A revitalizing North Broad Street girds for surge of apartments with two major projects planned
Both projects were at least partly motivated by their locations in Census tracts designated as a “Qualified Opportunity Zone," offering investors in projects there potentially big savings on what they owe the IRS.
Developers Toll Bros. and Alterra Property Group are separately planning apartment projects on Broad Street north of Center City that could add nearly 900 units to the rapidly revitalizing corridor.
Horsham-based Toll is teaming with Salt Lake City investment firm Sundance Bay on its plan for a 368-unit tower near the entrance to the landscaped Rail Park high line on Noble Street. Alterra, of Philadelphia, is planning a midrise with as many as 500 units at the northwest corner of Broad and Spring Garden Street.
Both projects were at least partly motivated by their location in census tracts designated as “Qualified Opportunity Zones” under a provision of the 2017 tax cut bill, offering investors in projects there potential big savings on what they owe the IRS.
John M. Piedrahita, a spokesperson for Toll’s rental-apartment development unit, said his company’s plan "offers a unique opportunity to contribute to the transformational growth and revitalization along North Broad.”
The North Broad Street corridor, bounded by Race Street and Girard Avenue and 12th and 16th Streets, has seen a near-doubling of rental units, from around 1,100 at the start of 2015 to about 2,000 today, according to real-estate tracker CoStar Group.
Contributing to that inventory are such projects as the Hamilton apartments on 15th Street north of Callowhill Street and the restoration of the former Divine Lorraine Hotel at Broad and Fairmount Avenue.
The proposals by Toll and Alterra, along with other projects planned or underway, could boost that number by almost 1,800. The others include the 1300 Fairmount Ave. apartments with 477 units by RAL Cos. & Affiliates of New York and Philadelphia-based developer Eric Blumenfeld’s proposed 205-unit Mural West at Broad and Spring Garden.
Adrian Ponsen, CoStar’s analytics director for Philadelphia, said landlords have managed to keep those units largely filled, though not always without the enticement of a month or more of rent-free living.
“Most new developments along North Broad Street have tight occupancy rates above 90% and have filled up at a healthy pace," he said. "But they’ve been more reliant on free rent discounts than most projects in Center City in order to secure those tenants.”
Toll aims to break ground in late 2020 on its project, which will be the first in Philadelphia for the company’s division that develops and manages rental buildings as opposed to condominiums, Piedrahita said. It is targeting summer 2022 for opening.
The project would rise to 18 stories at its highest section along Hamilton Street and step down to 13 stories along its eastern side, which faces the historic Lasher Printing Co. building, according to plans presented this week to the Callowhill Neighborhood Association.
The proposal also includes a two-story commercial annex with ground-floor retail fronting Broad, a public plaza along Noble, and an underground garage with 107 parking spaces.
Toll told neighbors it is under contract to buy the nearly one-acre site at 427 N. Broad, currently used as a parking lot, from the Church of Jesus Christ of Latter-day Saints after its zoning permits have been issued, association president Sarah McEneaney said.
The site was selected for its nearness to the Rail Park as well as its proximity to Center City and its public transit access using the Broad Street Line, Piedrahita said. Its location in an opportunity zone was also “one of the many factors we considered,” he said.
Toll’s condo-development division is building a 24-story residential tower in the Jewelers Row district on Sansom Street in Center City. Sundance Bay, Toll’s partner on the Broad Street project, is led by a team that includes two sons of U.S. Sen. Mitt Romney.
Leo Addimando, Alterra’s managing partner, said his firm is under contract to buy the 1.5-acre development site at Spring Garden from Parkway Corp., which previously proposed offices, apartments, and shops at the property.
Alterra’s plan for a seven-story midrise over ground-floor retail and 275 underground parking spaces will be financed with the participation of investors seeking to take advantage of the site’s opportunity zone designation, he said.
While its current permit application for the site calls for 500 apartment units, that number may be dialed back to the “low 400s” to accommodate office space on the second floor, Addimando said. The company is in talks with potential supermarket tenants to anchor the ground-floor retail space, he said.
Alterra hopes to start construction during the second half of next year, wrapping up before the end of 2021, Addimando said. Sections of the building will be constructed in factories and assembled on site.
Addimando said he’s not concerned about competing inventory in the immediate area, since he expects renter demand to come from throughout the city, as it has for his company’s 322-unit Lincoln Square project on South Broad Street.
“We look at it as an extension of Center City,” he said of the new site.