CPDC Developments Newsletter - 10.15.19

Office Sector News

Strong Third Quarter For CBD Office Market

The Philadelphia CBD office market added 259,000 square feet of newly occupied space in the third quarter of 2019 after two quarters of no growth, according to Newmark Knight Frank’s latest Philadelphia Office Market report.

NKF said that new-to-market tenants, relocations and expansions were the primary engines of Q3’s performance, including Merck taking a significant portion of WeWork’s new space in 1100 Ludlow and coworking provider Commongrounds taking space in 1700 Market.

Vacancy market-wide was trimmed by 20 basis points to 13.6%, and average asking rents continued to rise, growing a full dollar year-over-year to $29.58 per square foot.

Coworking Operator Takes 47,000 Sq. Ft. At Fashion District 

Industrious, a coworking operator, will occupy space at the newly opened Fashion District Philadelphia, its third location in Center City. It will have 47,000 square feet at Fashion District that it will manage and operate as coworking space. The Industrious space at Fashion District is expected to be open in the second quarter of next year.

The flexible workspace company occupies 55,000 square feet in Two Liberty Place at 50 South 16th Street and entered the market in 2015 when it took two full floors, or about 21,000 square feet, at 230 South Broad Street.

Liberty Property's Navy Yard Buildings Hit The Market 

Liberty Property Trust’s Navy Yard portfolio has hit the market with the 10 office properties estimated to be worth $300 million.  An affiliate of Ensemble Real Estate Solutions has already purchased four of the 10 buildings. The Arizona real estate company has been involved in the development of a Courtyard Marriott at the site and is also a partner with Gattuso Development Partners to develop 300 Rouse Boulevard for Iovance Biotherapeutics

Once the Navy Yard buildings have new owners, Liberty will be finished selling its wholly-owned office properties in Philadelphia. It will still own the 345,000-square-foot Tastykake facility at the Navy Yard as well as Center City’s Comcast Center and Comcast Technology Center, which it owns in a joint venture with Comcast Corporation.

Eds & Meds News

City’s Gene & Cell Therapy Firms Growing Rapidly

Both the number and size of Philadelphia’s gene and cell therapy companies have “exploded” in the last five years, according to a new analysis from JLL. The evolution of these companies from academic research efforts into temporary or shared lab spaces into dedicated facilities has corresponded to more than 375,000 square feet of new lab and office space absorbed.

JLL noted that this growth should continue into 2020 and 2021 as WuXi, Iovance, and other firms build out new space, and as additional firms seek a presence in the region. Over the last two years alone, $805 million in venture capital has been invested in local gene and cell therapy companies, a total 2.6 times larger than the previous four years of funding.

Tmunity Licenses Experimental Cancer Therapy From CHOP

Penn spinoff Tmunity Therapeutics Inc. has entered into an exclusive license and research collaboration agreement with Children’s Hospital of Philadelphia (CHOP) to advance an experimental immunotherapy targeting neuroblastoma, a rare childhood cancer.

Under the terms of the agreement, Tmunity will be responsible for leading the development, manufacturing, regulatory, and commercialization of the therapy. The majority of the preclinical studies for the experimental therapy will be performed by CHOP.

Digital Health Firm Gets $3M From Silicon Valley Company

Oncora Medical, a Center City-based digital health company, has received a $3 million investment from a Silicon Valley medical technology firm. The deal calls for Varian of Palo Alto, California, to work with Oncora to accelerate the development of software tools designed to enable the use of precision medicine in radiation oncology.

The company has developed a software and data platform to capture critical data about cancer patients, their treatments, and their clinical outcomes so doctors can learn from past experience and apply the knowledge to improve care for future patients.

Penn, Drexel Get $22 Million For Dementia Research

Two Philadelphia universities have received large grants from the National Institute on Aging (NIA) to study different aspects of dementia.

Drexel University has been awarded $4 million to test whether a new website can help family caregivers manage some of the most troubling behaviors associated with Alzheimer’s disease and other forms of dementia. The NIA has awarded $18 million researchers at the University of Pennsylvania’s Center for Neurodegenerative Disease Research to examine the role genes play in Alzheimer’s and Parkinson’s diseases and other dementias, as well as how these diseases spread in the brain.

Independence Blue Cross Opens Innovation Center

Independence Blue Cross has opened a new Center for Innovation, located in the company's headquarters at 1901 Market Street. The two-story, 30,000-square foot facility will provide space and resources to engage the community, members, customers, health care professionals, and other partners in innovative projects.

One floor of the new center is focused on Independence's work with external partners – customers, health care professionals, community leaders, and others. The company's Innovation team will use the space to run brainstorming and planning sessions, host events, and more. The other floor is for internal initiatives to promote and foster innovation and creativity among employees, at a personal and team level.

Tech News

Five Below Bets Big On Esports, Nerd Street Gamers

Philadelphia esports venue developer Nerd Street Gamers has completed a $12 million equity financing round led by retailer Five Below Inc. that is expected to dramatically expand Nerd Street’s national footprint. The deal calls for Five Below, based in Center City, and Nerd Street Gamers, based in Northern Liberties, to build 3,000-square-foot Nerd Street Localhost spaces for esports trainings and events connected to select Five Below stores, beginning with a multistore pilot in 2020.

The companies said if the pilot program is successful, they could establish 70 or more locations – designed to connect the gaming community through live events – within a few years.

Economic News

Philadelphia Is 12th Toughest City To Start A Company In U.S.

Philadelphia is the 12th most difficult city in the United States to start a business, according to new report by Arizona State University. The analysis, "Doing Business in North America," based its rankings on factors including the time, costs and number of steps required to get a business off the ground in dozens of cities in the U.S., Canada and Mexico.

In addition to measuring the number of legal requirements and days on average to start a business, the ASU report also considered required costs to secure a business license. On average, a new business in Philadelphia would need eight legal steps and $720.02 to start. At just over $1,000, Boston topped all U.S. cities in terms of fees and related startup costs.

Retail News

Amazon Has Plans For A Grocery Store In Philadelphia

E-commerce giant Amazon is planning to open a chain of grocery stores in the United States, and wants one of the first stores to be in Philadelphia, according to a report in The Wall Street Journal.

The paper said Amazon is moving forward with plans for locations in Philadelphia, Chicago, and Los Angeles for its initial rollout of grocery stores. The stores would not be designed to compete with Whole Foods, which is owned and operated by Amazon. Amazon declined to comment for the story.

Other grocery chains have recently opened or announced new stores in Center City, including Trader Joe’s upcoming location at 1324 Arch Street, as well as German grocer Lidl and Pennsylvania-based Giant Food Stores’ main chain and its urban format stores called Giant Heirloom Market.

Penn Grads Bring NYC & LA Salon To Rittenhouse Square

Two University of Pennsylvania graduates are returning to Philadelphia for the latest outpost of their salon business. Heyday, founded in 2015 by Adam Ross and Michael Pollak, has locations in the New York and Los Angeles metros. The Philadelphia salon will be the company’s first outside of those cities, with a 1,700-square-foot shop at 1735 Chestnut Street slated to open this month. 

Heyday is hiring about a dozen estheticians initially and could double that number in the weeks after the opening, Ross said.

Development News

BIA Will Support Certain Changes To 10-Year Tax Abatement

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The Building Industry Association (BIA) is ready to support changes to the city’s 10-year-tax abatement but remains opposed to ending the abatement. BIA’s President Jim Maransky said the organization backs legislative adjustments that would gradually reduce the 100% property tax break in the final years of the decade-long program.

He said that among the proposals being considered by City Council to change the abatement, the BIA would back those that maintain the full property tax break during the first few years and then phase in a percentage of property taxes until the abatement sunsets.

244-Unit Apartment Mid-Rise Planned Near Waterfront

Local development group Streamline plans a 244-unit apartment mid-rise that would span nearly an entire block near the Delaware River waterfront beside the historic Edward Corner warehouse building, which is slated to become the company’s headquarters.

The planned project would be the largest apartment development to date for Streamline, which paid $7.75 million in June for two parcels that make up the roughly one-acre Fishtown development site. The seller was real estate investor Michael Samschick’s Core Realty Inc.

Condo Prices Flat, Sales Decelerate From Their All-Time Peak

The average price of Philadelphia’s condos increased by 0.4% on a quality- and seasonally-adjusted basis in Q2, according to a new analysis by Kevin Gillen for Allan Domb Real Estate. The recent numbers continue to point toward a leveling off – but not serious decline – in Philadelphia’s overall condo market.

The report noted that centrality of location remains the key driver of both condo prices and condo price appreciation. Condos located in or very near to Center City not only have the highest prices, but have also experienced the greatest price appreciation (and, to date, the least price depreciation) during the current cycle. Currently, the submarket indices with the highest values are Rittenhouse Square, Washington Square and the Avenue of the Arts.

Employment News

Job Training Startup GoCoach Is Setting Up A Philadelphia Office

GoCoach, a New York City-based employee training startup, is setting up a Philadelphia office in early 2020. The company works to train or reskill employees, companies or individuals to make them more marketable to hiring managers, or to keep current employees up to date.

Within a few months after it launched in 2018, GoCoach doubled its initial sales and now has 150 coaches on 300 assignments, said company founder and Saint Joseph’s University graduate Kristy McCann Flynn. In 2020, the company is focusing expansion efforts on both coasts.

Transportation News

Amid Local Expansion, Amazon Leases Building Near PHL

Amazon has signed a long-term lease on a building near Philadelphia International Airport, completing a ring around Philadelphia for its last-mile distribution network that will serve the metropolitan area. The Philadelphia Business Journal reported that the e-commerce giant leased 7575 Brewster Avenue, a 165,000-square-foot building adjacent to I-95 and about two miles away from the airport in an area where other distribution centers are located.

Over the last two years, Amazon has been leasing smaller buildings in key locations throughout the region as part of a system to handle same-day and next-day delivery to its customers.

United To Restore Daily Flights From PHL To DC

United Airlines said it will restore its flights to Philadelphia International Airport from its hub at Washington Dulles International Airport, allowing customers to connect to the airline’s nearly 270 domestic and more than 30 international flights. Chicago-based United will operate four times a day between Washington and Philadelphia. The routes will be available for purchase starting October 5 with service set to begin on May 8, 2020.

The flights will take an hour and five minutes when departing from Washington and one hour when departing from Philadelphia. United said it already operates about 15 flights a day total to PHL from Chicago, Denver, Houston and San Francisco.

SEPTA Completes Renovation of 15th Street Station

SEPTA has recently completed its renovation of 15th Street Station on the Market-Frankford Line. The 15th Street and City Hall underground complex located under Dilworth Park and accessible through the park’s glass head houses, is a critical transportation hub for the entire region, connecting the Market-Frankford, Broad Street, Trolley and Regional Rail lines.

The work is part of a multi-phase $146 million project, which began in 2016. SEPTA will mark the official completion of the 15th Street project with an event on October 12.

Traffic Deaths Rising, Despite Vision Zero Effort

Two years after Mayor Jim Kenney launched the Vision Zero safety improvement project aimed at eliminating traffic deaths in Philadelphia by 2030, the number of people being killed in crashes is on the rise. PlanPhilly reported that in 2017, there were 78 traffic deaths in Philadelphia, the lowest since 2014, but last year, that number shot up by 17%, to 91.

More than 40% of those killed from 2014 to 2018 were pedestrians. As Vision Zero makes progress, crashes should begin to trend down, said Kelley Yemen, director of Complete Streets, a division of the city’s Office of Transportation Infrastructure and Sustainability (OTIS).

City Government News

City Exceeds OT Allocation By $18M In FY2019

The City of Philadelphia’s overtime costs totaled $172.9 million for fiscal year 2019 – $18.1 million more than was budgeted, the second highest-ever overtime spending total, according to a new report from the Pennsylvania Intergovernmental Cooperation Authority (PICA). It is the ninth consecutive fiscal year in which the City has exceeded its overtime budget.

Of the 40 departments that were allocated or incurred overtime in FY2019, just 12 managed to remain within their overtime allocations. An overall increase in full-time staffing – from 21,175 positions in the fourth quarter of FY2012 to 22,210 positions in the fourth quarter of FY2019 – has not had the desired effect of reducing total overtime costs, PICA noted.


CCD Annual Customer Satisfaction Survey: We Want Your Input

Each year, the Center City District surveys our constituents about our performance. What can we do better or differently? What are your perceptions of Center City’s cleanliness and safety? What changes would most help make Center City a better place to work or live?

Take our five-minute online survey and you could win $250 in restaurant gift certificates. The survey closes December 2.

November 7: CPDC Young Professionals Networking Series

CPDC is pleased to invite young professionals at member firms to a free networking event at City Winery in the Fashion District on Thursday, November 7, from 5:30 p.m. to 7 p.m.

Hear from Heather Crowell, Executive Vice President of Strategy and Communications at PREIT, how the Fashion District is bringing live entertainment to Market East and redefining the shopping experience in Center City. Enjoy complimentary appetizers along with a wine and beer open bar at the newly opened City Winery restaurant and music venue, 990 Filbert Street. Click the link below to register.