199 units permitted for Chestnut Street in 2021 are finally getting underway
The project finally getting off the ground could be a signal of a larger softening in the development environment.
Four years after receiving their permits, Quaker Lane Capital is finally moving forward with two apartment buildings at 42nd and Chestnut Streets in West Philadelphia.
The twin buildings, dubbed Penn Canopy, will include 199 apartments, at least 11,000 square feet of retail, and 35 parking spaces. Demolition recently began to make way for the larger building on the northeast corner of the intersection, located at 4145 Chestnut St.
“Despite an enormously challenging couple of years in the real estate capital markets, savvy investors remain focused on workforce housing investments in supply-constrained neighborhoods like University City,” said Puja Suneja Peruto, a locally based principal with Quaker Lane. The company splits its focus between Boston and Philadelphia.
Quaker Lane’s project received its zoning permits in 2021, a year before interest rates began to spike.
Since then, the development environment has grown more difficult with the price of construction materials remaining elevated, interest rates continuing to climb, an apartment glut emerging in parts of the city, and President Donald Trump’s tariffs creating uncertainty.
But Quaker Lane had distinct incentives to begin construction this year.
The developer received zoning permits for 4145 Chestnut before Philadelphia’s 10-year property tax abatement was halved and before the creation of Councilmember Jamie Gauthier’s controversial requirement that market-rate developers set aside affordable units within new buildings in University City.
Both of those advantages would be lost if construction did not begin soon, with the original permit for 4145 Chestnut expiring in December.
No zoning relief was needed for either project, although the developer did make use of a zoning bonus that allowed it to build more densely in exchange for underground parking.
All of the units in the two buildings will rent at market rate but will not be targeted toward students. Instead, Quaker Lane hopes to attract young professionals at the large educational and healthcare institutions that dominate the area.
“We think University City has plenty of student housing,” Peruto said. “and I don’t think there’s enough projects of this type.”
When Quaker Lane was originally designing this project, the life sciences boom and the expectation of a related jobs boom was still in full swing, buoyed by the success of the COVID-19 vaccines and the low interest rate.
But the cooling of that sector hasn’t led the developer to change their plans.
“The reality is that in University City, there’s still a strong workforce, but most housing that is built is more for students,” Peruto said. “There might be older projects that can target this type of workforce, but not necessarily new projects.”
Another 350-unit Quaker Lane development at 4011-19 Market St. is also targeting this segment of the market.
The developers are avoiding three-bedroom apartments — which in this part of the city they believe attract students with roommates — and focusing on one-bedrooms with dens. They are also providing robust amenities, including a pool at 4145 Chestnut, roof decks, and private outdoor space with a third of the units.
The building at 4145 Chestnut will have 35 underground parking spaces, and according to the 2021 permits, a handful of off-site spaces.
Both buildings are designed by Philadelphia-based CosciaMoos Architecture.
The larger building at 4145 Chestnut will include 7,000 to 10,000 square feet of commercial space — enough for three tenants — while the smaller building at 4201 Chestnut will have 4,000 square feet of commercial space.
“Between the two projects, we are bringing a lot of retail back to the neighborhood,” said Peruto.
The site at the northwest corner of the intersection is currently a surface parking lot and the popular Pakistani barbeque restaurant Kabobeesh. The northeast corner site included older commercial buildings — previously hosting Cleopatra’s Cafe and a yoga studio — that are in the process of being torn down.
The groundbreaking for 4145 Chestnut is expected before year’s end, with construction completed by the end of 2026. The smaller 4201 Chestnut will get underway a little later, as it will take less time to build. Its building permit expires in January 2026.