Office Sector News
1600 Market To Undergo $15M In Renovations
American Real Estate Partners plans to invest more than $15 million in renovations at 1600 Market Street. Virginia-based AREP enlisted Collective Architecture, a Washington, D.C., firm to update the design for the 39-story, 825,968-square-foot office building, last renovated in 1996.
The plans, which very much reflect changing attitudes about office space, include adding a coffee bar along with 8,000 square feet of dedicated amenity space on the second floor that will have work spaces, conference rooms, a fitness facility and social areas. A restaurant will also be added to the first floor that will be accessed by the lobby and have an expansive outdoor plaza area. The renovations are expected to be completed by March.
Eds & Meds News
Jefferson Gets $70M Gift From Kimmels For 12-Story Research Building
Thomas Jefferson University has received its second largest donation ever, a $70 million gift from Sidney and Caroline Kimmel, which it will use for a new building to expand the biomedical research capacity at its Center City campus. The 12-story Caroline Kimmel Biomedical Research Building will be located at 9th and Locust streets, on land now used for a Jefferson parking garage.
The $300 million project will create space for 56 additional National Institutes of Health-funded researchers, a 30% increase from what Jefferson has now, and their teams. The building will result in another 250 to 400 jobs at Jefferson, which currently has 32,000 employees.
Cell Therapy Startup Limelight Bio Raises $75M
Philadelphia gene therapy startup Limelight Bio, whose founders include researchers from the University of Pennsylvania’s Perelman School of Medicine and Children's Hospital of Philadelphia, has raised $75 million in venture capital financing.
The investment in Limelight was made by Apple Tree Partners, a life sciences innovation fund based in New York City that also provided seed funding to launch Limelight in late 2016. Limelight said it is developing technologies designed to overcome limitations of current gene therapy and gene editing treatments for a variety of inherited diseases.
CHOP, Bayer Team On $5M Hemophilia Research Effort
Bayer has entered into a three-year collaboration agreement with Children’s Hospital of Philadelphia to develop new treatments for hemophilia, a genetic bleeding disorder. Under the terms of the deal, the pharmaceuticals giant will invest $5 million in a joint research program and have an option to exclusively license the collaboration results.
The deal also gives Bayer, which is based Germany, the option of continuing the collaboration with the agreement of both parties. The partnership between CHOP and Bayer will focus on the discovery and development of oral medications. The main treatment for hemophilia currently requires regular injections.
Richard Vague Funds $1.5M Seed Round For Local Fintech Firm
Philanthropist and venture capitalist Richard Vague has funded a fintech startup’s $1.5 million seed round for its workflow software platform created for managers of trusts and family offices. WealthHub’s cloud-based software is designed to help financial professionals manage the complex mix of assets often seen in multigenerational family trusts or foundations.
WealthHub Solutions CEO Jim Marks said that getting backing from a well-known investor like Vague is validation of his firm’s platform and approach. WealthHub raised $1.6 million in 2016 from individual investors and local firms Rittenhouse Ventures and Ben Franklin Technology Partners.
Brookings Releases Recommendations For More Equitable Tech Growth
At a time when most lament paralysis in Washington D.C. and the growth of income disparities across the country, the Brookings Institution is releasing a new report today that starts from the novel premise of what might be accomplished through bi-partisan, federal initiatives for economic development. “The future of America’s economy lies in its high-tech innovation sector, but it is now clear that same sector is widening the nation’s regional divide,” it notes.
The report proposes that Congress establish “a rigorous competitive process by which the most promising eight to 10 potential growth centers would receive substantial financial and regulatory support for 10 years to become self-sustaining new innovation centers.”
Tourism Orgs Plan To Capitalize On NatGeo ‘Best Trips’ Ranking
Philadelphia’s tourism organizations are capitalizing on the city’s ranking by National Geographic as one of the best places in the world to visit in 2020. Philadelphia International Airport, tour bus operators, the Philadelphia Convention and Visitors Bureau and others are using the magazine’s ranking as a theme in next year’s marketing plan, Visit Philadelphia CEO Jeff Guaracino told the Philadelphia Business Journal.
Philadelphia was the only city in the U.S. named in NatGeo’s top 25 destinations for 2020. Guaracino noted that high-profile campaigns such as National Geographic’s can be highly influential in decisions to start a job, open a business or attend college in Philadelphia.
Philadelphia payroll employment for the month of October was 752,000, according to the Bureau of Labor Statistics, an increase of 1.8% from October 2018. The city’s average employment for the first 10 months of the year stands at 738,300, an increase of 2.4% from the same period last year.
Philadelphia is on track for a 10th consecutive year of job growth, the longest period of continuous job growth in recent memory. The data are from the BLS’s Current Employment Statistics, a national survey of businesses and government entities conducted each month.
CCD/CPDC’s new report, Growing More Family Sustaining Jobs in Philadelphia, notes that while the city has added jobs for nine consecutive years, a disproportionate number of those jobs, a total of 60.5%, are in sectors paying $35,000 a year or less.
Residential Market News
Freeman's Building Sells For $14.3M; Condo Tower Planned Atop
The building at 1808-1810 Chestnut Street that served as the headquarters for Freeman’s auction house for nearly a century has sold for $14.3 million to Astoban Investments, which plans to preserve the existing six-story, 46,000-square-foot structure and construct an eight- to 10-story condominium tower above it.
Freeman’s has leased two separate 4,600-square-foot spaces at 2400 Market Street: a first-floor gallery and retail space, and third-floor offices. Freeman’s will open a 15,000-square-foot location, focusing on emerging artists and decorative arts, at the Civic at 1600 West Girard Avenue.
Jewelers’ Row: Residential Tower Will Help District Evolve
An op-ed in The Philadelphia Inquirer by a longtime business owner and head of the Jewelers’ Row District said a new a mixed-use tower under construction on the historic Sansom Street “will introduce fresh energy to our neighborhood and drive more people to our doorsteps.”
“The Jewelers’ Row District is open and stronger than ever, and the commencement of this development marks the beginning of a new, exciting era. In a neighborhood shaped by many family-owned, multigenerational brick and mortar stores, we need development to strengthen our historic district. … In addition, there will still be retail on street level, including some of the jewelry stores that were previously at the same location,” wrote Rich Goldberg, third-generation owner of Safian & Rudolph Jewelers and president of the business district.
Center City Retail Is Thriving Amid ‘Retail Apocalypse’ Hype
WHYY’s PlanPhilly, reporting on the city’s retail scene, noted that fears of a brick-and-mortar “retail apocalypse” do not reflect reality – and that retail in Center City is thriving.
The piece featured data from CCD/CPDC’s new Center City Philadelphia Retail 2019 report, which notes that rising rents along West Walnut Street pushed more retailers to Chestnut and the numbered streets west of City Hall while the new Fashion District Philadelphia is the latest of a growing retail presence on East Market and East Chestnut streets.
CCD’s new Center City Philadelphia Retail report states that Center City’s 3,266 active storefronts in 2019 consist of 978 retail stores, 1,058 eating and drinking establishments and 1,230 service providers. And while an expanding job base and a dramatic increase in Center City residents has attracted 90 well-known national retailers in the last five years, 747 of those 978 retail stores – three out of four – are local businesses.
House GOP Unveils Plan To Fund Infrastructure Repairs Without Tax Hike
Republicans in the state House have released a plan they say will address billions of dollars in unmet repairs to Pennsylvania’s crumbling highways, bridges, dams and railroads without raising state taxes. Rep. Martina White, R-Philadelphia, said the House GOP wants to ensure that taxes collected on new cars, or fines paid on a speeding ticket are allocated toward transportation projects, and not unrelated spending.
The American Society of Civil Engineers’ 2018 infrastructure report card gave Pennsylvania a C+ grade, noting more than 4,100 structurally deficient bridges and 36,150 miles of roads in need of repaving.
NYC Looks To Cargo Bikes In Efforts To Reduce Gridlock
New York will allow major delivery companies to park cargo bikes in commercial loading zones as a way to get some delivery trucks off the city’s gridlocked streets. Up to100 pedal-assisted cargo bikes operated by Amazon, UPS and DHL will be allowed to park in hundreds of existing commercial loading areas that are typically reserved for trucks and vans. Unlike those vehicles, the bikes will not have to pay meters.
A spokesman for the National Association of City Transportation Officials, said that as many cities face similar congestion and delivery challenges, New York’s program would be closely watched “to see how pedal power can unclog the movement of goods in our most congested urban areas.”
In Philadelphia, delivery trucks paid $5.3 million in fines for illegal parking in Center City in 2017 – a 32% increase from 2013 – but big-name delivery companies account for only 26% of trucks stopping illegally in the right-of-way. CCD/CPDC’s report, Keep Philadelphia Moving, looks at Center City’s worsening congestion problem and presents ways to help alleviate our growing gridlock.
Replacement Named For Outgoing PennDOT Secretary
As PennDOT Secretary Leslie Richards prepares to take over as general manager of SEPTA in January, Gov. Tom Wolf has announced PennDOT executive deputy secretary Yassmin Gramian as her replacement, effective Dec. 6.
Gramian is an engineer who has spent more than three decades in the transportation and infrastructure industry, working on highways, bridges, and tolling projects. She has played a part in local projects including the Center City Concourse Improvement Program and Amtrak’s Keystone Corridor infrastructure rehabilitation and reconstruction.
Millennial Population Stable In Philadelphia, Unlike Other Big Cities
The number of 18- to 34-year-olds in Philadelphia has remained stable at a time when other large cities are seeing marked decreases in the millennial age group, an analysis from JLL has found. Though the city did see a slight decrease in 2018, it represents a year-over-year change of only about 2,200 people in a city that is currently home to more than 458,000 millennials – a rise of about 133,000 in that age group since 2005.
By comparison, San Diego “lost” over 21,000 young people, Chicago lost 9,000, and New York City lost nearly 100,000 in the same time frame. The cities with declining millennial populations were largely some of the most expensive to live in, while more affordable cities managed to retain a larger portion of their young population, JLL stated.
NY Fed: Biggest U.S. Metros Are The Most Economically Unequal
A new data analysis by the New York Fed of the U.S. economy since 1980 has found that while economic inequality has been rising everywhere in the U.S., the disparities are most striking in cities including the largest metros in the country: New York, Los Angeles, San Francisco, San Jose, and Houston.
In an overview of the Fed’s new findings, The New York Times said: “Thriving and stagnant places are pulling apart from each other. And within the most prosperous regions, inequality is widening to new extremes. That this inequality now so clearly correlates with city size – the largest metros are the most unequal – also shows how changes in the economy are both rewarding and rattling what we have come to think of as ‘superstar cities.’”
On December 17, the Central Philadelphia Development Corporation’s meeting will feature a discussion on reducing poverty and expanding job growth in Philadelphia, which has experienced dramatic growth since the end of the recession, but has the highest poverty rate of the 10 largest cities and a disproportionate number of lower-wage jobs compared to our peers.
Event details and RSVP information are at the bottom of this email. Copies of our new report, Growing More Family Sustaining Jobs in Philadelphia, will also be available at the meeting.
Manufacturing, Service Industries Continue Growth in November
Manufacturing activity in the region continued to grow in November, according to firms responding to the Manufacturing Business Outlook Survey conducted by the Federal Reserve Bank of Philadelphia, with new orders up for 32.0% of firms, down for 23.6%, and remaining the same for 44.4%. The number of employees increased for 26.6% of the companies, decreased for 5.1%, and was unchanged for 67.8%.
Looking ahead six months, 51.9% of the firms expected conditions to improve, 16.1% anticipated a downturn, and 25.8% predicted no change.
Business indicators suggest continued expansion of activity in the region’s service sector in November, according to responses to the Philadelphia Fed’s Nonmanufacturing Business Outlook Survey, with new orders up for 36.4% of firms, down for 10.8%, and remaining the same for 23.3%. The number of full-time permanent employees increased for 29.7% of the companies, decreased for 8.5%, and was unchanged for 61.8%.
Looking ahead six months, 35.0% of the firms expected regional conditions to improve, 13.9% anticipated a downturn, and 45.1% predicted no change.
City Government News
City Council Revises Abatement Bill After Veto Vowed
City Council will push back the start date of changes to the city’s 10-year tax abatement, after Mayor Jim Kenney vowed to veto the legislation if the implementation date wasn’t delayed until at least the end of 2020. The bill advanced by Council called for implementation in mid-2020, potentially jeopardizing projects that are in the pipeline and with financing that assumed the full abatement would be in place.
Due to a timing quirk with the end of Council’s four-year term approaching, the bill would not be able to become law without the mayor’s signature. With the amended timetable, it is expected to move to final passage this week.
The legislation calls for the value of the abatement to decrease by one-tenth per year over its 10-year span, so a full abatement would only be received in the first year. In year two, 90% of a property’s assessed value would be abated and by the tenth year, only 10% of the value would be abated.
Council Approves Bill To Provide 60,000 Households With Wage Tax Relief
City Council has unanimously passed legislation that would allow 60,000 households to apply for a refund that would give them back the wages they paid in city taxes. The bill, introduced by City Councilman Allan Domb and now awaiting the mayor’s signature, would allow qualifying low-income individuals and families to be reimbursed the city’s portion of the wage tax.
A family of four earning an income of $34,250 would receive a refund of about $810 annually. A single adult earning about the same income with three children would receive about $880 annually. Both of these amounts would increase significantly if the PICA portion of the wage tax expires in 2024.
City Spending Projected To Outpace Revenues Again In FY2020
Revenues for fiscal year 2020 are projected at $4.96 billion and expenditures are projected at $5.12 billion, according to
a new Pennsylvania Intergovernmental Cooperation Authority (PICA) analysis. These estimates increased over the projections in the City’s FY2019-FY2023 Five Year Plan by $48.7 million and $92.4 million, respectively, according to PICA’s Quarterly City Managers Report (QCMR) for the first quarter ended September 30.
Better-than-expected tax collections are the primary driver for the projected increase in revenues, while anticipated increases in wages and outside contracts are the primary causes for the projected increase in spending. City spending is projected to again outpace revenues in FY2020, by more than $150 million. The estimated year-end General Fund balance for FY2020 increased to $307.2 million, almost $100 million higher than in the City’s Five Year Plan, PICA noted.
Former Inquirer Building Completion Date Set For January 2021
The new home of the Philadelphia Police Department and other public safety agencies is starting to take shape. Scaffolding on the old Philadelphia Inquirer building at 400 North Broad Street is slated to come down within the next few weeks. The $300 million police headquarters will be called the Philadelphia Public Safety Building.
The Police Administration Building on Race Street will locate to the tower, freeing up a major development site, as well as the 6th Police District and 9th Police District headquarters.
New CCD Board Nominations Before City Council
City Council has introduced resolutions to approve the appointments of three new members of the CCD’s Board of Directors. A hearing is expected this week.
The new members are Clayton Mitchell, to serve through December 31, 2020; Greg Muller, to serve through December 31, 2022; and Carol Watson, to serve through December 31, 2024.
12/17: CPDC Discusses Growing Jobs, Reducing Poverty
Since the end of the Great Recession, nearly all cities have grown jobs, but nationally the gap has widened between wealth and poverty. Philadelphia has enjoyed recent growth, but still has 23% fewer jobs than in 1970 and the highest poverty rate of the 10 largest U.S. cities.
What can be done locally to foster inclusive growth without stifling our rebounding market? What is best achieved at the national or state level? Join us at 8 a.m. on December 17 in The Union League’s Meade Hall for a discussion. Membership meetings are open to all members of CPDC firms.
The event’s guest speaker is John H. Alschuler, Chairman of HR&A, New York; respondents are John Grady, outgoing President of PIDC, and Maria Quiñones-Sánchez, Philadelphia City Councilwoman for the 7th District. The moderator is Paul R. Levy, Executive Director of CPDC.
Copies of CCD/CPDC’s new report, Growing More Family Sustaining Jobs in Philadelphia, will be available for meeting attendees.
RSVP to Romina Gutierrez by Wednesday, December 11 by email at email@example.com or by phone at 215.440.5543.