OFFICE SECTOR NEWS
Report: Silverstein Properties looks to buy 1735 Market
Silverstein Properties, the New York developer that built the new World Trade Center, is pursuing the purchase of 1735 Market St. for an estimated $440 million, the Philadelphia Business Journal reports. Known as BNY Mellon Bank Center, the 54-story office tower totals 1.3 million square feet and was 91% occupied when it was put on the market in October by Chicago-based Equity Commonwealth.
This would be the first acquisition in Philadelphia for Silverstein and would mark Equity Commonwealth’s exit from Philadelphia office market. HFF investment broker Doug Rodio expects it to sell for about $500 million.
Center City CPA Firm Doubles Space, Acquires Suburban Rival
Marcum, the New York accounting firm that has entered and grown in the Philadelphia market via two acquisitions over the past decade, has nearly doubled its office space by relocating from 1600 Market St. to 1601 Market St., where it now occupies 40,000 square feet on the third and fourth floors.
The space gives the firm room to grow, and corresponds with Marcum’s acquisition of Horsham-based Silverman Kendall, a six-person firm specializing in representing manufacturing companies and professional service organizations, with a niche in the commercial printing industry. Silverman, Kendall, and the rest of their team will relocate to 1601 Market, where they will join about 175 Marcum employees.
EDS & MEDS NEWS
Mosquito Medicine? Philadelphia life sciences firm looking at links
While mosquitoes are responsible for as many as one million human deaths every year, a Philadelphia life sciences company is exploring the potential for mosquito-derived therapies to cure diseases. Financial terms of the deal were not released between Bioquark, a Center City biotech company, and Massachusetts-based Ectocrine Technologies.
The two companies noted that the saliva of mosquitoes has been shown to contain molecules with anti-inflammatory properties, anti-coagulants, and painkillers, among other beneficial compounds. Researchers said the evidence of low incidences of autoimmune diseases, inflammatory disorders, allergies, developmental diseases and certain cancers, in regions of high rates for mosquito-borne diseases may point researchers toward potential ways to combat such conditions.
Airbnb Hosts In Philadelphia Made $47.7M In 2018
Philadelphia residents who hosted travelers through Airbnb in 2018 made $47.7 million in net income from 404,000 guests, according to new data from the San Francisco-based home-share company. The company arrived in Philadelphia in July 2015 after city officials adjusted zoning rules for rentals, allowing them in residential areas and subjecting them to an 8.5% hotel tax.
Despite competition from Airbnb and similar services, Greater Philadelphia's hotels performed well in 2018, particularly in three key performance indicators: occupancy grew 4.1% compared with the same timeframe in 2017; average daily rate grew 2.1%; and revenue per available room grew 6.4%.
Greater Philadelphia Wage Growth Last Among 10 Biggest US Metros
Greater Philadelphia had average wage growth overall of 2.3% from November 2017 to November 2018. That figure is lower than the national average of 2.6% and the lowest among the nation’s 10 largest metropolitan areas, according to the recent analysis from job recruiting website Glassdoor.
San Francisco had the largest growth – 4.6%. New York City was at 4%, and Washington, D.C., wages grew at 3.2%. Wages are rising to attract increasingly scarce workers, with health care and tech continuing to see strong pay growth, the report found.
6% Toll Hike Takes Effect On Pennsylvania Turnpike
With the new year comes higher tolls on the Pennsylvania Turnpike. A toll increase, the 11th in as many years, took effect Sunday. E-ZPass rates have risen from $1.30 to $1.38, while cash rates have increased from $2.10 to $2.25, according to the Pennsylvania Turnpike Commission (PTC).
The 6% increase applies to all Pennsylvania Turnpike sections and extensions. Annual toll increases are required to meet the PTC’s funding obligations as well as maintaining and improving the 552-mile turnpike system.
RESIDENTIAL MARKET NEWS
U.S. Suburbs, Exurbs Dominate Mid-Decade Millennial Growth
The phenomenon of millennials flocking to urban cores is concentrated in a few U.S. cities and overall represents a minor fraction of those who instead opt to move to suburbia, according to newly released data showing that the suburbs and exurbs dominate population growth among 25- to 34-year-olds. The latest 2013/2017 American Community Survey (ACS) report, which provides a mid-decade snapshot of U.S. demography, does show that a small handful of cities -- including Philadelphia -- are exceptions to that overall trend.
Only five cities had more than 40% of their post-college millennial growth in the urban cores: New York, Boston, Philadelphia, Washington and San Francisco. All have “legacy” urban cores that most resemble the pre-World War II urban form of higher population densities and substantial reliance on public transit.
CCD/CPDC’s annual housing report, to be released in a little more than a month, will highlight the latest details on housing trends in Philadelphia.
Francisville Apartment Complex Sells For $4.55M
Adding to an already strong year for multifamily sales, the Corinthian apartment complex in the city’s Francisville neighborhood sold for $206,818 a unit or $4.55 million, according to Gebroe-Hammer Associates. The five-story property consists of 22 apartments at 909 Corinthian Ave., near Eastern State Penitentiary.
It was sold by Cambridge Partners, according to Pennsylvania business registration documents. The buyer was not disclosed. Eli Rosen and Joseph Gehler of Gebroe-Hammer arranged the transaction.
Drexel’s Calhoun Hall To Be Renovated, Expanded
Student housing developer American Campus Communities plans to renovate Drexel University’s vacant Calhoun Hall at 3301 Arch St. into dormitory and office space for the school’s honors program. Plans call for the semicircular eight-story brick building to return to dormitory use, with 211 sleeping rooms for honors program students, and for the construction of a new, two-story glass addition of about 10,800 square feet.
The building addition will house lounge and study space, seminar rooms, honors college offices, and a reception lobby, according to the plans. Once completed, it will serve as the main entry for the two combined structures. The nonbinding Civic Design Review board is scheduled to consider the proposal Jan. 8.
Brandywine Bringing New Beer Hall To University City
Brandywine Realty Trust is aiming to lure crowds to its expanding University City high-rise district. The developer is teaming with New York-based restaurateur Branden McRill on a combination game parlor and beer hall that will fill 7,000 square feet on the ground floor of its parking structure along 30th Street, between the Evo student apartments and FMC Tower office, residential and hotel building.
Named the Post in honor of the historic former postal building nearby, the venue is set to open in mid-January. Brandywine hopes the addition, which will cost $5 million to build, will give people another reason to linger in the area, in addition to the public plaza it constructed atop the parking garage and the new park it is completing just west of Amtrak’s landmark 30th Street Station building.
Old City Tech Firm Moving Into Former Moderne Gallery Space
Moderne Gallery, a high-end vintage furnishings store, is relocating from its longtime Old City home and a tech firm headquartered in the neighborhood is taking its place. The Philadelphia Business Journal reports that Moderne founder and owner Robert Aibel has sold the 111 N. 3rd St. building to Linode, a cloud hosting business.
Moderne Gallery will occupy 15,500 square feet as an anchor tenant at 2220 E. Allegheny Ave., a 100,000-square-foot brick structure recently renovated and branded as the Showrooms at 2220, an antique and design center. Linode has been growing its Old City presence. It bought and moved into 249 Arch St. in 2015, bringing 150 tech workers into the city.
CITY GOVERNMENT NEWS
Philadelphia Property Assessments Are Flawed, Audit Finds
Philadelphia’s property assessments do not meet accuracy standards and are plagued by deficient data, according to an independent audit of the city’s Office of Property Assessment (OPA). The audit, commissioned by City Council after a reassessment of residential properties sparked outrage by homeowners facing large tax increases, found that flaws in the city’s methods lead to inequities in assessments.
The audit found that assessments do not meet industry standards for residential and commercial properties as well as vacant land; assessments are off by more than 15% in some areas; OPA has deficient data and does not document all of its procedures; and the lack of transparency in assessment methods make it difficult for property owners to determine how their values were calculated.
Roundup: City Council Fall Session
Upon the completion of City Council’s fall session, PlanPhilly published an overview of where many key bills currently stand:
4601 Market Redevelopment
Councilwoman Jannie Blackwell put a hold on legislation to authorize the redevelopment of the Provident Mutual Life Insurance Company Building at 4601 Market St. The city has spent $52 million to buy and restore the building, now vacant after the Philadelphia Police Department scuttled plans for relocating its headquarters there.
The new plan for the site involves a health campus that would offer mental health care services provided by the Children’s Hospital of Philadelphia and daycare run by the YMCA.
“Good Cause” Eviction
Councilman Curtis Jones in October 2017 introduced a “good cause” eviction bill, which would require landlords to have a reason for not renewing a lease or evicting a tenant. Critics predicted that the proposed legislation would have very limited effect.
Jones held the legislation for almost a year, then introduced a measure that significantly narrowed its focus. As passed, the bill will only affect month-to-month leases, which are a small percentage of the market.
Public Land Sale Reform
Councilman Kenyatta Johnson and Council President Darrell Clarke introduced legislation to tweak the city’s land sale process. The proposal would give guidelines to the city’s Vacant Property Review Committee; ban resales within five years; and add a takeback provision to the city’s land deals to ensure purchasers follow through on the terms of their deals.
Many of the bill’s provisions have been enacted by Mayor Jim Kenney as part of new regulations issued in December. Clarke said his legislation will still be passed in order to codify those alterations.
Point Breeze Remapping
Councilman Kenyatta Johnson introduced a remapping bill that would update the zoning in Point Breeze and Grays Ferry to reflect the single-family row house nature of the existing neighborhoods -- and eliminate the zoning that currently allows attached multi-family units -- while upzoning Point Breeze Avenue. Johnson said allowing greater density will bring more life to the beleaguered commercial corridor.
The bill was held before it received a hearing and will be taken up again by the Rules Committee in the new year.
Litter Enforcement Corridors
Councilman Bobby Henon introduced legislation creating Litter Enforcement Corridors across the city, which will be marked by signs to inform violators that dumping in these areas will be punished with far larger fines than normal.
The city previously fined illegal dumpers between $50 and $300 on first offense. Those fines double under the new law. Commercial operators had been fined between $500 and $5,000, but the new legislation had those fines tripled.
After Councilwoman Maria Quiñones-Sánchez’s mandatory inclusionary zoning proposal was defeated, Council President Darrell Clarke’s 1% tax on new construction was passed. However, Council members retracted it in the face of a likely mayoral veto and the promise of $55 million from the city budget for affordable housing over the next five years.
A subsection of the Housing Trust Fund was created as well, allowing the new money to be spent on housing programs that also can be spent on “middle neighborhoods.”
Voluntary “Inclusionary Zoning”
As part of the substitute for the construction tax, the city also estimated that $18 million would be generated over the next five years from an enhanced voluntary inclusionary zoning bonus.
The law gives developers additional height, density, and floor area in exchange for payments to the Housing Trust Fund or for building new units on site. Most developers are expected to pay into the trust fund to access the bonuses.
Updated Plumbing Code
The plumbers union and the Building Industry Association reached an agreement that allows plastic pipes to be used in buildings up to 75 feet in height. In high-rise residential buildings of up to 150 feet, plastic piping can be used within apartments, while iron piping is still required between units. Philadelphia had been one of the only cities in the country requiring cast-iron pipes in mid- to high-rise construction instead of cheaper, lighter PVC pipes.
Jim Maransky of the Building Industry Association said the compromise could reduce construction costs by 20%. The bill approved by City Council allows the Department of Licenses and Inspections to pass the new code by regulation.
10-Year Tax Abatement
Councilwoman Cindy Bass introduced a bill that, if passed, would effectively end the 10-year property tax abatement on new and rehabbed properties in the city. Nothing more was heard about the bill after its debut in the early fall.
Bass stated that the bill has been referred to the Committee on Finance, with hearings expected “very early in the new year.”
Keystone Opportunity Zones
City Council tried unsuccessfully to require property owners who take advantage of Keystone Opportunity Zone tax breaks -- which offer relief from many local and state taxes -- to hire locally and provide apprenticeships to young Philadelphians.
At the bill’s hearing, the Kenney administration argued that the bill is unlawful.
Sprinklers In Historic Buildings
In response to a devastating fire in early 2018 on the historic 200 block of Chestnut Street, City Council introduced and passed a bill requiring sprinklers in historic buildings.
The bill would only mandate sprinklers in the basement and on the lower floors. Adding sprinklers throughout a historic building could be prohibitively expensive, and the Department of Licenses and Inspections said fires in these buildings often start on the ground floor.