Condo sales back on track at Reef Tower on the Delaware

David Grasso stood at the window of a 19th-story condo in Waterfront Square's Reef Tower, looking out at an old brick building at Columbus Boulevard and Spring Garden Street.

When Grasso was 15, his father, Michael, dragooned him into a summer rehab of that building, a 19th-century grain warehouse, into offices. The ground floor was for many years a club called Egypt, which Grasso managed while he was in college.

Back then, he recalled, he would look out the warehouse windows, watching the sun rise above 91/2 acres of derelict waterfront at the north edge of Penn's Landing.

On a recent hot summer day, the principal of Grasso Holdings Realty was conducting a tour of the 22-story Reef - once part of that acreage, and the third of what were to have been five residential towers built by Isle of Capri Associates.

In late 2011, Grasso, now 42, was appointed the Reef's receiver by the lender Union Labor Life Insurance Co., which took back 118 unsold units from the developer, Doron Gelfand.

"He built a wonderful project," Grasso said of the developer, "but he got caught in the market. He would have been fine had he not built the third building." Only 37 units were sold before foreclosure.

Since Grasso took control, 57 more have gone under agreement or have sold. Add 24 units sold at a November 2010 auction held under Gelfand's auspices and total sales now number 118, or a little less than two-thirds of the Reef's 179 units, Grasso said. About 60 to go.

"We're selling four a month," said Grasso, who put the average sale price at $413,000, including the $1.7 million penthouse and a $910,000 mini-penthouse.

That's about $315 a square foot, although the 1,455-square-foot 19th-floor condo Grasso was showing lists at $575,000, or $395 a square foot.

His firm also manages the two sold-out towers, the Peninsula and the Regatta, for their condo associations, he said.

Those towers were completed in 2005 and 2004, during the housing boom, and all but one unit had been sold by late 2010. The Reef, whose completion was delayed until April 2009, could not avoid the aftershock of the previous September's financial collapse - presales that had been at 72 percent melted down to 12 percent, Gelfand said at the time.

The current sales pace does not surprise Prudential Fox & Roach agent Mark Wade, who said he was selling more condos at the Reef than at "any other high-rise in town."

Wade and his partner, Jim Thornton, moved from their mid-rise Front Street condo to the Reef more than two years ago, in part, he said, because "there were no better deals in town."

The "value for the money" is what his clients pick up on quickly, Wade said.

At Waterfront Square's conception, local real estate observers gave it little chance of success because of its isolation from Center City. But in the ensuing years, adjacent neighborhoods like Northern Liberties, Fishtown, and Old City have moved east to meet it.

"Sure, you are not in Center City, but you are near one of the hottest areas building up," said recent buyer Christopher Chu, one of Wade's clients. "Whether it is for a drink, sports, or you just like the idea of 'getting away' from the hustle and bustle of the city, [Waterfront Square] has the perfect spot."

The price, $390,000, and the "well-run" homeowners' association convinced Chu that buying at the Reef was right.

Many buyers are from Bucks and Montgomery Counties, Grasso said, "looking for a heavily 'amenitized' gated community" and "not yet ready to make the transition from suburban to city life."

Early on, the first two buildings were heavy on those who had bought units as investment properties. Today, Grasso said, more owners live in the condos.

About 15 percent of Reef owners are converted renters or tenants from the other buildings, he said.

Nearby SugarHouse has had a "neutral" impact, Grasso said - a far cry from spring 1994, when the possibility of riverfront gambling was used as a selling point for condos at Piers 3 and 5, south of Waterfront Square.

The Delaware's allure remains strong, though, and future demand for river views may mean Waterfront Square's last two structures rise someday.

"It will happen at some point," Grasso said, "although it may not look like the original - low-rise buildings instead of towers."