CPDC Developments Newsletter - 05.29.19

Office Sector News

Neighborhood Group OKs Plan For New Center City Tower

A Center City community group has voted in favor of a 15-story office tower at 20th and Arch streets, a project that would create the first new corporate headquarters building in the downtown core in more than a decade. The Logan Square Neighborhood Association voted to approve the Parkway Corporation's plan for about 400,000 square feet of offices and ground-floor retail at the former rental car lot.

Parkway president Robert Zuritsky said during the community meeting that a prospective tenant for the parcel is considering sites outside the state, as well as a Philadelphia site that has been designated a Keystone Opportunity Zone (KOZ). But he said the prospective tenant wants to be in Philadelphia’s central business district, which continues growing in status among other businesses and potential recruitment candidates.

Office Tower Across from City Hall Hits The Market 

A 243,000-square-foot office tower across from City Hall is up for sale and could potentially trade for as much as $60 million. The 25-story building with the curved glass facade at 30 S. 15th Street, now being marketed as the Graham Building at Dilworth Park,  has been owned for the last 12 years by a partnership involving Grasso Holdings.

The building was constructed in 1985 and is currently 95% leased. Rents are in the low- to mid-$30s per square foot. Doug Rodio and Brett Segal of HFF are marketing the building.

New Retail Space Proposed For West Market Office Tower 

The new owner of 2000 Market Street is exploring constructing a “glass box” on an adjacent plaza to create new retail space and a distinguishing element for the office tower. New York-based Nahla Capital is proposing a structure that would total 9,832 square feet over three levels, one of which would be sunken into the existing courtyard.

Nahla Capital is in the middle of a $7 million capital improvement project at the 29-story, 665,649-square-foot building. Also on West Market, Shorenstein Properties has previously said it was contemplating plans for a two-story glass retail box that would be connected to 1700 Market Street, a 32-story, 848,000-square-foot office building it bought in 2016.

Biden Picks Centre Square For Campaign HQ

Presidential candidate and former Vice President Joe Biden has chosen a Center City location for his 2020 campaign headquarters. Biden, who was a senator from Delaware before serving eight years as Barack Obama's vice president, has leased a full floor of the Centre Square office complex. The campaign plans to have about 50 staff members in the central office, with the potential to add more down the road.

Centre Square, a two-building complex totaling 1.8 million square feet at 1500 Market Street across from City Hall, is best known for the Claus Oldenburg Clothespin sculpture in its front plaza. Centre Square has direct access to the subway and is undergoing a $12 million interior and exterior renovation. Nightingale Properties purchased Centre Square in 2017.

Coworking Operator Industrious Takes Space In Two Liberty

Industrious, a coworking operator, has leased 55,000 square feet in Two Liberty Place, where it will occupy two full floors. It will be the second Philadelphia location for Industrious, which entered the market in 2015 when it leased two floors, or about 21,000 square feet, at 230 S. Broad Street.

The new location will offer office spaces to accommodate 20 to 100 people. Industrious is expected to open in Two Liberty during the first quarter of 2020. Two Liberty Place was acquired in 2016 by Coretrust Capital Partners of Los Angeles. With the new lease, the 941,000 square feet of office space will be about 90% occupied.

Eds & Meds News

Chase Acquires Philadelphia Health Tech Firm For $500M

Center City-based health care payments tech firm InstaMed is being acquired by J.P. Morgan Chase in a deal worth a reported $500 million. J.P. Morgan Chase said the purchase will allow it to expand its payment services for health care consumers, providers and payers. InstaMed will remain in Philadelphia, keep its branding and continue to be led by co-founder and CEO Bill Marvin.

InstaMed employs 300 people, including 185 employees in Center City. In September 2018, it expanded its headquarters at 1880 JFK Boulevard to a third floor with 12,630 additional square feet, including a 3,200-square-foot "collaboration center" for hosting events and connecting with the region's entrepreneurship ecosystem.

Philadelphia Marketing Agency Evoke Acquires Irish Company

Philadelphia health and wellness marketing agency Evoke is acquiring a counterpart agency in Ireland. Center City-based Evoke has purchased Dublin-based KYNE, a specialty health communications agency providing public relations and patient advocacy services to pharmaceutical and biotech clients. Evoke acquired the agency for $17.4 million.

KYNE's 100 employees – spread across offices in London, New York, Los Angeles and Ireland – join Evoke's 600 employees located in Philadelphia and several other locations worldwide. Previously called Evoke Group, the company in mid-2018 rebranded and dropped "Group" from its name.

Jefferson Unveils Plan For Refugee And Immigrant Wellness Center

Jefferson Health and its affiliated Philadelphia Collaborative for Health Equity are creating a $5 million community center to serve immigrants and refugees. The Hansjörg Wyss Wellness Center is expected to open in early 2020 at the Bok Building in South Philadelphia. The project has received a $3.1 million gift from the Wyss Foundation.

The center will serve as a hub of Jefferson’s clinical and educational outreach activities and establish primary care and social services to community members regardless of health insurance or citizenship status. Dr. Marc J. Altshuler, director of the Jefferson Center for Refugee Health in Center City, said the wellness center also will serve as a training site for students of Jefferson's Sidney Kimmel Medical College.

Hospitality & Tourism News

2 New Boutique Hotels Planned In Center City 

Two new boutique hotels are planned for Center City. Estia Group, owners of Greek restaurant Estia and Italian restaurant Pietro’s, will develop a 14-story hotel called Blu Ivy at 11th and Sansom streets that will have 86 rooms and a 200-seat restaurant. Blu Ivy will be built on the site of the former Midtown II diner.

West of Broad Street, the Lau family of New York plans to develop a 14-story, 29,000-square-foot building at 15th and Cherry streets called the Revival Hotel that will have 64 micro-rooms. Both projects are scheduled to begin construction this year and are being designed by DAS Architects of Philadelphia.

National Museum Of American Jewish History CEO Resigns

The chief executive of the National Museum of American Jewish History (NMAJH), who steered the institution through economic challenges while mounting some highly regarded exhibitions, has resigned. Ivy L. Barsky, who was named CEO in 2012, will leave the institution at the end of June.

During Barsky's tenure, the museum created an education program around its core exhibition, launched special exhibition programming, and secured the long-term loan of George Washington's 1790 letter to the Hebrew Congregation of Newport, R.I. The museum had total revenue of $8 million in fiscal 2016.

Residential Market News

Calif.-Based Real Estate ‘Coliving’ Startup Launches In Philadelphia

San Francisco-based real estate startup Bungalow, which signs long-term leases with single-family homeowners and rents units in the residences, has arrived in Greater Center City. The company has launched in Philadelphia, its 10th market, with a portfolio of 13 three-bedroom properties in Center City and surrounding neighborhoods including Northern Liberties, Bella Vista, and Point Breeze.

It plans to more than triple its leases with city homeowners by year’s end. Rooms in the city range from $650 a month in Point Breeze to $970 a month near Washington Square, according to its website.

Ivy Realty Buys Two Center City Apartment Buildings 

Ivy Realty has purchased two Philadelphia apartment buildings for a total of $45.1 million. The Greenwich, Conn., real estate company bought the Lofts at Logan View, a 114-unit apartment property at 1666 Callowhill Street for $26 million. In addition, Ivy Realty bought the Old Quaker Building, a 76-unit complex on Lancaster Avenue in University City for $19.1 million, according to city property records. The seller was Reinhold Properties, a Philadelphia real estate company. 

The company currently owns 1600 Callowhill Street, a 93-unit apartment building next to 1666 Callowhill. Sonder, a San Francisco company that is taking on Airbnb and traditional hotels, leases all of the units at 1600 Callowhill.

Counter Capital Management Acquires 1501 Locust for $19.1M

Counter Capital Management has acquired 1501 Locust Street for $19.1 million. Barclays Capital provided a $14.1 million loan in the off-market transaction, in which Pearl Properties was the seller. The deal marks the first acquisition of Counter Capital, a new joint venture of Dalzell Capital Partners and Morning Calm Management.

The 10-story property was built in 1947 as an office building and converted into a multifamily property in 2010. It holds 29 apartment units plus three commercial units totaling 5,000 square feet. The building will soon undergo capital and operational improvements.

Development News

Mixed-Use Tower With 28 Residential Units Planned By The Parkway

A 17-story mixed-use tower with parking, commercial space, and residences is planned at the corner of 17th and Race streets, with 28 condominium units, ground-floor commercial space, a gym and 28 parking spots. The condos, ranging from 1,676 square feet to 2,450 square feet, will all offer two bedrooms and will each have access to a deck.

Three large 19th-century buildings will be cleared for the 190-foot tower project, dubbed the Residences on Race. Now used by nearby Friends Select School, the buildings have been owned and leased for the last 20 years by broker Steven Eizen, who is also helming the redevelopment proposal.

Developer To Extend Delaware River Trail For OK On Taller Towers

A large proposed development on the Delaware River waterfront could include a swath of a long-planned river trail in exchange for permission to build taller towers than local regulations permit. Developer Jeff Kozero will build the trail on a section of publicly owned land as part of the first phase of a potentially massive development that could span 18 waterfront acres between Washington Avenue and Reed Street.

The proposal includes 10 towers comprising nearly 2,000 residential units and a hotel. In addition to the public trail controlled by the Delaware River Waterfront Corporation, Kozero plans to create 2.2 acres of public space. The development, known as Liberty on the River, will rise behind the union hall of Sheet Metal Workers Local 19 on land purchased from the labor union.

Painted Bride Finds A Buyer After 2-Year Search

The Painted Bride, one of the city’s oldest arts venues, has found a buyer for its building on Race Street in Old City. Shimi Zakin, an architect and developer with Atrium Design Group, has offered $4.85 million for the building that for 37 years has been an art gallery and performance space. Zakin is known for high-end residential properties, having built modern apartments and townhouses in the Graduate Hospital, Northern Liberties, and Logan Square neighborhoods.

The Painted Bride has been seeking a buyer for almost two years. Proceeds from the sale will create an endowment to enable the organization to continue commissioning artists and presenting work through partnerships with other organizations, in other venues.

Retail News

$1M Pedestrian Plaza Coming To Reading Terminal Market

The 1100 block of Filbert Street outside Reading Terminal Market will undergo a $1 million transformation from a roadway to pedestrian plaza with 15,000 square feet of public space. The renovation is slated to open in spring 2020 and will be funded by a combination of state dollars and grants from nonprofits including the Knight Foundation.

Plans for the new plaza include widened sidewalks, no curbs, and areas with modular seating. It will be fronted by retractable bollards that, when raised, make it impassable to cars.

Acme To Invest Millions In Upgrades To 16 Philadelphia Stores

While supermarket chain Acme Markets reports that it has lost sales due to the city soda tax, it is moving forward with plans to invest millions of dollars into store renovations. Last year, it spent $42 million on renovations and plans another roughly $40 million this year.

Though the company is seeing business decline at most of its Philadelphia stores, Acme’s decision to spend millions remodeling is part of a broader effort to preserve its regional market position – third in sales volume behind ShopRite and Giant. Acme has 16 stores in Philadelphia and plans to remodel seven this year to add wine and beer sales, the Philadelphia Business Journal reports.

Urban Outfitters To Launch Clothing Rental Business

Urban Outfitters this summer will introduce a new clothing rental service called Nuuly to compete with companies like Rent the Runway. Urban Outfitters — parent company of the namesake brand, as well as Anthropologie and Free People — through Nuuly will give shoppers a choice to borrow six items at a time from its brands, outside labels including Reebok, and vintage pieces.

The Philadelphia retailer will charge Nuuly customers $88 a month. It aims to add 50,000 subscribers and generate over $50 million in annual revenue. David Hayne, chief digital officer and son of CEO Richard Hayne, will run Nuuly, which will operate as a separate entity.

Transportation News

Voters Approve New Traffic Enforcement Officers

Philadelphians who voted in the May 21 primary have approved creating a new class of public safety officers tasked with controlling traffic and enforcing other quality-of-life laws. The 69% approval vote in favor of amending the city’s Home Rule Charter to create a new breed of civil servant marks a key step forward in plans to reduce downtown congestion.  

The unsworn officers will not carry guns or make arrests, but they will be able to issue some citations, freeing up police officers to focus on more serious crimes. The program is expected to roll out around this time next year. Over the next 12 months, the Managing Director’s Office will hash out details such as the number of officers, their duties, and deployment.

As noted in CCD/CPDC’s March 2018 congestion report, Keep Philadelphia Moving, the increase in jobs and residents, new tourist destinations, hotels, retail and restaurants has led to an increase in car, bus and truck traffic and a 30% increase in pedestrians since the end of the recession. CPDC, along with the Philadelphia Police Department, expressed support of the addition of traffic enforcement officers to relieve downtown’s worsening congestion.

Philadelphia Picked For Eco-Friendly Transportation Program

The National Association of City Transportation Officials (NATCO) is partnering with Philadelphia and four other cities to speed the implementation of bike and transit corridors designed to reduce carbon emissions. The other participating cities are Atlanta, Boston, Denver and Minneapolis.

The partnership is part of a wider effort called the American Cities Climate Challenge, and will also involve the Natural Resources Defense Council and consultancy Delivery Associates. NACTO will provide technical expertise, convene workshops, and foster communication between the five cities and NACTO’s broader network of 82 North American cities and transit agencies to share information on similar projects completed in their own communities.

Mayors Of Philadelphia, 3 Other Pa. Cities Urge Bike Lane Bill Passage

A joint letter from Philadelphia Mayor Jim Kenney, Pittsburgh Mayor Bill Peduto, Harrisburg Mayor Eric Papenfuse and Lancaster Mayor Danene Sorace is calling on state lawmakers to pass a pair of bills to legalize “parking protected bike lanes” to place a buffer between cyclists and automobile traffic.

The letter states that the proposed change would allow safer bike facilities for projects currently under design in Philadelphia and Pittsburgh, as well as future projects elsewhere in Pennsylvania. House Bill 792 was introduced in March and Senate Bill 565 in April. Both bills remain in the Transportation Committees of their respective chambers.

Government News

PICA: Revenues, Expenditures In Q3 $100M Higher Than Projections

City revenues for FY2019 are projected at $4.7 billion and expenditures are projected at $4.8 billion, according to a new Pennsylvania Intergovernmental Cooperation Authority (PICA) analysis of Philadelphia’s Quarterly City Managers Report (QCMR) for the third quarter ended March 31. These estimates increased over the projections in the City’s FY2019-FY2023 Five Year Plan by $99.6 million and $98.5 million, respectively.

The estimated year-end General Fund balance for FY2019 is projected to total $280.8 million, $141.3 million higher than in the Five-Year Plan. While both revenue projections and expenditure projections increased, it appears that expenditures will once again outpace City revenues in FY2019, PICA noted in the report. Over the last four years, the City budget has increased by more than $800 million.

Upcoming Events

Save the Date: The Next CPDC Meeting is June 25

Mark your calendars for the next meeting of the Central Philadelphia Development Corporation (CPDC), taking place on Tuesday, June 25 at the Union League. More details on the meeting and an invitation will be coming soon.

CPDC members are encouraged to invite both young professionals and other members of their firms to attend this meeting.