PHILADELPHIA | Highrise Development Thread IX

[1487]

Originally Posted by McBane

I was pretty sure a TargetExpress was rumored to go into one or all of those retails spots. Then, it was reported that TargetExpress was coming to 19th and Chestnut, but that report had said they were looking for at least one other location in CC and so having one on 11th Street seems to make sense.

there has been speculation about Target going on chestnut for months but the fact that they announced the 19th and chestnut location before construction even starts on that retail building makes me think nothing is finalzed for 1000 block- especially when you consider that building is well under construction.

[PhillySteaks]

Originally Posted by McBane

I was pretty sure a TargetExpress was rumored to go into one or all of those retails spots. Then, it was reported that TargetExpress was coming to 19th and Chestnut, but that report had said they were looking for at least one other location in CC and so having one on 11th Street seems to make sense.

Target is days away from signing. Working on final negotiations. I'm sure they'll announce it when everything is set in stone.

[lsksl]

Originally Posted by DIESELPOLO

So. Much. Parking.

Also, they're building a Class A, architectural gem on spec! What is this? 2005?

So I'm really trying to understand the success of the Navy Yard: Is all this building activity happening in the there due to the tax advantages of being a KOZ or are these particular companies interested in this low-slung suburban-esque environment...although the goal of the Navy Yard is not to be suburban, but it's seemingly manifesting that way...

Really? That's the opposite of what they're accomplishing.
It really is a challenge to transform the Navy Yard into a more urban environment. It's separated from the rest of the urban part of the city by the stadiums area and FDR Park, and across the river there's the airport. So it's kind of isolated. There's no adjacent residential community where people can easily commute from without public transportation.
The next thing to do would obviously be to make it more accessible through public transportation (extend the subway line). They are doing at good job at attracting companies and businesses to the area and should continue doing the same so that people would see it as an increasingly attractive place to live. Which leads to the fact that they should probably establish a residential community in the yard for people who work there. I'm guessing most of them leave the area after work. And they all need cars. The place is probably dead after working hours and that's not going to change unless people actually live there.

[Larry King]

........

[hammersklavier]

Originally Posted by lsksl

Really? That's the opposite of what they're accomplishing.
It really is a challenge to transform the Navy Yard into a more urban environment. It's separated from the rest of the urban part of the city by the stadiums area and FDR Park, and across the river there's the airport. So it's kind of isolated. There's no adjacent residential community where people can easily commute from without public transportation.
The next thing to do would obviously be to make it more accessible through public transportation (extend the subway line). They are doing at good job at attracting companies and businesses to the area and should continue doing the same so that people would see it as an increasingly attractive place to live. Which leads to the fact that they should probably establish a residential community in the yard for people who work there. I'm guessing most of them leave the area after work. And they all need cars. The place is probably dead after working hours and that's not going to change unless people actually live there.

The Navy Yard started out as a brownfield the size of Center City. Without any existing mass transit down there it makes more sense to build out than build out.

I think the most important parts of the master plan are also the least-heralded: (a) a well-thought-out street network that can easily handle significant redevelopment and intensification, and (b) an equally-well-conceived parks system that not only defines nodes of intensification but also allows it to occur with a minimum of extraneous unusable "open space". Even the building placement is smarter (less haphazard) than your typical office park redevelopment -- framing important spaces rather than being lost behind seas of greenswards and parking lots.

And don't forget, the Navy Yard itself is one of the primary agitators for the BSL extension.

[Kidphilly]

Originally Posted by hammersklavier

The Navy Yard started out as a brownfield the size of Center City. Without any existing mass transit down there it makes more sense to build out than build out.

I think the most important parts of the master plan are also the least-heralded: (a) a well-thought-out street network that can easily handle significant redevelopment and intensification, and (b) an equally-well-conceived parks system that not only defines nodes of intensification but also allows it to occur with a minimum of extraneous unusable "open space". Even the building placement is smarter (less haphazard) than your typical office park redevelopment -- framing important spaces rather than being lost behind seas of greenswards and parking lots.

And don't forget, the Navy Yard itself is one of the primary agitators for the BSL extension.

good points and this will never look like CC, but is better planned - ultimately the surface lots could be filled if demand warrants. I for one would like to see the BSL extension and residential development. This could be sort of first to market housing, more akin to sunbelt development with urban connections

A question here is could the Patco line be trunked into the BSL

[DIESELPOLO]

Originally Posted by hammersklavier

The Navy Yard started out as a brownfield the size of Center City. Without any existing mass transit down there it makes more sense to build out than build out.

I think the most important parts of the master plan are also the least-heralded: (a) a well-thought-out street network that can easily handle significant redevelopment and intensification, and (b) an equally-well-conceived parks system that not only defines nodes of intensification but also allows it to occur with a minimum of extraneous unusable "open space". Even the building placement is smarter (less haphazard) than your typical office park redevelopment -- framing important spaces rather than being lost behind seas of greenswards and parking lots.

And don't forget, the Navy Yard itself is one of the primary agitators for the BSL extension.

Ah. That makes sense. While it is office park-like, I would agree in that it doesn't feel like a "straight up" suburban office park. They are certainly more judicious in the placement of new buildings and parking lots, I'm assuming, in anticipation of future intensification.

When I think of two other, equivalent blank urban canvasses–San Francisco's Mission Bay and Portland's South Waterfront–I want the Navy Yard to embody the success of those places. The former being a hospital, biosciences, tech HQ, and residential node, and the latter being a sciences and residential node.

That said, both, however, suffer from modern urban planning that incorporates contemporary traffic planning in that their blocks are massive. It results in the experience of getting to a "there" feeling generic and taking a while. The connections within these districts is good though. << if those counter observations make sense...

[summersm343]

Originally Posted by DIESELPOLO

Ah. That makes sense. While it is office park-like, I would agree in that it doesn't feel like a "straight up" suburban office park. They are certainly more judicious in the placement of new buildings and parking lots, I'm assuming, in anticipation of future intensification.

When I think of two other, equivalent blank urban canvasses–San Francisco's Mission Bay and Portland's South Waterfront–I want the Navy Yard to embody the success of those places. The former being a hospital, biosciences, tech HQ, and residential node, and the latter being a sciences and residential node.

That said, both, however, suffer from modern urban planning that incorporates contemporary traffic planning in that their blocks are massive. It results in the experience of getting to a "there" feeling generic and taking a while. The connections within these districts is good though. << if those counter observations make sense...

The placement of the buildings is definitely in anticipation of future intensification. The buildings meet the streets, and the parking lots are placed carefully so they can be built on at later dates. Hopefully the city and SEPTA can pull it together and get a Broad Street line expansion down there and Philly could have a nice new modern urban business district and residential neighborhood.

https://www.google.com/maps/@39.894935,-...WU56RTQRqYEIA!2e0!7i13312!8i6656!6m1!1e1

[PhillySteaks]

Originally Posted by Larry King

pretty ballsy to frame it out before having a lease

Institutional money is backing this development so in the grand scheme it's actual a blip in the portfolio along the east coast let alone the U.S. To give you an idea the same partner backing this project also has a sizable stake in a certain $20 billion project in New York.

There was quite some confidence among the broker contacts and representatives from 4 potential tenants who were vying for the space originally. Target made the best offer. The lease has been tied up for quite some time now, but target was the number one before any demo work took place. It's not guaranteed yet, but it's close. A sign of a strong market is to build on spec. I'm sure the building wouldn't of been considered if there was a prolonged chance of the space going unfilled, and you have to assume that there'd be decent cash flow coming in via the rental units; so not all that ballsy. Speaking specifically to the retail market of Philadelphia. Not multi-family which is strong, industrial which is decent, and office which is meh at best compared to national gateway cities. Philly has a long way to go still when it comes to office; that is if you're comparing core markets. Philly is up and coming in that capacity. We need more fortune 100s willing to locate downtown then what we have presently to justify a spec high rise. A build to suit with some spec like FMC, sure. But not straight class A high rise spec office, rents don't support the economics...but as I said it is definitely improving, so never know where the markets at in a few years time. Especially if vacancy rates keep dipping.

[hammersklavier]

Originally Posted by DIESELPOLO

That said, both, however, suffer from modern urban planning that incorporates contemporary traffic planning in that their blocks are massive. It results in the experience of getting to a "there" feeling generic and taking a while. The connections within these districts is good though. << if those counter observations make sense...

I've noticed that that's a trend with urban redevelopments in general. Newport and Battery Park City across the Hudson from one another; Oslo's Barcode; Melbourne's Docklands; Lisbon's Parque das Nações; etc -- all have that feel. Even redeveloping parts of DC that lie within the city's traditional L'Enfant grid, like NoMa and its own Navy Yard, have a certain pervasive sterility that the older neighborhoods don't have.

[apetrella802]

Originally Posted by lsksl

Really? That's the opposite of what they're accomplishing.
It really is a challenge to transform the Navy Yard into a more urban environment. It's separated from the rest of the urban part of the city by the stadiums area and FDR Park, and across the river there's the airport. So it's kind of isolated. There's no adjacent residential community where people can easily commute from without public transportation.
The next thing to do would obviously be to make it more accessible through public transportation (extend the subway line). They are doing at good job at attracting companies and businesses to the area and should continue doing the same so that people would see it as an increasingly attractive place to live. Which leads to the fact that they should probably establish a residential community in the yard for people who work there. I'm guessing most of them leave the area after work. And they all need cars. The place is probably dead after working hours and that's not going to change unless people actually live there.

The master plan for the Navy Yard by RAM Stern(2004, updated 2013) calls for a residential component, although it has not been acted upon as yet. The most appealing aspect of the Navy Yard IMO is that it seems like a world apart from CC.
http://www.ramsa.com/en/projects-search/planning/philadelphia.html

[McBane]

If those parking lots are slated - someday - to be developed then where will everyone park? I don't recall that any of the buildings were fitted with parking (under- or above-ground). And not only will new parking need to be created but the BSL would need to be extended, like now.

Finally, the Navy Yard needs to be more integrated into the cityscape. Right now Broad and 26th are the only connections. In addition to 95, there are a bevy of train tracks separating the Navy Yard from the city grid. It could use a few more connections. https://goo.gl/maps/39C7N

[Late1]

I'd love to see the Navy Yard integrated into the city not only by a BSL extension but also by a rapid transit line that intersects with the end of BSL and runs east/west thru the Navy Yard. The eastern route would run up/near the Delaware waterfront and connect with the Market-Frankford line, while the western route would run up by the Schuylkill.

That's where it gets really pie-in-the sky, though. Because the idea would be to compress all the industrial stuff along the lower Schuylkill back away from the river and to continue NavyYardesque development along the Schuylkill from the Navy Yard up to Gray's Ferry (except with an emphasis on public transit, rather than car - hence the rapid transit line), which would then link into the commercial districts of U City & Center City.

In addition to the commercial and residential space in a somewhat parklike setting along the Schuylkill (and the extended Schuylkill Banks Trail), I'm picturing one or more marinas, too. Imagine hundreds of sailboats dotting the lower Schuylkill all the way up to the Water Works. Think Boston's Back Bay/Charles River or London's eastern Thames.

This is probably a better idea down the road, though, when reducing industrial on the lower Schuylkill would be more feasible, and the commercial & residential development would be less likely to cannibalize from Center City.

[1487]

Originally Posted by PhillySteaks

Institutional money is backing this development so in the grand scheme it's actual a blip in the portfolio along the east coast let alone the U.S. To give you an idea the same partner backing this project also has a sizable stake in a certain $20 billion project in New York.

There was quite some confidence among the broker contacts and representatives from 4 potential tenants who were vying for the space originally. Target made the best offer. The lease has been tied up for quite some time now, but target was the number one before any demo work took place. It's not guaranteed yet, but it's close. A sign of a strong market is to build on spec. I'm sure the building wouldn't of been considered if there was a prolonged chance of the space going unfilled. Speaking specifically to the retail market of Philadelphia. Not multi-family which is strong, industrial which is decent, and office which is meh at best compared to national gateway cities. Philly has a long way to go still when it comes to office; that is if you're comparing core markets. Philly is up and coming in that capacity. We need more fortune 100s willing to locate downtown then what we have presently to justify a spec high rise. A build to suit with some spec like FMC, sure. But not straight class A high rise spec office, rents don't support the economics...but as I said it is definitely improving, so never know where the markets at in a few years time. Especially if vacancy rates keep dipping.

I read that the developers of East Market will be asking low 30s/sf for space in 34 S. 11th street which is pretty bold for something east of City Hall. if they are successful that definitely bodes well for the overall CC office market as well as the prospect of a new construction office tower.

[br323206]

Originally Posted by McBane

If those parking lots are slated - someday - to be developed then where will everyone park? I don't recall that any of the buildings were fitted with parking (under- or above-ground). And not only will new parking need to be created but the BSL would need to be extended, like now.

Finally, the Navy Yard needs to be more integrated into the cityscape. Right now Broad and 26th are the only connections. In addition to 95, there are a bevy of train tracks separating the Navy Yard from the city grid. It could use a few more connections. https://goo.gl/maps/39C7N

In new parking garages built where some of the surface parking currently exists?

[PhillySteaks]

Originally Posted by 1487

I read that the developers of East Market will be asking low 30s/sf for space in 34 S. 11th street which is pretty bold for something east of City Hall. if they are successful that definitely bodes well for the overall CC office market as well as the prospect of a new construction office tower.

Agreed. Unfortunately I don't get to follow philadelphia office as much as I'd like to but you also have to assume there is a decent spread on Asking vs. Taking rents, plus and concessions that are handed out. I really don't know what the downtown market is taking right now, but from what I recall months ago it was around the high 20s / low 30s? Now according to CBRE Downtown Class A is around $29.18 & Ucity $41.45. Ucity is understandable because much of the stock is brand new Class A vs. CC which is more often renovated older stock, so UCity is skewed higher. Conshohocken & The Main Line continue to be the biggest regional competitors with rents at $33.09 & $33.78 respectively (so obviously some real desirability to be out there); not to mention lower vacancy to boot. This is pretty much due to Philadelphia's awesome business tax policies. If there is a dime to be sniffed out, better believe Council will find it.

East Market is definitely going to be a tough sell at that rate since you can get class A for cheaper in the place most want to be, BUT it's a sign of change and the momentum is definitely heading in the right direction. Absorption in the area has picked up in the first quarter.

[Larry King]

Originally Posted by PhillySteaks

Institutional money is backing this development so in the grand scheme it's actual a blip in the portfolio along the east coast let alone the U.S. To give you an idea the same partner backing this project also has a sizable stake in a certain $20 billion project in New York.

There was quite some confidence among the broker contacts and representatives from 4 potential tenants who were vying for the space originally. Target made the best offer. The lease has been tied up for quite some time now, but target was the number one before any demo work took place. It's not guaranteed yet, but it's close. A sign of a strong market is to build on spec. I'm sure the building wouldn't of been considered if there was a prolonged chance of the space going unfilled, and you have to assume that there'd be decent cash flow coming in via the rental units; so not all that ballsy. Speaking specifically to the retail market of Philadelphia. Not multi-family which is strong, industrial which is decent, and office which is meh at best compared to national gateway cities. Philly has a long way to go still when it comes to office; that is if you're comparing core markets. Philly is up and coming in that capacity. We need more fortune 100s willing to locate downtown then what we have presently to justify a spec high rise. A build to suit with some spec like FMC, sure. But not straight class A high rise spec office, rents don't support the economics...but as I said it is definitely improving, so never know where the markets at in a few years time. Especially if vacancy rates keep dipping.

Cool to see institutional investors confident in philly street retail, hasn't always been that way. Congrats on the great project

[Outta here]

Just read late1's post. At the bottom is a foot note labeled pretty pretty pictures . Jason Knight shows
a shot of the CITC and states a " rumor " that this baby could top out at 1145' rather than the data
base figure of 1121' .

So now you went and done did it , because I'm salivating over a rumor that might contain a smidgen
of truth .

[1487]

Originally Posted by PhillySteaks

Agreed. Unfortunately I don't get to follow philadelphia office as much as I'd like to but you also have to assume there is a decent spread on Asking vs. Taking rents, plus and concessions that are handed out. I really don't know what the downtown market is taking right now, but from what I recall months ago it was around the high 20s / low 30s? Now according to CBRE Downtown Class A is around $29.18 & Ucity $41.45. Ucity is understandable because much of the stock is brand new Class A vs. CC which is more often renovated older stock, so UCity is skewed higher. Conshohocken & The Main Line continue to be the biggest regional competitors with rents at $33.09 & $33.78 respectively (so obviously some real desirability to be out there); not to mention lower vacancy to boot. This is pretty much due to Philadelphia's awesome business tax policies. If there is a dime to be sniffed out, better believe Council will find it.

East Market is definitely going to be a tough sell at that rate since you can get class A for cheaper in the place most want to be, BUT it's a sign of change and the momentum is definitely heading in the right direction. Absorption in the area has picked up in the first quarter.

Generally speaking suburban class A rents are lower and vacancy rates are higher than CC. Radnor is an exception because its in very high demand- but on the whole CC and Uc are doing better than the PA, NJ and DE suburban office markets. There isn't much new office construction in the entire Philly metro area so it's not like things are booming in the burbs at the expense of CC. Class A on west market is in the range you described but asking over 30 east of City Hall is unheard of- we shall see if this works. they believe the product they are offering- totally renovated loft style office space in the heart of the city is unique and can be priced accordingly.

[PhillySteaks]

Originally Posted by 1487

Generally speaking suburban class A rents are lower and vacancy rates are higher than CC. Radnor is an exception because its in very high demand- but on the whole CC and Uc are doing better than the PA, NJ and DE suburban office markets. There isn't much new office construction in the entire Philly metro area so it's not like things are booming in the burbs at the expense of CC. Class A on west market is in the range you described but asking over 30 east of City Hall is unheard of- we shall see if this works. they believe the product they are offering- totally renovated loft style office space in the heart of the city is unique and can be priced accordingly.

It's broken by submarket. Not suburbs or state vs. city, so the main line and conshohocken markets continue to be the cities largest competitors in leasing office space on a regional basis. These two sub markets are doing quite well, and it's not about building new. The strategy in these sub markets currently is buy class B and upgrade it to class A. There is quite significant demand for both trophy and class A in those two sub markets with very little inventory, this is obvious of the extremely low vacancy rates. The rest of the sub markets in the burbs, I don't really care about personally. Right now there are about 10 or so tenants shopping 100k SF of space with only 15 or so blocks of that size available in all of philly and the metro area. If you want exact numbers CBRE has its research posted on their website for free.