Office Sector News
Sale Of Mellon Bank Center Closes
New York real estate firm Silverstein Properties Inc. has closed on the $451.6 million purchase of BNY Mellon Bank Center. Silverstein Properties bought the 54-story, 1.3-million-square-foot trophy office tower in partnership with Arden Group, and Migdal Insurance, an Israeli-based insurance company and pension fund manager.
The building, constructed in 1990, was 92% leased at the time of sale with tenants including Goldman Sachs, JP Morgan Chase and Willis Towers Watson.
N.J. Software Firm Moves To Center City
Seven-year-old tech firm Wodify, which creates software for the fitness industry, has relocated from Cherry Hill, N.J., to a new 10,000-square-foot space at 1100 Ludlow Street. Company officials said the new location gives Wodify greater access to top tech talent. Wodify has 30 local employees and an additional 45 in Lisbon, Portugal.
Its products, which include a software platform to manage gym operations and exercise classes and provide performance tracking, are in use in 4,500 fitness centers in more than 85 countries. Wodify’s sales are in excess of $10 million.
Eds & Meds News
Philadelphia Biotech Firm Partners With CDC To Battle Zika
Group K Diagnostics has signed an agreement with the Centers for Disease Control and Prevention to design and evaluate a diagnostic test to detect Zika. The biotechnology company, which has its offices in Center City and its labs in University City, said the test will be able to be performed by clinicians in resource-limited areas where real-time testing is not available.
A virus spread primarily by mosquitoes, Zika has emerged as a major global public health concern in recent years. The goal of the CDC-Group K partnership is to create a point-of-care diagnostic that could expedite the testing and diagnosis process for health professionals in both suburban and remote regions.
CHOP Again Ranked Best Pediatrics Department In The U.S.
The pediatrics department at the Children’s Hospital of Philadelphia (CHOP) has retained its top position in the new U.S. News & World Report rankings. The department, part of the University of Pennsylvania’s Perelman School of Medicine, has been ranked the best in the United States for seven consecutive years.
CHOP also earned top rankings in two other pediatric specialties: diabetes and endocrinology, and urology. The rankings are based on assessments by medical school deans and senior faculty at peer schools. Determining factors include survival rates for children who underwent surgery for serious congenital heart defects, infection rates in neonatal intensive care units, complications from kidney biopsies and other care outcomes.
Drexel Receives Top Rank For Research Institutions
For the first time, Drexel University has been designated at the highest level of research activity from the Carnegie Classification of Institutions of Higher Education, which has recognized institutional diversity in U.S. higher education for decades. The organization’s 2018 classification system assigned Drexel to its category “R1 Doctoral Universities: Very High Research Activity.”
As a result, Philadelphia is now home to three top-tier research institutions. The University of Pennsylvania and Temple University are the others. The designation can help schools attract top faculty talent and boost its academic research efforts. Both are factors that can lead to more commercialization of research that can fuel the creation or growth of future businesses.
Penn Health System Names New CEO
The University of Pennsylvania Health System has announced its new CEO is Kevin Mahoney, currently executive vice president and chief administrative officer for the health system, will succeed longtime CEO Ralph Muller, who is stepping down from the post this summer.
Mahoney takes over as CEO on July 1. He will inherit the task of completing Penn Medicine's biggest building project ever: the $1.5 billion inpatient care pavilion set to open in 2021 ^. Mahoney, who also serves as executive vice dean for integrative services, has been with the Penn System since 1996.
Temple Outlines Changes Coming To Jeanes Hospital
Temple University Health System is planning to use Jeanes Hospital as a site for more elective procedures, and possibly a long-term acute care hospital, in an effort to improve its financial performance. Temple Health last year said it was considering the sale of both Jeanes and Fox Chase Cancer Center as it looked to improve the long-term financial viability of its health system.
Temple Health officials said in a conference call with investors that Jeanes is no longer on the auction block and system has already started the process of putting Jeanes under the same license as Temple University Hospital. Temple is in a 90-day exclusive negotiation period with Jefferson Health, which ends next month, regarding Jefferson's interest in buying the cancer center and Temple's stake in Health Partners Plans, a Philadelphia-based Medicaid and Medicare managed care organization.
Hotel Association Claims $1.6B Impact From New Fee
The Greater Philadelphia Hotel Association said a hotel fee earmarked for attracting major events to Philadelphia has secured millions of dollars in its first year to fund dozens of events with a combined impact of $1.6 billion.
Funded by a 0.75% assessment rate on top of a hotel's daily rate, the Philadelphia Hospitality Improvement Levy (PHIL) was created in 2017 to attract new business and incentivize major conventions and events to come to Philadelphia, including events the city otherwise could not afford to pursue. In 2018, the fee generated $5.6 million, in turn committing funding for 92 events through 2031 that would bring an economic impact estimated at $1.6 billion.
Calls to End Turnpike Commission Act 44 Payment To PennDOT
Auditor General Eugene DePasquale is urging state lawmakers to end or change a 2007 law requiring the Pennsylvania Turnpike Commission (PTC) to send $450 million each year to the Pennsylvania Department of Transportation (PennDOT) for public transportation projects in Philadelphia and statewide.
PTC is $11.8 billion in debt, with more than half of its $1.2 billion annual revenue going to debt payments. It has blamed the law, Act 44, for requiring toll hikes for 11 consecutive years. Meanwhile, groups representing motorists and the trucking industry filed a federal lawsuit last year alleging PennDOT is illegally using toll revenues for non-turnpike projects and seeking a refund of $6 billion.
During recent legislative hearings, Transportation Secretary Leslie Richards said the lawsuit and the removal of Act 44 funds could result in halting of current projects and cancellation of upcoming projects. In Philadelphia, those projects include crucial infrastructure and equipment improvements to SEPTA’s Market-Frankford Line, subway-surface trolley lines and Regional Rail.
Coalition Releases Report On Transportation Funding Crisis
The Southeast Partnership for Mobility, a collaboration between the PTC and SEPTA in coordination with PennDOT, is releasing today the results of a 15-month study of the region’s growing mobility challenges and ways to address the changes coming to Act 44.
Join us April 23 at The Union League for the next CCD/CPDC meeting and hear from SEPTA Board Chairman Pasquale T. Deon about SEPTA’s role as a major generator of economic activity in Center City and the region and the proposals for long-term revenue sources. See the final item below for additional details and RSVP information.
Residential Market News
7-Story Apartment Building Planned In Italian Market
A seven-story apartment building with parking spaces and retail could soon be coming to the corner of 9th Street and Washington Avenue. Recently revised plans from New York-based developers Midwood Investment and Development are for a mixed-use building with a first floor that has more than 15,000 square feet of retail space and 157 apartments on the upper floors.
The apartments will include a handful of studios, and primarily one- and two-bedroom spaces. Developers also plan to create 48 private parking spaces and 72 public spaces underneath the project. The space is currently home to Anastasi Seafood, which will relocate elsewhere in the market.
Philadelphia’s Housing Continues Q4 with Flat Prices, Strong Sales
House price appreciation in Philadelphia, citywide, remains modest while sales volume remains strong, according to the latest survey from Drexel University’s Lundy Institute for Urban Innovation. New Q4 data found that Philadelphia’s house prices are up 4.2% year-over-year (YOY) but show a deceleration from previous Q4s: in 2017 Q4, prices were up 6.4% YOY; in 2016 Q4, prices were up 11.8% YOY.
The report also found that median house prices citywide remain essentially flat and house price changes in individual submarkets are modest. However, home sales activity remains exceptionally strong while housing inventory plunged to a new all-time low in Philadelphia. From October to December, housing inventories dropped by nearly 1,000 units, from 4,331 to 3,336. Although inventories typically show a seasonal decline as the region transitions from the warm to cold weather months, this is now the lowest number of houses available for sale in Philadelphia since reporting began in 2001.
For details about Greater Center City market, including the surge in residential construction, visit the latest housing report from CCD/CPDC, Building Out From the Core, at https://www.centercityphila.org/research-reports/building-out-from-the-core-housing-report-2019
Center City Ends 2018 With Strong Growth In Apartment Rental Rates
Center City studio and three-bedroom apartments have experienced the strongest effective rental rate growth since 2014, approximately 11.5%. JLL reports that in the Greater Center City area, more than 9,300 new units have delivered in the last five years, mostly in ground-up construction.
While supply-side concerns and above-market concessions emerged in early 2018 as the market prepared for the delivery of nearly 2,500 units, JLL notes that the year closed out with strong occupancy in new deliveries, absorbing more than 1,500 units and pushing the market to above 80% occupancy for apartments leasing for at least $3 per square foot.
Construction Starting This Summer For $50M Esports Arena
Construction of a $50 million esports arena will begin this summer in South Philadelphia, Comcast Spectacor and The Cordish Cos. said the Fusion Arena – one of the first dedicated esports venues in the U.S. – will seat 3,500 video-game spectators. The site is near the Wells Fargo Center, Lincoln Financial Field, Citizens Bank Park and Xfinity Live.
This new, mixed-use 60,000-square-foot venture – to be built on what currently is a parking lot – will include a 10,000-square-foot training facility, two balcony bars, a broadcast studio and premium seating that could be used for events like concerts and corporate events. The venue's projected opening is 2021.
Revised Waterfront Proposal Calls For Fewer Townhomes, More Apartments
The developers behind a proposed residential development complex along the Delaware River in South Philadelphia have a revised their proposal to include fewer townhomes, more apartments, and a closer connection to a nearby walking trail. National Realty Investment Advisors of Secaucus, N.J., and Philadelphia-based U.S. Construction Inc. will present their new proposal Tuesday, April 2, to the Civic Review and Design Board.
The plans call for 92 townhomes on the north end of the property, down from the originally proposed 200, with a mixed-use building on the south end to include 330 multi-family units, 20,000 square feet of commercial space, and garage and surface parking. The project also proposes moving a planned riverfront plaza, thereby allowing the Delaware River Trail to pass uninterrupted between the development and the waterfront.
Mystery Sculptures On Vacant Lot Foreshadow New Museum
Ten life-size bronze sculptures appearing on a vacant lot on the 4700 block of Market Street are an unconventional announcement from the Daniel Veloric Foundation about a new museum planned for the site. City records indicate that the Veloric Foundation acquired the entire block along Market Street between 47th and 48th streets in 2017.
The foundation sold two of the lots at the corner of 48th and Market to Community College of Philadelphia, which intends to use the site to expand its automotive technology program. The rest of the block, studded with figures by New Jersey sculptor Seward Johnson, is being proposed as “a museum, classroom, and public meeting space and other community activities in West Philadelphia," according to the foundation’s 2017 federal tax return.
Developer Alterra Pays $17M For Semi-Demolished Church Site
Alterra Property Group has paid $17 million for a nearly one-acre property along the eastern side of 43rd Street, between Chestnut and Ludlow streets, where demolition has been underway of a 19th-century church on the site.
The purchase follows Alterra’s $9.9 million acquisition last year of a 16,300-square-foot former auto-maintenance-garage property about a block to the east, at 4125 Chestnut St., where a 130-unit apartment building is scheduled for completion by June.
Parks & Open Space News
Landscaper Providing Free Upgrades At Independence Mall
The grounds in front of Independence Mall and surrounding the Liberty Bell Center are getting major improvements at no cost. BrightView Holdings, a commercial landscaping services firm, will rehabilitate the grounds of Independence National Historical Park free of charge. Work is scheduled through the end of April.
The donated work will include sod replacement, irrigation system replacement or repair, updates to the gardens and hardscape along South Independence Mall East, planting beds and tree care.
Inc. Profiles Philadelphia’s Efforts To Add Immigrant Entrepreneurs
A new article in Inc. magazine profiles Philadelphia’s efforts to entice immigrant entrepreneurs to open businesses the city. The piece notes that “while places like New York and San Francisco price out some immigrant entrepreneurs, less-expensive Philadelphia is working hard to lure them,” from food cart operators to startup tech companies.
Among the efforts outlined in the article is Philadelphia's annual Immigrant Business Week, which hosts workshops for foreign-born founders; the Philadelphia Immigrant Innovation Hub (PhillyIHub), a co-working space and education source for immigrant entrepreneurs; the University City Science Center, an innovation and entrepreneurship hub on 24 acres in West Philadelphia; and the Global Startup Accelerator, launched in conjunction with the nonprofit Welcoming Center for New Pennsylvanians.
Ben Franklin Tech's Portfolio Companies Raised $345M In 2018
After ramping up investments in recent years, seed fund and economic development nonprofit Ben Franklin Technology Partners (BFTP) is reporting positive results. A new Performance Profile report shows that its portfolio companies raised $354 million in funding in association with BFTP’s investments in 2018, up from $152 million in 2017.
The increase comes as the Navy Yard-based company has increased its portfolio to 227 companies. BFTP helps startups access investors, corporations, the business community, universities, government and civic leaders and entrepreneurs.
PICA: City Spends $90M on OT Through Second Quarter
Overtime costs through the second quarter of FY2019 totaled $89.5 million, compared to almost $93.0 million over the same period last year – a 3.5% reduction in overtime spending, according to a new report from the Pennsylvania Intergovernmental Cooperation Authority (PICA). Departments with the highest overtime spending totals in FY2018, such as the Police, Prisons, and Streets Departments, have managed to decrease overtime costs. However, higher spending elsewhere offset those reductions.
PICA reported that 10 departments accounted for $86.7 million, or almost 97% of total overtime costs. The departments with the highest increases in overtime costs over last year were the Fire, Parks and Recreation, and Sheriff’s Departments.
CCD/CPDC Meeting April 23, With Release Of State Of Center City: 2019
Join us for the release of CPDC/CCD’s annual State of Center City report, where CCD President Paul R. Levy will provide an overview of the report highlighting the enormous strengths and progress in Greater Center City and the challenges Philadelphia still needs to address to make current growth even faster and more inclusive.
Hear from SEPTA Board Chairman Pasquale T. Deon about SEPTA’s role as a major generator of economic activity in Center City and the region and the proposals to secure and expand more sustainable, long-term revenue sources for SEPTA’s operating and capital needs.
First Deputy Commerce Director Sylvie Gallier Howard will focus on Philadelphia’s Global Identity Project – a plan to raise our visibility and tell our story more effectively regionally, nationally and globally through a common narrative and visual identity that promotes Philadelphia for business, talent and investment opportunities.
The meeting will take place April 23 at 8:30 a.m. at The Union League, Meade Room, 140 S. Broad Street.
CPDC members are encouraged to invite both young professionals and other members of their firms to attend this meeting. Please RSVP by April 17 to Romina Gutierrez at firstname.lastname@example.org or 215.440.5543.