PhillyTablet Inquirer Daily News
Mobile
Home Delivery
philly.com
email
font size
options
 
Tuesday, February 8, 2011

Glaxo downsizes from Center City to $81M Navy Yard site

GlaxoSmithKline has picked Liberty Property Trust's Navy Yard site to build its new Philadelphia-area offices at the Navy Yard. The job had been coveted by Hill International and other developers for Center City high rise and suburban office park locations. More about Glaxo's smaller new Philly office here.

The UK-based drugmaker's $81 million, 200,000-square-foot-project will be announced at City Hall later this morning. It's a quarter of the size of the roughly 800,000 square feet space Glaxo now occupies in Center City at One and Three Franklin Plaza near 16th and Vine.

Update: Does that mean Glaxo is shrinking its Philadelphia workforce, currently 1,300? No, says Glaxo spokeswoman Jennifer Armstrong: "About half of the space in our current location at Franklin Plaza is currently unoccupied.

But Glaxo is still cutting its Philadelphia occupied office space in half. That means job cuts? "No. They will move all of their employees to the significantly more efficient new building," says Liberty's Jeanne Leonard. "No job loss." Glaxo also has major US offices near Raleigh NC.

Glaxo will cut a hole in Center City as its leases expire over the next three years. The move follows the industrial departures of Arkema, Rohm and Haas, and a big part of Sunoco. No wonder developer Ron Caplan plans to turn the vacant AAA insurance building on Market Street into apartments. People are still moving their homes to Center City; offices, not much.

Liberty is also building a couple of office/warehouse buildings at the Navy Yard, already home to Urban Outfitters and Tastykake.

UPDATE: Liberty and Glaxo say they're sharing the standard 10-year property tax discount for new Philadelphia construction, but there are no Keystone Opportunity Zone benefits since there are no net new jobs being created in this move.
Posted by Joseph N. DiStefano @ 11:03 AM  Permalink | 11 comments
Comments   
  • 0 like this / 0 don't   •   Posted 11:17 AM, 02/08/2011
    Does this mean they won't pay city taxes being located in the Navy Yard? They were rumored to leave the city altogether, but this hardly seems like a good outcome considering they're moving out of downtown.
    — CoolZanna
  • 0 like this / 0 don't   •   Posted 11:28 AM, 02/08/2011
    CoolZanna: I work at the Navy Yard and I pay city wage. Unless there is a sweatheart deal in place, they should pay as well.
    — soverholt
  • 0 like this / 0 don't   •   Posted 11:37 AM, 02/08/2011
    I think you are referring to the Keystone Opportunity Zone
    http://www.philakoz.org/
    — jack_johnson
  • 0 like this / 0 don't   •   Posted 11:43 AM, 02/08/2011
    The Navy Yard is a Keystone Opportunity Improvement Zone, making corporations located there exempt from city business privilege tax, net profits tax, real estate tax, and sales & use tax (all in addition to several state taxes) for a multi-year period. With the onerous Philly tax structure, these are the type of deals that must be done to keep jobs within the city limits. No doubt a suburban township would have offered a similar deal as well. Here's the source on tax exemptions: http://www.philakoz.org/
    — atd
  • 0 like this / 0 don't   •   Posted 11:49 AM, 02/08/2011
    I agree with atd. Philly needs to do whatever it takes to keep these companies in the city. Otherwise they head to the suburbs or leave the state altogether (and head South).
    — jkt
  • 0 like this / 0 don't   •   Posted 11:51 AM, 02/08/2011
    Oh they will be paying a tax to have this built. It's called union labor.
    — dpg508
  • 0 like this / 0 don't   •   Posted 12:02 PM, 02/08/2011
    It's not clear from this article - is this expansion space, or do they intend to relocate all (or part) of their center city offices to this site?
    — Montco PA Dem
  • 0 like this / 0 don't   •   Posted 3:49 PM, 02/08/2011
    That makes sense. Pay companies money (via lower taxes) to move from a place that's accessible via public transportation from all surrounding areas, to a distant location only accessible by car on the edge of the city. Geniuses at work. After a hundred other companies relocate there and leave Center City empty, maybe the same geniuses will be shocked! shocked! that Center City is empty and that there's no public transportation for people to get to work, so they'll say we have to build trains to go the Naval Yard to cut polution.

    Of course, it would have been much easier to encourage business to stay in or move to Philadelphia by cutting everyone's taxes in Center City. But that would be too simple a solution for the geniuses.
    — mGirsh
  • 0 like this / 0 don't   •   Posted 4:45 PM, 02/08/2011
    I don't know but it seems like an embarkation location, and next step is off and out. I can't wait until the Mayor turns on the spotlight and begins his act, which will praise himself. Buyer Beware!
    — TheShadowKnows
  • 0 like this / 0 don't   •   Posted 5:15 PM, 02/08/2011
    jkt, tell us the truth. Are you a corporate propaganda plant?
    — Philly Born
  • 0 like this / 0 don't   •   Posted 10:13 PM, 02/09/2011
    And so the cannibalization of CC business to the Navy Yark continues. The Navy Yard's transportation is better now than previously w/shuttle, but if you just miss at the subway, you cool your heels for 20 minutes waiting. so you can spend another 40 mins. getting there on top of however long it took to get to CC in the first place. It'll be 15 years before subway extends. Calling anything "green" here is a fraud unless compared to a suburban office park for that very reason. My company moved here from CC, previously 85% used transit or walked and 15% drove, post-move the proportion flipped. No amenities, only places to eat are: 1. overpriced, mediocre food at Urban Outfitters (cool space, though); 2. greasy cheesesteak place w/lovely picnic tables in asphalt parking lot, and a sandwhich/soup place (mediocre food but at least honestly priced). No on-site retail, you have to drive to a CVS on Broad or the Sunoco on Penrose Ave. to buy a bag of chips or gum. Sucks working there unless point of reference is (again) a suburban office park.
    Nobody asks the workers prior to move, it's almost always executive fiat. And then they try to cover up afterwards with post-decision "surveys". Ours did.
    If the city really wants to keep business it has to keep its eyes on the ball with true tax reform, instead of what amounts to special deals for a few. Navy Yard is a niche product with long-term potential, but once again this is just gaming the system.
    — sirius1


11 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
Advertise Here