CBD Class A Rental Trends Strong in 2016
At the end of 2016, the average rental rate for the Philadelphia CBD was $29.09/sf, a 4.6% increase from the previous year's $27.80/sf, with submarkets University City and Market Street East showing Class A rental rates of $44.09/sf and $30.36/sf, respectively, according to SSH Real Estate's 2016 Year-End Greater Philadelphia Office Market Report and Outlook. SSH counts the year's end occupancy rate in the CBD, including University City, at 89.97%, down just slightly from 2015's 90.21%.
In suburban Philadelphia, the average rent at year's end was $25.55/sf, a 2.8% increase over the previous year, while the occupancy rate for Class A space rose from 88.11% in 2015 to 89.95% in 2016.
Highlights of the year in the CBD include the completion of the 47-story, mixed-use FMC Tower and Aramark's new lease for 300,000 sf at the redeveloped 2400 Market Street.
To read the report, please go to bit.ly/2jIjr1O [PDF].
Pennoni Moves Headquarters into Center City
Pennoni, the engineering and design consulting firm, announced on January 16 the expansion and relocation of its corporate headquarters from 3001 Market Street to a newly renovated space at 1900 Market Street, scheduled to take place in March. The move from University City follows the company’s celebration of its 50th anniversary.
To read the announcement, please go to bit.ly/2jRBkJ7.
Influx of New Office Space in CBD
In 2016, 891,000 sf of new office space became available in the central business district (CBD) at FMC Tower and 1100 Ludlow, plus new space at the Navy Yard, of which 73% is leased, leaving approximately 240,000 sf vacant, according to JLL’s Chart of the Week for January 16. Currently, 1 million sf is under construction, with 600,000 sf unleased in these projects: 3675 Market, 2400 Market and One Franklin Tower. Based on these projects, as well as the proposed development on the 1300 block of Market Street, the report notes that Philadelphia will need a sharp uptick in leasing to fill this large expansion of office space.
To view the chart, please go to bit.ly/1MnTEDp.
Wanamaker Building Sold
Dallas-based TIER REIT has sold most of its stake in the Wanamaker Building at 13th and Market Streets to Rubenstein Partners for about $114 million, The Philadelphia Inquirer reported on January 18.
Amerimar Enterprises, which has an operating interest in the property, will retain its stake, the article noted.
To read the article, please go to bit.ly/2k9sDZU.
Mixed-Use Development Proposed at Broad and Spring Garden
Parkway Corporation, in partnership with the New York-based Nightingale Group, has announced plans to develop a $300 million mixed-use project at the corner of Broad and Spring Garden Streets, currently a surface parking lot, the Philadelphia Business Journal reported on January 9.
The development would include two structures, a residential tower with 144 apartments and 87,000 sf of retail space, and an office tower offering 586,000 sf of space. A park with outdoor dining offerings will link the two buildings.
BLT Architects has designed the $280 million project.
To read the article, please go to bit.ly/2js3idp.
Clemens to Build New Tower at East Market
National Real Estate Development (NRED) has engaged Clemens Construction Company to build a 240-unit luxury apartment tower at 1199 Ludlow Street, scheduled to break ground in March with substantial completion expected in summer 2018, Clemens announced on January 12.
The new tower will occupy the northwest corner of the site at Market Street, adjacent to the tower already underway on the southeast corner, and will be built atop 160,000 sf of retail space and underground parking.
BLT Architects of Philadelphia and Morris Adjmi of New York will design the building, which will add upper-floor density and night-time activity on the street and include a third-floor green roof, movie theater and outdoor pool.
To read the Clemens announcement, please go to bit.ly/2iXq5kd.
PCPC Approves Zoning Changes for Schuylkill Yards
The Philadelphia City Planning Commission (PCPC) has approved zoning changes for the Schuylkill Yards development west of 30th Street Station, which is a joint project of Brandywine Realty Trust and Drexel University, The Philadelphia Inquirer reported on January 17.
One measure passed would change the zoning of the area occupied by the old Bulletin newspaper building and its parking lot, from industrial to high-density commercial-mixed-use. Another establishes a new zoning overlay for the entire Schuylkill Yards development site.
To read the article and see a rendering, please go to bit.ly/2iURj7P.
Conditional Permit for Fifth Street Development
Alterra Property Group has received a conditional zoning permit that allows demolition of the Acme Market on Fifth Street between Spruce and Pine Streets and construction of a 53-foot-high building with 65 residential units on the second through fifth floors, and 43 underground parking spaces, The Philadelphia Inquirer reported on January 17.
The Acme will close when its lease expires in about two years, the article noted. The project will be reviewed by the Philadelphia Historical Commission as it is in the Society Hill Historic District. The Society Hill Civic Association has expressed strong concerns about the potential loss of the only supermarket in that neighborhood.
To read the article, please go to bit.ly/2jxElP3.
No Adverse Impact When Tax Abatements Expire
The expiration of 10-year tax abatements has no appreciable effect on the value of those properties, based on a study conducted by Kevin Gillen, senior research fellow at Drexel University's Lindy Institute for Urban Innovation, as reported by The Philadelphia Inquirer on January 16.
Gillen found that 58% of the units with expired abatements remained with their original owners and the rate of sales among units with expired abatements was only slightly higher than the sales rate of housing citywide.
To read the article, please go to bit.ly/2iPIfRr.
Apartment Market Becoming More Competitive
Vacancy increased slightly in Class A apartments in the City of Philadelphia, from 2.8% one year ago to 3.6%, in the fourth quarter of 2016, according to Delta Associates’ Philadelphia Class A Apartment Market Report, Fourth Quarter 2016.
Market conditions in the fourth quarter pointed to a more competitive environment in the months ahead as rent growth was near the long-term average while vacancy rates increased slightly metro-wide. The pipeline of likely deliveries over the next 36 months in the city is still high, but is beginning to decline from earlier in 2016, as some projects were delayed. However, more apartments were filled in 2016 (1,350 units) than in 2015 (958).
In the near-term, vacancy will be higher in three years than it is today while rent growth is expected to remain below the long-term average as substantial new product comes online, the report predicted.
Record Crowds in December for Dilworth Park’s Expanded Activities
Dilworth Park at City Hall welcomed record-breaking weekend crowds during December when the park, now in its third winter season, hosted the Rothman Institute Ice Rink, Rothman Cabin, the City’s Philly Holiday Tree, the Made in Philadelphia Holiday Market and the park’s newest attraction, America’s Garden Capital Maze. An average of 36,000 people each day passed through the park during December, with crowds on weekends surpassing 37,500 visitors daily, equaling peak weekday crowds of July, when Philadelphia hosted the Democratic National Convention.
The number of skaters enjoying the Rothman Institute Ice Rink by December’s end exceeded last year’s season total of 47,000 skaters.
America’s Garden Capital Maze, made possible by the William Penn Foundation, debuted this year on the Greenfield Lawn on the south end of Dilworth Park and was enjoyed by an average of 6,000 people per day on the weekends.
The Rothman Rink, Cabin and America’s Garden Capital Maze will remain open through February 26.
The Winter Season at Dilworth Park is presented by Rothman Institute, William Penn Foundation and through generous support from Subaru, Capital One, The Philadelphia Orchestra, Temple University and 6abc. For more information on the continuing activities at Dilworth Park, please go to dilworthpark.org.
Philadelphia Can Absorb More Hotel Rooms
Across the U.S., average daily rate (ADR) is expected to grow by 3.3% in 2017, with greater opportunity in markets where there has been significant investment in infrastructure or private capital projects that broaden the attractions for tourists, convention goers or business travelers, while the greater risk will be in markets facing oversupply, according to CBRE's United States Real Estate Market Outlook 2017.
Philadelphia is one of a handful of 60 cities that CBRE lists as having an undersupply of hotel rooms, while New York, Washington, D.C., and Boston all are oversupplied, with Seattle leading all cities in oversupply, according to the report.
The report suggests that undersupplied markets are ripe for dividend growth and potential appreciation. To read the report, please go to researchgateway.cbre.com.
Philadelphia’s challenge, however, remains that ADR is not high enough to support new construction without forms of public subsidy.
New Appointment for the SRC
Mayor Jim Kenney has named former Lower Merion School District Superintendent Christopher McGinley to the Philadelphia School Reform Commission (SRC). He will take the seat vacated by the departure of Sylvia Simms.
McGinley becomes the fourth member of the five-member panel. The fifth seat is vacant.
To read the article, please go to bit.ly/2iK188b.
Barnes Foundation to Expand
The Barnes Foundation this month will begin construction on a $5.8 million project that will provide additional public-use space for education and community group meetings and an increased dining area, the Philadelphia Business Journal reported on January 20.
The new area, the Garden Pavilion, will be adjacent to the museum’s Garden Restaurant and add an additional 4,000 square feet. The Pavilion is designed by Tod Williams Billie Tsien Architects, designers of the original building.
The Garden Restaurant will be closed during construction until spring. The project is expected to be completed this summer.
To read the article, please go to bit.ly/2jI3bOU.
Knight Cities Challenge Finalists Announced
The Knight Foundation's 2017 Knight Cities Challenge has chosen 144 finalists from among 4,500 applicants.
Among the Philadelphia finalists is the Chinatown Street Market by Interface Studio (submitted by Stacey Chen): Bridging the Chinatown and Callowhill neighborhoods of the city – physically, conceptually and economically – with a street vendor marketplace.
To see all the finalists, please go to kng.ht/2iDpdNX.
Series of Horticultural Programs at Dilworth Park
Throughout January and February, Greater Philadelphia Gardens, which partnered with the CCD to create America’s Garden Capital Maze on the south side of Dilworth Park, continues to present free horticultural programs for both families and adults. Programs will be held in the Rothman Institute Cabin on the north side of the park and are made possible by generous funding from the William Penn Foundation. Whether you have a large backyard, a small roof deck, or a sunny apartment window, you will enjoy these programs:
Terrarium How To, January 24, Noon – 1 p.m. (Adults); January 28,
10 a.m. – 11 a.m. (Family)
Orchids for the Office, January 31, Noon – 1 p.m. (Adults)
Seed Bombs for Valentine’s Day, February 4, 10 a.m. – 11 a.m. (Family);
February 7, Noon – 1 p.m. (Adults)
Valentine’s Day Floral Arrangement, February 11, 10 a.m. – 11 a.m. (Family); February 14, Noon – 1 p.m. (Adults)
Flowers to Wear, February 18, 10 a.m. – 11 a.m. (Family)
Seed Starting, February 21, Noon – 1 p.m. (Adults); February 25,
10 a.m. – 11 a.m. (Family)
For up-to-date schedules and information on all activities at Dilworth Park, please visit dilworthpark.org.
19th Street Bridge Reopens
The new 19th Street Bridge over I-676, under construction since October 2015, reopened on January 11, PennDOT announced. The new bridge is the first of seven between 18th and 22nd Streets to be rebuilt as part of the first stage of a $64.8 million project.
The new span reopens 19th Street to vehicles and pedestrians between Vine Street on the north side of I-676 and Logan Circle south of I-676, and is accompanied by new wider sidewalks, street lights, ornamental fencing and concrete planter boxes.
For more information on the I-676 project, please visit bridgesover676.com.
State to Release Federal Transportation Grants
Governor Tom Wolf and PennDOT Secretary Leslie S. Richards on January 10 announced 51 projects to improve transportation alternatives that are targeted for $33 million in federal funds.
The City of Philadelphia is to receive funds for four projects: $984,692 to expand Indego bike share with 16 new stations; $1 million to construct a 6/10th of a mile, 12-foot-wide trail along the Delaware River between Magee Avenue and Princeton Avenue; $600,000 to remove slip ramps for eastbound and westbound Baltimore Avenue; and $250,000 to convert more than 17 lane miles into protected bicycle facilities.
To read the Governor’s announcement, please go to bit.ly/2jzRY3h.
Infrastructure on the Agenda in U.S. Congress
The U.S. Congress will explore ways to pay for infrastructure spending in the first 100 days of the new Trump administration, and will follow that with an infrastructure package in the next 100 days, The Hill reported on January 13.
Trump has called for massive transportation investments, with proposals ranging from $500 billion to $1 trillion, but congressional leaders have indicated they might not be comfortable with that amount and a final package could end up being far smaller.
Trump and his team have advocated for a “public-private partnership,” in which firms would bid on a project, build and maintain it for a set amount of time and recover costs through tolls or set state payments.
To read the article, please go to bit.ly/2iPGjcv.
NJ Transit Extends Bus Routes to 30th Street Station
Last week, three New Jersey Transit (NJ Transit) buses began stops at 30th Street Station expanding commuters’ options during morning and evening peak periods, Newsworks reported on January 17.
All trips will operate via Sixth Street, Market Street and JFK Boulevard. For more information, please call NJ Transit Customer Service at 973.275.5555 between the hours of 8:30 a.m. and 5:00 p.m. daily.
To read the article, please go to bit.ly/2jgYJmP.
Slight Reduction in Revenue at SugarHouse Casino
Revenue at SugarHouse Casino on the Delaware River dipped slightly in December, according to the Pennsylvania Gaming Control Board, with the casino taking in $24,301,524, compared to November’s $24,400,215.
The Commonwealth’s share of taxes was $6,251,128 compared to $6,264,795 in November.
The City of Philadelphia collected $768,751 in December, compared to November’s $769,978.
To all casino revenues, please go to bit.ly/2bkEjIO.
Regional Manufacturing Positive in January
The regional manufacturing economy continued to improve in January, according to the firms responding to this month’s Manufacturing Business Outlook Survey, with new orders up for 41.4% of the respondents, down for 15.3% and remaining the same for 39.8%.
Employment, though positive, remained lackluster with 18.9% reporting an increase in the number of full-time employees, 6.1% indicating fewer, and 70.3% reporting no change.
Looking ahead six months, 66.7% expected business conditions to improve, 10.0% predicted a downturn and 20.0% foresaw no change.
To read the report, please go to bit.ly/2iLBAfO.
City’s Tax Collections Up
City of Philadelphia General Fund tax collections through November totaled $913.3 million, an increase of 2.4% from the same period in FY16, with the current estimate for FY17 General Fund tax revenue at $3.089 billion, 4.7% above the FY16 estimate, but slightly below the projected growth rate, according to the Pennsylvania Intergovernmental Cooperation Authority’s (PICA) Monthly Tax Revenue Update City of Philadelphia November 2016.
Wage and earnings revenues increased 5.7% percent through November, compared to a projected growth of 3.5%; while net profits collections increased 32.3%, compared to projected growth of 7.5%; and BIRT revenue declined 28.1%, compared to an anticipated decline of 2%, reflecting a change in the BIRT tax rate along with exemptions.
To read the report, please go to bit.ly/2jEbI4W [PDF].
Center City District Restaurant Week Continues Through January 29
Center City District Restaurant Week presented by TD Bank, Open Table and Cardiology Consultants of Philadelphia, began yesterday and continues through Friday, January 27, and Sunday, January 29 through Friday, February 3, offering a variety of dining options in more than 120 participating restaurants.
Restaurants are offering three-course dinners for $35, with some restaurants featuring a three-course lunch for $20, not including tax, gratuity, or alcohol, as well as signature cocktails from partners Basil Hayden and Jim Beam Double Oak.
Reduced parking rates for guests of Center City District Restaurant Week are available at various Philadelphia parking facilities through a partnership with the Philadelphia Parking Authority. A full list and map are available at bit.ly/2hOCqn6.
For a complete list of participating restaurants, please go to bit.ly/1eofALq. Also, use m.CenterCityPhila.org to search for participating restaurants, check menus and make reservations on your phone. Keep up with the latest Restaurant Week news on Twitter @PhilaRestWeek. For complete information, please visit centercityphila.org/RestaurantWeek.
Future of Philly Tech
WeWork – Future of Philly Tech will focus on "A Global Perspective for a Local Market" on Wednesday, January 25, from 6:30 p.m. to 9:00 p.m., at WeWork Northern Liberties, 1010 North Hancock Street.
Panelists will include the Salesforce Vice President of SMB Sales, Comcast's Danielle Cohn, and Tiffanie Stanard, CEO of the growing startup, Stimulus. The panel will discuss the future of Philadelphia tech on a local, national, and global scale.
Cocktail hour begins at 6:30 p.m.; at 7:00 p.m. is the Mission Possible Presentation; and at 7:30 p.m. is the panel discussion.
Please RSVP at bit.ly/2jhqWd6.