PHILADELPHIA | Highrise Development Thread IX

[cardeza]

There is a pending zoning bill to create more CX-5 zoning for s. Yards near 30th street.

https://phila.legistar.com/View.ashx?M=F&ID=7102548&GUID=8AB6FC68-AF99-4472-B3DC-98A2C92B59D6

[Tlphila]

Originally Posted by Londonee

Speaking of taxes and the abatement. I've never heard a great reason why we couldn't figure out a way to do something similar for businesses. Provide a one-time, 10-Year (Business-related) tax break for companies who relocate an HQ from outside the city. Provide minimum requirements so you aren't getting the empty room with a receptionist and a phone but have the breaks be pretty substantial, like you're paying basically nothing as a company - more than KOZ. Keys are that the tax breaks are temporary and the companies must be relocating from outside of the city to earn them. Some companies might move back at the end of 10 years, but that doesn't seem to be happening with residential properties (as opponents claimed it would). Wage Taxes would not be waved, so the benefit to the city will come in the form of wage, sales, and ancillary taxes like the hotel tax.

Very interesting idea! They have to figure something out bc reducing the wage tax would turbocharge job growth.

[mcgrath618]

Will anyone on here be attending the gathering at 27th and Girard this weekend? I forget if it's been mentioned on here at all.

[Jawnadelphia]

Originally Posted by mcgrath618

will anyone on here be attending the gathering at 27th and girard this weekend? I forget if it's been mentioned on here at all.

do attend.

[Londonee]

Originally Posted by cardeza

The KOZs basically accomplish this- although they are targeted and not global. It's definitely an idea I thought of as well and its interesting that no one else has proposed it. I think part of the issue would be the blowback from existing companies who would feel they were immediately being put at a disadvantage vs companies eligible for the benefit.

Aren't KOZs just state tax benefits (I know it's a state sponsored program)? So i doubt it would apply to local Philly taxes like NPT?

[jsbrook]

Originally Posted by Londonee

Aren't KOZs just state tax benefits (I know it's a state sponsored program)? So i doubt it would apply to local Philly taxes like NPT?

It indeed applies to NPT and other local taxes. The state designed them to be like that.

https://www.phila.gov/programs/keystone-opportunity-zones/

http://www.marcumllp.com/insights-news/k...opportunity-to-reduce-philadelphia-taxes

[3rd&Brown]

Originally Posted by Tlphila

Very interesting idea! They have to figure something out bc reducing the wage tax would turbocharge job growth.

Wrong. Reducing the NPT would turbocharge job growth.

Companies don't care what you pay as an individual. They care what they pay.

[Boku]

Expect a new building soon.

Philadelphia office rents poised to hit a record $50 per square foot

https://www.bizjournals.com/philadelphia...office-rents-poised-to-hit-a-record.html

The cost of rent for Center City office space is poised to hit $50 a square foot, an unprecedented threshold for a market that has often lagged behind other major cities when it comes to rent growth.

Newly constructed buildings such as FMC Tower at Cira South and space at the Science Center have often garnered the highest office rents in Philadelphia with space in the Central Business District showing modest gains. That is changing. One building — BNY Mellon Bank Center — is on the cusp of hitting the $50 high watermark, according to various market sources, and other trophy and Class A buildings are seeing rents in excess of $45 a square foot.

Average asking rents are now $32.83 a square foot, which is a new high and a dollar gain year over year, according to Newmark Knight Frank data from the first quarter. Five years ago, rents were in the mid to upper $20s a square foot.

“The market has been slow, steady and strong for the last five years and landlords always want to push rates but there’s usually a building or two that holds back,” said George Cauffman, a Center City broker with CBRE Inc. “Now everyone wants to push rates.”

There are multiple reasons triggering the shift upward. New landlords have plowed tens of millions of dollars into upgrading spaces and adding amenities such as conference centers and lounge areas. These are additions tenants have come to expect and landlords want a return for that investment. “That drives rates up as well,” Cauffman said.

The rising rents have narrowed the cost between Class A and trophy space. There used to be an $8 to $10 difference but that has whittled down to $5 to $6 a square foot, Cauffman said.

The strengthening market is taking place against a backdrop of continued corporate downsizing. Companies including Macquarie Investment Management, Deloitte, Wells Fargo and Reliance Standard Insurance have reduced the amount of space they lease. Cauffman attributed this to “right-sizing” as employers use space more efficiently. This contributed to 200,000 square feet of negative absorption during the quarter, according to CBRE research.

In spite of that pull back, the vacancy rate remains low and rents continue to rise. Though data differ, Newmark has vacancy at 13.5 percent and Avison Young at 9 percent.

The basics of supply and demand are driving rents up as well.

“January and February were pretty quiet given the market and March and April came and it’s as active and as tight as I have ever seen,” said Neil Brazitis, a broker with Newmark. “There is a lack of quality space. I was out with a group looking for 4,000 square feet of Class A or trophy space and we have three maybe four options. That’s spaces not just buildings.”

Tenants large and small out in the market are finding it challenging to find the space they need. Several large law firms and other companies are looking for large blocks 50,000 square feet or more. In addition, co-working firms have ramped up their search for new space and they too are finding it difficult to find what they need. Brazitis, who represents Convene, has calculated 500,000 square feet of co-working tenants scouring the market.

“There’s a ton of competition for big blocks of space for co-working,” he said. “It’s a race. Their marching orders are to open more locations. The existing ones are full."

While the rent growth is remarkable for Center City, Philadelphia is still behind its counterparts across the country compared with Manhattan or Washington D.C., where average rents long ago surpassed $50 a square foot. Regardless, these price gains and lack of space have some predicting a new building could be on the horizon. "I wouldn't be surprised if new construction is announced this year," Brazitis said.

[PHL10]

Originally Posted by 3rd&Brown

Wrong. Reducing the NPT would turbocharge job growth.

Companies don't care what you pay as an individual. They care what they pay.

"Like"

[Milksteak]

Originally Posted by Boku

Expect a new building soon.

Philadelphia office rents poised to hit a record $50 per square foot

https://www.bizjournals.com/philadelphia...office-rents-poised-to-hit-a-record.html

What would everybody's preferred new office building be out of the current proposals?

While I would love to see the first SY building go up, I'm leaning towards 13th and Market...that area is going through such a drastic improvement, this building would really seal the deal and help fuel all of the retail and restaurant business coming in.

[iamrobk]

Originally Posted by 3rd&Brown

Wrong. Reducing the NPT would turbocharge job growth.

Companies don't care what you pay as an individual. They care what they pay.

Yeah FWIW I think this is true and I've never understood why people equate the wage tax with job growth. The wage tax has its own issues, sure, but I don't think it has much to do with whether employers are hiring or not.

Originally Posted by Milksteak

What would everybody's preferred new office building be out of the current proposals?

While I would love to see the first SY building go up, I'm leaning towards 13th and Market...that area is going through such a drastic improvement, this building would really seal the deal and help fuel all of the retail and restaurant business coming in.

I don't think there is a current proposal for it but I would love to see some sort of mega-structure at 8th and Market. It's such a huge lot and I think even more important than 13th and Market in terms of bringing Old City together with the business oriented part of Center City. Also, the Gallery.

[mcgrath618]

Originally Posted by Milksteak

What would everybody's preferred new office building be out of the current proposals?

While I would love to see the first SY building go up, I'm leaning towards 13th and Market...that area is going through such a drastic improvement, this building would really seal the deal and help fuel all of the retail and restaurant business coming in.

13th and Market would definitely be great, but the Schuylkill Yards tower would stand out on the skyline... very hard to choose...

What about that proposal by Brandywine at like 21st and Market? The 500' one? I'd like that one very much. All of these lots have sat vacant for so long that it's becoming hard to choose.

Edit: What about the Disney Hole?

[Skintreesnail]

I'd rather see SY get started. I feel like that would draw even more interest in opening offices in the city and kick off additional development (including 13th and Market/Disney hole). It's really the only project that would have that wow factor. Having lots of office space around 30th street station and the universities is really a no-brainer.

[iheartphilly]

I don't have a preference for either sites, but more importantly, if we can land a large tenant to get the building process started, that would be huge. Imagine if Comcast wasn't headquartered in the city, we would not have CTC or Comcast Center and the skyline would look like it was stuck in a time capsule from the 80's and 90's. I would go as far to say big buildings need big corporate tenants and without it, it will be really hard if not impossible to get office high rises built.

[jsbrook]

https://www.bizjournals.com/philadelphia...hsoIc4dQ08177717&t=1556134294&j=88009851

Children’s Hospital of Philadelphia has expanded its presence in the Wanamaker Building and added another 54,000 square feet.

CHOP now occupies a total of 300,000 square feet in the building at 100 Penn Square East in Philadelphia and serves as its largest tenant. The hospital has been in Wanamaker since 2005. It started out with 192,000 square feet and added space over the years. In 2011, the hospital expanded and renewed its lease in the building. The new 54,000-square-foot lease will run coterminous with its other leases, said Scott MacGregor, vice president at Rubenstein Partners, which owns the building.

With the new deal, CHOP backfills a vacancy that had been created when Aramark Corp. relocated to 2400 Market St. in Philadelphia. The building’s office space is 95 percent occupied.

CHOP maintains administrative offices in Wanamaker and joins the University of Pennsylvania in using Center City office space to house a portion of those functions. They are both based in University City. Penn Medicine initially signed onto space in Centre Square in 2007. It has been growing its Center City presence ever since and now occupies 264,000 square feet.

Though already based in Center City, Thomas Jefferson University has decided to centralize and relocate it corporate and administrative offices off of its main campus and into 1101 Market St. It occupies 237,000 square feet in the building and also backfilled space vacated by Aramark.

In addition to CHOP expanding, a new tenant to Wanamaker is Kambi, a British-based gaming company. It leased a 7,000-square-foot spec suite. CHOP and Kambi were represented by Neil Brazitis and Sid Smith of Newmark Knight Frank.

The Wanamaker building is one of the city's most iconic. It once housed Wanamaker's department store, which is now the Center City Macy's.

[jsbrook]

Good news: https://www.bizjournals.com/philadelphia...office-rents-poised-to-hit-a-record.html

The cost of rent for Center City office space is poised to hit $50 a square foot, an unprecedented threshold for a market that has often lagged behind other major cities when it comes to rent growth....

While the rent growth is remarkable for Center City, Philadelphia is still behind its counterparts across the country compared with Manhattan or Washington D.C., where average rents long ago surpassed $50 a square foot. Regardless, these price gains and lack of space have some predicting a new building could be on the horizon. "I wouldn't be surprised if new construction is announced this year," Brazitis said.

[summersm343]

CDR Submissions are up!

Including, the first 3 towers for Liberty on the River, and CHOP's new tower which tops out at 377 feet

[iheartphilly]

CHOP is killing it with another one. Nice!

[Urbanthusiat]

Originally Posted by summersm343

CDR Submissions are up!

Including, the first 3 towers for Liberty on the River, and CHOP's new tower which tops out at 377 feet

I still think Liberty on the River is pie in the sky, but I'd love to be wrong. CHOP's new tower we can count on looking good though!

[Urbanthusiat]

CHOP's new tower.