News

CPDC Developments Newsletter - 07.10.18

Local Government News

Roundup: City Council Spring Session
Upon the completion of City Council’s spring session, PlanPhilly published an overview of where many key bills currently stand:

Property-Tax Abatement: Councilwoman Helen Gym’s bill, which proposed exempting the 55% of every property-tax dollar that goes to the Philadelphia School District from the 10-year property-tax abatement, was pulled from committee before receiving a hearing. However, abatement reform is widely expected to be on the agenda in the fall.

Inclusionary Zoning: The bill allows developers to build taller and denser buildings in many more parts of Philadelphia, including most multifamily districts, while requiring them to pay far less into the city’s Housing Trust Fund than the previous bonus required. Council unanimously approved the measure passed on the final day of the spring session, and the mayor is expected to sign it.

1% Construction Tax: A proposed 1% construction tax was narrowly approved by City Council with a 9-8 vote on the last day of the session. Mayor Jim Kenney has been a vocal critic of the construction tax and there is reason to believe that a veto is likely.

Mandated Property Appraisals: Councilman Allan Domb’s bill calling for appraisals of sales or purchases of real estate worth more than $200,000 by the City of Philadelphia is now law.

Giving Tax Assessment Powers To City Council: After the City Administration gave no advance notice of the citywide reassessment carried out by the Office of Property Assessment, which reports to the Finance Director, and substantial tax reassessments took many residential property owners by surprise, Councilman David Oh sought to give City Council the power to approve or deny any increase above the rate of inflation. Amid criticism that the measure would politicize the assessment process, the bill never made it out of committee. Instead, City Council will be auditing the Office of Property Assessment.

New Keystone Opportunity Zones: The Finance Committee approved 81 sites for tax-free Keystone Opportunity Zones covering a total of 93.7 acres. No further action was taken this session, but the bill will have to be wrapped up before the October 1 state deadline for new KOZ considerations.

Mandatory Parking Minimums: Councilwoman Jannie Blackwell resurrected a 2016 bill that would double parking requirements in most parts of the city. It proved to be unpopular with community associations, real estate developers, and affordable-housing groups, as was a scaled down revision. A compromise version will likely be on the agenda again in the fall.

Transit Oriented Development Overlays: Councilwoman Maria Quiñones-Sánchez introduced legislation that would allow developers to build denser and taller buildings around four El stops on the Market-Frankford Line. Despite endorsement from the Planning Commission and unanimous approval by the Rules Committee, the bill remains in limbo.

Longtime Owner Occupants Program (LOOP) Expansion: LOOP was designed to offer property-tax relief to longtime, lower-income homeowners reeling from spikes in home valuations resulting from the 2014 Actual Value Initiative. Legislation to scrap LOOP’s 10-year limit was passed and signed into law during the spring session.

Spot Zoning In University City: Councilwoman Jannie Blackwell tried in April to change the zoning of a University City parcel, containing a vacant motel with no pedestrian access, to allow the construction of a skyscraper. Blackwell told PlanPhilly she scrapped the bill.

Callowhill Business Improvement District: The legislation allows the leaders behind the proposed Callowhill BID, spearheaded by Arts and Crafts Holdings LLC, to begin discussing the proposal with property owners. The bill is on the mayor’s desk and is expected to be signed.

Northern Liberties Business Improvement District: The enabling legislation for this new BID passed in early June, and it is now law.

More: planphilly.com/articles/2018/06/28/a-retrospective-what-passed-muster-with-city-council-and-what-didn-t

Office Sector News

After Tripling In Size, Gordon & Rees Moves To 1717 Arch
Since opening its Center City office in 2013 with eight former Cozen O’Connor partners, San Francisco-based law firm Gordon & Rees has tripled in size in Philadelphia. The growth led to a move in June to Three Logan Square at 1717 Arch St., where it will occupy most of the 6th floor.

Gordon & Rees has signed a 10-year lease with options to expand. It retains the same landlord, Brandywine Realty Trust, as it had at its former location at One Commerce Square and increases its square footage from 11,000 to 14,000.

More: bizjournals.com/philadelphia/news/2018/06/26/gordon-rees-relocates-logan-square-law-firm.html

MRP Realty To Sell Two Center City Office Buildings 
MRP Realty has put up for sale 400 Market St. and 325 Chestnut St., two buildings that were part of a $110 million deal for four buildings in Old City.

The four properties Washington, D.C.-based MRP bought in the 2016 deal totaled 702,014 square feet and also included 111 South Independence Mall East — also known as the Bourse building — and 400 Ranstead St., which is a garage. The company has not put up for sale the Bourse and the garage.

The building at 325 Chestnut, built in 1960, has 13 stories and 211,818 square feet of space that is 72.9% occupied. The building at 400 Market, built in 1967, has 12 stories and 185,522 square feet of space that is 91.7% occupied.

More: bizjournals.com/philadelphia/news/2018/06/25/mrp-realty-to-sell-two-center-city-office.html

NKF Arranges $355M Refinancing For 3 Office Buildings
NKF Capital Markets has arranged two loans totaling $355 million to refinance three Center City office buildings: 1500 Spring Garden Street1635 Market Street and 1835 Market Street. NKF Capital Markets arranged the loans on behalf of the borrowers, Nightingale Properties and Wafra Capital Partners.

Nightingale acquired the 1.1 million-square-foot 1500 Spring Garden in 2013. Upon acquisition, the company implemented a $10 million capital improvement program to upgrade the lobby, elevators, restrooms and newly leased spaces. Nightingale acquired 1635 and 1835 Market in 2014. The buildings total 286,000 square feet and 800,000 square feet, respectively.

More: citybizlist.com/article/488252/nkf-capital-markets-secures-two-loans-totaling-355m-for-refinancing-of-1500-spring-garden-1635-market-street-and-1835-market-street

Development News

Philadelphia Adopts 2018 International Building Code
Philadelphia is one of the first on the East Coast to implement the 2018 International Building Code, which incorporates more environmentally sustainable building practices in commercial construction.

New requirements include: increasing buildings’ wind resistance to stand up to increasingly severe storms due to climate change; installing lighting systems that use less energy and windows that screen out more heat while still letting in light; and building stronger stair towers used in high rises during fire emergencies.

Under the code, which takes effect October 1, new commercial or multifamily construction will be safer and up to 30% more energy efficient, saving up to $51 million annually in energy costs.

More: beta.phila.gov/2018-06-28-philly-becomes-national-building-code-leader/

RAL To Break Ground On $190M Project At 1300 Fairmount 
RAL Development is prepared to break ground at 1300 Fairmount, a 14-story mixed-use development, by the end of the summer and has made headway in leasing up a portion of 58,000 square feet of retail space built into the project. Plans include 471 apartments, 287 parking spaces and the retail space. In all, the building will total 625,000 square feet. The $190 million project is expected to be completed by the end of 2020.

The project is located near the North Broad Street corridor, an emerging residential market with additional developments including the Divine Lorraine, Hanover North and Mural Arts, as well as the revitalization of the Spring Arts neighborhood to the east near the new Rail Park.

More: bisnow.com/philadelphia/news/multifamily/new-multifamily-retail-mixed-use-13th-fairmount-ral-development-90024

George Foreman III To Open Luxury Boxing Gym In Center City
George Foreman III will open the seventh location of his EverybodyFights, a luxury boxing gym, at 1900 Market St. The 12,000-square-foot gym will have four classrooms, two steam rooms, a coffee and juice lounge, and will host about 100 classes per week.

Foreman III -- the son of Olympic gold medalist, world heavyweight boxing champion and entrepreneur George Foreman Sr. -- said the gym is slated to open in winter 2019. The Philadelphia location is expected to employ more than two dozen people, including about 15 trainers.

More: finance.yahoo.com/news/everybodyfights-coming-philadelphia-140000041.html

Bookbinder's Former Space Up For Sale 
A commercial condominium housing the Olde Bar, a Jose Garces restaurant in the space once occupied by the landmark Old Original Bookbinder’s, has been put up for sale. The 13,017-square-foot space at 125 Walnut St. is listed for $3 million.

The property is owned by an entity affiliated with Renaissance Properties, which has owned the structure for roughly 15 years and redeveloped the upper floors of the building into 19 condominiums called the Moravian.

The Olde Bar has a long-term lease on the space. Garces Group is in Chapter 11 bankruptcy proceedings but Larry Steinberg of Rittenhouse Realty Advisors, who is marketing the property for sale, said Olde Bar is expected to remain in the property.

More: bizjournals.com/philadelphia/news/2018/06/29/bookbinders-olde-bar-garces-renaissance-properties.html

Center City Mixed-Use Property Sells for $21M 
Dalzell Capital Partners, a Westport, Conn., real estate investment firm, has paid $21 million to buy the Waverly Court apartment complex at 412-26 S. 13th St. The property last sold in March 2014 for $6.92 million, prior to its expansion to 61 apartments from 27 apartments. The restaurant Amis continues as the property’s ground-floor retail tenant.

The purchase is the third for Dalzell Capital in Philadelphia and the firm plans to look for other potential deals in the city. Last year, the company bought 1430 South St., a 35-unit mixed-use building, for $10.8 million and 514 South St., a 33-unit mixed-use property, for $10.35 million.

More: https://commercialobserver.com/2018/06/dalzell-capital-closes-on-21m-philly-mixed-use-acquisition/

Residential Market News

NYC Developer Planning $2 Million Townhouses On South Broad 
Brooklyn-based Heights Capital Partners is planning to break ground this fall on a development of 10 townhouses on the long-vacant lot at the southwest corner of Broad and Fitzwater streets.

The townhouses, which are expected to range from 4,000 to 5,000 square feet and go for around $2 million each, are likely to be completed by fall 2019. OCF Realty, founded by developer Ori Feibush, will be the broker.

Heights Capital Partners is also planning a 38-unit apartment project at Ridge Avenue and Mount Vernon Street in North Philadelphia, just a few blocks south of the revived Divine Lorraine building.

More: philly.curbed.com/2018/6/25/17500214/developer-nyc-building-broad-fitzwater-south-philly-retail-homes

Philadelphia Rents Are Up Since Summer 2017
A new study by Apartment List examining three years of annual rental rates in the top 25 U.S. cities ranks Philadelphia as 11th for year-over-year rent growth.

Compared with this time last year, rental rates have grown 1.2%. Last year, the city was 17th on the same list with 1.7% growth. In 2016, the city was also 11th, but with 3.5% growth. In 2015, the city experienced 2.1% growth, placing it 19th in the rankings.

More: apartmentlist.com/rentonomics/rents-growing-fastest/

Hospitality and Tourism News

AKA Rittenhouse To Get $10M+ Renovation 
The 12-story, luxury hotel AKA Rittenhouse Square will get a $10 million revamp to include amenities sought by corporate groups and film production companies.

The overall renovation project for the property at 18th and Walnut streets is expected to be complete by the end of March 2019, with a number of items slated to open this summer. Rooms and other facilities will be upgraded, and new additions will include a private, seven-seat cinema, a library, and two boardrooms.

More: hotelmanagement.net/aka-rittenhouse-square-unveils-new-amenities-and-enhancements-led-by-nicholas-cardone

$40M San Francisco Convention Canceled Amid Safety Concerns
A large medical association that has held its conventions in San Francisco every three to four years since the 1980s is looking for a new host city because attendees feel unsafe. The organization, which San Francisco tourism officials declined to identify, said their members were afraid to walk in the city amid the homeless tent encampments, open drug use, threatening behavior and mental illness that are common on the streets.

The medical organization’s five-day trade show typically draws 15,000 attendees and pumps about $40 million into the local economy. Tourism is San Francisco’s biggest industry, employing 80,000 people and generating more than $725 million in local taxes.

More: sfchronicle.com/bayarea/matier-ross/article/SF-s-appalling-street-life-repels-residents-13038748.php

Small Business News

Work To Repair Broken Water Main Could Take Months
It is expected to take months to clean up and repair the mess caused by a 48-inch water main that burst below the intersection of Juniper and Sansom streets on July 3. The predawn break of the 91-year-old cast iron water main sent about 15 million gallons of water into the streets, flooding 30 to 40 buildings, including a number of restaurants in an area that is densely populated with eateries.

Owners who sustained damage can file a claim, but the city’s liability is limited to $500,000. City agencies will be surveying damage of each property in the coming week and advising building and business owners about how to apply for federal disaster loans and small-business emergency loans.

More: philly.com/philly/news/pennsylvania/philadelphia/water-main-break-center-city-philadelphia-repairs-20180705.html

Transportation News

SEPTA Set To Begin Rollout Of Key Card Regional Rail Passes
Some SEPTA Regional Rail passengers will soon be able to use a Key Card loaded with a Monthly TrailPass for their rides, marking the next phase in the rollout of the transit agency’s new payment system.

Under an “early adopters” program starting August 1, riders will be able to travel to and from one of 19 selected Zone 4 stations using the Key Card. They can purchase Key Cards loaded with the pass starting July 20, when Monthly TrailPasses go on sale. The Key Card program for Regional Rail will eventually expand to include Zones 1, 2, and 3, and allow for the purchase of Weekly TrailPasses.

More: septa.org/media/releases/2018/6-28-18.html

Philadelphia Eyed By Dockless Bike Share, Scooter Companies
The city’s Office of Transportation and Infrastructure Systems (OTIS) has been directed to formulate a set of regulations and licensing requirements for dockless bike share and electric scooters. OTIS plans to develop those rules over the summer, with the hope of beginning to accept license applications this fall.

Dockless bike share and “e-scooters” are self-locking and can be left anywhere. Other cities have reported problems caused by users dropping their bikes everywhere, including in the middle of sidewalks, so OTIS is examining how these issues have been addressed and managed elsewhere.

Indego, the popular bike-share service that debuted in 2015, will continue to operate and plans an expansion of its docking locations later this summer.

More: billypenn.com/2018/06/05/dockless-bike-share-is-coming-to-philly-could-be-active-by-end-of-year/

Economic and Employment News

Manufacturing, Service Industries Continue Growth in June
Manufacturing continued to grow in the region in June, according to responses to the Manufacturing Business Outlook Survey conducted by the Federal Reserve Bank of Philadelphia, with new orders up for 38.0% of firms, down for 20.2%, and remaining the same for 41.8%. The number of employees increased for 33.5% of the companies, decreased for 3.1%, and was unchanged for 59.9%.

Looking ahead six months, 47.8% of the firms expected conditions to improve, 13.0% anticipated a downturn, and 28.0% predicted no change.

Business activity continued to expand in the region’s service sector in June, according to responses to the Nonmanufacturing Business Outlook Survey, with new orders up for 49.0% of firms, down for 13.5%, and remaining the same for 14.6%. The number of full-time permanent employees increased for 29.7% of the companies, decreased for 9.8%, and was unchanged for 60.3%.

Looking ahead six months, 47.8% of the firms expected conditions to improve, 8.7% anticipated a downturn, and 42.0% predicted no change.

For the Manufacturing report, go to philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2018/bos0618

For the Nonmanufacturing report, go to philadelphiafed.org/research-and-data/regional-economy/nonmanufacturing-business-outlook-survey/2018/nbos0618

Eds and Meds News

Jefferson Gets $2M For Population Health Professorship 
Thomas Jefferson University is creating what it is calling the country’s first nationally focused professorship in population health, thanks to a $2 million gift from Navvis, a St. Louis-based population health managed services company.

Dr. David Nash, founding dean of the Jefferson College of Population Health, said what makes the arrangement unique is it marks the first time a commercial entity has funded a professorship in the field.

Navvis works with health plans, health systems, providers and employers to eliminate the “barriers, boundaries and siloed efforts that fragment care.”

More: businesswire.com/news/home/20180625005323/en/Thomas-Jefferson-University-Navvis-Establish-Nation’s-Nationally-Focused

Wills Eye Gets $5M Gift To Expand Research Initiatives
Wills Eye Hospital has received a $5 million gift that will be used to augment the Center City medical center's vision research programs. The donation by philanthropists Vickie and Jack Farber will support development of new research initiatives in data mining and analytics, tele-ophthalmology, expanded community-based research and the creation of a clinical trials unit.

The Farbers previously gave Wills Eye a $2 million gift that allowed it to expand its research efforts. In 2016, they donated $20 million to Thomas Jefferson University and Jefferson Health to strengthen the Center City neuroscience institute that bears the couple’s name.

More: willseye.org/5-million-gift-to-support-vision-research/

Penn Immunotherapy Spinoff Closes $53M Financing 
Carisma Therapeutics Inc., a University of Pennsylvania spinoff formerly called Carma Therapeutics, has closed a $53 million series A investment round. Carisma was founded last summer by Saar Gill, an assistant professor of hematology-oncology at the University of Pennsylvania’s Abramson Cancer Center, and Michael Klichinsky, a Ph.D. candidate at Penn, in partnership with Penn’s UPstart Program.

Carisma said it is building a cancer-fighting platform it calls CAR-Macrophage, which it says is designed to use disease-fighting cells to target and kill cancer tumor cells, while also boosting the body’s immune response.

More: technical.ly/philly/2018/06/27/penn-50m-biotech-investing-push/

Culture and History News

Inquirer Urges Action To Save Philadelphia History Museum
The Philadelphia Inquirer’s editorial board on July 2 urged action to prevent the permanent closure of the Philadelphia History Museum at the Atwater Kent, likening the move to “throwing away the family photo album.”

The museum closed after the breakdown of talks for a potential partnership with Temple University, with hopes that it would allow the museum to reduce or eliminate the need for a $250,000 city subsidy. The museum board and the city are now trying to save the museum and its collection of 100,000-plus artifacts, paintings and photographs.

The editorial noted that “one intriguing suggestion for saving the museum comes from history videographer and former mayoral candidate Sam Katz. He says the museum’s collections should be relocated to the first floor of City Hall. Why not? It’s Philadelphia’s most important public building and sits in the heart of the city.”

More: philly.com/philly/opinion/editorials/philadelphia-history-museum-close-atwater-kent-july-fourth-history-editorial-20180702.html