OFFICE SECTOR NEWS
Repositioning Strategy Underway For Leasing 123 S. Broad
SSH Real Estate has implemented a new leasing strategy aimed toward diversifying its tenant mix at 123 S. Broad St., which has 250,000 square feet of available space due to the relocations of Wells Fargo and Montgomery McCracken to other Center City locations.
In the absence of other large tenants looking for space, SSH has decided to market the 30-story building by sections to appeal to a variety of tenants. Two of the lower floors — the sixth and seventh — total 50,000 square feet and are targeted to nonprofits. The middle section of the building will cater to law, accounting and other traditional professional firms. The upper floors are being positioned for creative tenants.
Clarifi Relocates Headquarters To 1635 Market
Financial counseling services organization Clarifi has moved into 7,165 square feet of office space on the fifth floor of 1635 Market St. Formerly located at 1608 Walnut St., Clarifi opened in its new headquarters on October 29.
CBRE negotiated terms on behalf of the building’s owner, Nightingale Properties. The 286,574-square-foot, 19-story building was completed in 1966 and underwent extensive renovations in 2015.
Post-HQ2 Analysis: No Surprises In Amazon’s Picks
In the wake of Amazon’s choices of Long Island City, New York and Crystal City, Va., as the locations of its coveted HQ2, Philadelphia officials are suggesting that the effort was not in vain in that multiple agencies worked collaboratively to put together a compelling proposal that suggested three potential sites and this collaborative endeavor lays the groundwork for future efforts. The city and state also offered the e-commerce behemoth $5.7 billion in tax breaks in exchange for the HQ2’s expected $5 billion investment and 50,000 jobs.
PIDC President John Grady suggests that the HQ2 process signals a need for the city to expand its economic development strategies -- specifically for its nascent technology sector.
But multiple commentators suggested that Amazon ultimately chose both the largest and technology-dense labor markets and Philadelphia was unable to compete with New York’s status as a global hub for media and finance, and Washington, D.C.’s status as a mecca for government and health.
Amtrak Announces Shortlist For 30th St. Station Overhaul
Amtrak has announced its four-team shortlist of finalists to oversee the redevelopment of 30th Street Station. The finalists are Brandywine Realty Trust, whose team includes Pelli Clarke Pelli Architects and CBRE; Paris-based engineering firm Meridiam, joined on its G30 Collaborative team by Aramark and WeWork; PHL 30 Vision, led by JLL and including New York-based FXCollaborative and London-based ARUP; and Plenary, an Australian firm joined by Skidmore, Owings & Merrill of Chicago.
Amtrak said it will announce its final pick sometime in 2019. The project will expand the 30th Street Station concourse to accommodate anticipated ridership increases, while introducing new amenities to the station, upgrading its commercial and retail offerings, and improving transit and pedestrian flow.
EDS & MEDS NEWS
IBC & Penn Medicine Lower Readmission Rates By 25%
Penn Medicine and Independence Blue Cross produced what they are calling "unprecedented results" during the first year of a five-year network provider contract signed by the two organizations. At the top of the list of results is a 25% reduction in preventable hospitals readmissions, the largest reduction in both organizations’ long histories.
The new contract, which took effect July 1, 2017, was designed to encourage collaborative efforts by the insurer and the health system to improve quality of care and reduce health care costs for IBC members. That effort included implementing new strategies to reduce the number of patients who return to the hospital within a month after their discharge.
Philadelphia Med Tech Firm Founders Named On Forbes' 30 Under 30
The three co-founders of Center City-based Proscia made the health care edition of this year's Forbes magazine “30 Under 30” list of young business leaders and entrepreneurs. Proscia, which moved its headquarters from Baltimore to Philadelphia last year, is a medical technology company using artificial intelligence to improve how pathologists diagnose cancer.
The company has developed a cloud-based platform featuring software that incorporates artificial intelligence to take some of the subjective analysis out of analyzing biopsies. The system allows researchers and pathologists to upload, extract and manipulate data — and provides a way for images to be analyzed by different people simultaneously at locations around the world.
Philadelphia Ranks No. 4 In Combined Business & Leisure Travel
A new report ranks Philadelphia fourth among U.S. cities for combined business and leisure travel, in which people who visit for business purposes are most likely to spend their free time exploring the city’s museums, restaurants and retailers. Philadelphia is among the top U.S. cities that "make it easy for travelers to squeeze in a little bit of fun while still taking care of business," according to the survey by TravelBank, a travel and expense system software maker.
Philadelphia came in just behind New York, Chicago and San Francisco. TravelBank analyzed the 25 largest U.S. cities in four factors that influence adding leisure time into a business trip: average hotel rates, walkability, entertainment and restaurants.
Hotel Planned For Cherry Street Site In Center City
A Japanese hotel chain has paid $2.4 million for a lot on Cherry Street near the new Philadelphia Family Court building and has plans to develop a new hotel on the parcel. Toyoko Inn Development Co. Ltd. bought the 3,075-square-foot lot at 1528-30 Cherry St. that has approvals in place for the construction of a 17-story building. MMB Contractors Inc. was the seller; MPN Realty Co. arranged the sale.
Toyoko Inn Development builds economy business hotels near rail stations. This project, its first in Philadelphia, will be situated about a three-minute walk to Suburban Station.
GoPuff to create 500+ jobs, build new Philadelphia HQ
GoPuff, the on-demand delivery company founded by two Drexel University undergraduates, just announced a large expansion in Pennsylvania. Backed by $400,000 in state funding and a potential $2.5 million in city loans, it plans to open 10 warehouses across Pennsylvania over the next three years, as well as a new, 30,000-square-foot headquarters at 3rd and Spring Garden streets.
The company says the expansion, estimated to cost $4 million, will double its workforce to create more than 500 jobs, of which 400 will be in its warehouses. Currently serving 48 markets in 21 states, GoPuff has plans to expand to 60 locations.
Bourse Food Hall Opens After $22.5M Facelift
The Bourse Food Hall is open to the public, after a $22.5 million overhaul of the historic building's retail space into a food hall comparable to New York's Chelsea Market and Washington, D.C.'s Union Market.
MRP Realty curated a list of nearly 30 local and regional vendors for the food hall, which will be the anchor to a nine-floor atrium comprising 250,000 square feet of renovated office spaces, including the third Philadelphia location for co-working and shared office company MakeOffices. The Beaux-Arts building dates back to 1891, when it was founded as the country's first commodities exchange.
Spirit Airlines To Begin Direct Flights From PHL To New Orleans
Spirit Airlines is adding a nonstop route from Philadelphia International Airport to New Orleans next year. The budget airline announced that flights to Louis Armstrong International Airport from Philadelphia International Airport will run four times a week on a seasonal schedule, beginning May 2, 2019.
Indego Rolls Out Electric Bike Pilot Program
Bike-share company Indego has announced plans to start a two-month pilot program for electric, pedal-assist bikes. The bikes have a motor that adds power to the wheels, allowing riders to pedal at speeds up to 17 mph.
Ten bikes have been set up at various Indego stops, which can be located via Indego’s online map or recognized by their white color (as opposed to the standard blue Indego bikes). Transportation officials are seeking feedback from riders during the pilot program and will monitor the e-bikes’ usage, in order to determine whether to add them permanently.
RESIDENTIAL MARKET NEWS
Philadelphia No. 2 Of Cities Where “It's Cheaper To Own Than Rent”
A recent report from Forbes placed Philadelphia in the top three U.S. cities – and the only one on the East Coast – where a monthly mortgage is more affordable than monthly rent. The report, based on recent data from GOBankingRates, found that Chicago topped the list, followed by Philadelphia and Detroit.
Forbes said of Philadelphia, “Although single-family homes have been climbing in price since last year, they’re still quite affordable in the grand scheme of things. Currently, the median list price for a single-family home in Philadelphia is only $195,000. Based on 20% down and Pennsylvania’s current average 30-year mortgage rate of 4.78%, a monthly mortgage is $1,049 vs. $1,422 in rent.”
The National Opens After $70M Redevelopment
Renters are now moving into The National, a $70 million redevelopment of the former National Products Co. building. Buccini Pollin Group bought the long-vacant property for $9 million in 2016 and moved forward with constructing a mixed-use project, which has 192 apartments that have rents ranging from $1,700 to $3,200 per month.
The project is the first multifamily development in Philadelphia by Buccini Pollin. The real estate company has gone on to buy the Sheraton Society Hill and plans to renovate the hotel. It also bought the former Omni hotel at 4th and Chestnut streets, renovated and rebranded it as The Franklin.
Tiny Houses To Make Philadelphia Debut On City Land
Philadelphia is on track to begin construction of prefabricated “tiny houses.” With support from two City Councilmembers, a team plans to construct a model unit on a 700-square-foot city-owned parcel in Kensington. A $75,000 no-interest loan made personally by Councilman Allan Domb to the nonprofit Student-Run Emergency Housing Unit of Philadelphia is paying for the construction.
The first home will be a rowhouse infill designed to blend in with nearby houses. The nonprofit hopes to build 14 similar rowhouses if they are able to acquire more land on the block. Councilman Mark Squilla said the small size and prefab nature of the houses will allow them to be sold at a price that low-income residents can afford.
Rittenhouse Realty Offering Multifamily Portfolio in Northern Liberties
A major multifamily portfolio in Northern Liberties is being offered for sale by Rittenhouse Realty Advisors.
The offering includes Liberties Walk, with 70 apartments, 18 townhomes and 31,501 square feet of retail; Boone Lofts, a1920s-era former school building with 45 apartments; and Del Campo Apartments, a redeveloped 1920s industrial building with 33 apartments and 10,768 square feet of retail space.
Guru Rolls Out New AI Voice Recognition
Center City-based tech firm Guru just rolled out a new feature to its artificial intelligence-driven software to give customer support teams faster access to information. Touted by the company to be a first, the technology can listen in on customer support calls, convert the voice into text and search for relevant content to guide desk agents through problem solving.
Guru moved into a 6,000-square-foot office last year on the 11th floor of the North American Building at 121 S. Broad St., where it currently employs 50 people.
PICA: Philadelphia Tax Collections Up 7% Overall Through October
The City of Philadelphia collected $227.3 million in General Fund tax revenue in October, compared to $212.5 million in October 2017, a 7% increase, according to the Pennsylvania Intergovernmental Cooperation Authority (PICA).
The City collected $872.5 million in tax revenue through October of FY2019, up 3.4% over the same point last year. The year-to-date increase was driven primarily by a 5.5% increase in the City portion of the wage, earnings, and net profits taxes. Wage, earnings, and net profits; real estate; realty transfer; and amusement tax collections all exceeded five-year projections, while the business income and receipts tax (BIRT), City sales, parking, other miscellaneous, and beverage taxes all fell short.
Through October, BIRT fell -10.7%, compared to a projected increase of 2.8%; the real estate tax rose 3.8%, 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 -0.5%, compared to a projected growth of 5.9%.
City Exceeds OT Allocation By $44 Million In FY2018
The City of Philadelphia’s overtime costs totaled $179.4 million for fiscal year 2018 — $43.8 million more than was budgeted, and $16.1 million more than FY2017, according to a new report from the Pennsylvania Intergovernmental Cooperation Authority (PICA). It is the eighth consecutive fiscal year in which the City has exceeded its overtime budget and the most it has ever spent on overtime in a single fiscal year — over $9 million more than the previous high total in FY2016.
According to the report, seven departments — Public Property, Free Library, Fire, Streets, Parks & Recreation, Police, and Prisons — spent $160.7 million on overtime, representing 90% of the total.
Join Us December 18 For CPDC’s Membership Meeting
The final Central Philadelphia Development Corporation meeting of the year will convene a panel who will look ahead in a session entitled: Philadelphia 2019: Strengths, Opportunities & Challenges. Please join us on Tuesday, December 18, 8:30 a.m. at The Union League, 140 South Broad St., Grant Hall. In a series of quick, lightning round responses, panelists will highlight the opportunities they see before us in the New Year and the challenges and hurdles that Philadelphia must overcome to capitalize on these opportunities.
Panelists will be Della Clark, President, The Enterprise Center; Michael Forman, Chairman & CEO, FS Investments; Mike Pearson, President & CEO, Union Packaging; Shari Reams-Henofer, Senior Vice President, Northeast REIT Client Manager, PNC Real Estate; Jerry Sweeney, President & CEO, Brandywine Realty Trust; and Richard Vague, Managing Partner, Gabriel Investments.
CPDC members are encouraged to invite both young professionals and other members of their firms to attend. RSVP by December 13 to Romina Gutierrez at email@example.com or 215.440.5543.