OFFICE SECTOR NEWS
Philadelphia Continues Leading Region In Office Asking Rental Rates
The Philadelphia CBD has led the region since 2015 in overall office asking rental rate growth at 12.8%, mirroring regional job growth, according to a new JLL data analysis.
Rental rate growth is traceable in part to a tight Trophy market despite the addition of more than 2.3 million square feet in the CBD this year. JLL also noted that an influx of new institutional owners has led to substantial capital improvements to the existing stock, pushing CBD Class A rental rates up to an average of $33.01 per square foot.
Mellon Bank Center Sale To Close In March
A partnership involving Silverstein Properties of New York and the Arden Group of Philadelphia has a deal to pay $451.6 million for the office tower at 1735 Market Street known as BNY Mellon Center. The partnership, Silverstein/Arden 1735 Market Holdco LP, entered a sale agreement for the 54-story, 1.3-million-square-foot tower on January 29, seller Equity Commonwealth said in a regulatory disclosure.
The building’s per-square-foot price of about $350 would be the highest ever for a Center City office building, not counting the 2014 deal in which Comcast Corp. bought out the majority owner of its headquarters tower. But it is still below replacement costs. BNY Mellon Center is the last remaining property in what had been a large portfolio of Philadelphia office buildings owned by the Chicago-based real estate trust controlled by investor Sam Zell.
EDS & MEDS NEWS
Leadership Changes Underway At Temple Health System & Hospital
Six months into Temple University's effort to fix its financially ailing health system, a restructuring of the leadership of Temple University Hospital and the health system is underway.
Dr. Larry Kaiser, president and CEO of the Temple Health System, said the positions of system chief medical officer Dr. Susan Freeman and system chief administrative officer Alan Rosenberg are being eliminated. In addition, Dr. Verdi DiSesa has stepped down as CEO of Temple University Hospital and Dr. Herb Cushing is stepping down as the hospital's chief medical officer.
Michael Young, currently Temple University Hospital's chief operating officer, has assumed the additional position of CEO of Temple University Hospital effective immediately.
Gene Therapy Company Gets $4.5M For Cystic Fibrosis Research
Talee Bio Inc., a University City-based biopharmaceutical company developing gene therapy treatments for cystic fibrosis, received a grant of up to $4.5 million from the Cystic Fibrosis Foundation. The organization will use the grant to fund the preclinical development of two potential gene therapy products. The company has set a 2020 goal for initiating clinical trials of the first product.
The CF Foundation has previously supported the company's product development efforts, which Talee Bio said is the result of decades of research by scientists developing innovations aimed at overcoming vexing hurdles in treating a diseased lung. Cystic fibrosis is a progressive, life-threatening genetic disorder with no known cure.
Report: Center City Hotel Occupancy Hits All-Time Highs
Center City hotels in 2018 hit record numbers, some not seen in at least three decades, according to new full-year data provided by analytics firm STR to the Philadelphia Business Journal. The analysis found that the downtown’s 56 hotels reached all-time highs in 2018 among all three key metrics: occupancy, average daily room rate (ADR) and revenue per available room (RevPAR). Growth in demand also outstripped supply.
The report compared downtown Philadelphia's 23 hotels’ occupancy levels in 1987 of 75.9%, ADR of $76.17 and RevPAR of $57.83. Those figures in 2018 grew to 79.6%, $191.30 and $152.36, respectively. For the first time in 2018, Center City hotel demand increased every month compared to the previous year.
Welcome America Names New CEO
Michael DelBene will be the new president and CEO of Welcome America Inc., effective February 6. DelBene will be responsible for managing the operations and staging of free events, including the annual Wawa Welcome America Festival and the Philly Holiday Festival.
DelBene will also be responsible for sponsor and partner management and acquisition, focusing on growing Welcome America's $3 million operating budget. He was previously vice president of business development for the Mann Center for the Performing Arts, where he was responsible for developing and implementing strategies to increase its contributed and earned revenue. He succeeds Jeff Guaracino, who stepped down to become CEO of Visit Philadelphia.
RESIDENTIAL MARKET NEWS
Flat Prices, Strong Sales For Q4 Philadelphia Housing Market
House price appreciation remains very modest while sales volume remains strong in Philadelphia, according to the recent Q4 analysis from Drexel University’s Lindy Institute for Urban Innovation. The average price of a home in the city rose 1.1% on a quality- and seasonally-adjusted basis for Q4, down from the previous quarter’s 2.1% growth while city home sales activity is up 5.1% in Q4 from one year earlier and the highest quarterly volume since 2006. Philadelphia is sustaining these trends even though national trends indicate a cooling housing market, though the same lag occurred before the last downturn.
Housing inventories fell to an all-time historic low in Q4, with only 3,336 homes listed for sale in December. The report also found that million-dollar sales dropped sharply, with 2018 becoming the first year since the recession that total million-plus sales have shown a year-over-year decline.
31-Story Apartment Tower Proposed For Society Hill
A new, 31-story development is being proposed next to the Sheraton Society Hill Hotel. The project plans, which were posted online ahead of a Civic Design Review (CDR) slated for tomorrow, February 5, calls for a tower at 1 Dock Street with 272 residential units, ranging from studios to three bedrooms. The development would include amenities like a second-floor fitness area; second- and third-floor lounges; and a rooftop pool, kitchen, and lounging area.
The plans, submitted by developers LCOR and design firm BLT Architects, envision the tower as a largely glass and metal structure, with a brick facade on the first three floors. The structure would rise a few stories above the Society Hill Towers located across the street from the site.
Will 2019 Be A Groundbreaking Year For 8th And Market?
The owner of the surface parking lot at 8th and Market streets may be inching closer to a development deal at the property, which was once eyed for a failed DisneyQuest project and later pitched as a site for a casino. Goldenberg Group, the long-time owner of lot, continues to have temporary permits for surface parking renewed.
Goldenberg COO Seth Shapiro told the Philadelphia Business Journal, “Any ground breaking is well over a year out. We love the site as much as we ever have and, given how good things are going in the city, it’s important that you do the right development there and not rush it.”
Shapiro said while businesses considering the site are pleased with the progress Philadelphia has made, they are concerned about the “anti-business platform coming out of City Council” but they “are also watching closely both the East Market project and the (Fashion District) project and they want to see how those turn out.”
Developer Eyes June Construction Start For Old Family Court
After raising an additional $2 million in state and city funding, Peebles Corp. said construction is slated to begin in June on its delayed redevelopment project to turn the former Family Court building into a boutique hotel.
The Florida-based developer is completing designs for the historically designated Beaux Arts building at 1801 Vine Street, which has been unoccupied since 2014. Plans for the 78-year-old structure include more than 200 hotel rooms, a roof terrace, lounge, spa and possibly some co-working space.
NYC’s Durst Buying Another Site Along The Delaware River
The Durst Organization is making its second acquisition along Philadelphia’s Delaware River waterfront, moving to buy a surface parking lot located between Vine and Callowhill streets on the west side of Columbus Boulevard. The Delaware River Waterfront Corporation has entered into an agreement with the New York real estate company to purchase and eventually develop the 1.6-acre property into a mixed-use development. The property sits across from four piers Durst bought in 2017.
Though details such as size, price and asset class were not immediately disclosed, Durst pledged that the plan would include a healthy portion of public green space and the preservation of the Wood Street Staircase. That staircase, leading up from the west side of the property, is reportedly the last of 10 such structures commissioned by William Penn to increase access to the Delaware River.
Trader Joe’s Eyeing Location Near Convention Center
Trader Joe’s is contemplating plans for a second Center City grocery store on the ground floor of a parking structure across Arch Street from the Pennsylvania Convention Center. The Monrovia, Calif.-based grocery chain said it has taken the initial steps toward moving forward with a store at the 1324 Arch Street site but no timetable has been set for developing the space, which is owned by Realen Properties.
The store would be Trader Joe’s second in Philadelphia, following its bustling location at 22nd and Market streets. The Arch Street property comprises 15,750 square feet of retail space under several decks of parking that can accommodate 540 cars, according to a brochure that had been posted to the website of real estate brokerage MSC Retail, which had marketed the site.
PlanPhilly Examines The Return Of Independent Bookstores
A new report by PlanPhilly examined the surprising comeback of independent booksellers in Philadelphia and other markets nationwide. According to the report, the American Booksellers Association’s membership in Philadelphia increased by almost 15% between late 2017 and late 2018 and Philadelphia has gained three independent bookstores, including Shakespeare & Co. at 1632 Walnut Street.
Factors in the industry’s comeback include growing customer preferences toward local businesses, and the Amazon-fueled demise of mall bookstore chains that gave smaller sellers more breathing room. Small stores have also added services like those at Shakespeare & Co., which can print and bind books onsite from a catalog of more than 10 million titles.
Center City's First Medical Marijuana Dispensary Opens
Center City's first medical marijuana dispensary has opened for business at 1206 Sansom Street. The Beyond / Hello dispensary is staffed with a licensed pharmacist and sales team offering an array of lab-certified and state-approved products, including dry leaf, concentrates, oil cartridges, capsules, and tinctures.
Beyond / Hello received nine new permits in Phase II of the Pennsylvania Medical Marijuana Program, bringing the company’s total number of dispensary permits statewide to 12. Nearly 50 dispensaries have opened in Pennsylvania, including 14 in the Philadelphia region, during the past year following the 2016 approval of the state’s medical marijuana law.
UPS Trades Trucks For Tricycles In Some Cities
Instead of parking delivery trucks on major streets, UPS introduced a delivery system in Hamburg, Germany in 2012 in which truck cargo is off-loaded in a slightly remote location onto tricycles and then brought into the business district. After a recent announcement that UPS will expand these battery-powered cargo tricycles to a third U.S. city, Philadelphia officials noted that current state regulations would allow the company to roll out a cargo e-bike delivery program in Center City. Pennsylvania law allows e-bikes without any special permit, as long as they are activated by pedaling, not fully battery-powered, and do not exceed speeds of 20 miles per hour.
UPS launched the pedal-assist cargo trike deliveries in Pittsburgh in 2017, followed by Seattle in 2018 and an as-yet-unnamed city in 2019. UPS works with host cities to iron out the details of a deployment in advance, and officials at Philadelphia’s Office of Transportation and Information Systems (OTIS) said they had not been contacted about any e-bike plans.
Last fall, the city launched an enforcement campaign against illegally parked delivery trucks and other vehicles on Market and Chestnut streets, and it will release a policy document on curbside vehicle management in the next few months.
The city’s effort comes amid increasing concerns cited by residents, businesses and developers about the worsening congestion and parking difficulties in Greater Center City. CCD/CPDC’s 2018 ^report on congestion, Keep Philadelphia Moving, looks at the city’s challenges and outlines possible solutions, and was widely cited in media reports about the city’s congestion crackdown effort.
Resolution Introduced To Make JFK/Market Bike Lanes Permanent
A resolution has been introduced in City Council that proposes making the now-temporary protected bicycle lanes permanent on JFK Boulevard and West Market Street. The next step is for legislation to be introduced in City Council.
The bike lanes were installed as a nine-month pilot project in June 2018. Surveys conducted by Center City District found positive feedback from business owners and those who work and live along the corridor. Last month, the Logan Square Neighborhood Association and the Center City Residents Association voted unanimously to support the protected bike lanes.
‘Buy American’ Rule Expanded To Infrastructure Projects
The Trump administration will use a newly signed executive order to expand “Buy American” requirements to infrastructure projects that receive federal financing as a way to boost the use of American-made products and support U.S. manufacturing and jobs.
White House trade policy adviser Peter Navarro said “Buy American” requirements generally apply to direct federal purchases of goods or products. The latest executive order expands the administration's current "Buy American and Hire American" policy to apply to contracts, subcontracts, purchase orders and sub-awards of infrastructure projects.
PennDOT Asks For Meeting With City Officials Over Link Kiosks
PennDOT Deputy Secretary George McAuley recently sent a letter to Philadelphia Mayor Kenney and Council President Clarke requesting a meeting to discuss Center City’s new digital kiosks. The kiosks, called Links, offer free public Wi-Fi, device charging, domestic phone calls, access to city services, maps and directions, and event information, supported by commercial advertising. PennDOT requested the city to temporarily suspend the kiosk installation work, which began in December in Center City and University City.
McAuley’s letter stated that the kiosks “may be considered outdoor advertising devices subject to PennDOT regulation,” and added that “it is unlawful to place any signs or other advertising matter on or across any structure within the legal limits of any state highway right-of-way” without PennDOT approval. The letter also noted that violation of those regulations could result in the loss of federal highway funding.
City Spends $47.6M In OT For Q1 FY2019
Overtime costs for the first quarter of fiscal year 2019 totaled $47.6 million, or 30.7% of the city’s total annual overtime allocation, according to a new Pennsylvania Intergovernmental Cooperation Authority (PICA) report.
The report also found that 10 departments accounted for 97.5% of overtime spending in Q1, and that five of 34 city departments have already spent more than half of their annual overtime allocations in the first quarter.
New Crop Of Candidates, Buoyed By Young Voters, Set Sights On City Council
Dozens of candidates are lining up for City Council races this year, fueled by the surge of turnout among younger voters since 2016. In the 2017 primary, turnout among 18- to 34-year-olds nearly tripled compared with the previous comparable election. The trend continued through the 2017 general, 2018 primary and 2018 general elections, when 18- to 34-year-olds cast more votes than any other age cohort in the city.
Besides voting, young “progressives” won scores of Democratic Party committee posts in South Philadelphia, Center City and the river wards. The impact of a continuing surge of younger Philadelphia voters in 2019 might be greatest in the Democratic primary for City Council-at-large seats, which could also mean that traditional party ward leaders will have less influence.
Among the City Council hopefuls for District seats are Fairmount Park Conservancy executive director Jamie Gauthier, who has stepped down from her position to challenge longtime City Councilwoman Jannie Blackwell for control of West Philadelphia’s 3rd District and Lauren Vidas, who is challenging Kenyatta Johnson for the 2nd District, which includes portions of Center City, South and Southwest Philadelphia.
Council candidates must file by March 13 to run in the primary election on May 21.
The Central Philadelphia Development Corporation (CPDC) is pleased to announce four new members to its Board of Directors, who were confirmed at CPDC’s December membership meeting.
The new members are: Kenneth R. Fulmer, President & CEO of Urban Engineers; Monica Jindia, Vice President of Business Development, Commonwealth Land Title Insurance Company; Christopher W. Rosenbleeth, Chair of the Real Estate Practice and Partner, Stradley Ronon Stevens & Young LLP; and Jason Tucker, Vice President of Acquisitions and Development, The Goldenberg Group. In addition, CPDC Board member Edward D’Alba has been named Emeritus.