PHILADELPHIA | 8th & Walnut - Penn Medicine at Washington | 12 Stories | 260 FT

[Cro Burnham]

Excellent, sharp photos, but . . . . oh dear; here we go again:

Need about 1/2 dozen 300-500 ft towers . . . Penn wasted an oppurtunity here at (8th)and Jefferson blew an oppurtunity with their little munchkin tower at 9th st.

Is it difficult to understand the notion of supply and demand? In a reasonably market-oriented community (i.e., not Dubai or China), organizations don't build tall buildings because it's fun and ego-stroking, but because there is a need for the space.

You can wait until you are about to croak from rickety old age, it is very unlikely that we will see a cluster of new 300 - 500 foot tall office buildings in Market East. There is no demand and rents are insufficient to cover costs. It's really easy to understand if you try.

If you just want to see tall buildings built out of psychological insecurity and for no other reason (the architectural equivalent of Napoleon complex, look it up), you should be in the Gulf or the command economies of East Asia, places where a corrupt elite have a need to overcompensate through tall buildings for the myriad ways in which they are deficient.

Needless to say, the presence of tall buildings does not make a place great or important, but their presence is used by those in places that are not great or important to delude themselves that they are great or important. This is not really the case in the US.

As long as the US has a primarily market driven economy, you will not see organizations in Philadelphia building 500 foot buildings just because.

You really need to outgrow this adolescent fixation. It is so incredibly stupid. It is how incompetent but status seeking Chinese party bureaucrats, Russian mafiosi, or petty oil sheiks think. It is not how intelligent people think.

[Pennsgrant]

Originally Posted by Cro Burnham

Needless to say, the presence of tall buildings does not make a place great or important, but their presence is used by those in places that are not great or important to delude themselves that they are great or important. This is not really the case in the US.

That is your opinion of which I Could not disagree more. An impressive continuous downtown skyline absolutely helps the marketing and self promotion of a city as a robust, vibrant, happening place.

If Chicagos business and office jobs were dispersed evenly throughout the entire city in office parks it would not have the same cachet as it does today with its ultra modern, beautiful, skyscraper core. Chicago would not be looked on in glowing admiration as it is today. Their skyline is their calling card and main free advertisement.

I had friends visit from Arizona who had never been East before. I assked them what they most wanted to see? In unison about 8 of them said the NYC Skyline. Not Philadelphias history, not the beach, not the munchkin tower at 9th + walnut. They wanted to see the awesome skyline of NYC.

[PhiLaw]

Originally Posted by Pennsgrant

That is your opinion of which I Could not disagree more. An impressive continuous downtown skyline absolutely helps the marketing and self promotion of a city as a robust, vibrant, happening place.

If Chicagos business and office jobs were dispersed evenly throughout the entire city in office parks it would not have the same cachet as it does today with its ultra modern, beautiful, skyscraper core. Chicago would not be looked on in glowing admiration as it is today. Their skyline is their calling card and main free advertisement.

I had friends visit from Arizona who had never been East before. I assked them what they most wanted to see? In unison about 8 of them said the NYC Skyline. Not Philadelphias history, not the beach, not the munchkin tower at 9th + walnut. They wanted to see the awesome skyline of NYC.

Both of you have a point: in certain cases a robust skyline is a primary selling-point of a major city - eg., NYC, Chicago, and the like. On the other hand, it does not preclude a city from being able to market itself as a great, world-class city - eg., San Francisco, LA, etc. Each of the above cities takes advantage of their individual assets. San Francisco with its low-mid-rise density and bohemian/yuppy allure, Chicago with its skyline/architecture, NYC with its Skyline (Cluster?) density, and LA as a sort of western paradise (albeit looking like a suburb on steroids).

This begs the question: what encapsulates Philadelphia's essence? It's not quite skyline, not quite its density, not necessarily its culture. Philadelphia's allure comes frome the idiosyncrasies of its diverse neighborhoods - everything else is ancillary (yet nonetheless important). Skyline will be important, but I fell in love with this city only after exploring its neighborhoods, and feeling all of their quirks. If we take advantage of this distinguishing feature of Philadelphia the rest of the cards will fall in place. Demand will accelerate even faster.

[Cro Burnham]

Originally Posted by Pennsgrant

I had friends visit from Arizona who had never been East before. I assked them what they most wanted to see? In unison about 8 of them said the NYC Skyline. Not Philadelphias history, not the beach, not the munchkin tower at 9th + walnut. They wanted to see the awesome skyline of NYC.

well the i guess hup and jeff should build some empty 40 story buildings so your friends from arizona will prefer philly over manhattan.

more people want to see london, paris, dc, san fran, barcelona, berlin, tokyo than chicago. and it's not because of tall buildings.

tall buildings are great. ny, hong kong, chicago are famous for them.

philly, especially market east, will never be anything like these cities. if philly becomes great, it will not be because of its tall buildings.

[Pennsgrant]

Originally Posted by Cro Burnham

well the i guess hup and jeff should build some empty 40 story buildings so your friends from arizona will prefer Philadelphia.

It wouldn't hurt anything. If you are going to the pain and expense of building an 12 story tower why not add another 12 -15 stories and make your mark on society. The space will eventually get leased.

Originally Posted by Cro Burnham

more people want to see london, paris, dc, san fran, barcelona, berlin, tokyo than chicago. and it's not because of tall buildings.

Come on man you know better than that. The iconic European cities evolved and were built over milleniums,impossible for Philadelphia to be mentioned in the same breath as those cities with the junk that has been built in the usa over the past 50-75 years.

Originally Posted by Cro Burnham

]philly, especially market east, will never be anything like these cities. if philly becomes great, it will not be because of its tall buildings.

Anything is an improvement at Market East. IMO a row of tall buildings would add much more to the city than than say replicas of the Gallery. Whether you want to believe it or not people do get wowed with attractive skylines/cityscapes. They become badges of honor if done right.

[Cro Burnham]

Originally Posted by Pennsgrant

It wouldn't hurt anything. If you are going to the pain and expense of building an 12 story tower why not add another 12 -15 stories and make your mark on society. The space will eventually get leased.

Because you will go broke. Because the rents will likely be much too low even to break even. Because the lenders will not finance it in the first place. Because this is how reality works. I think you understand this, but you seem to not want to accept it.

Originally Posted by Pennsgrant

Come on man you know better than that. The iconic European cities evolved and were built over milleniums,impossible for Philadelphia to be mentioned in the same breath as those cities with the junk that has been built in the usa over the past 50-75 years.

Washington DC and SF, both considered "greater" than Philly by most non-Philadelphians, evolved only over the last 150 years. Yet I think most would consider Philly greater than Houston despite its larger stock of very tall buildings. Tall buildings are great, but they are not what makes a city great.

Originally Posted by Pennsgrant

Anything is an improvement at Market East. IMO a row of tall buildings would add much more to the city than than say replicas of the Gallery. Whether you want to believe it or not people do get wowed with attractive skylines/cityscapes. They become badges of honor if done right.

I love tall buildings, or else why would I post here? But don't you understand people just don't build them for their own sake if they have any sort of sense of economic self preservation?

This is a ridiculous discussion.

[Pennsgrant]

Originally Posted by Cro Burnham

Because you will go broke. Because the rents will likely be much too low even to break even. Because the lenders will not finance it in the first place. Because this is how reality works. I think you understand this, but you seem to not want to accept it.

You have absolutely no idea what the assets and profit margins are for these specific developers so stop acting like you do. Liberty is a $6 B per year developer, I think they can afford to spend the cash on an extra 10 stories of office or residential in the heart of the city overlooking Washington Square.

Originally Posted by Cro Burnham

Washington DC and SF, both considered "greater" than Philly by most non-Philadelphians, evolved only over the last 150 years.

Geography is probably SF's greatest asset and DC gets to write blank checks for their development. Lets put a $300 M museum over here, a $150 M monument over there. Unfortunately Philadelphia isnt afforded these luxuries.

Originally Posted by Cro Burnham

This is a ridiculous discussion.

Most of it your doing.

[Cro Burnham]

Originally Posted by Pennsgrant

You have absolutely no idea what the assets and profit margins are for these specific developers so stop acting like you do. Liberty is a $6 B per year developer, I think they can afford to spend the cash on an extra 10 stories of office or residential in the heart of the city overlooking Washington Square.

That's just not how the business works. It's not complicated, this concept. You don't have to be any kind of expert to get it. I know you don't want to believe it, but I'm only stating a simple fact accepted by pretty much all but one person.

No doubt you are aware that only two office skyscrapers have been built in Philadelphia in twenty years. Yes, even very big companies like LPT and Brandywine don't just slap on an extra fifteen spec floors for good measure. There are no examples from reality of what you suggest is easy as pie to do. Because it isn't done. Your endless obsessive bleating about it is so odd, both because it is divorced from reality and because it will not change anything. Reality will keep on being reality, oblivious to your repetitive pleas for tall buildings for which there is no market.

I have spent over fifteen years working in commercial real estate finance, so I suspect I have a slightly better understanding of the industry than you do. Though on a point as basic as this, you do not need experience in real estate development. You just need a common sense.

[SkyscraperGuru]

Originally Posted by Cro Burnham

tall buildings for which there is no market.

Just wondering, if there was no market for tall buildings, why did the ACC get so far proposed? (This is more a question since I only have basic knowledge about all of these things.)

and secondly, I completely agree with you (Cro) on everything but this and people thinking of SF as greater than Philly. (I think most people respect Philadelphia's history and the city is enough of a player that Non-Philadelphians can accept that Philadelphia is a "greater" city in terms of if the average American were to list the most notable American cities.


Lastly into my input

I admire your pride in the city, Pennsgrant. But large buildings alone won't prove us better than any other cities, the small devolopeds do count every bit as much towards proving us better. They better our neighborhoods which could become a niche that no other large American city may offer.

[Kidphilly]

Originally Posted by SkyscraperGuru

Just wondering, if there was no market for tall buildings, why did the ACC get so far proposed? (This is more a question since I only have basic knowledge about all of these things.)

and secondly, I completely agree with you (Cro) on everything but this and people thinking of SF as greater than Philly. (I think most people respect Philadelphia's history and the city is enough of a player that Non-Philadelphians can accept that Philadelphia is a "greater" city in terms of if the average American were to list the most notable American cities.


Lastly into my input

I admire your pride in the city, Pennsgrant. But large buildings alone won't prove us better than any other cities, the small devolopeds do count every bit as much towards proving us better. They better our neighborhoods which could become a niche that no other large American city may offer.

The ACC failed because they never found a tenant to occupy the building. Even with the credit crunch this building would have been built if the demand (a tenant) was to be found.

[summersm343]

Cro... I certainly agree with you on most parts and agree that skyscrapers are built out of demand not because a developer just feels like building a tall building...

However, one thing I don't agree with is your statement that "we will never see Skyscrapers on Market East in our Lifetime"

This is just not true... I don't know how old you are, but I am only 22... and in my life time I will see a new business tax structure in the city as well as the completion of the Northeast Highspeed Rail line that will get you from Midtown Manhattan to Center City Philadelphia in 37 minutes.

Do you have any idea how much demand this is going to create in Philadelphia both from Residents and Businesses seeking cheaper taxes?

There is so much going for Philadelphia right now, it is not only possible that we will see Skyscrapers go up here in the next 10-20 years... it is inevitable.. it is only bound to happen. It is the next logical spot to build highrises and skyscrapers now that most of the rest of Center City is practically built out. With a new business tax and The HighSpeed Rail line running through Center City stopping at Market East... this area willl explode.

[summersm343]

Originally Posted by Kidphilly

The ACC failed because they never found a tenant to occupy the building. Even with the credit crunch this building would have been built if the demand (a tenant) was to be found.

The reason they did not find tenants was because of the Economic downfall of the country. No tenant was going to move during poor economic conditions. If the same (or similar) building is to be proposed 10 years from now.... tenants will likely be obtained.

We will see if Liberty obtains tenants for their 27 floor proposed office building and then we can judge the market... but seriously, a new business tax needs to be laid out in order for this city to properly move forward.

[Cro Burnham]

double post

[Cro Burnham]

Class A office rents in center city (about $25 PSF) are the same or lower than they were in the 1980s. this is before you take inflation into account, which means on an inflation adjusted basis, rents are considerably lower than 25 yrs ago. meanwhile construction costs have risen substantially in this period. this means the economics of building tall office buildings has weakened tremendously in 25 yrss

to make money on a new office building, you need tenants like comcast willing to pay a 40%+ premium over market (say, $35 PSF). or you need incredible tax rebates (like the koz benefits available at cira ctr) that result in an effective rent comparable to market.

without one or the other of these, building an office building will lose mkooney. unless you are in china or dubai, typically developers build to make money.

this is why ACC was not built. it is not a KOZ and other than comcast, there are few if any tenants in the market willing to pay $35 PSF to be in a new building when there is space in class A buildings like liberty place and logan sq for $25 PSF.

If you build it they will come . . . eventually . . . at $25 PSF . . .when you need $35 PSF now to pay your lenders and investors.

spec office development is dead in philly until we get a strong tenant market here. this may or may not happen. it is totally dependent on the economic growth of the region , which is historically below average, and on the political willl to reduce business taxes meaningfully and quickly. the politicians have proven over the last three decades incapable of doing this.

in the meantime, no developer will build on spec in the hopes that our idiotic city council will come to their senses and drastically cut business and wwage taxes.

this is reality. pennsgrant, suck it up. your height complaints are pointless. write a letter to your council person instead.

[Jelly Roll]

Originally Posted by Cro Burnham

Class A office rents in center city (about $25 PSF) are the same or lower than they were in the 1980s. this is before you take inflation into account, which means on an inflation adjusted basis, rents are considerably lower than 25 yrs ago. meanwhile construction costs have risen substantially in this period. this means the economics of building tall office buildings has weakened tremendously in 25 yrss

to make money on a new office building, you need tenants like comcast willing to pay a 40%+ premium over market (say, $35 PSF). or you need incredible tax rebates (like the koz benefits available at cira ctr) that result in an effective rent comparable to market.

without one or the other of these, building an office building will lose mkooney. unless you are in china or dubai, typically developers build to make money.

this is why ACC was not built. it is not a KOZ and other than comcast, there are few if any tenants in the market willing to pay $35 PSF to be in a new building when there is space in class A buildings like liberty place and logan sq for $25 PSF.

If you build it they will come . . . eventually . . . at $25 PSF . . .when you need $35 PSF now to pay your lenders and investors.

spec office development is dead in philly until we get a strong tenant market here. this may or may not happen. it is totally dependent on the economic growth of the region , which is historically below average, and on the political willl to reduce business taxes meaningfully and quickly. the politicians have proven over the last three decades incapable of doing this.

in the meantime, no developer will build on spec in the hopes that our idiotic city council will come to their senses and drastically cut business and wwage taxes.

this is reality. pennsgrant, suck it up. your height complaints are pointless. write a letter to your council person instead.

Nice post and great summary of what is going on in the office market right now. I just wanted to add that throughout the entire US very few markets if any are building spec office space right now.

[Kidphilly]

Originally Posted by Jelly Roll

Nice post and great summary of what is going on in the office market right now. I just wanted to add that throughout the entire US very few markets if any are building spec office space right now.

Even NYC and the new WTC development have either scalled back or stalled projects dues to lack of viable tenants.

Chicken/egg - attract business and see how things change

I personally would love to see ME with some new tall buildings but until there is a demand to do so, well...

[summersm343]

Update 10/10/2012

[slow-v6]

I like this building as well.. Adds some density to the area especially from the street. Makes St James look really tall now as well!

[summersm343]

11/30/2012

Still no work on the garage

[summersm343]

1/11/2013