Developments for May 26, 2020
Office Sector News
IBX Buys Its HQ Tower For $360M
Independence Blue Cross (IBX) has reached an agreement to purchase the 45-story tower at 1901 Market Street that houses its Center City headquarters. The region's largest health insurer had previously owned the 801,000-square-foot building, which was purchased in 2003 by Georgia-based Piedmont Office Realty Trust for $174 million.
The reported sale price of $360 million, or roughly $450 per square foot, will be one of the top transactions for a Philadelphia office building on a per-square-foot basis. IBX, which recently invested upwards of $100 million in upgrades to the building, has a lease agreement through 2033 and two additional 10-year options to remain in the space.
$100M Development In University City Lines Up Another Tenant
The Barer Institute, a collaborative cancer drug development initiative, intends to lease space at the planned 3.0 University Place development in University City. The institute signed a non-binding letter of intent to occupy 2,500 square feet on the fifth floor of the building that will feature 10 other suites of the same size, all dedicated to startup companies.
The proposed $100 million, 250,000-square-foot building is being developed at 41st and Market streets by University Place Associates, which has built two other buildings in the vicinity of 30th and Market streets and has plans to build a bigger campus there. Other tenants that have committed to the building include the Wistar Institute, Ben Franklin Technology Partners and Fulton Bank. In all, 80,000 square feet is leased so far.
Workers Miss Their Offices But Want Safety Protocols In Place
Predictions that working from home would lead to the “end of offices” are far off-base, according to the results of a new Gensler survey. The global architectural firm surveyed more than 2,300 U.S. workers from 10 industries about their remote working experiences during the current crisis and found that 74% of office employees miss being at work.
While survey respondents expressed eagerness to return to their offices in some fashion, they said that the “new normal” in the workplace must include a combination of more space, more cleaning and stricter sick policies.
Eds & Meds News
Jefferson Finds Commercial Partner For Vaccine Candidate
A new licensing deal between Thomas Jefferson University and Bharat Biotech will give the Indian life sciences firm exclusive rights to develop a COVID-19 vaccine candidate developed by Jefferson researchers. Under the agreement, Bharat will have the rights to produce and market Jefferson’s vaccine, if approved, in more than 80 countries.
The experimental vaccine is made from part of the current coronavirus and is combined with a deactivated rabies vaccine, which serves as a carrier. Recently completed preliminary tests showed a strong antibody response in mice that were administered the vaccine. The partnership will help Jefferson complete animal testing and move to a Phase 1 clinical trial.
Region Set To Add Thousands Of Cell And Gene Therapy Jobs
An independent study is forecasting thousands of new jobs in the Philadelphia region's cell and gene therapy and connected health industries in the decade ahead.
The study — commissioned by CEO Council for Growth, the University City Science Center and University City District’s West Philadelphia Skills Initiative — found the region has about 4,900 people working at cell and gene therapy companies, contract manufacturing organizations, biopharma companies, research organizations or research hospitals in the cell and gene therapy fields. Another 700 people in the region work in connected health, digital health, telehealth or mobile health.
The report states that employment in these sectors in the next decade is expected to grow 35% to 94% using mid-range growth estimates and 54% to 136% using high-range growth estimates. The report researchers believe the projections remain valid despite the current health crisis, which occurred after data was collected.
Penn Lays Out 4 Scenarios For Fall Semester
The University of Pennsylvania has released four scenarios for the fall term, ranging from ending in-person classes after Thanksgiving break to an entirely virtual learning model. In an email to students, Penn said that until a coronavirus vaccine is available, “even the best scenarios foresee a fall semester and a school year that requires new community-wide protocols and practices.”
The scenarios include implementing a hybrid of in-person and online instruction; or ending the semester’s in-person instruction at Thanksgiving break with additional class meetings scheduled for evenings or Saturdays; or expanding summer class offerings in 2021; or continuing the current online-only instruction for the entire fall semester. The school said it will announce a decision by the end of June.
Well-Positioned For Success When Leisure Travel Resumes
New research suggests that domestic leisure travel will lead the tourism industry’s post-pandemic recovery. Philadelphia is well-positioned to capitalize when the first stage of recovery begins, given that our location is within a five-hour drive of a quarter of the U.S. population.
In partnership with Russell Research, Visit Philadelphia has been gathering data since mid-March to gauge public sentiment about travel in the region. The latest findings show that respondents in the designated market area (DMA) are becoming more optimistic about travel, with 31% saying they feel things are improving, compared to only 5% in March and April. Visit Philadelphia’s research also found that nearly 33% of respondents in the Philadelphia DMA would feel most comfortable taking a day trip as their first leisure trip.
PHLCVB Names New President & CEO
The Philadelphia Convention and Visitors Bureau (PHLCVB) has named Gregg Caren as its new president and CEO, effective June 8. Caren, who has more than three decades of experience in the industry, most recently served as executive vice president of sales and strategic business development for ASM Global, which operates more than 350 venues worldwide. He also worked in various senior leadership positions with the company for 20 years.
Caren is replacing Julie Coker, who filled the role for about a decade and is headed to lead the San Diego Tourism Authority. The two will work together on a transition plan before Coker, who extended her stay due to the economic fallout from the coronavirus pandemic, departs on May 28.
Residential Market News
PMC Pursuing A New Project Near Its River Walk Development
PMC Property Group is planning another apartment building adjacent to its River Walk high-rise complex under construction along the Schuylkill waterfront. The Philadelphia Inquirer reports that the developer was granted a zoning permit last week for a 115-unit, 45-foot-high building on the parking lot at the northeast corner of 23rd and Cherry streets.
The proposed project at 139 North 23rd Street also includes 46 parking spaces, most of them in an underground garage. Adriano Calvanese, a PMC vice president, told the Inquirer that the company remains “confident in the strength and resilience of the Philadelphia market.”
Permits Posted For 23-Story Residential Tower At 17th & Race
Building permits have been posted for a 23-story reflective-glass residential tower to rise next to the Cathedral Basilica of SS. Peter & Paul as a first phase of development at the Center City property.
The development by Exeter Property Group is planned for the corner of 17th and Race streets, currently the site of a vacant convent building and a parking lot. The 245-foot-high building will have 273 dwelling units and a landscaped public plaza.
Small Number Of Houses On The Market Sold Quickly In April
Houses for sale in the Philadelphia region sold more quickly in April and at higher prices than they have in a decade, due to historically low mortgage rates and low housing inventory, according to multiple listing service Bright MLS. The median sale price was $272,100, the highest for any April in the last 10 years and more than $32,000 higher than April of last year.
The median number of days a home in the Philadelphia area spent on the market was 16 last month, a 10-year low, according to Bright MLS, which represents about 95,000 real estate professionals in the mid-Atlantic region.
Low-Wage Sectors Take Biggest Economic Hit In Current Crisis
The economic impact of the COVID-19 pandemic is striking some sectors harder than others—and among them are several in which the jobs of city residents are concentrated, according to a recent analysis by the Pew Charitable Trusts.
Accommodations and food services; arts, entertainment, and recreation; and retail trade are among the industries expected to be most vulnerable nationally to immediate disruption from social distancing measures to control the novel coronavirus’ spread. Philadelphia residents make up a large share of these sectors locally, which tend to have high numbers of lower-paying jobs. As a result, a larger proportion of Philadelphia workers may be most vulnerable to the financial impact of current or future layoffs.
The findings on jobs are very similar to the CCD/CPDC report released last fall, Growing More Family Sustaining Jobs in Philadelphia, which found that the city has grown a disproportionately larger share of lower wage jobs than both the nation as a whole and the 25 largest U.S. cities.
Cleaning Is Key For Consumers To Return To Physical Stores
A new survey conducted by the International Council of Shopping Centers sheds light on what retailers must implement to make consumers comfortable with returning to brick-and-mortar establishments.
Consumers ranked frequent cleaning and sanitizing as the top (66%) measure that would make them more likely to return to physical stores. It was followed by having hand sanitizer stations and/or disinfecting cloths for shoppers (62%); seeing staff wear gloves and/or masks (49%); requiring staff/employee training on hygienic protocols (48%); implementing measures that facilitate in-store social distance (48%); and putting in place new occupancy limits (44%).
Forty-seven percent of respondents ranked transit hubs and live events venues as the places they had the most (47%) concerns about visiting, closely followed by movie theaters (46%) and restaurants/bars (44%). Physical stores/shops were further down on the list of concerns (24%).
PREIT Expresses Concerns About Its Outlook
PREIT said in its first quarter report filed with the Securities and Exchange Commission that it is uncertain about whether it will “continue as a going concern within one year” of the filing. The owner of 20 malls including Fashion District Philadelphia said its cash flow has been most recently hampered by tenants delaying rent payments or seeking reductions due to coronavirus-related store closures.
PREIT was able to work with its lenders to amend certain requirements on its loans earlier this year, but told the SEC that the relief will last until the end of September. The company is hopeful several pending deals will help its outlook, including the sale-lease back of five of its mall properties.
6 Rittenhouse Parcels Sell For $25M
Six contiguous parcels in the Rittenhouse Square neighborhood are under agreement for an estimated $25 million. The properties, which are zoned CMX-5, span 1822-1824 Chestnut Street and 113-121 South 19th Street.
The portfolio was put up for sale by the Kean family and purchased by Pearl Properties, which most recently completed The Harper at 112 South 19th Street. The 25-story apartment building has 167 apartments, 25,000 square feet of retail, 10,000 square feet of office space and K’Far Café on the ground floor.
SEPTA Fare Restructuring Includes Free Transfer, Discount Child Fares
SEPTA plans to implement free transfers and discounted $1 child fares and to defer all proposed fare increases until at least January 2021. If approved by the SEPTA board at its virtual meeting scheduled next month, these elements of the overall fare restructuring plan would go into effect July 1.
SEPTA will also advance a plan for new passes with an expected rollout in the fall, providing new options for those who ride SEPTA fewer than five days a week. The options will include a three-day pass, valid for 72 hours from the time of the initial trip.
State Government News
Philadelphia Will Enter ‘Yellow’ Reopening Phase By June 5
Gov. Tom Wolf announced that Pennsylvania counties still under strict coronavirus-related restrictions — including Philadelphia and its suburbs — will move to the “yellow” reopening phase by June 5.
Under the Wolf administration’s reopening plan, 49 of 67 counties are already in the yellow phase, or the first phase of reopening, in which limitations on public gatherings remain, and restaurants and bars remain closed to in-person business. Gyms, salons, malls and movie theaters also remain closed.
City Government News
PICA: April Tax Collections Drop 55% Compared To Last Year
Philadelphia collected approximately $287.1 million in General Fund tax revenue in April 2020, compared to $639.7 million in April 2019, a decrease of approximately $352.6 million, or 55.1%, according to preliminary figures from the Pennsylvania Intergovernmental Cooperation Authority (PICA). All of the City’s major tax types saw decreases in April except the City sales and beverage taxes, which saw moderate and slight increases, respectively.
The City portion of the wage, earnings, and net profits taxes decreased by $14.6 million or -8.2%. The rest of the decreased tax types did so by double digits, including the business income and receipts tax, or BIRT, (-80.5%), real estate (-52.1%), realty transfer (-65.4%), parking (-50.0%), amusement (-91.9%) and other miscellaneous (-35.1%) taxes. “Whereas March collections showed only the beginning of the decline in tax revenue due to COVID-19, the impact has become fully clear in April as tax revenues declined by more than half compared to last year,” PICA noted.
Fiscal year-to-date collections are behind last year by -5.5% through April. While only three major tax categories (BIRT, parking, and amusement) are showing year-to-date decreases, the $352.6 million overall decrease in April collections was enough to push FY2020 into negative territory.
CCD Adds Overnight Security Patrols In Prime Retail Areas
With the support of several major owners of retail properties, CCD has retained Allied Universal Security to provide overnight vehicular patrols in the Rittenhouse Row and Midtown Village areas from 8 p.m. to 6 a.m., seven days a week.
The goal is to provide additional eyes and ears on the street, with vehicles patrolling each of the prime retail streets in those areas several times per hour. The Rittenhouse Row patrols started on May 4 and Midtown Village started on May 16. Click below for more details about CCD services.