NEW YORK TIMES • Philadelphia’s First Step to a Platform of Innovation

Tuesday, February 20, 2018


Across from Amtrak’s 30th Street Station in Philadelphia, Drexel Square is under construction at Schuylkill Yards, a $3.5 billion innovation community. CreditMark Makela for The New York Times

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 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.

“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.

“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.”