Wednesday, January 2, 2013

Top 11 Real Estate Stories of 2012 (according to Greg)

By Greg

Happy new year! A couple days ago Philadelphia Business Journal’s Natalie Kostelni came out with her list of “The top 10 real estate stories of 2012:” Yesterday she came out with number 11. No offense meant to Natalie, but she left off many of the items that I thought were most significant in 2012. So I decided to make  my own list.

Glaxo moving to the Navy Yard was a shame because we lost another corporate headquarters from downtown, but it wouldn't be in my top ten (or eleven). Sale of buildings like Two Penn Center and 1515 Market would be significant if the new owners were going to do anything meaningful to them, like opening them up to the street and filling the ground floors with nice restaurants. I am highly skeptical that these types of improvements will take place, but I’d love to be proven wrong.

To me, the stories that are important are not the ones with the biggest price tag, but the ones that have the greatest impact on the urban landscape. Anyway, here goes (since Natalie chose 11, so will I):

Top 11 Real Estate Stories of 2012 (according to Greg)

11. West Philadelphia High School Sold
The fact that a New York developer was willing to spend millions of dollars and commit to invest tens of millions more in a gorgeous, but ungodly expensive, rehab of the former school at 48th and Walnut is telling about the shift in the West Philly real estate market. There have been a lot of sales of multifamily buildings in this vicinity, and I think we’ll be seeing a lot of activity around here in the year ahead.

10. Philadelphia Zoo starts construction on its new parking garage
I know it’s a parking garage, but this is the first major new development in Parkside since the Please Touch Museum, and the Zoo has been working on this for almost a decade. It will provide new street presence on Girard, and most significantly it lays the groundwork for reopening a SEPTA regional rail stop at the Zoo. There are big, unrealized plans for the Centennial District, and this was one of the Zoo’s pieces to moving the plan forward. I hope more good things will follow for this part of the city that has such enormous potential.

9. Forum theater closes
One of my favorite Philly Mag articles of all time is this piece on the Forum Theater: Now that the theater is closed and presumably for sale, that block of Philly’s business district could totally transform. Inga Saffron wrote that these two blocks by the theater: “may be the most crucial to Philadelphia's future success:”

8. Point Breeze housing market blows up
Point Breeze is not the most expensive market in the city, but it’s probably the most talked about. In part this is because it’s the obvious “next” neighborhood to gentrify, and part because of the highly visible, and at times controversial, work of OCF. Anyway, lots of rehabs, gentrification, racial tension, some cool architecture, some awful architecture, lots of new residents, heated community meetings, new businesses like Sardine Bar, etc. etc. Such is the story of Point Breeze in 2012.

7. Penn starts developing Grays Ferry Crescent
When DuPont Marshall Labs closed down, this could have become yet another massive, blighted brownfield destined to sit around for years or decades like an anchor around a struggling part of the city. But instead the University of Pennsylvania bought this 25-acre site and is starting to develop it as its new data center. Alongside is the newly opened Grays Ferry section of the Schuylkill River Trail. Instead of being a blight this campus holds huge potential for exciting redevelopment.

6. Toll Brothers starts construction on 2400 South
The new Toll Brothers project at 24th and South was controversial in the neighborhood, but will bring lots of new housing and retail to create a hub at the corner of 23rd and Bainbridge. It’s a massive project, and arguably Toll Brothers’ investment in this area also enticed CHOP to purchase the old School District building. This overall transformation in the western reaches of South of South are going to be profound in the coming years.

5. Drexel breaks ground (lots of it)
This is the only item that was both on mine and Natalie’s list. But it deserves to be there. Under John Fry’s leadership, Drexel is building its new business school, broke ground on its project on Chestnut Street, and is moving head on other new projects that will change the face of University City. However, equally significant is the fact that Drexel is investing in Lancaster Avenue, and imitated some of the more subtle neighborhood investment strategies that Penn used, such as its community mortgage program.

4. The Parkway is really happening
In the City’s quest to bring new life back to the Parkway, attracting the Barnes was the critical piece to the puzzle. According to Meryl Levitz (GPTMC), a host of international art critics agreed that the Barnes moving to Center City Philadelphia was the art event of the year (in the world) in 2012. Pretty incredible! But that’s not all. There was a recent announcement that the ill-fated Barnes Tower will now be a mixed-use building with a Whole Foods. That means the existing Whole Foods site will be redeveloped. Also CCD’s Sister Cities Plaza renovation is beautiful. The Parkway has a ways to go before it will be the successful urban space we all dream of, but I think it’s over the tipping point now.

3. Major downtown sites developed
The block-long AAA building has been sitting vacant (except when it was briefly Bob Brady’s campaign headquarters for his mayoral run). Now a new construction tower is rising above the old building, filling in a key piece of Market Street. Around the corner the new tower is rising on the site of the Sidney Hillman Medical Center (for the record, I was opposed to demolishing it, but glad the new project moved ahead quickly). It also looks like 1919 Market is finally making progress, filling in an embarrassing vacant lot in the heart of downtown. These projects and others to follow will truly transform Center City. How? Second tier cities have big vacant lots in the center of downtown. Top tier cities don’t.

2. Sunoco Refinery Sold
When Sunoco was bought this year and the Philadelphia refinery was supposed to close, the city stood to lose 850 jobs. But it also looked like the city could have to deal with 1,400 acres of vacant, polluted land that could sit there for a long time. Deputy Mayor Alan Greenberger has talked a lot about the long-term potential of this and other industrial sites for redevelopment. However that discussion was postponed when Sunoco announced that a joint venture with Carlyle Group will keep the facility open. The new use for the site will involve natural gas from Marcellus Shale, which brings up a whole new set of interesting issues of how this may affect Philadelphia’s economy.

1. Eric Blumenfeld buys the Divine Lorraine (again)
Blumenfeld not only plans to finally invest in the Divine Lorraine, but he has a whole master plan for revitalizing north Broad Street, including the Metropolitan Opera House. His plan is big and visionary, and will probably take a long time, but we need some of that these days. If even just the Divine Lorraine gets redeveloped it will be a game changer for North Broad and the City. If the whole plan is realized it will be one of the largest American urban redevelopment projects of our time.

Honorable Mention: PREIT close to starting Gallery renovation
It’s only an honorable mention because I’m not fully convinced it’s happening quite yet. However, if PREIT moves ahead on this $100-million+ project to modernize the Gallery and open it up to Market Street, it could be huge. I spend as little time in shopping malls as possible, but from people I know who go to malls they tell me PREIT’s redo of Plymouth Meeting, Cherry Hill, and others were super successful. I think PREIT knows what they’re doing, and if so the Gallery could become a valuable downtown amenity, and maybe even a great urban space.


HcoRealEstate said...
This comment has been removed by the author.
PhillyCara said...

This one's a saver! I'll see how the city stacks up this time next year. Thanks for the great insight.