CPDC Developments Newsletter - 03.19.19

Development News

Details Revealed For Hotel In Former Family Court Building

The luxury hotel planned for Center City’s historic former Family Court Building on Logan Square will feature 203 guest rooms, a ballroom, restaurant, fitness center and a new rooftop terrace with views of Logan Square. Architecture and design firm Beyer Blinder Belle also said exterior improvements will include a mid-block crossing on Wood Street, improved exterior lighting, sidewalk improvements, façade restoration, and landscape and hardscape improvements in sunken drives along 18th and 19th streets.

Beyer Blinder Belle, which recently redeveloped Eero Saarinen’s 1962 TWA terminal at JFK International Airport into a hotel, set a projected 2021 opening for the 1801 Vine Hotel.

Parkway Corp. Looks To Build A New Center City Office Tower

Parkway Corporation is looking to build a new, ground-up office building in Center City. The project, currently titled 23rd + Market, does not yet have an anchor tenant attached.

Parkway Corp. has applied for a $5 million grant from Pennsylvania's Redevelopment Assistance Capital Program to build an 18-story, $176 million tower on the southeast corner of 23rd and Market streets. The Forum Theatre, the last pornography theater in Center City, was demolished in 2012 on the site, which Parkway purchased in 2015.

Swim Club To Top Off Former PHA Building

A rooftop swim club is coming to the Philadelphia Housing Authority’s former offices at 23rd and Ludlow streets. Construction permits show plans to build fitness facilities and a pool area with cabanas, dining space and a bar atop the parking and office building sold by PHA in 2014.

The addition will open as an independently operated swim club accessible to members of The Fitler Club, a private social club opening this spring in the adjacent Aramark headquarters at 2400 Market Street, said Sam Gordon, zoning chair of the Center City Residents Association. The 23rd Street swim club will be built atop several floors of offices and a 312-space parking garage for Aramark employees.

Durst Closes Marina Ahead Of Delaware River Development

New York developer Durst Organization has ordered the closure by April 15 of the Philadelphia Marine Center marina just north of the Benjamin Franklin Bridge in an early step toward developing the surrounding piers. Durst officials said the marina needs to be cleared so divers can start surveying the area’s underwater terrain for reports needed by the Army Corps of Engineers for its permitting processes, which are aimed at protecting sensitive marine life and can take several years to complete.

The marina previously was owned by Brandywine Realty Trust, which sold Pier 12 — the Marine Center pier — to Durst in a package that also included the Pier 24 parking lot north of Callowhill Street and the current sites of the Dave & Buster’s, Morgan’s Pier, and Hibachi Japanese Steakhouse restaurants.

Eds & Meds News

NIH Renews $13M Contract With Penn's Gene Therapy Program

The National Institutes of Health has renewed a five-year contract with the University of Pennsylvania's gene therapy program, which will receive $13 million to support the advancement of gene-therapy research to the clinic.

The National Heart, Lung and Blood Institute awarded the contract to Gene Therapy Program Preclinical Vector Core in the Perelman School of Medicine at Penn. The contract will support the preclinical production, analytics, and immunology services the Core provides to approved scientific investigators from Penn and other institutions.

Search Is On For New CEO Of Hahnemann And St. Christopher’s

Suzanne Richards has departed two months into her as chief executive of Hahnemann University Hospital and St. Christopher’s Hospital for Children. The departure is part of ongoing management changes at the hospitals, bought early last year for $170 million by an affiliate of a California private equity firm.

Paladin Healthcare, an investment firm in El Segundo, Calif., created American Academic Health System LLC to own the Philadelphia facilities. American Academic, also known as Philadelphia Academic Health System, has applied for a $5 million grant from Pennsylvania’s Redevelopment Assistance Capital Program to help pay for the first phase of a project that would include a St. Christopher’s outpatient clinic and pediatric emergency department.

Drexel Law Cracks U.S. News Top 100 For First Time

For the first time since opening its doors in 2006, Drexel University’s Kline School of Law was among the top 100 in U.S. News & World Report's annual law school rankings. Drexel Law, which became fully accredited in 2011, has moved up the list each year, finishing at No. 100 this year, compared to No. 101 in 2018 and No. 112 in 2017. A $50 million donation from Tom Kline of Kline & Specter to enhance trial advocacy offerings, has moved Drexel’s trial advocacy program up to No. 11 on the list.

University of Pennsylvania Law School retained its No. 7 spot on the national list, while Temple University’s Beasley School of Law slipped one spot to No. 48 but still was rated well for having one of the top trial advocacy programs in the country. It also received high marks in areas such as part-time programs, tax and health care.

Hospitality News

Hospitality Venture Sonder To Take Over 4 Philadelphia Properties

Hospitality venture Sonder Corp. has plans to take over four Center City-area properties that are being converted into apartments, offering furnished rooms and hotel-like service to visitors seeking short-term stays in Philadelphia.

The historic Witherspoon Building office property at 1319 Walnut Street, the former Frank P. Heid & Co. hat factory on 13th and Wood streets, and two smaller buildings in Old City and near Rittenhouse Square comprise a portion of what San Francisco-based Sonder says are 500 apartments that it has under lease citywide. Sonder, which has raised $135 million from investors to fuel its expanding business, operates in about a dozen cities worldwide, including London, Miami, New Orleans, and San Francisco.

N.Y.-Based Boutique Hotelier Sets Sights On Philadelphia

A Brooklyn-based developer that specializes in renovating historic buildings into hotels is planning a 150-guest-room project in a former paintbrush factory in Old City. Ash NYC Inc., whose past hotel projects include the Dean in what had been a historic Providence, R.I., boarding house and the Siren hotel in Wurlitzer Co.'s long-vacant former Detroit headquarters, is negotiating a long-term lease for the Elder & Jenks Inc. brush company building and an adjacent parking lot on Vine Street near 4th Street.

The plans call for a full interior rehabilitation of the five-story building with a newly constructed annex on the parking lot property. Ash is seeking $5 million in state funding for the $41 million project, which is also slated to include two restaurants, a spa, a gym, an events space, and a rooftop bar.

Cambridge Landmark Acquires Former Sheraton Philadelphia

Cambridge Landmark has closed on the acquisition of the former Sheraton Downtown Philadelphia, a 757-room hotel near the Pennsylvania Convention Center. The hotel currently operates as the Philadelphia 201 Hotel under the Marriott reservation system.

As part of the deal, new franchise agreement has been signed with Marriott International for the property to regain the Sheraton brand upon completion of a $28 million renovation focused on upgrading the rooms, creating new suites, enhancing the lobby and meeting space, and adding a new Sheraton Club Lounge. The property was formerly owned by The Blackstone Group.

Residential Market News

Dorm-Like Apartment Building Planned In Northern Liberties

Real estate company Medici Living Group plans so-called “co-living” apartments with communal kitchens and bathrooms above a fitness studio at the former site of a beer distributor in Northern Liberties. Medici, of Berlin, Germany, has a lease to operate the six-story building under construction at Germantown Avenue and North American Street as apartments under its Quarters brand.

The Philadelphia project will consist of 186 units across 74 shared two- and four-bedroom flats, of 550- and 1,064-square-feet, respectively. Residents share kitchens and bathrooms. Other communal spaces include a roof deck, lounge, espresso bar, and shared offices. Medici already operates Quarters locations in New York and Chicago.

Retail News

New Restaurant Planned For LOVE Park Welcome Center

Safran Turney Hospitality will open Loveluck, a restaurant and bar inside LOVE Park's "flying saucer" building, later this year. The restaurant will provide interior seating for 50-55 patrons, with additional outdoor seating for up to 135 people on the balcony and in an adjoining park-level terrace.

The new restaurant will be the latest from restaurateurs Marcie Turney and Valerie Safran, who run five restaurants (Lolita, Jamonera, Barbuzzo, Bud & Marilyn’s, Little Nonna’s), a prepared food market (Grocery), a chocolate company (Marcie Blaine Artisanal Chocolates) and an event space (Upstairs at Barbuzzo).

Grubhub Expands In New 15,000-Square-Foot Center City Office

Online food delivery company Grubhub has officially opened the doors to its 15,000-square-foot office on the corner of 16th and Cherry streets. Grubhub’s 100 employees previously had been scattered among five different offices around the city.

GrubHub's history in Philadelphia began in 2017, when it absorbed a Philadelphia-based competitor. A publicly traded company, Grubhub delivers almost a half-million daily orders to 2,000 U.S. cities.

Reading Terminal To Diversify Tenant Mix With Two New Eateries

As part of an ongoing effort to diversify its tenant mix, the Reading Terminal Market announced that it will add Careda's Caribbean Cuisine and Umi Seafood and Sushi Bar to its roster.

The market's competitive environment is changing as more grocery stores expand their local offerings, so the market’s managers are working to expand their offerings to gain a slice of visitor and locals' attention and time with foods not currently available at the market.

Transportation News

PHL Sees Biggest Passenger Numbers Since 2008

Nearly 31.7 million passengers made their way through Philadelphia International Airport in 2018, up more than 7% year-over-year and just short of 2008’s high of 31.8 million passengers. It also marked the first increase since 2015, and the highest percentage increase since the nearly 11% growth in 2005.

Airport officials attribute the growth in passengers in 2018 to new air service, including flights to 27 destinations from American Airlines, Frontier Airlines, Spirit Airlines, Southwest Airlines and Delta Air Lines. The added airlift gave a boost to international travel. More than 4.2 million international passengers passed through PHL, a 6% increase from 2017 and the largest percentage increase since 2004, when figures grew 17.1%.

Protected Bike Lane Coming To 22nd Street In Center City

Seven blocks along the busy 22nd Street corridor in Center City will soon be upgraded with protected bicycle lanes. The proposed upgrade is part of a larger lane-replenishment project for the north-south throughway that dovetails with a scheduled repaving and restriping. The Office of Transportation, Infrastructure, and Sustainability (OTIS) said the bike lane will be upgraded concurrently with the road work.

More than 1,500 bikes a day travel along the roadway, according to city data in 2012. The protected part of the bike lane would comprise seven blocks’ worth of bollards separating cyclists from two lanes of car traffic between South and Market streets.

Government News

Troubled City Land Sale Office Facing Takeover

A memo of understanding obtained by PlanPhilly calls for merging the staff functions of the Vacant Property Review Committee into the Philadelphia Land Bank, which was created in 2015 to centralize and simplify city land sales. Under the current system, these staffers are charged with vetting prospective buyers interested in public land.

In the wake of reports citing land undervaluation and other problems at the VPRC, the Philadelphia Redevelopment Authority froze all VPRC transactions, pending reform. Although its staff functions will be absorbed by the Land Bank, the board itself, which signs off on the majority of city land sales, will remain. The VPRC was created in the 1970s during the Rizzo administration.

Philadelphia Mayor Outlines $5 Billion Budget Proposal

Mayor Jim Kenney’s 2020 budget proposal does not include a tax increase, but does plan for almost $5 billion in general fund expenditures. Kenney, who is seeking re-election, described the proposed spending plan as a commitment to improving government services.

Key elements of the proposal include putting more money toward the Philadelphia School District, amounting to a total of $1.2 billion over the next five years from the general fund; adding $30 million to the municipal pension fund and $14 million to the “rainy day” fund; adding $200 million over five years for street repairs; $80.4 million over five years to support affordable housing; and $36 million over five years for measures to combat the city’s opioid crisis.

PICA: February Tax Collections Up 10% Compared To Last Year

The City of Philadelphia collected approximately $562.4 million in General Fund tax revenue in February 2019, compared to $511.6 million in February 2018, an increase of 9.9%, according to a new report from the Pennsylvania Intergovernmental Cooperation Authority (PICA). While the City portion of the wage, earnings, and net profits taxes and the real estate tax increased in February, the realty transfer and City sales taxes decreased.

Year-to-date collection totals for FY2019 are 2.6% higher than what was collected at the same point last year. PICA noted that as the major tax collections in the spring are remitted, a clearer picture will emerge as to annual revenue growth as compared to FY2018.

Through February, the business income and receipts tax (BIRT) rose 12.8%, compared to a projected growth of 1.8%; the real estate tax increased 4.5%, compared to a projected growth of 1.5%; the realty transfer tax decreased by -9.7%, compared to a projected -2.5% decrease; and the City sales tax collections decreased by -1.1%, compared to a projected growth of 6.0%.

PICA was created in response to the City’s financial crisis in the early 1990s. It helped the Rendell administration refinance overpriced debt and provided the fiscal discipline required to negotiate competitive, municipal labor contracts. A portion of the City’s wage tax is collected by PICA and used to pay off the debt service on the original bonds. The balance comes to the City in the form of grants.   PICA’s fiscal oversight authority come from its ability to comment on how the City is spending its resources. In 1998, the portion of wage tax collected by PICA and devoted to paying off the original bonds was 44%. In 2019, it’s just 8%: $47.1 million devoted to debt service with $523.7 million in diverted wage tax revenues flowing back to the City as grants that go into the operating budget.  PICA is set to expire in 2023 when the bonds are fully paid off.

City Council Proposes 3 Affordable Housing Bills

City Council has introduced three pieces of proposed legislation to address affordable housing and poverty in Philadelphia. If enacted, the bills would establish a low-income legal defense fund, “fair-chance” housing for people returning to the city after incarceration, and requirements for affordable housing when certain city-owned land is sold or leased.

Philadelphia’s poverty rate peak at 28.4% in 2011 but came down to 25.7% in 2017 as Philadelphia began to grow jobs, resulting in 4,600 fewer people in poverty each year.  Faster job growth would result faster poverty reduction. Philadelphia status as one of the slowest growing large cities with one of the highest poverty rates go hand in hand.

Philadelphia Launches $40 Million Home Repair Loan Program

A new low-interest loan program aimed at helping Philadelphia homeowners fix aging or damaged homes will provide $40 million worth of repairs to qualified applicants. The Restore, Repair, Renew program signals the city’s renewed focus on stabilizing and fixing the tens of thousands of Philadelphia homes threatened by aging bones and disrepair.

Restore, Repair, Renew will be available to homeowners with credit scores of at least 580 and income of up to about $105,000 for a family of four. The program will allow loans between $2,500 and $25,000 over 10 years, with interest rates fixed at 3%. Univest Bank and Trust Company and Finanta, a nonprofit lender, will provide the loans. The Redevelopment Authority also plans to roll out a separate home repair-oriented loan program later this year to help landlords who own four or fewer units make fixes.  The $40 million came from a 2016 proposal to issue a $100 million bond that the Council members said would be paid back through an increase in the city’s realty transfer tax.

CCD/CPDC’s Annual Housing Report: Building Out From the Core

In 2018, 2,810 new housing units were completed in Greater Center City – the largest number since Center City District began tracking the market almost 20 years ago. Strong growth is continuing at the beginning of 2019 with 3,017 more housing units under construction in Greater Center City, based on a new 20-page report from CCD/CPDC, Building Out From the Core: Housing Report 2019.

The majority of housing built in and around the downtown during the past eight years focuses on renters: 72% of the new housing units added since 2010 are apartments (10,660 units); 4,143 for-sale condominiums and single-family homes were delivered during the same period. New housing development is highly concentrated in limited areas: 46% of new units in Philadelphia are in Greater Center City, and 80% are being built in Greater Center City or its five adjacent ZIP codes – an area comprising just 17% of the city’s geography.

CCD News

The Facts About Dilworth Park

We want to make sure all our members have accurate information about the new walk-up coffee kiosk being installed at the southern end of Dilworth Park. Through our lease with the City, the CCD is responsible for supporting all the operating costs of Dilworth Park, freeing up City funds to support neighborhood parks and other essential services.

We are leasing the coffee kiosk to our current café operator, Brulee, who has entered into a license agreement to sell Starbucks products. Revenue CCD earns from the kiosk will be devoted 100% to park maintenance and programming, helping to employ more than 40 workers who maintain the park and to provide free programming on more than 160 days each year. Like the balance of the $55 million in improvements that CCD made to Dilworth Park, the new kiosk will be owned by the City of Philadelphia. You can find a complete fact sheet on our website.