News

CPDC Developments Newsletter - 09.18.18

OFFICE SECTOR NEWS

Reliance Standard Will Relocate Center City HQ To 1700 Market

Reliance Standard Life Insurance Company is relocating its Center City headquarters from Commerce Square to 1700 Market St. The insurer, a unit of Japan's Tokio Marine Group, plans to move into the roughly 150,000-square-foot space in the office tower in late 2020.

The move will allow Reliance Standard to increase employment by more than 120 people over three years, according to an announcement from Gov. Tom Wolf's office. Reliance Standard currently employs more than 550 workers at the 141,000 square feet it leases on five floors in Commerce Square at 2001 Market St., its home for the past 18 years.

media.pa.gov/Pages/Insurance-Details.aspx?newsid=337

United Way Building To Get Upgrades, New Name 

The United Way building in Center City is available to new office tenants for the first time in 40 years. United Way will be vacating the building and relocating to a new location not yet announced.

The nonprofit sold the 68,000-square-foot structure in April for $10.85 million to Pearl Properties, which is maintaining the structure as office space. Pearl plans to rebrand and rename the building, which served as the headquarters for the United Way since it was built in 1967.

bizjournals.com/philadelphia/news/2018/09/13/united-way-building-to-get-upgrades-new-name.html

Entercom Inks Deal For New HQ In Center City

Entercom Communications has signed a lease for the fourth floor of 2400 Market St. and will occupy a total of 67,000 square feet in the building that is being renovated for Aramark’s headquarters, the Philadelphia Business Journal reports.

At 2400 Market, the radio station owner and operator is taking 45,000 square feet more than the 14,000 square feet it occupies in its current Bala Cynwyd headquarters. The company, whose merger with CBS Radio Inc. has made it the No. 2 radio operator in the U.S., owns six stations in Philadelphia including KYW (1060 AM) and WOGL (98.1 FM).

bizjournals.com/philadelphia/news/2018/09/10/entercom-2400-market-new-hq.html

Visual Search Company Slyce To Open Paris Office

Center City tech company Slyce will open an office in Paris as part of its selection for the retail-focused Lafayette Plug and Play accelerator. Slyce beat out 213 other applicants for one of 17 spots in the program, which is a sister accelerator to the Bay Area’s Plug and Play Ventures.

As part of the award, three Slyce staffers will work for three months in Paris, where they will be introduced to about 40 major retailers. The company then will evaluate whether to expand its presence in France. Slyce, which employs about 50 people, makes image recognition technology used by some 60 retailers including Macy’sHome Depot and Tommy Hilfiger.

technical.ly/philly/2018/09/04/were-looking-to-take-over-europe-slyce-to-open-paris-office/

EDS & MEDS NEWS

Jefferson, Einstein sign merger agreement 

The boards of Jefferson Health and Einstein Healthcare Network have approved the union of the health systems. The proposed merger still requires state and federal regulatory approval, a process the organizations hope is completed by next summer.

The merger would create a health system with more than 38,800 employees, 18 hospitals and more than 60 outpatient care and urgent care centers along with a combined teaching program with 2,000 residency slots.

kywnewsradio.radio.com/articles/news/einstein-healthcare-network-and-jefferson-health-make-their-merger-legally-binding

Stephen K. Klasko, MD, MBA, President of Thomas Jefferson University and CEO of Jefferson Health will be the featured speaker at CPDC’s next membership meeting at the Union League on Tuesday, September 25th at 8:30 am (see last item in this issue of Developments).

PCOM Forms Medical Marijuana Research Partnership

Philadelphia College of Osteopathic Medicine (PCOM) is partnering with Miami-based Cansortium Holdings to conduct medical marijuana research in Pennsylvania. Cansortium serves thousands of medical marijuana patients in the U.S. and Latin America. Pennsylvania’s medical marijuana laws allow partner organizations to conduct research on the pharmacology, biochemistry and long-term best practices for patients on medical marijuana regimens.

PCOM officials said a research team has developed a collaborative, interdisciplinary research program to examine medical marijuana’s effects on physical and mental health, quality of life, chronic pain, and opioid use. The study results will be shared with other researchers to develop specific treatment recommendations.

bizjournals.com/philadelphia/news/2018/09/07/pcom-forms-medical-marijuana-research-partnership.html

Penn Medicine extends global reach to Vietnam

Penn Medicine and Penn Nursing have formed an alliance with Vingroup to improve and advance medical education and clinical care in Vietnam. Vingroup is comprised of a private not-for-profit university project (VinUni) and the largest private health service provider in Vietnam (Vinmec).

The partnership will first establish medical and nursing schools within VinUni, and to enhance graduate medical education and health care programs within the Vinmec Health Care System. Penn Medicine and Penn Nursing will also work with Vingroup to develop the undergraduate curriculum and establish educational and training programs. A long-term goal of the alliance is to build a new teaching hospital in Hanoi.

pennmedicine.org/news/news-releases/2018/september/penn-extends-its-global-reach-to-improve-health-care-education-and-quality-of-care-in-southeast-asia

EIR Healthcare unveils modular hospital room prototype

EIR Healthcare has unveiled the first prototype of its first product: a prefabricated, modular hospital room under the brand MedModular. The Center City-based company said the product would allow hospitals to save construction costs by ordering customizable hospital rooms.

MedModular rooms would be delivered 90% complete, constructed to facilitate simple integration into hospital infrastructure, and wired with smart technology. EIR said the per-square foot price for a MedModular room is similar to traditional construction but the savings is due the 30% to 40% faster completion times compared to traditional construction.

technical.ly/philly/2018/09/13/modular-hospital-room-medmodular-room-prefab/

HOSPITALITY NEWS

VISIT PHILADELPHIA Names Jeff Guaracino President & CEO

Jeff Guaracino, current president and CEO of Welcome America, Inc., has been selected to lead Visit Philadelphia as president and CEO effective October 29. Guaracino will succeed Meryl Levitz, Visit Philadelphia’s founding president and CEO.

Guaracino first joined Visit Philadelphia in September 2001 and spent over a decade in leadership roles with the organization. In 2016, he was recruited to lead Welcome America, a public-private nonprofit that partners with Philadelphia to produce citywide events.

prnewswire.com/news-releases/visit-philadelphia-names-jeff-guaracino-president--ceo-300708116.html

RETAIL NEWS

Outdoor Seating in Center City Continues To Grow And Add Vibrancy

From sidewalk cafés and well-managed parks to seasonal pop-up gardens and reclaimed office plazas, outdoor seating in Center City continues to expand and now numbers 428 locations with 6,743 seats from Vine Street to South Street, river to river, according to a new report from the Center City District/Central Philadelphia Development Corporation.

Outdoor seating has increased 391% since the CCD began its annual surveys in 2001. Restaurants, coffee shops, juice bars, retail establishments and formerly barren office plazas have all contributed to the increase in outdoor seating from zero locations in 1995 to 428 in 2018.

centercityphila.org/research-reports/outdoor-seating-2018

Physical Retail Stores Rebound As “Clicks & Bricks” Gains Ground

After a slow start to the year, retail sales spiked over the summer and retailers that survived the so-called “retail apocalypse” are rebounding with gusto, The New York Times reports. 

Successful retailers are adapting to the realities created by online sales. Among examples cited by the Times: making shopping less of a chore by allowing customers to order items via phone and having them brought out to the parking lot; easy returns by dropping items in a box outside a store; and personal shoppers who select and package groceries to be picked up curbside.

Another strategy of successful physical retailers is shorter-term leases that allow retailers to experiment in new locations without an expensive commitment.

nytimes.com/2018/09/03/business/retail-walmart-amazon-economy.html

Report: Center City Retail Sector Has Shown “Remarkable Resilience”

An examination by CBRE of 16 retail corridors in Center City found that rents rose in eight and remained stable in eight. Related data shows average, signed lease rates are running at record-highs along Walnut Street from Broad to 19th streets. CBRE also stated that an analysis of rent increases by neighborhood shows Market East experienced some of the highest increases.

The report states, “more people (consumers) are moving to Central Philadelphia, more people are employed, and they're making more money to spend at local retail establishments and service providers.”

cbre.us/real-estate-services/real-estate-industries/retail-services/philadelphia/Urban-Retail-Trends

1608 Chestnut Is On The Market 

The owner of 1608 Chestnut St. has put the building up for sale. The four-story, 40,655-square-foot building last traded in 2014 for $24.5 million when TH Real Estate, a division of TIAA Global Asset Management, bought it as part of an acquisition of a four-property portfolio also including assets in New York and San Francisco.

The four properties have been put up for sale as a portfolio but could also be sold individually. In that instance, 1608 Chestnut could trade for as much as $26 million, the Philadelphia Business Journal reported. The building is leased to retailer Uniqlo through 2029. 

bizjournals.com/philadelphia/news/2018/09/14/16th-chestnut-retail-building-uniqlo.html

RESIDENTIAL NEWS

Q2 Transitions to a “Seller’s Market” for Philadelphia Condos

Philadelphia’s condominium inventories hit an all-time low while sales hit a new post-recession high for Q2, according to a new report by Kevin Gillen for Allen Domb Real Estate. The analysis found that the average condo price declined 1.4% on a quality- and seasonally-adjusted basis and median condo prices were essentially flat at $301,500, compared to $300,000 in the previous quarter.

Condo inventories remain low, with 712 currently listed for sale, and sales volume reached a post-recession high with 824 condo units changing hands in Q2, up 23.5% in the same quarter one year ago and up 75.3% from the previous quarter.

allandomb.com/philadelphias-condo-market-transitions-to-a-sellers-market-in-q2/

DEVELOPMENT NEWS

27-Story Condo Tower Proposed For 709 Chestnut

A proposed condominium tower at 709 Chestnut St. garnered positive reviews from the Civic Design Review Committee and the city’s Planning Commission. The project is under development by Parkway Corporation, which is seeking to develop several of its surface-parking lots in Center City.

The proposed 27-story tower and its 278 market-rate single-family units would replace a 75-space lot. The proposal includes 125 spaces of automated parking that will be provided to unit owners; the developer said that a traditional ramp-parking garage is not feasible on the 75-foot-wide site.

planphilly.com/articles/2018/09/04/favored-to-rise-at-709-chestnut-st-a-27-story-condo-tower

First Bank Building Gets $8M Renovation Grant From Pa.

State officials have approved an $8 million grant to refurbish the First Bank of the United States building in Old City and reopen it as a museum commemorating the central bank started by Treasury Secretary Alexander Hamilton when Philadelphia was the nation's capital.

The award to the Independence Historical Trust, a nonprofit that raises money for Independence National Historical Park, makes it the state's biggest recipient of funds from this year's round of Redevelopment Assistance Capital Program grants, according to the Pennsylvania Budget Office.

philly.curbed.com/2018/9/10/17830800/philly-first-bank-renovation-refurbish-classical

PARKS & OPEN SPACE NEWS

Pulse Artwork Debuts To Enthusiastic Crowds At Dilworth Park

Phase 1 of Pulse, a dynamic and interactive work of public art by internationally renowned sculptor Janet Echelman, is now on view at Dilworth Park. The debut event on September 12 was attended by leaders of the city’s philanthropic, business and cultural communities, as well as dozens of curious and enthusiastic members of the public.

Media coverage included a positive review from Philadelphia Inquirer architecture critic Inga Saffron, who predicted it would fast become “our answer to Chicago’s Bean - a selfie magnet.”

philly.com/philly/columnists/inga_saffron/philadelphia-public-art-city-hall-janet-echelman-20180912.html

Pulse traces the SEPTA transit lines directly below Dilworth Park’s fountain with moving curtains of brightly colored mist. Phase 1 has brought to life the Subway-Surface Line component of Pulse; the Center City District Foundation is fundraising to activate the parts of the work that represent the Broad Street Line and the Market-Frankford Line.

centercityphila.org/foundation/our-work/pulse-at-dilworth-park

GOVERNMENT NEWS

Council Pulls 1% Construction Tax Plan Amid Compromise with Mayor

City Council has withdrawn its proposed 1% tax on new construction for an alternative plan advanced by Mayor Kenney that will contribute real estate tax revenue from properties with expiring 10-year tax abatements to the city's Housing Trust Fund.

Council also added more affordable-housing money beyond the deal with Kenney, allowing developers to get zoning bonuses for contributing to the Housing Trust Fund.

philly.curbed.com/2018/9/13/17856324/mayor-council-affordable-housing-construction-tax-bill

For detailed data on how much revenue could be raised from properties coming off the 10-year tax abatement, see pages 18-20 of CCD/CPDC’s report, Housing Development in Perspective: 2018.

centercityphila.org/research-reports/housing-development-in-perspective-2018

City Announces Plan To Add 100,000 Homes By 2028

A housing plan introduced by city officials calls for adding 100,000 new units to the city’s inventory over the next decade. The Philadelphia Housing Action Plan recommends creating and preserving 60% more housing than the 63,000 units produced or preserved over the previous decade.  

Specific recommendations will be made in the final version of the plan to be released in October. Preliminary suggestions have included a repair program for small landlords, a down-payment loan fund, and an increase in funding for the city’s Housing Trust Fund. The city Department of Planning and Development worked with Vincent Reina, urban planning professor at the University of Pennsylvania, and housing consultants from LISC and Wilson Associates Inc. to craft the plan.

planphilly.com/articles/2018/09/06/city-officials-philly-to-add-100-000-homes-by-2028

ECONOMIC NEWS

PICA: City Tax Collections Up 4.9% Overall In August

The City of Philadelphia collected $211 million in General Fund tax revenue in August, compared to $203.5 million in August 2017, an increase of 4.9%, according to the Pennsylvania Intergovernmental Cooperation Authority (PICA).

Many major taxes also saw increases in collections, with the real estate and realty transfer taxes continuing their strong growth. Several major categories saw decreases including the business income and receipts tax (BIRT), city sales tax, and beverage tax, while the parking and “other miscellaneous taxes” also fell slightly. However, PICA said these decreases were more than offset by increases in the other tax categories, and the city realized overall increases in both August and year-to-date collections.

Through August, BIRT fell -43.1%, compared to a projected increase of 2.8%; the real estate tax fell -2.7%, compared to a projected growth of 3.5%; the realty transfer tax increased by 1.9%, compared to a projected -0.9% decrease; and Philadelphia sales tax collections fell -6.6%, compared to a projected growth of 5.9%.

picapa.org/2018/09/just-released-picas-august-tax-revenue-update/