UCD Market Trends Report Fall 2019

Market Trends Report FALL 2019

M E M B E R S O N LY

Market Trends Report FALL 2019 PUBLISHED SEPTEMBER 2019 WITH DATA FROM Q2 2019

Introduction

2

Development

3

Office

5

Retail

7

Residential Rental

8

Residential Sales

10 1

Introduction

U

niversity City District’s Market Trends Report for Summer 2019 supplements our comprehensive State of University City publication released each fall. The UCD Market Trends Report captures the latest information on announced and completed projects, commercial transactions, retail leases, and housing market trends. We strive to provide exclusive access to critical, actionable, and timely market data for UCD’s closest partners and supporters.

2

Development

Philadelphia Ronald McDonald House

In the same year they are celebrating their 45th anniversary, the Philadelphia Ronald McDonald House has completed work on their massive expansion that has more than doubled their capacity to serve families in need of temporary housing while children undergo treatment at nearby hospitals. The Room in Our Hearts expansion campaign has grown the organization’s capacity from 45 to 127 rooms at the Chestnut Street house, and modernized and expanded common facilities to more than double the number of families served each year. The project also includes a new green roof, new courtyard, and an outdoor dining area.

Drexel Square - the 1.3-acre park that marks the kick-off of Brandywine Realty Trust and Drexel University’s ambitious Schuylkill Yards development - officially opened to the public in June. Designed by West 8 and SHoP Architects, the $14.3 million park is a place for people to gather, rest, and be renewed by the natural world. Conceived as an intimate, natural space within the urban environment, Drexel Square provides a clear transition from the city to a lush enclave, with 23 Dawn Redwood trees standing more than 25 feet tall lining the perimeter. Next up for Schuylkill Yards is the anticipated 2020 completion of the $43.4 million re-imagination of the Bulletin Building, and breaking ground on the recently unveiled East and West Towers at 3001 and 3025 JFK Boulevard.

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Drexel Square

The University of Pennsylvania has made significant progress on two projects located on 40 th Street. The New College House West at 40 th & Walnut Streets is beginning to rise after a summer of excavation. This 250,000 GSF residential building will be designed specifically as an undergraduate college house, part of Penn’s residential system of shared communities. The estimated completion date is Summer 2021, and the project will target LEED Silver.

Just north on the northeast corner of 40 th and Sansom, construction is progressing on Tangen Hall, the seven story, 68,000 square foot mixed-use Wharton building. Tangen Hall will include co-working and collaboration spaces, a VR environment, maker spaces, pop-up retail space for concepts conceived

by Wharton students, and a Venture Lab. The building will also house the master’s level Integrated Product Design Program jointly operated by Wharton, the School of Engineering and Applied Science, and the Stuart Weitzman School of Design. The university is targeting a Fall 2020 date for completion.

Tangen Hall

4

Office

A

fter University City office vacancy rates saw slight increases for the first time in many years at the end of 2018, rates have stabilized at 10.6% vacancy at the end of Q2 (2019). Although higher than the typical average for the neighborhood for the past decade, these vacancy rates are still much lower than the region and Center City. The average asking rent saw an uptick from Q4 of 2018, from $38.95/sq. ft. to $39.02. More inventory is on the way with upcoming groundbreakings planned for buildings in Schuylkill Yards and 3.0 University Place.

Local and Regional Office Market Statistics 2019 (Q2) Total Vacant Square Feet

Total Occupancy Net Absorption (sq. ft.)

Vacancy Rate Rate

Under Construction (sq. ft.)

Asking Gross Rent ($/sq. ft.)

University City

520,993

10.6%

89.4%

5,463

0

$39.02

Philadelphia Downtown

5,332,247

11.5%

88.5%

164,305

0

$33.24

Region

14,807,460

13.9%

86.1%

66,967

805,045

$29.47

Note: Philadelphia Downtown includes Center City and University City • Source: CBRE

5

Office Asking Rent

Office Vacancy Rate 45

Asking gross rent (USD/sq. ft.)

15

10

5

40

35

30

25

0

10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19

09

Region

Downtown

University City

20

08

20

20

07

19

18

20

17

20

16

20

15

20

14

20

13

20

12

20

11

20

10

20

09

20

08

20

20

20

07

20

20

Vacancy rate (%)

20

Note: Downtown includes University City and Center City • Source: CBRE

Offices Under Construction

Office Net Absortion

3,000,000

Under construction (sq. ft.)

Net absorption (sq. ft.)

2,000,000

1,000,000

0

2,000,000

1,000,000

−1,000,000

Center City

19

18

20

17

20

16

20

15

20

14

20

13

20

12

20

11

20

20

10

20

09

20

08

20

20

19

18

20

17

20

16

20

15

20

14

20

13

20

12

11

20

20

10

09

20

08

20

20

07 20

20

University City

07

0

−2,000,000

Surrounding region

Note: Surrounding region excludes Downtown Philadelphia • Source: CBRE

6

Retail

T Giant Heirloom Market

Bonchon

he retail market remained hot in the first portion of 2019, with the addition of national brands and much needed amenities opening through the neighborhood.

NOTABLE NEW BUSINESS OPENINGS: Giant Heirloom Market, the second location in Philadelphia for the small-format concept from the supermarket chain, opened in July at 3401 Chestnut Street. The 9,950 squarefoot store includes fresh local produce, grab-and-go meals, plant-based foods, a large gluten-free section, and Philadelphia-area food products. Post Brothers’ redevelopment of Hamilton Court’s retail offerings is nearly complete with the official opening of Korean fried chicken chain Bonchon and boba drinks and Asian nibbles at Tea Do. Twelve stories above street level at Cira Green, Brandywine Realty opened Sunset Social, a stand offering a menu of American eats like burgers and fries plus blended drinks, beer, and wine. Additionally, University City gained a Panera Bread at 40th and Walnut, and new Mexican restaurant Don Barriga opened to much fanfare at 4443 Spruce Street.

COMING SOON:

Tea Do

The Board & Brew, a new restaurant, bar, and board game café, is set to open at 32nd and Chestnut Streets in the former CoZara space. Board game cafés are gaining popularity in the city after the success of Thirsty Dice in the Fairmount neighborhood, and The Board & Brew will be the first such concept in University City to offer gaming together with food and a bar.

Sunset Social

7

Residential Rental

R

ental prices currently listed on Zillow have seen an increase since our last report, up from $1,500 a month for all units (from studio apartments to whole house rentals) to $1,720. This increase is less indicative of a larger trend, and more a result of several luxury units being pre-leased before their official opening. As we’ve seen in the past, the highest median rents (currently $2,600) are luxury units in Central University City, and the lowest rates can be found in Garden Court (median $1,100 right now).

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Zillow Rent Index Monthly Rent

Zillow Rent Index Monthly Rent per Square Foot

$2,200

$1.10

Rent per square foot

Monthly rent

$2,000

$1,800

$1,600

$1,400

$1.00

$0.90

$0.80 $1,200 $0.70 $1,000

2011

2012

Cedar Park

2013

2014

2015

2016

2017

2018

Garden Court

2011

2019

Spruce Hill

2012

2013

2014

Walnut Hill

2015

2016

2017

2018

2019

West Powelton

Note: Neighborhood boundaries as defined by Zillow. The Zillow Rent Index (ZRI) gives rental price insights without bias of homes that are currently listed for rent. • Source: Zillow Rent Index (ZRI)

Median Rent in University City for Current Listings

Current Listing Area vs. Price by Neighborhood

3,000

Central University City

Median monthly rent

Median rent (USD)

2500

2,000

1,000

2000

Powelton

West Powelton 1500

Spruce Hill

Cedar Park Walnut Hill

Garden Court 0

Cedar Central Powelton University West City Powelton Park University City

Walnut Hill

Spruce Hill

Garden Court

800

1000

1200

1400

Median square footage median for all University City neighborhoods

Note: University City includes all neighborhoods • Source: Zillow, August 2019 snapshot

Central UC removed because of lack of data • Source: Zillow, August 2019 snapshot

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Residential Sales

g in

32nd St

Schu y

lkill A ve

edy Blvd

30th St

ter ce n

d Blv er v Riv

iew

th S

Walnut St

t

Dr

Price

dla

e Av

34th St

36th St 38th St

39th St

40th St

ic Civ

nd

Av e

So u

$100,000 - $200,000 $200,000 - $300,000 $300,000 - $400,000 $400,000 - $500,000

th 48 St

$500,000 - $600,000

Home Sales 160

120

80

40

Q1

Q4

19

18

20

20

17 20

16

15

14

Q3

20

20

13

12

Q2

20

20

11

20

10

0

20

he number of home sales in the district remained fairly steady with the trends of recent years, as have the median sale prices after peaking in 2018. The highest-priced sales of Q2 in 2019 were seen in Spruce Hill and Cedar Park along Baltimore Avenue, while the lowest-priced sales came in West Powelton. Homes are still averaging less than a month on the market before selling, indicative of a continuing hot market for the neighborhood as a whole.

> $600,000

20

e Av ay nw

09

s

Central University City

Spruce St

20

ng Ki

s es

Arch St

John F Kenn

W oo

te es Ch

39th St

41st St

42nd St 42nd St

43rd St 44th St

45th St

46th St

e

Av

ee Gr

T

41st St

48th St 50th St

49th St

47th St g

in

r Sp

ld ďŹ e

ve rA

33rd St

Cedar Park

St

Ave

e Av

Powelton 35th St

re Ave

Baltimo

Av e

y rsit

e

Chestnut

Pine St d Ave

n Ave Powelto Winter St

ve Uni

nc re Flo

Market St

Woodland Ter

St

Spruce Hill

Larchwoo

Cedar Ave Catharine

Locust St

37th St

39th St 39th St

Garden Court

ca s ter

West Powelton

41st St

Walnut Hill

Lan

arden St

32nd St

Spring G

31st St

Residential Sales 2019 Q2

Source: Philadelphia Department of Records

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Median Home Sale Price

Median Home Sale Square Feet

$500,000

3,000

Median home sale (sq. ft.)

Median home sale price

$450,000

$400,000

$350,000

$300,000

$250,000

2,500

2,000

1,500

$200,000

$150,000

$100,000

1,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Phila Dept of Records

Source: Phila Dept of Records

Median Home Sale Price per Square Foot

Average Days on Market

250 150

Average days on market

Median home sale price per square foot (USD/sq. ft.)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

200

150

125

100

75

50

100 25

50 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Phila Dept of Records

0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: RedďŹ n Note: historical data may be different from past reports as the data source has changed from MLS to public record data.

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University City District 3940 Chestnut Street Philadelphia, PA 19104 215.243.0555 University City District (UCD) was founded in 1997 by a partnership of worldrenowned anchor institutions, small businesses and residents to improve economic vitality and quality of life in Philadelphia's University City. Our primary mission is community revitalization. We work within a place-based, data-driven framework to invest in world-class public spaces, address crime and public safety, bring life to commercial corridors, connect low-income residents to careers, and promote job growth and innovation.

To make a secure, online donation to UCD, please visit: www.universitycity.org/donate

universitycity.org universitycity @ucdphl @universitycity

For more information about UCD’s Membership Program: Contact Morgan Rogers Burns, Development Manager at 215.243.0555 x247 or morgan@universitycity.org.

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