Office Sector News
Philadelphia ranks third in hunt for Amazon
Moody’s Analytics has ranked Philadelphia third behind only Austin and Atlanta as the best place for Amazon to locate, citing the city and region’s colleges and universities and transportation accessibility as major selling points.
“The downsides in Philadelphia,” the report notes, “are an inefficient tax structure and significant public sector pension problems. The state has its own fiscal problems, including a structural budget deficit. As a result, whether the city and state are able and willing to offer generous enough incentives remains to be seen. However, overall the upsides in Philly outweigh the downsides. Amazon would be coming to the city at exactly the right moment: A boom is under way but is not so far along that the city is now expensive.” (see story on incentive under Government News)
To read more, please go to bit.ly/2yrFII0.
Q3 Reports: CBD Slow Down
Slow leasing activity in Center City led to little change in vacancy rates for the third quarter of 2017, according to CBRE’s report this month. In the Philadelphia Central Business District (CBD), the largest transaction was Morgan Lewis’ renewal of 95,000 square feet at 10 Penn Center.
In its third quarter report, Newmark Knight Frank noted minimal activity as the co-working space explosion has slowed, following the opening of MakeOffices’ second Philadelphia location, 57,320 square feet at 1635 Market St. In addition, Comcast has not leased more space in this quarter, PNC, Wells Fargo and Verizon reduced their footprints and the only new tenants to enter the market were Freedom Pay and Vanguard.
JLL highlighted in its Q3 report the positive absorption in suburban markets, suggesting that the CBD slowdown could be an ebb in advance of the delivery of the Comcast Technology Center, in 2018.
To read the CBRE report, please go to bit.ly/2hCD4Wn.
To read the NKF report, please go to bit.ly/2yOevkj.
To read the JLL reports, please go to bit.ly/2kGpypG.
To read more about Make Office, please go to bit.ly/2ylQ8tX.
Stoltz Management of Bala Cynwyd has purchased 2300 Chestnut St. for $28.75 million. The building totals 103,905 square feet, of which 80,000 is office space and the remainder is basement storage leased to telecom companies.
To read more, please go to bit.ly/2yalkew.
Owners of 1760 Market St. Announce Intent To Sell
Stockton Real Estate Advisors and Alterra Property Group have put the 15-story, 126,689-square-foot, 1760 Market St. on the market just two years after buying it for $20 million.
Gemini Rosemont Realty is looking to sell 2000 Market St., a 29-story, 665,649-square-foot office building, while Equity Office Properties is seeking to sell 1600 Market, a 39-story, 760,000-square-foot office structure.
To read more, please go to bit.ly/2fOdRva.
Aramark Agrees To 2 Acquisitions Totaling $2.35B
Aramark Corp. will acquire two companies to bolster its facilities management offerings in two deals worth a combined $2.35 billion.
The food services firm is spending $1.35 billion on Avendra LLC, a hospitality procurement services provider, and $1 million for AmeriPride Services Inc., a uniform and linen rental and supply company.
To read more, please go to bit.ly/2zddMWb.
New Owner for Former Strawbridge & Clothier Building
A $96 million financing package is in place for developers Cohen Properties and Taconic Capital Advisors to purchase a portion of 801 Market Street. JLL Capital Markets secured the financing for the developers, who will buy the lower half of the building and rehab the 695,130 square foot office tower.
The purchase comes amid the Market East corridor’s extensive revival. In addition to PREIT’s $365 million redevelopment of the Gallery into the Fashion District of Philadelphia, construction on the $600 million East Market mixed-use development is well underway.
The 801 Market building opened in 1931 as a Strawbridge & Clothier department store. The office building is already occupied by Philadelphia Media Network and the General Services Administration.
To read more, please go to bit.ly/2fRdTme.
Municipal Court Divisions To Move to Market East, Arch St. Building Sold For Apartments
The Philadelphia County court’s probation and pretrial divisions are leaving 1401 Arch St., which will be converted to apartments. The First Judicial District of Pennsylvania departments will move to a 120,000-square-foot space at 714 Market St. by the end of 2018.
CBRE, which helped arrange the deal, said the 220,300-square-foot 1401 Arch St. building was acquired from Swiss pension-fund adviser AFIAA by Alterra Property Group. The 266,000-square-foot 714 Market St. building is owned by the Brooklyn-based Leser Group.
To read more, please go to bit.ly/2xnbUbY.
23rd & Arch Towers Asked to Make Revisions
The Civic Design Review committee has asked PMC Property Group to make revisions to their development proposal for RiverWalk on the Schuylkill at 60 North 23rd St. and 2301 JFK Blvd.
The project includes two 28-story apartment towers connected by a third-floor bridge, a 60,000 square-foot grocery store and another 12,000 square-foot retail space and an above ground parking garage.
To read more, please go to bit.ly/2xZ5aon.
Chinatown’s Eastern Tower Community Center Breaks Ground
After 16 years of design revisions and fundraising, Chinatown has broken ground on the Eastern Tower Community Center at 10th and Vine Streets.
The $75 million project will bring 150 market-rate apartments to the site, along with office, commercial, retail and public space. The 20-story building will also include 18,600 square feet of office space, a 17,000-square-foot community center and 8,600 square feet of commercial and retail space.
The project was first announced in 2001. John Chin of PCDC and Ahsan Masratullah of JNA Capital worked to garner federal, state, and city funding as well as private donations from equity groups and the Chinatown community.
To read more, please go to bit.ly/2kz8vG0.
Philadelphia Ranks Third In Survey of Startup Cities
Philadelphia scored the No. 3 spot on a yearly ranking of the country’s 25 top startup cities, behind only Boston and the Bay Area.
The Innovation That Matters 2017 report, released October 12, was compiled by the U.S. Chamber of Commerce Foundation and Washington D.C.-based incubator 1776. The report tracks a “combination of new and updated economic data and an online survey of 413 startup founders and leaders” done by London-based Brunswick Insight.
Philadelphia climbed five notches in the rankings from last year’s report. Startup PHL, Comcast, Drexel University and Benjamin's Desk all get mentions in the report.
To read the report, please go to bit.ly/2g5MGJ2.
City Sees Slight Decline in Unemployment
Philadelphia’s non-seasonally adjusted unemployment rate was 6.7% in August, 0.6% lower than the previous month and 0.8% lower than last August, according to the August Economic Report from the Office of the City Controller released October 2. The city’s civilian labor force increased by 15,800 year-over-year.
The report also found that Philadelphia’s housing market continues to show strength as total sales in August were up almost 6% over last year. Additionally, the current month’s total is up 42% over August 2013.
To read the report, please go to bit.ly/2xJqpfk.
Hospitality and Tourism News
Independence Visitor Center hits visitor milestone amid multimillion-dollar upgrade
The Independence Visitor Center is hitting record visitation figures as it is undergoes its first major renovation since opening in 2001.
A record 2.5 million people came through its doors in 2016, and 2017 is on track to exceed that figure. Year-to-date, the center has seen over 2.19 million visitors, a 9.5% increase over the same period last year, according to data provided to the Philadelphia Business Journal.
The visitor center’s $15 million, multi-year renovation includes an expanded second floor, outdoor terrace, and touchscreen digital displays.
To read more, please go to bit.ly/2yD8Mho.
Eds and Meds News
IBC, Tower Health Reach Terms on 3-Year Contract
Independence Blue Cross and Tower Health have reached terms on a new three-year contract. The deal, which took effect October 6, gives Independence members in-network access to the five Philadelphia-area hospitals Reading-based Tower Health acquired from Community Health Systems Inc. of Tennessee.
The five medical centers that are now back in IBC’s provider network are: Brandywine, Chestnut Hill, Jennersville, Phoenixville, and Pottstown hospitals. An impasse could have affected 120,000 Independence Blue Cross members in the Philadelphia area.
To read more, please go to bit.ly/2hZOkjj. To read the companies’ joint statement, please go to bit.ly/2g5qBxC.
Residential Market News
Curtis building secures $173M loan to finish luxury apartments
Keystone Property Group has secured $173.25 million in new financing to buy out previous partners and to complete construction of luxury apartments on the upper floors of the Curtis building; $30 million is earmarked for constructing 63 high-end residential units and future office and retail space, with the balance retiring existing debt. JLL's Capital Markets team secured the loan.
Built in the early 20th century for the Curtis Publishing Co., the 12-story, 912,000-square-foot building at 6th and Walnut Streets is mostly office space, including co-working firm Benjamin's Desk and Philadelphia magazine. Keystone Property Group purchased the building for $125 million in 2014.
To read more, please go to bit.ly/2fZJ0YY.
Apartment Rental Rates Remain Flat From Previous Month
Apartment rental rates in Philadelphia remained flat over the past month but increased 1.4% year-over-year, according to the latest report from Apartment List.
Current median rents in Philadelphia stand at $970 for a one-bedroom apartment and $1,170 for a two-bedroom. Philadelphia's year-over-year rent growth lags the state average of 1.6% and the national average of 2.8%.
As rents have risen slightly in Philadelphia, other large cities have seen rents grow more quickly, including Seattle (+4.5%), Baltimore (+2.7%) and Chicago (+1.8%).
To read the report, please go to bit.ly/2knPBlf.
The Amazon Effect, From Corporate Parks To City Neighborhoods
A growing number of buildings, in unassuming locations from the Bridesburg neighborhood in Philadelphia to suburban spots in King of Prussia and Langhorne, are part of Amazon’s next frontier to get online orders delivered even faster.
The service, called Amazon Flex, leases buildings smaller than its typical giant warehouse-distribution centers that are located in office and industrial parks close to densely populated areas, the Philadelphia Business Journal reported October 11. The service is part of a growing on-demand economy in which people can sign up for a shift to make Amazon Prime deliveries to customers around the region who want orders on their doorstep within a couple of hours.
By extending its reach into the office park down the road or neighborhood around the block, and through significant financial incentives from communities large and small, the e-commerce giant is becoming a force not only in retailing but as a user of space and an employer throughout the region.
To read more, please go to bit.ly/2y9TgIV.
Suburban Station To Undergo First Upgrade in 15 Years
Philadelphia’s busiest transit station, with roughly 100,000 daily commuters, is undergoing its first upgrade in 15 years. Over the next several months at Suburban Station, real-estate services firm AthenianRazak will roll out mostly new food venues, along with some apparel shops and services in the $3.75 million first phase of the project.
To read more, please go to bit.ly/2hZaa6y.
Amtrak postpones search for 30th Street developer amid Amazon HQ pursuit
Amtrak has postponed its search for a developer to remake the area around 30th Street Station, amid signals that city officials will pitch an adjacent swath to Amazon for its planned second headquarters.
Amtrak informed potential “request for qualifications” applicants that the search would be delayed until early 2018, The Philadelphia Inquirer reported October 2.
Amtrak issued a request in August seeking a master developer for the first phases of a $6.5 billion redevelopment plan for 30th Street. The area is adjacent to the site of the proposed Schuylkill Yards redevelopment project, which city officials are expected to propose to Amazon as a headquarters location.
To read more, please go to bit.ly/2xZ6urH.
Homeless Service Center Coming To Suburban Station
Construction is underway in Suburban Station for a $1.4 million service center for the city’s homeless. The 11,000-square-foot facility is scheduled to be finished by the end of the year.
SEPTA and the city evenly are splitting the costs of the cleaning and reconstruction needed in the new Hub of Hope facility, which was last used about 15 years ago as a police substation. The facility will provide medical and psychiatric attention, legal services, showers, and laundry. Project HOME is working to raise $500,000 to purchase furniture and appliances for the space.
To read more, please go to bit.ly/2kV3XtM.
Aer Lingus Announces Dublin Non-Stops Between PHL and Dublin
Ireland's flag carrier airline will begin year-round nonstop flights in March between Philadelphia International Airport and Dublin. Aer Lingus COO Mike Rutter said the flights from PHL will help grow its trans-Atlantic network and strengthen Dublin Airport as a gateway to North America.
To read more, please go to bit.ly/2xRo1m1.
City Council Boosts University City KOZs Ahead Of Amazon Pitch
City Council’s Finance Committee on October 10 supported a bill that would renew 12 Keystone Opportunity Zone (KOZ) designations for University City properties. The bill also allows the city to seek seven more KOZ designations in the same area, PlanPhilly reported October 12.
City officials said the legislation, expected to be approved by the full Council, would enhance the city’s pitch for Amazon’s second headquarters.
The 12 sites up for KOZ renewal largely overlap with the Schuylkill Yards project and the Market Street spine of University City’s office district. The seven proposed new sites would address a few spots on the map where KOZ-related tax breaks are not already available.
To read more, please go to bit.ly/2gCdiSi.
Editorial: Why change only for Amazon?
City leaders should work to create a more friendly business environment to attract and retain growing businesses, regardless of whether Amazon chooses Philadelphia, Philadelphia Business Journal editor-in-chief Craig Ey wrote in an October 5 editorial.
Ey noted that while Amazon HQ2 would be transformational for the regional economy, “there’s another way to get 50,000 jobs and a tremendous economic boost: We can help our own companies grow and lure new ones by becoming an unabashedly pro-business city and region that embraces pro-growth policies.”
He cited Bureau of Labor Statistics figures noting that the Atlanta area added 98,000 new jobs to its civilian labor force between August 2016 and August 2017, while Greater Philadelphia added less than 1,000.
To read more, please go to bit.ly/2y6i6Hd.
More Than 1,000 police officers moved to suburbs since rule change
More than 1,000 Philadelphia police officers have moved out of the city since the department’s residency rules were softened five years ago, according to a payroll data analysis reported October 6 by The Philadelphia Inquirer and the Philadelphia Daily News.
The figure represents about 15% of the nearly 6,000 eligible officers, a tally likely to grow each year. Next year, an additional 200 will become eligible.
In 2010, union negotiators won a battle to end the residency requirement for members with at least five years on the job. The rule went into effect five years ago.
To read more, please go to bit.ly/2gj8otv.
PICA: September Tax Collections Outpace Last Year
The City of Philadelphia collected $190.1 million in General Fund tax revenue in September 2017, the third month of FY2018, compared to $166.5 million in September 2016, an increase of 14.2%, according to the Pennsylvania Intergovernmental Cooperation Authority (PICA).
Strong collections in September resulted in year-to-date growth in all major tax categories thus far in the fiscal year. Through September, the business income and receipts tax (BIRT) increased by 55.6%, compared to a projected growth of 12.6%; the real estate tax increased by 3.5%, compared to a projected growth of 11.7%; the realty transfer tax increased by 41.4%, compared to a projected 4.3% growth rate; and the City sales tax collections increased by 8.7%, compared to a projected growth of 5.6%.
To read the report, please go to bit.ly/2zecxWu.
Commission gives preliminary OK for 100 digital ad kiosks
The Philadelphia Art Commission has granted conceptual approval to a plan for advertising kiosks, called Links, on city sidewalks. PlanPhilly said the kiosks would feature LED screens on both sides with ads, Android tablets for information and for phone and video calls, emergency call buttons and USB ports for charging, and they would serve as public Wi-Fi hotspots.
The proposal was presented by the city's Office of Transportation and Infrastructure Systems in conjunction with Intersection, an advertising firm that has a deal with the city to build and maintain around 600 digital SEPTA bus shelters.
Intersection will cover all installation costs for the Links. The revenue share for the city on the advertising is 50% after capital recovery, with a minimum of $450,000 annually.
To read more, please go to bit.ly/2yMRgDj.
Tenant Protection Proposals Introduced in City Council
Two members of Philadelphia City Council have introduced proposals aimed at providing more protection for tenants.
Democratic Majority Leader Bobby Henon’s bill would require landlords to provide their rental license information as part of a lease with a tenant. Councilman Curtis Jones’ bill would prevent landlords from evicting tenants upon the expiration of a lease without cause.
To read more, please go to bit.ly/2yTjSuu.
Parks and Open Space News
LIVE@LUNCH Concert Series Wraps For The Season
The popular lunchtime concert draws to a close with the last PNC Presents Live@Lunch of the year on Wednesday, October 18, noon to 1:30 p.m. It features local singer-songwriters performing familiar tunes, along with their own original scores.
For more information, please go to dilworthpark.org.
Fall Into The Season At John F. Collins Park Pop-Up Wine Garden
The Center City District Foundation (CCDF) and Chaddsford Winery host a wine garden at John F. Collins Park on Friday, October 20, 4 p.m. to 9 p.m. to offer guests the chance to sip wine and hard cider in the autumn splendor of Center City.
For more information, please go to johnfcollinspark.org.
100 Volunteers From Timberland Volunteer at Rail Park
More than 100 volunteers from Timberland visited the Rail Park on October 13 for a daylong service project. In partnership with the Center City District (CCD) and Center City District Foundation (CCDF), the volunteers assisted with the installation of approximately 25,000 square feet of landscaping.
CCD, which is overseeing fundraising and construction, has completed nearly all of the structural renovation of the former train bridges and has begun to install new landscaping.
In addition to State, City and Foundation funding, several major companies including Timberland have made contributions to the CCDF for the renovation.
For more information, please go to bit.ly/2yWsTTv.
Center City District Survey
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For 26 years, the Center City District has been making downtown Philadelphia clean, safe and attractive with lighting, signs and landscaping. Ten years ago we began renovating and programming Center City parks, including Dilworth Park and Sister Cities Park. We produce Restaurant Week and publish key market research on significant issues that impact Center City.
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