Kensington faces a new challenge: Luxury development. Can a woke developer mitigate gentrification? | Inga Saffron

Just a few steps from the Tioga El station in Kensington, where wraith-like drug users bob and sway in front of vacant storefronts, J Street has been remade, as if for a movie set.

A glittering, architect-designed glass cube, accented with marigold-and-cayenne-colored panels, rises above a meticulously renovated brick loft building.

Next door, Shift Capital has transformed the matching wings of the old Diamond Furniture warehouse into what it describes as a socially responsible apartment community called J-Centrel. The building, whose name is a nod to the elevated train that rumbles past its front door, will formally open in March with $1,000-a-month studios, a Vietnamese-style coffee shop in the courtyard, and message boards listing volunteering options with neighborhood organizations.

Watching Philadelphia gentrify in real time is always jarring but rarely has the process produced so much cognitive dissonance as it has in Kensington, ground zero for the city’s raging opioid crisis.

Barely a week after the city cleared out several drug encampments flanking Lehigh Avenue in 2019, the Riverwards Group broke ground next door on a sprawling, 155-unit community called Kensington Courts. In a promotional video for the nearly finished project, a British announcer proclaims in plummy tones that “thriving Kensington” is the “next hot location.” This summer, the ultimate harbinger of gentrification appeared on D Street: a beer garden at The Somerset, a local dive bar under new ownership.

Despite these odd juxtapositions, Kensington’s development boom shouldn’t come as a surprise. The same scenario has been playing out for two decades in other communities along the Market-Frankford Line, from Old City to Olde Richmond. The question is whether one of Philadelphia’s poorest neighborhoods can learn from their experience to create ways to keep long-term residents from being displaced.

Jasmin Velez, who grew up in the neighborhood and is a member of the Kensington Neighborhood Association, told me she welcomes some new development as a way to drive out the drug trade and create economic opportunity. “Of course, you want to see your community thrive,” Velez said.

Yet she also worries about the impact on Kensington’s predominantly Latino and Black population. More than 60% of the residents who live west of Kensington Avenue are renters, and the sturdy rowhouses there have long provided an affordable — and transit-accessible — refuge in an increasingly expensive city. What happens now that the gentrification train has arrived?

Casey O’Donnell, who runs the nonprofit Impact Services, has been scrambling to prepare. Because the median income for an individual in the 19134 zip code is less than $17,000, his group is buying up as many shells as it can afford for renovation. It’s been a struggle. Since March, the price per vacant house has risen from $35,000 to $40,000. Impact did manage to acquire the notorious vacant textile factory at A and Indiana, across from Hope Park, where people use drugs in plain view. That project, which goes into construction this summer, will create another 48 family-size, affordable apartments.

“Maybe we’ll produce a hundred affordable units at the end of it all,” said Paul Marcus, who oversees Impact Service’s housing efforts, but that number won’t nearly address the need. “It’s like standing in front of the ocean as the waves come in, putting up your hands and saying, ‘I’m going to stop what I can.’ ”

Enter Shift Capital, which bills itself as a socially conscious developer and is registered as a “B Corp,” a certification for companies that seek to balance purpose and profits. Shift was among the first big developers to buy Kensington real estate in bulk, amassing a portfolio of vacant factories, crumbling houses and empty storefronts — more than 1.7 million square feet in all. Rather than squeeze every cent of profit out of its buildings, its website declares, “we’re on a mission to create inclusive, equitable communities.”

Other Philadelphia developers, like D3 Real Estate, which was behind Fishtown’s Oxford Mills, have dabbled in affordable housing but usually as a sideline. Shift won plaudits for its MaKen Studios project, which turned a pair of derelict mills into job-generating spaces for makers and small businesses. Working with Impact Services and PIDC, it has helped train residents to be developers. It has also bankrolled several new retailers to try to repopulate Kensington Avenue, which lost at least three major chains — Rainbow Shops, Sneaker Villa, and Rent-a-Center — when vandals set fire to several buildings during last summer’s unrest.

Shift’s CEO, Brian Murray, says these efforts are all aimed at mitigating the gentrifying effects of development. But as the company moves into residential construction with J-Centrel, some community leaders are questioning that narrative. Can one private developer really make a dent in gentrification when other big players, like George Manosis’ GM Holdings, are creating new apartments by the dozen? (Manosis built the eye-catching glass cube on J Street.) Is Shift really a new kind of developer or just a regular developer in woke clothing?

“Shift has always been something of a puzzle,” said an official who works for a mission-driven lender, and asked not to be named so he could speak freely. “It’s not clear what they want their endgame to be.”

J-Centrel certainly looks like the kind of project that any developer might undertake. Handsomely renovated by JKRP Architects, with carefully conserved industrial details and an amenity-filled courtyard, the converted textile mill could have been airlifted in from Fishtown. Murray, who started out in the Peace Corps before going to work for Price Waterhouse, acknowledges that J-Centrel’s 116 apartments will alter Kensington’s economics.

But he argues that the company is doing everything it can to soften the effects. Shift has earmarked 64 apartments for people earning 60% of area median income — a higher unit count than in comparable Philadelphia projects. Two additional apartments are being reserved for people earning 40% of median and will have monthly rents under $700. And because the arrival of new residents often creates tensions, Shift has established a “Good Neighbor Program.” Tenants who volunteer with a local nonprofit will get up to $100 off their monthly rent.

“We see this as bridge-building,” Murray said. “How do you bring new people with more discretionary income into the neighborhood and do it responsibly? We want this to be the most civically engaged building in the country. If you engage, you get an incentive.”

Yet, even with the discounts, Velez complained that Shift’s loft apartments will be out of reach for most Kensington residents. “It’s an awesome project and a great reuse,” said Impact’s O”Donnell. “But I don’t believe J-Centrel is in any way anti-gentrification.”

As more developers focus on Kensington, O’Donnell worries that nonprofit housing advocates like Impact will be no match for corporate investors, who have access to vast capital and can move quickly when property becomes available. It can even be hard for ordinary home buyers to acquire a rowhouse in Kensington. By the time they collect the paperwork to qualify for a mortgage, some investor has already paid cash.

Shift tried to address that disparity, Murray said, when it acquired about 120 houses and vacant lots from what he described as an out-of-town slumlord, including several on a drug-ravaged block of Argyle Street profiled in a 2015 Inquirer story. The goal was to renovate them as affordable housing — some for owners, some for renters. Then Shift decided instead to sell them.

Several local housing advocates said they were deeply disappointed. Sarah Martinez-Helfman, president of the Samuel S. Fels Fund, which has invested “substantial” sums in Shift and is effectively a shareholder, said the move suggests that “their social mission may be taking a real back seat.” Shift, she added, “sold us on a vision of shared prosperity, that people living in the neighborhood could stay and reap the benefits of development. The jury is still out.”

But Murray maintains that the neighborhood will still gain. Rather than sell the properties in bulk to a single investor, Shift will make individual deals with homeowners and local organizations, even if it means taking a loss. A group of Latino investors, organized by the Community First Fund, has arranged to buy at least six, and 39 others are being acquired by individuals. Kersy Azocar, who oversees the fund’s microlending program, said Shift had been enormously accommodating and acted as a mentor.

Tayyib Smith, who combines social activism, real estate development, and marketing at Little Giant Creative in Philadelphia, argued that it’s unfair to expect Shift to solve the problem of gentrification. Smith has partnered with the company on a business incubator in the ground floor of J-Centrel, called IF Lab. “It isn’t just developers,” who are responsible, he said. “It’s city planners, financiers, foundations, public policymakers — the whole system.”

That’s what makes it so hard to manage what’s happening in Kensington. No matter how much affordable housing Shift and local housing advocates create, no one has yet figured out how to stop gentrification.