Office Sector News
Centre Square Refinanced For $388M
Centre Square, which recently underwent an estimated $12 million in interior and exterior renovations, just completed a $388 million refinancing. Newmark Knight Frank and Walker & Dunlop arranged the transaction with JPMorgan Chase for the joint venture between Nightingale Properties and Wafra Capital Partners, owners of the1.8 million-square-foot office complex at 1500 Market Street. The loan includes funds for leasing costs and future upgrades.
Recent renovations focused on updating the 45-year-old office building’s plaza, retail and lobby areas and establishing a visual connection to Dilworth Park. New York-based Nightingale Properties bought Centre Square in 2017 for $328 million.
Five Below Adds More Office Space For HQ Expansion
Five Below Inc. is expanding its headquarters at the Lit Brothers building by nearly 43,000 square feet. The discount retailer is moving into space that had formerly been occupied by the Internal Revenue Service, which moved to 600 Arch Street, an office building adjacent to the federal courthouse.
Five Below’s new space is being renovated and the company is expected to occupy it in 2020. Five Below also has a two-story, 14,000-square-foot flagship store in the Lit Brothers building at 7th and Market streets.
Baltimore Marketing Firm Opening Center City Office
Baltimore marketing firm Imre is opening a Center City office in order to have better access to its pharmaceutical clients and to marketing talent specializing in pharma. Imre said it is finalizing a deal for about 2,500 square feet of space near Rittenhouse Square and will open in February with around a dozen employees.
The agency’s business is about two-thirds pharmaceutical clients and one-third consumer clients. It is also looking to tap into Philadelphia’s emerging biotechnology scene. The agency said it chose the as-yet-unannounced Center City location after asking applicants where they would want to work. Access to transportation played a large part in its selection.
Eds & Meds News
Jefferson To Acquire Fox Chase Cancer Center
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Thomas Jefferson University has agreed to purchase Temple University's Fox Chase Cancer Center. The agreement also calls for Jefferson to take on Temple's stake in Health Partners Plans, a managed care health insurer. The boards of trustees from both institutions have approved the agreement, Jefferson and Temple said in a joint statement.
The acquisition means that Center City-based Jefferson will have both Fox Chase and the Sidney Kimmel Cancer Center under its expanding umbrella, which officials said will create new opportunities for cancer treatment and research. Both cancer centers have designations from the National Cancer Institute.
Tower Health, Drexel Complete $50M Deal For St. Christopher's
Tower Health and Drexel University have finalized their $50 million acquisition of St. Christopher's Hospital for Children. The closing of the sale returns the 188-bed pediatric hospital to nonprofit status — something it had not been under its previous two owners.
Tower Health and Drexel have agreed to provide St. Christopher's with a $20 million capital infusion. They also agreed to retain substantially all of St. Christopher's more than 700 employees.
Center City Behavioral Health Startup Lands $7.5M In Series A Round
NeuroFlow, a Center City behavioral health medical software start-up whose clients include Jefferson Health, has raised $7.5 million in its first venture capital fund-raising round, led by San Francisco-based Builders VC, and also including Dreamit Ventures, Spring Point Partners, Penn-based Red & Blue Ventures, and AWT Private Investments.
NeuroFlow said it will use the money to expand its 28-person staff. The company’s cloud-based, HIPAA-compliant platform is designed to enable both patients and health providers to communicate between appointments, manage treatment plans and access tools and resources. The platform is already in use by more than 25,000 patients nationwide and has been adopted by more than 200 health care facilities.
VC Firm Closes $93M Fund, Grows Center City Team
Venture capital firm MissionOG closed its second major fund, raising $93 million to pour into business-to-business tech firms. The Center City firm is doubling down on its strategy of supporting high-growth opportunities in the fintech, data and software industries while ramping up the size of investments it makes into portfolio companies, which is usually between $1 million and $10 million.
MissionOG’s team in the city has also expanded and now includes 12 employees and strategic advisers. The company also recently moved from 1760 Market Street to the Fitler Club's new coworking space at 2400 Market Street.
Tech Jobs Having Modest Impact on Philadelphia Office Rents
A report released by real estate services and investment firm CBRE Group has ranked Philadelphia 29th out of 30 cities in terms of high-tech job growth, though the report suggests that the local tech industry increased in office market rent growth by 9.6% since 2017, placing it 12th among the 30 leading tech markets in North America.
The city is home to a tech labor pool of about 109,000 and graduated more than 4,800 new tech degree holders in 2017, CBRE said. The report identified Center City’s Spring Arts neighborhood near the Rail Park as a cost-effective rent option for growing tech firms and noted that telecommunications companies, including Comcast, are expected to add about 4,000 jobs in the near future.
Tourism & Hospitality News
Oracle Cites “Street Conditions” As Factor In Moving SF Conference
Computer giant Oracle cited “street conditions” as a key reason for relocating its OpenWorld conference out of San Francisco to Las Vegas next year. The loss of one of San Francisco’s biggest annual tech events has prompted concern that the city’s rise in homelessness, open drug use and incidents of street violence that alarm visitors is having a long-term impact on their tourism and travel industries.
The 60,000-person conference began in 1997. The loss of the conference – despite the $551 million renovation and expansion of Moscone Convention Center – will cost San Francisco an estimated $64 million a year, according to the city’s tourism bureau. Other conferences have recently left the city, including Apple, Google and Facebook.
Hilton-Branded Boutique Hotel Plans Spring Opening
An $80 million, 236-room Hilton boutique hotel called Canopy is scheduled to open next spring in Center City’s transformational East Market development and will join several other new hotels that opened this year. National Real Estate Development is renovating the historic Stephen Girard Building at 1180 Ludlow Street for the hotel.
The Canopy is the latest addition to East Market, a $400 million mixed-use development that National Real Estate has undertaken on a 4.4-acre site bound by Chestnut and Market streets and 11th and 12th streets. Dan Killinger, president of National Real Estate, said his firm is currently looking for new opportunities in Greater Center City.
Parkway Corp. Buys 7-Eleven Property On West Market Street
Parkway Corporation has purchased a property currently occupied by a 7-Eleven store at 2200-2202 Market Street. Parkway paid 2200 Market Street Associates $4.75 million for the 3,456-square-foot corner property. With the acquisition of the building, Parkway now owns most of that block including a surface lot and another structure housing a Chinese restaurant at 2206 Market.
Parkway is planning a 308,000-square-foot office building for law firm Morgan Lewis. The location is on the western edge of Center City, where growing interest from developers and office tenants is helping to close the gap between the downtown and University City. Brandywine Realty Trust proposed a 23-story mixed-use project at 2120 Market Street and PMC Property Group has two residential projects under development in that area.
Developer Says No Extra Parking Needed In Apartment Plans
A developer seeking to build 170 apartments in South Philadelphia’s Passyunk Square neighborhood countered residents calling for fewer units and more parking spaces, saying that only 20% of the occupants of his 2,000-plus housing units in Greater Center City have cars.
Alterra Property Group plans to redevelop a city-owned municipal complex bounded by Wharton, Reed, 11th, and 12th streets. Some long-time residents expressed concerns about increased parking struggles and traffic congestion. Conversely, a contingent of generally younger residents expressed support for a walkable, dense development and less parking.
Post Brothers To Embark On $500M Final Phase Of Piazza Site
Post Brothers will embark on the final phases of the Piazza mixed-use complex with a $500 million development of 1,100 apartments in multiple buildings. The developer has arranged $370 million in financing with Starwood Property Trust to move ahead with the initial phase, which includes the development of 697 units in five connected buildings.
About 400 units will come at a later date and will cost about $130 million. The projects will rise on a nearly four-acre parcel spanning between Germantown Avenue and Hancock Street along West Wildey Street. It will mark the final component of the mixed-use community conceived two decades ago by Bart Blatstein of Tower Investments.
Redevelopment Is Underway At Former Military Site
Redevelopment is underway at a former military textile manufacturing complex in South Philadelphia that ceased operations in 1994. Sky Management, which has owned the Philadelphia Quartermaster Depot in the Girard Estates neighborhood since 2001, has begun renovations to turn the 24-acre complex into an office/flex campus called the Quartermaster.
Sky's capital improvements to the property are set to be completed by the end of spring. They will include adding greenery, public art and hardscaping down the central street; the conversion of the gatehouse into an events, meeting and creative space; and the construction of a public green space for food trucks and outdoor events.
Residential Market News
Shirt Corner Apartment Building Sells For $22M
Real estate investment firm Dalzell Capital Partners LLC of Westport, Conn., has acquired the Shirt Corner apartment building in Old City. The firm bought the 62-unit apartment building from Alterra Property Group for $22 million.
The property at the northeast corner of Third and Market Streets also includes commercial space occupied by a Snap Kitchen shop and nine parking spaces. With the acquisition, Dalzell owns nine apartment buildings in Center City, comprising nearly 300 units.
Fashion District Welcomes More Than 2M Visitors In 2 Months
In just over two months since its opening, more than 2 million people have visited the newly redeveloped Fashion District Philadelphia, the Pennsylvania Real Estate Investment Trust (PREIT) announced. Upcoming openings of key destination tenants, including Round 1, Wonderspaces, Primark and Sephora are likely to bolster these results, PREIT added.
PREIT and Macerich Co. redeveloped the former Gallery into Fashion District, which opened in September and has a mix of apparel, entertainment and dining tenants.
Click-To-Brick Subleasing Firm Is Coming to Fashion District
Click-to-brick subleasing company Anchor Shops plans to open a 7,000-square-foot concourse-level storefront at the Fashion District, a new concept for online retailers seeking a brick-and-mortar presence. It will be the first retail location for Anchor Shops, which is a division of e-commerce supply chain company ShopFulfill.
The retail store estimates that it will house more than 40 digital-first retailers at the Fashion District location, which is expected to open in the second quarter of 2020. Depending on the size and type of space required, brands will have the option to join Anchor Shops and its national distribution network for about $800 per month.
TF Cornerstone Buys Macy’s Portion Of Wanamaker Building
An owner of New York’s Grand Central Terminal has purchased the section of Center City’s Wanamaker Building occupied by Macy’s. TF Cornerstone Inc., a major property holder in New York, closed on the 435,000-square-foot, three-story portion of the property earlier this month. The price was not disclosed.
The sale divides the historic 1.4 million-square-foot building between separate ownership groups, with Rubenstein Partners and Amerimar Enterprises retaining the office section that occupies its upper floors. Macy’s has a long-term lease for the building’s lower-level retail space.
Tiffany & Co. Moving To New West Walnut Street Location
Tiffany & Co. is moving its Center City store from its long-time Shops at the Bellevue home into a new space on West Walnut Street. The luxury jeweler will move to 1715-1717 Walnut Street, a space previously occupied by fast-fashion apparel brand Zara.
The building totals 18,000 square feet over two floors; Tiffany will take the ground floor space totaling 4,121 square feet. Walnut Street is one of Center City’s prestigious retail corridors, with rents at around $125 a square foot.
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 downtown residents has attracted 90 national retailers in the last five years, 747 of those 978 retail stores – three out of four – are local businesses.
Spanish Grocer Opens At Reading Terminal Market
Reading Terminal Market’s newest merchant is a specialty grocery store with gourmet products imported from all over Spain. The opening comes as Reading Terminal is turning from prepared food options toward more market offerings to differentiate it from a “food hall” model.
The merchant, called A Taste of Spain, won the spot at Reading Terminal after participating in a request for proposal concept competition.
Croatian Coffee Roaster Opens First U.S. Café In Center City
Croatian coffee roaster Cogito Coffee has opened its first American cafe on 12th Street near Chestnut. The first café opened a decade ago in Zagreb and expanded to five locations in Croatia. The decision to locate in Center City came after Marko Brkich, the Philadelphia-raised son of Croatian immigrants, visited one of the cafes and contacted Cogito’s owners, one of whom is a native of the Philadelphia suburb of Glenside.
Until Cogito opens a U.S. production facility, coffee is roasted in Zagreb. The company is sourcing beans and using a roastery in Queens, N.Y.
PICA: November Tax Collections Up 7.3% Compared To Last Year
The City of Philadelphia collected approximately $192.7 million in General Fund tax revenue in November 2019, compared to $175.5 million in November 2018, an increase of approximately $17.2 million, or 9.8%, according to preliminary figures from the Pennsylvania Intergovernmental Cooperation Authority (PICA). Strong increases in the city portion of the wage, earnings, and net profits tax, business income and receipts tax (BIRT) and realty transfer taxes pushed collections to an almost double-digit increase, compared to November of last year.
Year-to-date collections are ahead of last year by 7.8% through November. PICA reports that BIRT rose 54.7%, compared to a projected decrease of -2.1%; the real estate tax rose 0.7%, compared to a projected decrease of -0.8%; the realty transfer tax rose 5.9%, compared to a projected 2.7% increase; and the city sales tax collections rose 10.3%, compared to a projected growth of 5.8%.
West Philadelphia Jobs Program: A“Workforce Model” For Cities
West Philadelphia Skills Initiative (WPSI), a workforce development program founded in 2011 by the University City District (UCD), has connected 530 West Philadelphians – 95% of WPSI graduates – to full-time positions with access to benefits or with a direct path to full-time employment. Graduates earn 25% higher wages on average, keeping $37 million in the community over the last eight years.
In a new report on WPSI’s successful workforce model, the Nowak Metro Finance Lab at Drexel University and its research partners concluded that “WPSI’s best-in-class model innovative practices can be scaled and replicated in cities across the U.S. Its groundbreaking formula of employer-driven skill-building shows how to leverage global innovation districts to keep income in some of our most disadvantaged neighborhoods.”
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 (60.5%) are in sectors paying $35,000 a year or less.
The report states, “The best way to reduce poverty and to support schools and services is not to raise local taxes more, but to accelerate private sector job growth, add more family-sustaining jobs and expand the city’s tax base.”
City Government News
Council Bill Requires Developers To Provide Neighborhood Amenities
A bill requiring developers to provide public services and amenities in neighborhoods where they build major projects was passed by City Council on the last day of its four-year term. The proposed legislation now awaits the signature of Mayor Jim Kenney, who has never vetoed a bill.
The bill, written by Council President Darrell Clarke’s office, has received support from community groups but still leaves many details undetermined, and concludes by asking the Department of Planning and Development to figure out the precise rules and procedures to ensure implementation of the measure.
City Council Approves 3 New Members Of CCD Board
City Council has approved the appointments of three new members of the Center City District Board of Directors.
The new members are Clayton Mitchell, Senior Vice President, Real Estate and Facilities, Thomas Jefferson University Hospitals, to serve through December 31, 2020; Greg Muller, COO and Partner, SSH Real Estate, to serve through December 31, 2022; and Carol Watson, General Manager, Hotel Palomar Philadelphia, to serve through December 31, 2024.
Customer Satisfaction Survey Results Are In
Thank you to all who took the time to complete our recent Customer Satisfaction Survey. Your thoughts and comments directly influence how we shape our programs, services and policy advocacy each year.
CCD President Paul Levy’s cover essay in the latest CCD/CPDC Center City Digest contains a summary of what more than 5,200 survey respondents told us about living, working and spending time in Center City, and it also describes how we are responding to that feedback. To read the article, download the full Center City Digest via the link below.
Inquirer Editorial: Center City Alone Can’t Solve Homelessness
In an editorial published December 10, The Philadelphia Inquirer cited the Center City Digest cover essay, as well as CCD/CPDC’s new report on the city’s disproportionate growth of low-wage jobs, and concluded that the Ambassadors of Hope collaboration of CCD, Project HOME, and police “is a pragmatic and practical response to the five years of growth in the homeless population.”
The editorial stated, “It’s not realistic to expect solutions to Philadelphia’s economic woes to come from a single sector of the city, any more than it would be realistic to expect downtown to solve the citywide problem of homelessness. But the interdisciplinary Ambassadors of Hope offer a worthwhile approach.”
During this year’s 35-week Ambassadors of Hope program, which recently concluded, 185 people accepted services offered by the joint outreach teams and were transported from the street to a site appropriate for their needs. The CCD provided transportation for more than three-fourths of the people who were connected to services. Six other individuals were connected to services through the 302 commitment process.
In the cold weather months, the Ambassadors of Hope initiative will continue on a scaled-down basis, as the City of Philadelphia increases its winter outreach. CCD’s website has more information on the program and how you can help:
January 9: CPDC’s In Conversation: Cities of Tomorrow
Join us at 8:30 a.m. on Thursday, January 9, at Jacobs, 2301 Chestnut Street, for Cities Of Tomorrow: Integrating Buildings, Infrastructure & Technology.
Successful cities are integrating building design, infrastructure and technology. Using examples from other cities, the Jacobs team will illustrate how leaders in the industry are moving from vision to implementation, adjusting and calibrating the latest technologies to the local physical, environmental, economic, social and political context.
The panelists are James Moore, Jacobs Advanced Planning Group; Gary Lapera, FAIA, Jacobs Buildings Architecture; and Mark Bandy, Jacobs Infrastructure. The moderator is Maureen Byrne, LEED AP, Jacobs Buildings Design.
This event is open to all members of CPDC firms. RSVP by Tuesday, January 7 to Romina Gutierrez by Tuesday, January 7 at email@example.com or 215.440.5543.