Philadelphias first step to a platform of innovation || https://www.nytimes.com/2018/02/20/business/philadelphia-commercial-real-estate.html

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BUSINESS DAY
Philadelphia’s First Step to a Platform of
Innovation
Square Feet
By JON HURDLE FEB. 20, 2018
PHILADELPHIA — On the west side of this city’s main Amtrak station sits an
empty lot. But soon, it will be transformed into a public park filled with lawns,
walkways and even redwood trees, in the first stage of one of Philadelphia’s
biggest real estate projects.
The 1.3-acre park, to be known as Drexel Square, kicks off a 20-year, $3.5
billion development that aims to create a hub for technology and life-sciences
companies called Schuylkill (pronounced SKOO-kul) Yards. Not only will the
project fill in an underused section of real estate, it is also intended to develop
business opportunities for research coming out of Drexel University and the
University of Pennsylvania, both just a few blocks away.
The developer of Schuylkill Yards, named after the river that separates it
from Philadelphia’s central business district, plans to convert 14 acres occupied
by parking lots and older buildings on land adjacent to the rail yards into an
innovation community. It will eventually include seven million square feet of
office, laboratory, retail and residential space within walking distance of
downtown businesses, attributes that may be attractive to Amazon, which has
named Philadelphia as one of 20 finalists in its search for a second headquarters.
The project, announced in 2016, hopes to attract an additional $4.5 billion in
private investment from companies that seek proximity to the intellectual capital
of the universities. Other benefits include access to Philadelphia’s growing

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population of skilled millennial workers as well as rail links to the suburbs and
the northeastern cities beyond from Amtrak’s 30th Street Station, the nation’s
third-busiest passenger rail hub, after Pennsylvania Station in New York and
Union Station in Washington.
The development will include 2.8 million square feet of office space, 1.6
million square feet of apartments, one million square feet of lab space and more
than 100,000 square feet of retail in buildings that will combine new and
refurbished construction. Much of the land is owned by Drexel, whose main
campus abuts the site. The university has leased the ground to the developer,
Brandywine Realty Trust.
Its scale and location will give further impetus to the University City district,
a neighborhood in West Philadelphia that houses a complex of academic and
research institutions, including Drexel, Penn and the Children’s Hospital of
Philadelphia. Recent investment in research facilities and student housing in the
district has already created one of the fastest-growing areas of the city, said
Brandywine’s chief executive, Gerard H. Sweeney.
“Our hope was that we could connect the city, eliminating the river as a historic
dividing point,” Mr. Sweeney said. “We hope Schuylkill Yards is going to move
the physical perception of the city west.”
The park is a linchpin of the project, Mr. Sweeney said, because the overall
intent is to create a livable neighborhood that will attract an educated work force,
one that increasingly demands walkable access to offices, shops and homes in a
dense urban environment.
“Some people think you put a big tall building here right outside the train
station,” Mr. Sweeney said during a visit to the park construction site. “But you’ve
got to create a platform for excellence, and the way you do that is you invest in
public space. You create a place where people want to be.”
The first tenant will be Spark Therapeutics, a five-year-old gene therapy
company that has adapted expertise developed at University City’s rich
intellectual resources.
John Fry, president of Drexel, called Spark’s participation “a major win” for
Schuylkill Yards.
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“Having Spark as our first tenant signals to everyone that we are going to
favor life-sciences companies and high-tech companies,” Mr. Fry said. He added
that Spark planned to move into the first renovated building in the new complex
in 2018.
Mr. Fry said the project differed from innovation districts in other cities by
combining the resources of a major university with a major developer. But the
real draw was its proximity to a deep talent pool at Drexel, Penn and the
University City Science Center, a nonprofit organization that provides resources
to entrepreneurs.
“There’s an aggregation of talent in the fastest-growing employment center
in the city, and Schuylkill Yards is right in the middle of that,” Mr. Fry said.
Bruce J. Katz, a scholar at the Brookings Institution who has studied the
development of University City, agreed that the project’s proximity to
transportation and top research facilities in the heart of a major city was an
unusual combination that was likely to attract the significant investment sought
by the developer.
“This is an unparalleled opportunity, and very distinct from other innovation
hubs,” Mr. Katz said.
Many cities have research institutions that are miles from downtown, but
Philadelphia has them within walking distance, he said. Because of that, the
development project is well positioned to create a nexus of research and
commerce that will become a major growth engine for the local economy.
“This parcel is going to be an enormous catalyst for broader-scale
regeneration,” Mr. Katz said.
He said the attributes of Schuylkill Yards could also be attractive to Amazon,
the Seattle-based behemoth. The development would fulfill many of Amazon’s
requirements for a second headquarters, including access to transportation,
availability of skilled workers and an urban location, Mr. Katz said.
But even if Amazon does not choose Schuylkill Yards or two other
Philadelphia sites that the city has proposed, the new development is well placed
to meet the demands of the businesses that it seeks, he said.

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“What the innovation economy wants is this kind of proximity and density,
and Philadelphia is giving it to them, and now they are leveraging it,” Mr. Katz
said. “This whole area where Schuylkill Yards is going to be located is really the
platform for that innovative economy.”
An influx of new workers in West Philadelphia would help strengthen the
city’s economy. But some critics say it could also drive up real estate prices in
adjoining low-income neighborhoods, which have already suffered from
gentrification because of demand for housing from college students.
Hoping to address those concerns, Brandywine has agreed to help fund
affordable housing in local communities, and it is linking local businesses with
existing vendors in an attempt to create jobs, Mr. Sweeney said.
In addition, the developer has started an apprenticeship program for local
people, who will be invited to take courses to meet trade union standards so they
can become eligible for employment by Brandywine.
Brandywine will provide $5.6 million to community organizations in the first
phase of the development, a spokeswoman said. The outreach will also include
support for education, housing preservation and minority business development.
One of the groups, the Mount Vernon Manor Community Development
Corporation, expects to share $3.1 million of the total, said its executive director,
Michael Thorpe. Sixty percent of the money will be spent on affordable housing in
a neighborhood where housing is already under pressure from the nearby student
population.
“We’ve been seeing a great deal of pressure for market-rate development, not
for affordability,” Mr. Thorpe said. “People could be potentially pushed out if we
don’t create a program to offset some of that stress.”
Mr. Sweeney said he hoped that the development’s benefits would spread
broadly to a city that for decades was seen by outsiders, and by some of its own
people, as an inferior location.
“We were losing population, we weren’t growing jobs, we weren’t attracting
young people,” he said. “When you look at the attributes that a company should
look for to cement its growth for the next 50 years, it’s right here.”

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A version of this article appears in print on February 21, 2018, on Page B3 of the New York edition
with the headline: Philadelphia’s First Step to a Platform of Innovation.
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