Philly developers propose thousands of new apartments in a rush to beat the tax abatement change | Inga Saffron
Nevermind the pandemic and economic uncertainty, developers believe this is a good time to be building.
Over the last half-century, the hopscotch board of empty lots along Delaware Avenue in Northern Liberties has come to feel like a permanent feature of the Philadelphia landscape. Building booms have come and gone, master plans have been adopted and revised, and yet those former industrial sites have stubbornly resisted the kind of development that has transformed neighborhoods elsewhere in the city.
But now, in the middle of a historic pandemic, with massive numbers of people unemployed and the city’s economic fortunes uncertain, developers seem to have decided that this is a perfect time to build on the Delaware. This month alone, four companies will present their waterfront visions to Philadelphia’s Civic Design Review board. Should these projects get built, more than 1,500 new apartments would rise in the empty zone between Spring Garden Street and the Fillmore complex on Frankford Avenue. A real neighborhood could finally emerge on the Delaware.
And that’s just the waterfront. Across the city, developers are scrambling to put together housing proposals before Philadelphia’s lucrative 10-year property tax abatement expires Dec. 31 and is replaced by a less generous incentive. The revised version cuts the value of the tax holiday in half.
So many housing proposals were submitted to the city this month that the design review board had to schedule a second meeting to accommodate everyone. There are plans for glass skyscrapers in Center City, a full-block apartment building in Brewerytown, even a mid-rise in the Northeast neighborhood of Tacony. An advisory group that relies on the power of persuasion, the design review board is a mandatory stop before developers can apply for a building permit.
All told, the August proposals would produce 3,600 new apartments — just slightly less than all the housing units that were approved in 2019. September’s agenda is likely to bring another bumper crop of apartments, including a thousand units in Northern Liberties alone. Among those angling for a hearing is developer Bart Blatstein, who has a new plan for his sprawling site at Broad and Washington, this time a 14-story apartment building.
It’s clear that the impending demise of the 10-year abatement is what’s driving these applications, but how many of these projects are likely to be built? Interest rates are now near zero, making it cheap to borrow. But are banks and investors really willing to gamble on speculative rental housing in Philadelphia?
Based on interviews with developers, urban planners and industry experts, the answer is a qualified yes. Not every pretty rendering submitted to the design review board will turn into an actual building. And the bigger projects, such as the 461-unit enclave on the former Festival Pier, will probably be built in phases. As long as developers produce construction drawings and obtain a building permit before the end of 2020, they are locked in under the 10-year abatement, even if they don’t actually start digging right away.
Given all the talk about people fleeing cities for the suburbs to escape the pandemic, developers here remain surprisingly bullish about Philadelphia’s future.
“Most of the larger projects take two or three years to build, and I think by then we’ll be back to some sort of normalcy,” said Marcus Toconita, a partner at Callahan Ward, which will present plans Tuesday for a 160-unit building on a vacant lot at 26th and Girard in Brewerytown. “We still have an incredible city. We’re seeing more and more New Yorkers come here for the value and the quality of life. We just have to get through this blip.”
Still, Callahan Ward is one of the developers hedging its bets. The Girard Avenue apartment house was designed by ISA to be built in three phases. Most likely, the company would start with a modest 56-unit structure on Girard Avenue.
But other, more established companies, such as PMC, Southern Land and Post Brothers, which already own hundreds of apartments, are powering ahead, undaunted. Because rent collections at the high end of the market have remained strong, they have a lot of cash coming in, and they appear to be putting their money into new buildings.
PMC, which has two glass skyscrapers going up on the Schuylkill waterfront, just released designs for two more towers in the Logan Square neighborhood, one wedged next to the SEPTA viaduct on JFK Boulevard, the other in the Trader Joe’s parking lot on 22nd Street. It also has plans for a mid-rise at 23rd and Cherry. The five projects would create 1,500 apartments in the neighborhood, all within an easy walk to 30th Street Station and Center City’s office district.
Unfortunately, the company seems to work in only one architectural medium: glass. Its two latest proposals, both by Chicago’s SCB, have at least introduced some sculptural elements. The rounded prow of 2301 JFK — originally designed as an office building — is a welcomed change, nicely detailed with bronze-colored window trim. But it’s still concerning that PMC continues to build bird-killing all-glass towers so close to the Schuylkill River flyway.
Like PMC, the Post Brothers, who once specialized in redeveloping old factories, are now focused on new construction. Since purchasing the Piazza complex in Northern Liberties, they have been filling in an empty block next door on Germantown Avenue with a mix of towers and mid-rises, linked by pedestrian streets. The development, called the Piazza Terminal, will eventually have 1,100 apartments.
Most units at the Terminal are the usual one- and two-bedrooms, but Post is so optimistic about Philadelphia’s future that it is now planning a 102-unit project aimed at families. All the apartments would have three or four bedrooms and large terraces, CEO Mike Pestronk said. To make room for the project, Post plans to demolish Liberties Walk, a group of four-story apartment buildings constructed in 2004 as a companion to the Piazza.
While such gracious apartments sound like something that belongs on Park Avenue, Pestronk argues that the project would satisfy an overlooked market niche. Because new home construction hasn’t kept up with demand, he said, many middle-class families can’t find a house at the right price.
“Northern Liberties is an extremely desirable neighborhood. The problem is that the only product is $700,000 townhouses,” and many millennials don’t have the money for a down payment on such an expensive house, he said. Meanwhile, “all the inventory outside the city is in exurban locations, 45 minutes from downtown. That’s not where people want to live.”
Pestronk believes the large apartments in the new development will offer an alternative and allow families to stay in the city. Like PMC’s towers, all the Post Brothers’ projects are a short walk to transit.
As the core of Northern Liberties densifies, developers are finally turning their attention to the large empty lots on the east side of I-95, close to the Delaware waterfront. The area has been slowly filling in with townhouses, but now developers are proposing dense apartment buildings. Even though the area has been neglected, such street names as “Beach” and “Canal” evoke its maritime past, when wharves lined this section of the Delaware.
The project called 700 Delaware Ave. would close the gap between Front Street and the waterfront. In contrast to PMC’s glass towers, the design by JKRP architects adopts the other architectural style popular with developers, the faux loft. The project gets points for preserving a row of early 19th-century houses on Fairmount Avenue.
The plan would also create a new pedestrian walkway along the old Beach Street right-of-way, with space for restaurants and shops. (That’s assuming it’s possible to lease commercial tenants in the post-pandemic future.) The downside is that there is no space set aside for retail on Delaware Avenue — a major requirement of the waterfront master plan. Instead, JKRP recommends putting a small plaza on the avenue to try to encourage pedestrian activity.
In contrast, the proposal for 918 Delaware Ave. creates a strong, urbane streetscape that would have plenty of ground-floor space for commercial uses. That long skinny site is one of the most unusual and atmospheric in Philadelphia. The west side is bordered by Canal Street, which bends and flows like a river toward the Delaware, and is paved with Belgian block.
The architects, Harman Deutsch Ohler, have divided up the block into five, seven-story buildings that would be faced in brick and metal panels. The arrangement is a nice response to Canal Street’s sinuous curves, and the spaces between the buildings allow pedestrians to easily cut through from Delaware Avenue to Canal Street. But too much of the development’s central plaza is eaten up by surface parking, defeating the effort to create a gracious public space. Because Canal Street leads directly into the Fillmore complex, it would make a great pedestrian-only street.
How likely is all of this to happen? The project’s developer, Doron Gelfand, is the same person who built Waterfront Square, a gated trio of towers, on the opposite side of Delaware Avenue in the mid-2000s. The prospect of similarly gated complexes popping up along the Delaware is what finally prompted the city to create a special master plan for waterfront development.
When that effort started in 2007, more than a dozen developers were seeking zoning approval to build high-rises on the Delaware. It took five more years for the waterfront master plan to be completed. By then, the world had changed. Not a single one of those high-rise projects was built.