So, Bart Blatstein, what’s the problem with impending plans for the construction of the 59-story, $1.2 billion Comcast Innovation and Technology Center in the heart of Center City?
“From my perspective, there is no problem,” says Blatstein, chief executive officer of Tower Developments. “The more attention a project of this magnitude brings to the neighborhood, the more dynamic the neighborhood becomes — and the more people it attracts to the area.”
Jerome Kranzel, can you discuss the potential negative aspects of the venture, a state-of-the-art facility along the 1800 block of Arch Street?
“I see no negatives,” states Kranzel, senior vice president of Capital Markets Institutional Group. “In the past, we’ve seen many companies migrate out of Center City, so to see Comcast make this kind of commitment, which will create so many jobs and opportunities within the region, is a tremendous benefit to the city.”
The Innovation and Technology Center will complement Comcast’s global headquarters — the Comcast Center, located at 17th St. and John F. Kennedy Blvd. — and significantly extend the Comcast vertical campus in Center City. Might that make Robert Zuritsky and others in the real estate and development business rather uncomfortable?
“What this city needs is fresh ideas, new technologies and increased office space,” opines Zuritsky, president of Parkway Commercial Properties. “All of that will be represented in this project. Furthermore, the potential exists for spin-off projects and businesses to emerge, the likes of which this town has never seen before. This could be a game changer for the city.”
From its beginnings in the early 1960s, when its offices were in Bala Cynwyd, Comcast has been a Delaware Valley company. In 2002, when Comcast acquired AT&T Broadband, executives from AT&T wanted to move the corporate headquarters to New York. According to Comcast spokesman John Demming, Comcast chairman Brian Roberts had no interest in entertaining the proposal.
“He said it wasn’t negotiable,” Demming reports. “Period.”
Back then, Comcast had approximately 800 employees. By the time the Comcast Center opened in 2008, that number had swelled to nearly 3,000. Today, Comcast has a 4,800-person workforce.
When the new building opens in 2017 — construction is expected to begin this summer — it will house more than 3,000 employees; significantly, 1,500 of those jobs do not presently exist.
“Those 1,500 new jobs will be filled by people who buy condos, shop in stores and eat in restaurants,” says Steven Gartner, president of Metro Commercial Real Estate, Inc. “That’s quite an endorsement of what Philadelphia has to offer. Hopefully, that will send a clear message to other corporations that are either already here or are seeking to relocate.
“Specifically, it reinforces the area west of Broad Street as a major business center.”
Designed by world-renowned architect Lord Norman Foster and developed by Liberty Property Trust, the 1,121-foot tower will be connected to the Comcast Center via an underground gateway. The facility, which will become home to the company’s ever-increasing workforce of technologists, engineers and software architects, is expected to be the tallest building in the United States outside of New York and Chicago. It also will be the largest private development project in the history of Pennsylvania.
“We’ve continued to grow,” Demming says, “and we need a world-class place for our employees to work.”
The structure will serve as a media center, housing local television stations NBC 10/WCAU and Telemundo 62/WWSI, and offer space for local technology startups. In addition, the Comcast Innovation and Technology Center will house the Four Seasons Hotel, featuring more than 200 rooms. The luxury hotel will include a world-class spa, fitness, event and meeting facilities as well as a restaurant located on the top floor of the building, offering 360-degree views of the city. (The current larger Four Seasons on Benjamin Franklin Parkway will close by the new one’s completion, anticipated in 2017.) An estimated 1.285 million square feet of office space will be available, 957,000 square feet of which will be leased by Comcast. Also available will be almost 2,700 square feet of rentable retail space.
Top of the market quality office space is what all want, notes Forrest Huffman, a professor of real estate and finance at Temple University’s Fox School of Business. “Since there will be space available to tenants other than Comcast, that increased supply could have a negative impact on vacancy rates” in other Center City buildings. However, Kranzel points out, in the so-called trophy class segment of the market for Center City office space — One and Two Liberty Place; BNY Melon Center; One, Two and Three Logan Square; and One and Two Commerce Square — the vacancy rate is as low as 7 percent.
Adds Zuritsky: “As more people and businesses are drawn to the area, the higher the demand will become for office space.”
According to Comcast, the new structure will create a plethora of economic benefits long before its scheduled completion. The construction phase of the project will create at least 20,000 temporary jobs and produce $2.75 billion through direct and spillover activities. The economic activity generated during construction is expected to provide an estimated $16 million in tax revenue to the city and $67 million to the state. Once completed, the Innovation and Technology Center will be among the crown jewels in Logan Square, which, Tower’s Blatstein relates, “is the last Center City neighborhood that has parcels available for large-scale development.”
High-profile projects in the neighborhood include the recently opened Barnes Foundation at 2025 Benjamin Franklin Parkway and a pair of impending ventures: a Whole Foods at 22nd and Spring Garden streets and a Mormon meetinghouse and tower near 16th and Vine streets. “It’s not difficult to see why it’s an attractive site for Comcast,” says Blatstein, who is hoping to receive approval to open a casino at Broad and Callowhill streets, former site of the Philadelphia Inquirer and Daily News. “Not only is it in close proximity to the Comcast Center, but it’s in an extremely dynamic area.”
The addition of 1,500 new jobs, courtesy of Comcast, is almost certain to make the area even more dynamic. “The significance of anything that brings more jobs to Center City cannot be overstated,” Metro’s Gartner says. “So many people like being able to walk to work, and for those who will be filling these new jobs, that means living in Center City. The housing market is impacted. The retail market is impacted. The ramifications are enormous.”
Yet another benefit real estate experts expect from the new Comcast building is a residual effect from companies that do business with the Philadelphia-based corporation. “Comcast is a major international entity whose headquarters are in our backyard and is about to build a $1.2 billion Innovation and Technology Center as well,” Gartner says. “How could companies that have a business relationship with Comcast not take notice of that kind of commitment?”
While Temple’s Huffman doesn’t expect Philadelphia to surpass New York’s volume of business development any time soon, he believes that the city has raised its corporate profile. “It used to be that discussions about the Northeast Corridor went from D.C. to New York and skipped over Philadelphia, but that’s no longer the case,” the professor says. “I’d definitely classify Philadelphia as an up-and-comer.”
Not long ago, Capital Markets’ Kranzel recalls, the prevailing theme regarding the corporate presence in Center City was job loss. He is among those who are encouraged by the recent turnaround. “In the last 20 years or so, there have been quite a number of businesses that either reduced their presence in Philadelphia or left the area entirely,” he says. “IBM, CoreStates Bank, Conrail, Sunoco, to name a few. For a corporation to increase its presence in this city, particularly on the scale that Comcast is doing, is an indication that the demand for Philadelphia is increasing.”
Matt Schuman is an area writer. This article originally appeared in "Real Estate," a special section in the Jewish Exponent.