UC 2.0: Development in University City is transforming West Philadelphia

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By Natalie Kostelni | Philadelphia Business Journal | November 22, 2017

When University City District was established 20 years ago, the West Philadelphia neighborhood was a much different version of itself.

Like many parts of Philadelphia, it had suffered from urban decay and blight over the years as the city’s manufacturing base dwindled and residents fled for the suburbs. That pocket of Philadelphia suffered a 33 percent decline in population. The neighborhood was rife with crime and it wasn’t unusual to have students attending the University of Pennsylvania or other schools robbed, sometimes violently. Between 1988 and 1997, the percentage of Penn graduate students who lived in University City fell from 60 percent to 25 percent.

“It felt on the verge of hopelessness and helplessness,” said John Fry, president of Drexel University who at that time was executive vice president at Penn. “The institutions felt beleaguered and didn’t know what to do to help themselves. There was no collective conversation about what to do. We could secure our own campuses as much as we wanted but outside of the campuses the problems remained.”

It was a reckoning of sorts and, in hindsight, a fortuitous one.

Judith Rodin, then president of Penn, acknowledged that universities that don’t recognize the importance of the community they are in and fail to launch revitalization programs are doing a disservice. That sentiment set in motion the formation of University City District (UCD).

At the time, Fry went to more than 25 institutions, community organizations and neighborhood groups and asked them to voluntarily come together to work on improving the neighborhood. Most joined, and unlike Center City District, which taxes property owners to financially support it, these institutions put up their own funds to support the endeavor and continue to do so today.

The establishment of UCD, which just turned 20 years old, was a turning point. Money began to pour into commercial and residential construction projects and by 2001 more than $1 billion was being spent on new development. It marked the first time in decades that so much money was being invested and so much development activity was underway in the neighborhood, and it seems to have gone unabated ever since.

Craig R. Carnaroli, executive vice president at Penn, sees the progression of development activity in University City occurring in three phases. The first started in the late 1990s and early 2000s when Penn ramped up the number of its new projects.

“The challenge John [Fry] and his team faced before I joined Penn is they saw the market opportunity but getting other people to see it was a challenge. The way others evaluated the area, they couldn’t see the power of the local economy,” Carnaroli said.

As a result, he said, Penn took on the role of stimulating the market. Its first major undertaking was University Square at 36th and Walnut streets, which included the Inn at Penn, the Penn Bookstore and some shops and restaurants. Farther west on Walnut Street, Penn constructed a movie theater with a café and lounge, and, across the street, a supermarket with a parking garage above it.

From there the second phase emerged when Penn started to do ground leases for developments such as World Cafe Live and the Left Bank, which began to provide new housing and amenities in the neighborhood. Penn also embarked on other projects such as Huntsman Hall. As Carnaroli sees it, the third phase is underway now and it’s vastly different from the prior two.

“People are now looking at the success of the last 18 years and they are saying: ‘I want in, but I don’t need Penn or Drexel.’ and just want to invest in University City,” Carnaroli said. “There are 18 developments on the docket and they are all being done by outside developers with no connection to the universities. You couldn’t say that 18 years ago.”

Private developers have not only recognized the market opportunity the neighborhood offers but have fully embraced it.

“We’re seeing a lot of private investment at all scales here from the FMC Tower and the Science Center to medium scale in residential,” said Seth Budick, senior manager of policy and research at UCD. “That has been a new phenomenon in University City.”

Since 2009, more than $4.7 billion has been invested in commercial, residential and institutional development projects in University City, according to UCD’s most recent data. The organization only tracks real estate investment back to 2009 so that figure is likely understating how much has been spent on development activity in the past 20 years. The amount is likely to double — closer to more than $8 billion or more — if it included work that happened after the special services district was formed and Penn first began its development push.

In the last year, 1.5 million square feet of real estate projects were completed and the number of construction permits climbed by more than 500 percent from pre-recession levels, according to UCD’s most recent annual report. In addition, 28 development projects in the neighborhood were in different stages of completion. In all, 4.5 million square feet of office, residential, academic, research, restaurant and medical space will be added when those projects are done.

More development is on the horizon and in a big way including: Schuylkill Yards, a $3.5 billion, 14-acre mixed-use project that will total 5 million square feet at build out. That project is being done by Drexel and Brandywine Realty Trust; uCity Square, which is a development of 6.5 million square feet in 10 new buildings. University City Science Center and Wexford Science and Technology are partners on that project; and the redevelopment of the area around 30th Street Station.

In what is a telling indicator of how much has changed, graduate students attending Penn have started to reside in the neighborhood again. In 1997, just 20.6 percent of Penn’s grad students lived in University City and now that figure has grown to 40.5 percent, according to Penn’s Office of Institutional Research & Analysis.

While the development activity is pronounced, little of it would have happened without job growth. For some time, 75,000 jobs was a milestone to reach. “In the last two years we jumped from 75,000 jobs to 80,000 jobs,” said Matt Bergheiser, president of UCD.

For all of the progress University City has made, there remain challenges. While not an issue isolated to University City, improving the state of public education often gets cited as a nagging issue that needs to be addressed. “Inclusive growth and the problems of the city are writ large,” said Stephen Tang, president and CEO of the University City Science Center.

Some inroads are being made and Tang noted several efforts are underway including: UCD’s West Philadelphia Skills Initiative, which trains and connects people who live in West Philadelphia with employment opportunities at the medical and educational institutions in University City; an apprentice program with the Wistar Institute that caters to graduates of the Community College of Philadelphia; and the Science Leadership Academy Middle School that opened last year in Powelton Village.

Those programs will provide change and an opportunity for those who live in University City to work in University City, Tang said.

“We are moving ahead on all fronts,” he said. “It’s not all about the buildings and infrastructure but also about the people.”

One constant over the years is that lack of connection between the Market Street corridor in Center City to University City, and efforts, including the eventual development of space around 30th Street Station should improve though not solve that issue.

As development and job growth continues at a torrid pace, other issues have cropped up including finding ways to preserve some of the neighborhood’s historic and iconic structures such as the Provident Mutual Life Insurance building and abandoned churches.

With 80,000 people working in University City and the expectation that number will continue to rise, investing in transit infrastructure has also become a deepening need. UCD has launched a transit management agency as a subsidiary “to grapple with getting people in and out and to and from,” Bergheiser said.

Other see the successes and progress made over the last 20 years and want more.

Della Clark is president of the Enterprise Center, which fosters minority entrepreneurs in West Philadelphia. She had held that job for 25 years and has seen how things have changed and wishes she could extend the boundaries of UCD. “I want it all over West Philadelphia,” she said.