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October 19, 2015 • Volume 18 • Issue 21 • A bi-weekly email news service

Office Sector News
Rents in Market East Closing Gap With Market West
Philadelphia’s central business district (CBD) experienced a 91.1% occupancy rate in the third quarter of 2015, with 47,832 square feet (SF) absorbed and asking rents averaging $27.70, up 1.9% over the previous quarter, according to JLL’s Office Insight, Philadelphia, Q3 2015. Suburban Philadelphia’s vacancy rate was 15.7%, with 490,224 SF of absorption and an average rent of $24.67, down 0.6% from the previous quarter.

Two years ago, Class A asking rents were 16% higher in Market West than in Market East. A year later, the gap was 14.1% and currently is only 7.4%, the report noted.

Of the 2,224,864 SF of office space under construction in the CBD, 79.6% is preleased.

To read the report, please go to bit.ly/1Ng3x5h [PDF].

In a separate report using slightly different geography, Newmark Grubb Knight Frank counts the occupancy rate in the downtown as 88.5% in the third quarter of 2015, with asking rents averaging $26.92.

The report notes the sales of 2000 Market Street for $111,583,879, or $168 per SF; and the Public Ledger Building for $58 million, or $109 per SF.

To read the report, please go to bit.ly/1j80wK3 [PDF].

Development News
Multifamily Leads Development
Multifamily projects continue to dominate development in Philadelphia’s central business district (CBD), with almost 6,000 units scheduled to be completed in the next three years, plus the possibility of 1,500 additional units, according to the JLL Chart of the Week for October 12. To see CCD/CPDC’s February 2015 projection of how supply aligns with demand, please go to centercityphila.org/docs/CCR15_housing.pdf [PDF].

Overall, there are more than 18 million square feet under construction or proposed in the CBD. The largest project is the Comcast Innovation and Technology Center at 18th and Arch Streets, to be completed in fall 2017.

To view the Chart of the Week, please go to bit.ly/1MnTEDp.

Council Passes Bill Allowing More Density
City Council on October 15 passed 15-0 Councilman Mark Squilla’s Bill #140519-AAA, which adapts the Zoning Code to allow additional height and density in some commercial and residential properties in some parts of Center City, The Philadelphia Inquirer reported.

Among the changes, the bill would reduce the minimum lot size for buildings in the highest-density, single-family category.

Squilla introduced the bill last year at the request of the Building Industry Association.

To read the article, please go to bit.ly/1LQLHZo. To read Bill #140519-AAA, please go to bit.ly/1iofgnJ.

Developer to Build Office Tower in University City
Developer Scott Mazo last week began demolition of the Pep Boys store at 41st and Market Streets in preparation for next spring’s groundbreaking for his forthcoming $70 million office building, 3.0 University Place, The Philadelphia Inquirer reported on October 12. The 190,000-square-foot, five-story structure will boast state-of-the-art features such as photoreactive glass, and the developer will seek LEED Platinum certification for the building.

Mazo's 2.0 University Place, which opened in 2013 at 41st Street and Powelton Avenue, is now 90% leased, the article noted.

To read the article, please go to bit.ly/1hCKyGD.

Residential Market News
Toll Brothers Pursuing Society Hill Playhouse Development
Toll Brothers is negotiating with neighborhood groups over a proposed development of the Society Hill Playhouse, where the builders would like to create 17 condominiums and 18 parking spaces, PlanPhilly reported.

The development needs a zoning variance, and if City Council approves it, Toll Brothers will complete the project in approximately 2½ years.

The Playhouse has not yet announced its closing, the article noted.

To read the article, please go to bit.ly/1hsYXVU.

Economic News
Manufacturing Weakens in October
The Federal Reserve Bank of Philadelphia’s report on manufacturing conditions in the region indicated continued weakening, with new orders down for more than one-third (36.0%) of the respondents to October’s Manufacturing Business Outlook Survey, while 25.4% reported an increase, and 33.7% indicated no change.

The number of employees increased for 13.4% of respondents, decreased for 15.0%, and remained the same for more than two-thirds (68.7%).

Looking ahead six months, a majority of the firms (52.9%) expected business to improve, while 16.2% anticipated a downturn, and 22.3% foresaw no change.

To read the report, please go to bit.ly/1LP5WQO.

Eds and Meds News
Aria Health to Merge With Jefferson
Officials from Jefferson and Aria Health signed a letter of intent on October 6 that initiates the process for Aria to become part of Jefferson Health, which would create the biggest health system in the five-county metropolitan area, the Philadelphia Business Journal reported.

Jefferson Health was created in May when Thomas Jefferson University Hospitals merged with Abington Health of Montgomery County.

The Jefferson Health board will have up to 29 members, with Jefferson, Abington and Aria equally represented. The merger is expected to be completed in spring 2016.

To read the article, please go to bit.ly/1L6ViFy. To read the press release, please go to bit.ly/1N0wUby.

Benjamin’s Desk to Operate Penn’s New Center
Benjamin's Desk, the coworking space at 1701 Walnut Street, will be the operator and manager of member services at the University of Pennsylvania’s new Pennovation Center, a 58,000-square-foot facility expected to open next summer at Pennovation Works, the Philadelphia Business Journal reported on October 8.

Benjamin's Desk also will coordinate efforts on commercialization, workshops and networking events and collaborate with PCI Ventures to incubate new companies generated at the Center.

To read the article, please go to bit.ly/1WPSJzc.

New City/School District Agreement
The Philadelphia School Reform Commission (SRC), the School District of Philadelphia, and City Council signed an agreement on October 7 providing for the School District to deliver quarterly school management reports and briefings to Council on the District's finances, and allowing Council to offer input on the District's five-year financial plans, The Philadelphia Inquirer reported.

Council had agreed to give $70 million in new money to the schools but had attached strings to the final portion of it, $25 million, the article noted, bit.ly/1K78J6R.

On October 14, City Council held a hearing to address School District issues and appeared ready to release the $25 million, bit.ly/1OxzPvA.

Temple Renames Medical School to Honor Lewis Katz
Temple University on October 13 dedicated and renamed its medical school the Lewis Katz School of Medicine at Temple University in honor of the late businessman and philanthropist who last year made a $25 million gift to Temple, the largest single donation in the university’s history, the Philadelphia Business Journal reported.

A co-owner of The Philadelphia Inquirer and Philadelphia Daily News, Katz died in a plane crash shortly after the gift to Temple was announced. A portrait of Katz by Italian artist Francesco Mernini was dedicated at the ceremony and is displayed in the school’s lobby.

To read the article, please go to bit.ly/1k2oebn.

Labor News
Service Employees and Building Managers Reach Agreement
The union representing 2,800 custodians, 32BJ Service Employees International Union, and the Building Operators Labor Relations Division of the Building Owners and Managers Association of Philadelphia (BOMA), representing managers of 168 Philadelphia-area office properties, on October 15 reached agreement on a four-year contract; a ratification vote is scheduled for Wednesday, the Philadelphia Business Journal reported.

The union voted on October 13 to authorize a strike, but agreement was reached shortly before the current contract expired. The new pay scale was not disclosed, but union leaders indicated it was a fair increase.

To read the article, please go to bit.ly/1LynkO2.

Gaming News
PCPC Approves Plan for Second Casino
The Philadelphia City Planning Commission (PCPC) on October 6 voted to approve a master plan for the $500 million Live! Hotel & Casino in South Philadelphia, contingent on City Council passing the needed zoning changes, The Philadelphia Inquirer reported.

The plans created by Stadium Casino L.L.C. call for a 19-story hotel tower attached to a seven-story parking structure, with gaming, dining, and entertainment on the complex's ground floor. The parking structure also would feature a landscaped “green” roof.

The Pennsylvania Supreme Court is reviewing briefs in an appeal filed by the rival competing groups for the gaming license Stadium Casino was granted in November. The appellants allege that Stadium Casino's interest in Parx Casino should have disqualified it from winning another license, the article noted.

To read the article, please go to bit.ly/1OlXAFo.

Hospitality News
Democratic Convention Planners Expect to Spend $50 Million
The Reverend Leah Daughtry, CEO of the 2016 Democratic National Convention Committee (DNCC), on October 15 announced that the committee expects to spend about $50 million in Philadelphia for the convention that will be held during the week of July 25, 2016. Organizers want 35% of the spending to go to businesses owned by women, minorities, veterans and members of the LGBT community, Newsworks reported.

On October 27, the first of a series of webinars, Get Involved: How to Bid an RFP for the 2016 Democratic National Convention, will be presented. There also will be a series of outreach forums to educate regional business owners about Convention opportunities, with the first being held in Philadelphia on November 16.

To read the article, please go to bit.ly/1LSUIL4.

To view the vendor form, please go to bit.ly/1R5eNkA.

Transportation News
US Airways Merger with American Completed
US Airways’ final flight landed early Saturday morning at Philadelphia International Airport (PHL) after a round-trip via Charlotte, Phoenix and San Francisco, and the airline has now completely merged with American, The Philadelphia Inquirer reported.

With the $17 billion merger completed, check-in kiosks, ticket counters, and gates that had carried the US Airways name have been renamed American and the website and app for ticket purchases will redirect customers to the American equivalents. Some planes will still carry the US Airways name through the end of 2016.

American will staff a 24-hour center with 1,000 employees to help with any customer questions or concerns through October 27.

To read the article, please go to bit.ly/1VWReSU.

PennDOT Announces Closures
I-676 will be closed at night in both directions between the I-76 and Broad Street interchanges tonight, Monday, October 19, through Thursday, October 22, from 11:00 p.m. to 5:00 a.m. for overhead bridge construction, part of the four-year, $64.8 million project to replace seven structurally deficient bridges over I-676 between 22nd Street and 18th Street, and to make landscaping and streetscape improvements above the expressway.

Also, on Saturday, October 24, from 8:00 a.m. to 2:00 p.m., the I-76 west off-ramp at 30th Street/Market Street (Exit 345) will be closed and detoured.

For more information and detours, please go to 511PA.com or penndot.gov.

Parks and Open Space News
Activities at CCD Parks
This week, OctoberFest presented by Saul Ewing will fill Dilworth Park from Wednesday, October 21, through Sunday, October 25, with games, vendors, DJs and live music to accompany the 21+ Saultoberfest Beer Garden by Rosa Blanca Café.

A variety of other activities are ongoing at CCD’s four parks. For complete information, please go to ccdparks.org.

Government News
Police Commissioner Ramsey to Retire
Philadelphia Police Commissioner Charles H. Ramsey announced on October 14 that he will retire at the end of this year, The Philadelphia Inquirer reported. Ramsey has held the job since 2008; his last day will be January 7, 2016. Ramsey indicated that the next mayor should be able to choose a new commissioner, the article noted.

Current First Deputy Police Commissioner Richard Ross, Jr. was mentioned as one likely replacement.

To read the article, please go to bit.ly/1OCiGj0.

Executive Turnover at the PRPA
Executive Director James T. "Jamie" McDermott, Jr., announced that he will retire in April after 25 years at the Philadelphia Regional Port Authority (PRPA), while the Authority's second in command, Senior Deputy Executive Director Robert C. Blackburn, left the PRPA, effective October 12, The Philadelphia Inquirer reported.

Governor Tom Wolf earlier this year appointed a new PRPA board chairman, Gerard H. Sweeney, and six other board members, which together represent a majority on the 11-member board.

The PRPA is in discussions about developing 200 acres at the Navy Yard for the first major Philadelphia port expansion in 50 years, the article noted.

To read the article, please go to bit.ly/1Prx8ei.

Program Would Score City’s Performance
Boston’s City Hall uses a mapping app, Waze, to manage public works and traffic, as well as other matters such as the diversity of the City’s employees, and now wants to add data on crime, housing for veterans and Wi-Fi availability and turn them into a single numerical score intended to reflect the city’s overall performance, The New York Times reported on October 8.

The expanded program, called CityScore, would require additional data gathering from various agencies, but would give cities a quick measure of how well government is functioning.

To read the article, please go to nyti.ms/1R7ama0.

Startup PHL Announces Grants
Startup PHL, an initiative of the Commerce Department, PIDC, and First Round Capital to provide funding for early-stage companies and to support the startup community, has announced six new recipients of grants, Mayor Michael A. Nutter and Deputy Mayor for Economic Development Alan Greenberger announced on October 8.

Among the grants was $15,000 to the Corzo Center for the Creative Economy at the University of the Arts, which in January will partner with the Philadelphia Free Library to offer an interactive program for those considering a business based in the creative economy. Participants will also receive two hours of one-on-one consulting and the opportunity to apply for seed grants.

To view all the grants, please see the Mayor’s press release at bit.ly/1LSJJBr.

Upcoming Events
CPDC Young Professionals: Focus on the Viaduct Rail Park
On Wednesday, October 28, from 5:30 p.m. to 7:00 p.m., at
Brick and Mortar, 315 North 12th Street, join other young professionals at CPDC-member firms to hear about development plans for the Viaduct Rail Park from Michael Garden, Friends of the Rail Park Board Member and Space & Company real estate professional; and Paul R. Levy, Executive Director of the CPDC. Learn about the first elevated phase, which the Center City District is constructing, and the broader vision for a continuous three-mile, above- and below-ground linear park and recreation path. The timing for construction and volunteer opportunities with Friends of the Rail Park also will be discussed.

Space is limited, so please RSVP to dallen@centercityphila.org by Noon, Friday, October 23. To attend you must be an employee of a CPDC member firm. (View list of firms here: centercityphila.org/about/CPDCMembers.php).

Last Meeting on Love Park Redesign
Philadelphia Parks & Recreation and the Fairmount Park Conservancy will hold a final public meeting for the redesign of LOVE Park/JFK Plaza on Monday, October 26, at 5:30 p.m., in the Skyline Room of the Free Library of Philadelphia, 1901 Benjamin Franklin Parkway.

Construction is expected to begin in spring 2016.

To see the final plan, please go to 1.usa.gov/1hEIL3Y [PDF].

Election Day
Election Day in Philadelphia will be Tuesday, November 3, with polls open from 7:00 a.m. to 8:00 p.m. The candidates for mayor are Jim Kenney, Democrat; Melissa Murray Bailey, Republican; James Foster, Independent; Boris Kindij, Independent; and Osborne Hart, Socialist Workers Party.

All 17 city council seats—seven at-large and 10 districts—are up for election. In addition, the ballot will have a City bond question and two other questions.

The questions will determine if the City of Philadelphia should borrow $155,965,000 for capital purposes; create an Office of Lesbian, Gay, Bisexual and Transgender (LGBT) Affairs, headed by a Director of LGBT Affairs; and create a new Department of Planning and Development, headed by a Cabinet-level Director, to oversee the City's planning, zoning, and development.

For complete information on the election, please visit the Committee of Seventy’s website at bit.ly/1jxbAkC.

Play Space Design Competition
Registration will remain open until Monday, November 30, for the How We Play design competition hosted by the Community Design Collaborative and Delaware Valley Association for the Education of Young Children (DVAEYC).

The competition is for interdisciplinary design that promotes innovative outdoor play spaces for Philadelphia and other cities at a public school, library, or recreation center. Multidisciplinary, integrated teams must have at least one licensed architect, landscape architect, or civil engineer on the team.

For details on the competition, please go to bit.ly/1G7J7vT.

To register, please go to cdesignc.org/playspace/participate.