Development and jobs converge in hot spot

Originally published by Philadelphia Business Journal

Development and jobs converge in hot spot

University City has hit some remarkable milestones this year that paint a portrait of a neighborhood with serious momentum, according to University City District’s recent annual report.

In contrast to its neighbor across the Schuylkill River, Center City, University City is growing jobs and ones that pay well. From 2008 until 2013, the area that’s home to some of Philadelphia’s largest academic and medical institutions, saw a 79 percent rise in middle- to high-wage jobs ($40,000 in annual pay or more) and it has grown to have 75,000 jobs. University City has one of the most educated workforces, as well, with 56 percent of residents having a minimum of a bachelor’s degree, which makes sense because many people in the community work in academia and health care.

“In a city whose progress has been constrained by tepid private sector job growth, the magical mix of academic, research and commercial partners in University City is leading the region — and much of the country — in the acceleration of economic activity,” wrote Matt Bergheiser, executive director of the University City District, in a letter that accompanies the organization’s annual report.

With University City on a trajectory of becoming an increasingly more robust, innovation district, it’s expected that more jobs are on the horizon and that it will become an even stronger economic development engine for the city and region. Bergheiser and his team predict the area will exceed 76,000 jobs by the end of next year. The biggest employers, in order, are theUniversity of Pennsylvania, the Penn Health System and the Children’s Hospital of Philadelphia.

The boost in the area’s job growth is seeping into other economic indicators:

• Its office market has grown by 26 percent and is at nearly 3.6 million square feet with a 2.6 percent vacancy rate. Average office rents are some of the highest in Philadelphia at $38.62 a square foot, according to JLL data;
• The median home sale price is $316,000. While that may pale in comparison to the million-dollar plus homes that trade in Center City, it’s a price that a few years ago would have been thought unattainable;
• Development activity is hitting new heights. Twenty-nine projects totaling 10 million square feet are under construction or nearing completion, representing $4.6 billion in investment. The projects range from residential to academic, research and mixed use; and
• Also of significance is the amount of new retail development underway and the number of establishments that have moved into University City. The neighborhood experienced a 15 percent rise in the number of full-service dining establishments and 23 percent in casual service restaurants since 2009. There are also more retailers that aren’t just focused on catering to the student population but other residents ­— families, young professionals and empty-nesters ­— also populating University City.

More high-paying jobs, additional housing, a growing list of dining establishments all add up to a neighborhood that stands out. There’s a 24/7 vibrancy emerging, a job density higher than Cambridge, Mass., home of Harvard University, and future development activity that will further define University City, according to Bergheiser in an interview.

“There are other pieces of the puzzle when you think about what completes the picture,” he said. “What allows growth to continue and [creates] neighborhoods that are attractive to talented people and employees is the infrastructure. The streets and the spaces in between as well as the entrepreneurial infrastructure, which is everything that the Science Center, Drexel and the University of Pennsylvania are doing. That’s the next big step that has to be taken here.”

Natalie Kostelni covers real estate and economic development.