The new Comcast tower reflected in the side of the current one.
At the corner of 12th and Market streets, a brutalist block that long held downscale retail shops has been torn down, and in its place hard hats, dump trucks and backhoes are bustling about as they build a new retail, residential and office complex called East Market.
Half a dozen blocks to the west, another swarm of construction workers is hard at work on the 13-story concrete core of Comcast’s massive new tower, the Innovation and Technology Center. When completed in 2018, the skyscraper will be the tallest in the city and home to 2,800 new office jobs.
At 36th and Filbert in West Philly, piles of rubble make up the remains of the former University City High School, which is being demolished to make way for a $1 billion expansion of the University City Science Center. The center is a magnet for companies seeking to commercialize the innovations emerging from nearby Penn and Drexel laboratories.
Four miles south of City Hall, the Navy Yard is adding thousands of square feet of office and laboratory space on its 1,200-acre riverside campus and has just completed a 4.5-acre park, designed to burnish its “live-work-play” credentials for about 12,000 people who work at the farthest tip of South Broad Street.
And at a former metalworking factory in Fishtown, concert giant Live Nation is creating the city’s newest rock venue, a short walk from SugarHouse Casino and Yards Brewery.
Philly’s construction boom is picking up steam across the city, as the demand for a “live-work-play” lifestyle among city-loving millennials has pushed development of more shops, apartments, offices and entertainment spaces. Along with the much-publicized millennials is a sizable contingent of baby boomers who are exchanging their suburban palaces for proximity to the city’s art galleries, restaurants and concert halls.
“What’s going on in Philadelphia right now is a confluence of factors,” said Mitch Marcus, managing director in the Philadelphia office of Jones Lang LaSalle, a global commercial real estate and investment management firm. “You have an influx of millennials and empty nesters coming back to the city.
“That spurred some of the redevelopment of our residential base, which is also feeding our retail base, and then slowly but surely, those young people who are staying around now,” he said.
Since 2000, the city’s population in the section from Girard Avenue in the north to Tasker Street in the south, and river to river, has grown by 16 percent to 183,000 residents. Of that number, about 40 percent are millennials, aged 20 to 34. Another 23 percent are over 55, according to Center City District’s 2015 annual report.
The growing demand for city living is being fueled by the improvement of public spaces such as Dilworth Park and the Schuylkill River Trail extension that help to create a more livable city, Marcus said.
“It’s very affordable. It’s really taken advantage of its outdoor spaces in creating a very walkable, cyclable, livable city, and I think that’s driving a lot of the development,” he said.
One indication of demand for the new development is the low vacancy rate for high-end apartments in Center City, Marcus said. At below 3 percent, the rate is putting pressure on developers to build more.
“We’re getting to the point where there is not enough inventory to keep up,” he said. “We’re leasing up so fast, we’ve never really had this before.”
While Center City apartments are still more affordable than their equivalents in New York and Washington, D.C., the new space isn’t cheap. A one-bedroom, 700-square-foot apartment in one of the new buildings is likely to rent for about $2,200 a month, he said.
Equally worrisome, as some parts of the city prosper, lower-income residents are being displaced. Poorer neighborhoods, which aren’t attracting development dollars, are only becoming more rundown, and the cycle of inequality is perpetuated. Activists are calling for more affordable housing to be built with the new residental development.
The biggest of the new projects is the $1.2 billion Comcast tower that is rising along Arch Street between 18th and 19th streets. When finished, it will be 1,121 feet high, making it the eighth tallest building in the United States. By late July, its structural core had risen 13 stories above street level, and steel was up to the second floor.
“It’s on schedule and it’s on budget,” said John Gattuso, senior vice president and regional director for the tower’s developer, Liberty Property Trust.
The developer is projecting the first quarter of 2018 for completion of the core building, and of a new 222-room Four Seasons Hotel that will occupy the top floors. By that time, Comcast is expected to take occupancy of all the building’s 1.335 million square feet of office space, up from the 75 percent that it originally planned on.
Gattuso declined to comment on speculation fueled by Liberty’s purchase of a nearby parcel of land that Comcast is contemplating building a third tower.
“We have no plans underway,” he said. “It’s well publicized that we have acquired land on an adjacent block, but there’s no specific program tied to that right now. It’s for a future building at some point in time.”
Millennials are the primary target of East Market, the residential, retail and office project that will occupy a 4-acre site bounded by Market, Chestnut, 11th and 12th streets.
Demolition crews have already transformed the landscape along Market Street, removing an unlovely 1960s-era block. In its place will be a 322-unit residential building where one-bedroom apartments will start at $1,600 a month, and two bedrooms will go for $3,500. The development will include 16 retail units on the first two floors and 150,000 square feet of office space.
The first retail tenant, Mom’s Organic Market, at 34 S. 11th St., is expected to open in the spring of 2016 when the first residents also are supposed to move in.
The $500 to $600 million East Market project is the latest iteration of the “live-work-play” concept that concentrates apartments, offices, restaurants and entertainment venues in proximity. Fashion, furniture and fitness will be among the targeted retailers, said Daniel Killinger, director of East Market developer National Real Estate Development.
Killinger said Clover and Ludlow streets will be paved with cobblestones and lined with retailers after having been effectively off limits to pedestrians for decades because of a loading dock and street closures for a former family court building.
The project will reopen Ludlow Street to traffic and create a 30-foot-wide pedestrian walkway between Market and Ludlow streets, eventually extending to Clover Street. The walkway will divide two new buildings fronting Market Street.
“Our goal is to make them exciting, to be the place where people want to be,” he said.
The project located between City Hall, Independence Mall, the Pennsylvania Convention Center and Jefferson Hospital will fill in what has been effectively a blank spot in Center City, Killinger said.
“The idea is to find a way to reactivate this 4-acre site that has really been removed from the grid,” he said. “The vision is to take that large block and reconnect it to the city.”
Local real estate professionals see East Market as the first opportunity in decades to revitalize a section of Center City that has lagged surrounding areas in terms of economic development.
“This is the hole in the doughnut that is going to be filled,” said Clint Randall, a research analyst at Jones Lang LaSalle.
While the new developments are widely welcomed as a boost to the economy and to city tax revenues, they may also drive out lower-income people, perpetuating a cycle of inequality, said Beth McConnell, policy director for the Philadelphia Association of Community Development Corporations.
The association is urging city policymakers to require new residential development to be accompanied by affordable housing, as called for in the group’s policy paper on “Equitable Development” issued last year.
Without such a policy, people who cannot afford the new development will end up in neighborhoods that lack amenities such as good schools, grocery stores and green spaces, McConnell said.
The absence of affordable housing “continues to reinforce generations of economic inequality,” she said.
As millennials and other professionals demand a dense mixture of downtown development, they also seem to be content with the more spacious quarters offered by the Navy Yard only four miles away. The site, under development since 2004, continues to add office buildings and laboratories for companies whose activities range from manufacturing to finance to life science.
“Companies find it very easy to attract labor,” said Gattuso of Liberty Property Trust, which is developing the former Navy base as well as the new Comcast project. “There is a high demand for a highly skilled workforce.”
Gattuso said employees see the Navy Yard as a “pleasant, collaborative place” that is steadily adding “play” elements to its “work” environment. The Navy Yard is likely to see its first apartments, in accordance with its master plan, after completing negotiations with the U.S. Navy to remove restrictions on residential development, said John Grady, president of PIDC, the public-private economic development organization that has headed the repurposing of the Navy Yard. That is expected within the next two years.
For now, the Yard is pressing ahead with new construction on its tree-lined campus. Projects include a 94,000 square-foot office building and a 150,000 square-foot laboratory space for WuXi AppTec, an existing Navy Yard tenant that commercializes gene therapy conducted by the University of Pennsylvania.
Urban Outfitters, which first came to the Navy Yard with 600 employees, is now up to 2,200 in its corporate office there and is adding two new buildings, Grady said.
“There is this element of flexibility and growth that people really respond to, particularly younger companies that are in a more aggressive phase of growth,” Grady said. He added that PIDC and Liberty will “tear up” leases if holders want to expand at the Navy Yard before their leases expire.
The Navy Yard has just completed the Central Green, a 4.5-acre park at the center of the campus, adding to recent “lifestyle” improvements such as the opening of a Vetri restaurant and ongoing efforts to encourage recreational use of the Navy Yard in the evenings and on weekends.
Grady argued that demand for space in the Navy Yard is also fueled by its proximity to Center City and the airport, and by its spacious suburban feel.
“It’s hard to find 1,000 acres near Center City,” he said. “Companies increasingly see that by creating the right kind of work environment you tend to get more productivity, you get more energy.”
Grady said a subway extension to the Yard would be a big boost to its growth, but that development plans are not dependent on it.
“We’re optimistic about the subway,” he said. But “we’re not waiting for it.”
In West Philadelphia, the University City Science Center has launched a $1 billion project that could add some 4 million square feet in offices and labs, almost doubling its current footprint.
Its most visible development is the demolition of the former University City High School on a 17-acre site bounded by Market Street, Lancaster Avenue and 36th and 39th streets.
The organization plans to use about 10 acres to build offices, apartments and laboratory space for new tenants, while most of the remainder will house a K-8 STEM school being planned by Drexel University.
Science Center President Stephen Tang said the expansion toward Mantua and Powelton Village neighborhoods to the north represents an effort to bridge a wealth gap between the universities and surrounding areas.
Officials at the 52-year-old Science Center want to facilitate a more socially inclusive approach by creating opportunities for local residents, he said.
“What’s commonly thought about innovation and entrepreneurship as the province of Ph.D.’s really has to be much more approachable to the entire community,” Tang said. “That means we have to make some sort of investment in not only the higher education … but we have to create entry points at the associate-degree level, at the high school level, at the G.E.D. level, as a way of making the innovation and entrepreneurship theme more available to them.”
Across town, at the intersection of Delaware and Frankford avenues in Fishtown, the former Ajax metalworking factory is being converted into Philly’s newest live-music venue.
The Fillmore Philadelphia, named after the legendary San Francisco space that hosted rock shows in the 1960s, is due to open on Oct. 1 with a sold-out show by Philly’s own Daryl Hall and John Oates. The makeover of the site is reportedly costing $32 million.
The project, led by concert promoter Live Nation, is creating a 2,500-seat main auditorium and a secondary space holding up to 450 for local singer-songwriters and smaller touring bands. The new space adds to existing Philly area Live Nation venues, including Upper Darby’s Tower Theater and the TLA, and recognizes a “robust” local market for live music, said Ron Bension, president of House of Blues Entertainment, a unit of Live Nation.
Bension said the conversion of the abandoned factory mirrors the revitalization of Fishtown and is likely to appeal to the neighborhood’s artistic community, but he predicted the new space will attract music fans from across the city.
“When you are in Fishtown and Northern Liberties you often don’t feel that proximity to the Delaware, but having such a locus of activity on the river side of those neighborhoods is going to pull a lot of people down there,” predicted Randall of Jones Lang LaSalle.
He said the project represents a good reuse of the old factory, and said it will help to create a new sense of place.
“It’s a home run for a use for that building,” he said. “It’s sort of an unattractive location, which is often the best kind of spot to put a concert building you don’t have the critical mass of immediately adjacent neighbors who would get up in arms about it.
“It’s finally creating a little bit of a ‘there’ there on the waterfront.”
The new venue is expected to attract millennials like Emily Carris, a photographer and gallery owner who fled New York for Philadelphia in 2012. Carris, 32, “lives and works” in the same building at Berks and Tulip streets in Fishtown. She “plays” in local venues, including the Go Vertical indoor climbing gym and Johnny Brenda’s music bar, and rarely strays outside of Fishtown and Northern Liberties because she says those neighborhoods have everything she needs.
She said Philadelphia’s lower costs gave her the opportunity to buy her own building and open a business, both of which would not have been possible in New York. Asked whether she planned to go to the new Fillmore, Carris said she was initially skeptical that it would succeed because it will be so close to the well-established Union Transfer on Spring Garden Street.
But she welcomes the addition of a new place to hear live music. “If it’s another place where I can go to hear bands, sure, I’ll go,” she said.