income of $125,000 or more) grew by 20,000 households, or 44%; middle income households ($40,000-$124,999) grew by 10,000 or 4.9%, and low income households (less than $40,000) decreased by 31,000 households, or 9.9%.
Glassdoor report: glassdoor.com/research/local-pay-reports/philadelphia
NYT report: nytimes.com/2018/08/03/business/economy/july-jobs-report-2018.html
Manufacturing, Service Industries Continue Growth in July
Manufacturing continued to grow in the region in July, according to responses to the Manufacturing Business Outlook Survey conducted by the Federal Reserve Bank of Philadelphia, with new orders up for 45.7% of firms, down for 14.2%, and remaining the same for 33.9%. The number of employees increased for 24.1% of the companies, decreased for 7.4%, and was unchanged for 64.8%.
Looking ahead six months, 42.1% of the firms expected conditions to improve, 13.1% anticipated a downturn, and 32.8% predicted no change.
Business activity continued to expand in the region’s service sector in July, according to responses to the Nonmanufacturing Business Outlook Survey, with new orders up for 42.4% of firms, down for 10.9%, and remaining the same for 23.5%. The number of full-time permanent employees increased for 35.4% of the companies, decreased for 5.8%, and was unchanged for 55.6%.
Looking ahead six months, 60.1% of the firms expected conditions to improve, 18.6% anticipated a downturn, and 20.8% predicted no change.
More on the Manufacturing report: http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2018/bos0718
More on the Nonmanufacturing report: philadelphiafed.org/research-and-data/regional-economy/nonmanufacturing-business-outlook-survey/2018/nbos0718
SEPTA Sells Naming Rights Of AT&T Station To NRG
SEPTA is changing the name of AT&T Station, the southern terminus of the Broad Street subway, to NRG Station. The subway stop, which serves the stadium complex and handles about 1 million rider trips a year, previously was known as the Pattison Avenue station. The change officially takes effect August 14.
NRG Energy Inc., whose retail energy supply subsidiary is based in Philadelphia, agreed to pay the transit agency $5.25 million under a five-year deal and will pay for replacing signs, maps, and other expenses. SEPTA will get 85% of that, which is earmarked for its operating budget. The rest goes to Intersection, the company that represented SEPTA in negotiations over the naming rights.
PPA: Pay-By-App Parking Expanding To Metered Spots Citywide
The Philadelphia Parking Authority is expanding its pay-by-app parking to all metered street parking citywide. Motorists can use the meterUP app on their smart phones to pay for parking at any spot in the city that is regulated by kiosks and coin-operated meters.
The app allows users to add parking time remotely or cancel parking if they leave before the allotted time expires. The app is managed by Parkmobile LLC, which charges users 40 cents per transaction. PPA says the app has been downloaded 91,000 times since it debuted at the end of 2017.
City Winery Coming To Fashion District Of Philadelphia
City Winery, a New York-based chain of live-music clubs with wine bars and restaurant space, will occupy part of the Fashion District Philadelphia shopping and entertainment complex. The venue, with locations in six cities including New York, Chicago, and Atlanta, is among the tenants newly announced by PREIT and Macerich.
The developers also said that Fashion District will open all at once in September 2019. Macerich noted in a separate earnings statement that the project’s budget has grown to $420 million, up from $325 million. Leases have been signed for about 80% of the project’s rentable space and include: Leases announced to-date include: Polo Ralph Lauren, AMC Theatres, H&M, Forever 21, Zumiez, Asics, Zales, Guess, Columbia, Levi’s, Skechers, Francesca’s, Dallas BBQ, Burger Fi, Chickie’s & Pete’s, Pei Wei, Freshii, la Madeleine, Chick-fil-A and Oath Pizza.
Aramark Announces Plan To Reduce Single-Use Plastics
Aramark has announced an effort to phase out single-use plastics starting this September, with the goal of significantly reducing the company’s plastic use globally by 2022. The food services giant cited a survey it conducted in which 60% of respondents said they were concerned with plastic overuse.
The company wants to completely eliminate single-use stirrers and straws in national parks, higher education residential dining and many business client locations. It is also aiming for a 30% to 60% reduction in K-12 schools, sports venues and healthcare facilities.
Eds and Meds News
University City Science Center Names New CEO
The University City Science Center has named the former CEO of Safeguard Scientifics as its new leader. Stephen Zarrilli will begin his new role as president and CEO of the Science Center on October 1, taking over the job from Curtis M. Hess, the Science Center's senior vice president who served in an interim role following the departure of Stephen Tang in February.
Zarrilli has served on the Science Center’s board of directors since 2014. Tang is now CEO of medical device company OraSure.
New Owners To Add St. Christopher's Presence At Hahnemann
The new owners of Hahnemann University Hospital and St. Christopher’s Hospital for Children are planning to establish 50 to 100 pediatric care beds at Hahnemann in Center City, where they would also create a pediatric ambulatory care center, the Philadelphia Business Journal reported. Officials said the goal is to improve access for St. Christopher patients, not to increase competition with the city’s other pediatric hospital, Children’s Hospital of Philadelphia.
American Academic Health System (AAHS), which purchased Hahnemann and St. Christopher’s from Tenet Healthcare Corp. for $170 million in January, expects to invest $30 million over the next two to three years in physical plant improvements. AAHS and its Los Angeles-based parent, hospital management company Paladin Healthcare, have experience in turning around distressed hospitals in Los Angeles and Washington, D.C.
"The Rise Of The Rocky Steps" Coming August 7
As part of Parkway 100, the yearlong celebration of the Benjamin Franklin Parkway’s centenary, a free, two-part event is taking place August 7. The Rise of the Rocky Steps brings Steadicam inventor Garrett Brown and Rocky statue sculptor A. Thomas Schomberg to the Philadelphia Museum of Art, where they will discuss the Rocky film franchise with Greater Philadelphia Film Office executive director Sharon Pinkenson and Rocky Stories author Michael Vitez.
An 8:30 p.m. screening follows at Sister Cities Park of Before Hollywood: Philadelphia and the Birth of the Movies, which tells the story of Philadelphia as the birthplace of motion pictures. The film will be introduced by producer Carrie Rickey and director Andrew Ferrett. Bring your own lawn chairs and blankets; food and drinks will be available for purchase.