Center City is Ready
Center City experts are big on multifamily, hopeful for hospitality and office, and fired up about taxes (friendly reminder: 35 days to file yours). That's the word from yesterday at Bisnow's annual Future of Center City Summit.
A crowd of 350 gathered on the 32nd floor of Brandywine's Two Commerce Square, which provided stellar views of Center City in all directions. (So if you jaywalked this morning, we saw you.) They heard deputy mayor Alan Greenberger discuss the three areas the city's concentrating on to kick Center City (and beyond) into high gear.
That includes Market East, through redevelopment of The Gallery and Girard Square; North Broad, where “a whole world of possibility” exists between Center City and Temple's campus; and the two river banks, especially the Delaware, to encourage more private investment, Alan says. While tax issues are complex, the city is taking the steps to tax the immobile (property) more and the mobile (jobs) less; overhauling property assessments with the passage of AVI last year was a crucial milestone. The real goal is to make Center City more valuable through quality-of-life improvements and growing downtown by unifying it with its surrounding neighborhoods.
The big hurdles to development, echoed by several panelists, are high construction costs and business taxes. Philly’s nagging reality is that pro-forma projects still don’t work without subsidies, as pointed out by panel moderator Stephen Aichele of Saul Ewing. Parkway Corp prez Robert Zuritsky (above) agrees and thinks that cutting business taxes shouldn't be dirty words. The city is doing a lot of things right, but attracting jobs and startups is still a challenge; fix the tax code, says Robert, and we'll see rents rise into the $40s and $50s on par with the major cities where Philly belongs. (Getting the Phillies out of the toilet might help, too.)
Former PA Convention Center Authority CEO Ahmeenah Young says the city has made enormous strides in building its hospitality industry. Philly's ability to define its brand and market itself were important in that development. Still, she adds, there can be more done to make the Convention Center’s surrounding blocks, like the Broad and Arch intersection, more attractive and connected to Philly’s arts and culture scene. She stresses walkability and attractiveness for sake of commerce as well, as boosting retail can be done by getting more convention-goers out to shop.
Liberty Property Trust SVP John Gattuso agrees about branding: Philly is competing with other cities for talent and revenue and needs to put its assets to good use. As for Arch Street, Liberty is doing its part with Comcast II: The Sequel. (Or Comcast Innovation and Technology Center, if you prefer.) That development at 18th and Arch, he says, will drive housing and retail along Arch Street. Yet it’s still critical for the city to encourage more knowledge-based workers to move in, so that the jobs will follow them. In an ideal environment, the tax barriers for new companies would be removed so they can grow and thrive; lest we forget, even Comcast started out with modest office space.
One issue for Post Bros prez Matt Pestronk is that Philly’s business communities are not politically active enough in guiding policy more toward businesses to bring in high-paying jobs. To improve quality of life, issue No. 1 has to be is fixing the public schools. Young people are certainly moving in, but having poor education options won’t keep them around. And that applies citywide, including the city line, where Post is doing its Presidential City Apartments renovation and just announced its purchase of the land beneath the complex.
Multifamily is doing well downtown, says Carl Dranoff, thanks in part to property tax abatements and housing demand. (We snapped this pic of Carl in December, if you think we forgot to take our Christmas tree down.) Two big projects from Carl are in the planning: the SLS International on South Broad and One Riverside Place on the Schuylkill. But it’s the surrounding and outer neighborhoods that interest him—an extended property tax abatement in underdeveloped communities would be a good step, but he thinks it will take a “unified front” for the city to persuade Harrisburg to amend its tax code.
Center City's expansion is also linking it to crucial "intellectual capital" in University City, notes Brandywine Realty Trust leasing director Steve Rush. He calls the west bank of the Schuylkill a smart-growth location, and it's seeing the rise of Cira Centre South, with FMC's new HQ to break ground later this year. Meanwhile, Steve says that the city needs to keep the ball rolling by accommodating Millennial migration, especially as more of them become homebuyers, to stabilize the tax base and the office sector.
Our gracious hosts, Brandywine's Dan Kessler, Danielle Wisniewski, Chris Condon, and Ryan McManus, after the panel.