[IMGCAP(2)]"The Comcast Center sets new standards in the city of Philadelphia for quality and pricing," George Cauffman, SVP with CB Richard Ellis' Greater Philadelphia office, tells GlobeSt.com. "Now, in order to compete in this market, future development must consider several factors. Buildings need to be LEED certified, offer tax incentives for new tenants moving into the city which do not unfairly affect current city tenants, have top quality construction with excellent window line views—for light gathering ability similar to the Comcast Center—and have access to public transportation."
Jack Soloff, SVP with Grubb Ellis' Philadelphia office, says the advent of the 975-foot tower is "definitely changing the psychology in Philadelphia. With the exception of Cira Centre, there hadn't been a new high-rise tower since 1991, following a boom of institutional-grade building in the '80s. So it had been a long time, and I think this has definitely changed attitudes."
He adds, "the atmosphere in the business community in Philadelphia has certainly improved particularly with our new administration, which understands the value of trying to simply and lower business taxes here in Philadelphia."
Soloff notes that tax incentives could help some projects move off the drawing board. "There are a number of developments being proposed now in Center City," he says. "One of them is Cira South, and that is in a Keystone Improvement Zone. Obviously it's very attractive from a tax perspective, particularly for certain types of companies, such as financial firms, to locate there. There's a compelling reason to build that building because of that KOIZ." He adds that Liberty controls a smaller site adjacent to the Comcast Center that has been approved for up to 350,000 sf, and at the other end of the size spectrum there's Walnut Street Capital's proposed American Commerce Center mixed-use development, which is planned to reach 1,500 feet in height. Soloff says the ACC will require "some pretty significant preleasing and some of that will most likely have to come from outside the area. That will be an interesting test of whether our market has the ability to sustain some additional towers."
The Center City office leasing market that the Comcast Center has come into has experienced "seven consecutive quarters of positive net absorption," says Cauffman. "AA rental rates are up and vacancy is down, hovering around the 9% range with projections that it will go lower. Although there has been a small slowdown in the velocity of deals in the Center City marketplace as a whole, it is expected to pick-up late 2008 into early 2009 based on a large number of upcoming lease expirations."
As Liberty and Comcast Corp. prepared for the opening ceremony on Friday, a report the two companies had commissioned from locally-based Econsult Corp. measured the project's economic impact on the city. "During its construction, Comcast Center generated more than $1.2 billion in economic activity in the City of Philadelphia, supporting over 5,400 jobs and almost $210 million in earnings," according to a prepared release from Econsult. "Now that Comcast Center is open, ongoing business activity at the building will generate nearly $1.2 billion each year in economic activity, supporting more than 6,500 jobs and almost $460 million in earnings within the city of Philadelphia."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
