When Pearl Properties bought the Embassy Suites hotel on the Benjamin Franklin Parkway in 2018, the real estate investment and development company planned a few upgrades for the then-newly renovated hotel. It intended to welcome guests to the hotel, which catered to business travelers, for many years to come.
Then came the pandemic.
Pearl Properties anticipates that business travel will take awhile to come back. So the company decided to invest in a pivot. It is converting the hotel into apartments and believes the balconies on each unit will draw residents looking for private outdoor space.
When the company bought the 288-suite property for $67 million, the Embassy Suites by Hilton became the company’s second hotel, joining the Cambria on South Broad Street. Pearl Properties’ portfolio mainly consists of apartment and mixed-use buildings.
“Obviously, it’s a tough time for the hotel world,” Pearl Properties principal Reed Slogoff said.
A year ago, hotel revenue in Philadelphia was on the upswing, partly due to groups bringing their conventions to the city, and city tourism officials envisioned welcoming even more visitors in 2020. But the hospitality industry has been one of the hardest hit during the pandemic, and industry watchers don’t think tourism will fully recover for two or three more years. The number of leisure hotel room nights booked in the city dropped by more than 70% last spring and summer compared with the same period in 2019.
Pearl Properties closed the Embassy Suites the weekend of July 4th and is taking the property back to its residential roots. The building was built in 1963 as the Plaza Apartments.
“We thought that this particular building would really be a tremendous building where our residents would be able to have outdoor space, have coworking space” to adapt to lifestyles in the post-pandemic world, said James R. Pearlstein, president of Pearl Properties.
The Terrace on 18th will feature 288 one-bedroom, one-bath apartments with balconies and new kitchens. Planned amenities include a fitness center, a movie room, recreation rooms, and a space with a commercial kitchen that residents will be able to rent out for gatherings. The Terrace is accepting applications for leases that will start June 1.
Rent will start at $1,895 for the apartments, which will range in size from 680 square feet to 715 square feet.
The Terrace also will host Downingtown-based Victory Brewing Co.’s first Center City location, a two-level brewery and taproom. The space was formerly occupied by a TGI Friday’s. Pearl Properties expects to announce a second restaurant at the site this spring.
In 2015, the firm bought the former Latham Hotel at 17th and Walnut Streets and converted it into 144 apartment units with retail space on the lower floors.