THE $5 BILLION DECADE: Even through the pandemic, University City remains a hotbed of development.
Throughout the pandemic, real estate development has ramped up in University City where in excess of $5 billion has been spent on construction projects over the past decade.
Billions more are in the pipeline.
Just about every local academic and medical institution has contributed to the development in University City, solidifying it as a hub of innovation and as a place for investment. Private developers such as Brandywine Realty Trust, Wexford Science & Technology, GMH Capital Partners, Radnor Property Group, and Southern Land Co. are among those participating in the boom and signaling to those outside the region to also bet on University City’s future.
As a result, the neighborhood saw more national and international investors come on the scene in the past year than ever before. Examples include:
- Ventas Inc., a Chicago company, is financially involved with Wexford in the development of uCity Square and Drexel University’s new academic tower. Last fall, Ventas sold a stake in those projects to GIC, Singapore’s sovereign wealth fund. Ventas formed a joint venture with GIC that now owns part of four buildings under construction totaling 1.4 million square feet. The cost of the development of those four buildings is roughly $930 million. Under the terms, Ventas will own more than 50% and GIC will own a 45% stake.
- Republic Properties Group, a Washington, D.C., real estate company, plans to develop a $190 million, 185,000-square-foot life sciences building on a parcel at 125 N. 32nd St.
- Brandywine secured two partners — one an undisclosed global institutional investor — on the development of a $287 million project at Schuylkill Yards. The other investor is Gotham Organization, a New York real estate company.
- Silverstein Properties Inc. and Cantor Fitzgerald have made a $56 million investment in the development of 3.0 University Place, a proposed 250,000-square-foot life sciences building at 4101 Market St.
WHERE IT’S HAPPENING
Below is a rundown of projects underway, proposed, or completed, according to University City District. Scroll over the locations on the map to see details on each project.
Academic Commercial Medical Public space
“It speaks to how well the market has performed and the prospects for continued growth. University City has arrived,” said John Grady, senior vice president at Wexford. “I think there’s always risk in any market but what we see here is based on strong fundamentals. It’s not a fad. Most research you see coming out of the pandemic indicates there is going to be more focus on life science research and development and more investment in academic and medical centers. People that look to invest in Boston or San Francisco for life sciences see Philadelphia is a world-class market that has room to grow. We do have to be aware that we’re not the only place in the country seeing this growth. We do have to be conscious that it will be a competitive landscape.”
Wexford and its partners have real estate projects underway in University City totaling $750 million.
The University of Pennsylvania alone completed $300 million in projects over the last two years including a new dorm called New College House West, a 68,000-square-foot innovation center at 40th and Sansom streets called Tangen Hall, and a 68,400-square-foot academic research building at Wharton. That figure excludes Penn Medicine’s new $1.5 billion, 1.5-million-square-foot Pavilion, which was delayed for a few months because of the coronavirus and is set to open this year.
Between 2006 and the end of 2022, Penn and Penn Medicine will have invested $6.8 billion in new construction or renovation including $1.2 billion spent by third-party entities Penn partnered with on development.
“We’re looking at the next phase of Pennovation Works, updating the master plan, looking at new infrastructure investment and assets in ground lease development,” said Anne Papageorge, vice president for facilities and real estate services at Penn.
The infusion of billions of dollars of investment is solidifying University City as an innovation powerhouse on the global stage and helping to establish an innovation district between the neighborhood and Center City.
For decades, innovation was concentrated in suburban corporate campuses, which gave rise to such places as Bell Labs in North Jersey and the Research Triangle in North Carolina. By the early 2000s, urban areas such as University City were emerging as innovation hubs. This coincided with the return of cities and urban living along with anchor institutions such as universities investing more in commercialization, licensing, and startup spaces.
In May 2017, the Brookings Institution issued a 62-page report outlining several recommendations to better position Philadelphia as a center for innovation.
The report, titled “Connect to Compete: How the University City-Center City innovation district can help Philadelphia excel globally and serve locally,” was a culmination of an 18-month study that began in the spring of 2015. It urged officials to do more to take advantage of anchor educational and health care institutions and to focus on establishing an innovation district between 17th and 43rd streets. Brookings describes these districts as “dense engines of economic activity where research-oriented anchor institutions, high-growth firms, and tech and creative startups exist within an amenity-rich residential and commercial area.”
University City and Center City had all of the ingredients to firmly establish such a district but the city wasn’t taking advantage of them in an organized, concerted effort.
“But for all these strengths — perhaps because of these strengths — Philadelphia leaders have been missing a sense of collective urgency to determine the position the region should play in the global economy and to fully leverage the power of the innovation district’s institutional, corporate, and civic anchors to drive innovative firm and job growth,” the report said. “The lack of a cohesive vision exacts a severe opportunity cost that Philadelphia can ill afford to ignore.”
The report’s recommendations were taken to heart by the university, civic and corporate leaders. Penn, Drexel University, the Science Center, Children’s Hospital of Philadelphia, and other institutions committed to University City, stretched its boundaries and moved forward with significant projects.
In addition to its clean and safe mission, University City District mounted placemaking, a jobs program called the West Philadelphia Skills Initiative and other economic development efforts to improve the neighborhood for businesses, visitors, and residents. As University City undergoes more development, areas such as Baltimore Avenue have remained vibrant tree-lined corridors with eclectic restaurants and retailers.
Over the years, Drexel, Penn, and Brandywine seized upon various opportunities presented when large pieces of underutilized real estate such as the Civic Center, U.S. Post Office at 30th Street, and former University City High School became available. The development by Brandywine of the Cira Centre campus and Schuylkill Yards, along with a westward shift of Center City, have also helped to knit Philadelphia’s academic hub with its financial district.
“It’s hard for people to remember what it was like,” said Alan Greenberger, vice president of real estate at Drexel. Greenberger spent years as Philadelphia’s deputy mayor for economic development, director of commerce, and executive director of the planning commission.
“There was the giant gap between the heart of Drexel and Penn and Center City,” Greenberger said. “It’s hard for people who haven’t been around to realize how significant of a gap that was. It’s hard for them to picture how uninteresting [John F. Kennedy Boulevard] was and there were gigantic parking lots on 17th, 18th and 19th and people said JFK will never get developed. Here we are and it seemed so obvious. It’s not just dumb luck. It’s because of very smart investments that have been made.”
When the city, under Greenberger’s tutelage, began working on the Philadelphia 2035 comprehensive plan, Center City and University City were increasingly being discussed as a metropolitan center. Of the 700,000 jobs in the city, half are concentrated between those two sections, Greenberger said.
For all of the progress that has been made, there’s more work to be done. The last 25 years laid the groundwork for innovation and the commercialization of that innovation so Philadelphia could seize upon its dominance in life sciences and the emerging cell-and-gene therapy industry, which have thrived during the pandemic.
The next frontier is executing on Amtrak’s master plan for eventual development over the rail yards next to 30th Street Station. The ambitious plan involves creating 40 new acres of open space and the potential for 18 million square feet of new development with a mixed-use neighborhood as an anchor project on top of 88 acres of rail yards along the Schuylkill River. In all, an estimated $4.5 billion in real estate activity could be undertaken.
While the billions of dollars spent on new buildings portend economic development activity, that success could easily be overshadowed by the abundance of work that remains in the West Philadelphia neighborhoods surrounding the college campuses, medical institutions, and office buildings.
“We still have so much potential for growth and expansion,” said John Fry, president of Drexel University. “Key to that is that it needs to be done in an inclusive way.”
For Fry, that means thinking of a plan that looks at the area toward Spring Garden Street Bridge, Powelton Village, Mantua, and areas up to the Philadelphia Zoo and marries the innovation district with the area’s designation as a Promise Zone and Promise Neighborhood.
“As part of our work in West Philadelphia, this is the next big thing we need to think about,” Fry said. “We need to think about going into the neighborhoods not to develop but to create neighborhoods, not for students, but for those who live in them and want to live in them. The key to that is affordable housing. We can set the example for real equity and inclusion. We have generations worth of work there.
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