PHILADELPHIA | River Walk | Two Towers | 363 FT & 315 FT | 32 FLOORS & 28 FLOORS

[summersm343]

^^I meant to say $2200-$2300+, that was a typo. Correct that 700+ square feet for a one bedroom in 1911 Walnut would easily fetch $2500+. It all depends on views though too.

Condos here will easily be $1M+, depending on size. This building has potential too to fetch the highest price-per-square foot in the city for a condo. That's due to the location and the height of the tower. Those top floor, 3-bedroom condos could easily fetch $20M+. I doubt many millennials would be buying these... maybe those in their 30s. The rest would be wealthy empty nesters/retirees or suburbanites looking for a pied-a-terre. They're aiming for about 60 condo units here, but I would bet it would be less than that as people will likely buy and combine condos like what is happening at One Riverside.

There is a lot of money in the Philadelphia metro for sure. The metro ranks 7th in the country for millionaires after NYC, LA, Chi, San Fran, DC and Boston. This ranks ahead of markets like Houston, Dallas, Seattle, Atlanta, Miami, etc. which are seen as wealthy places. Philly outranks them all.

[1487]

Originally Posted by summersm343

The market is not saturated, and there are no signs of the market becoming saturated - not sure where you got this info from. It SEEMS as though the market has slowed down, but it hasn't. There have just been a dozen or so apartment buildings that have finished up or are finishing up around the same time. One Water Street, the Collins, Griffin, Dalian, etc. are all meeting their lease-up goals. The expectation for a new luxury highrise in Philadelphia is 13 months until lease up.

1919 Market, 3737 Chestnut, Icon, etc. all leased up AHEAD of expectations. 1919 Market is expected to lease up in 10 months - which is way ahead of goal.

Other buildings like Touraine, Icon, 2116 Chestnut, 3737 Chestnut, 1900 Arch, 2040 Market etc. are all fully leased up.

The only two buildings to struggle that were recently completed are Tower Place, and 3601 Market. I wouldn't say that is from market saturation though, but rather from location (Tower Place) and location and ridiculous asking prices on rent (3601 Market) due to the location. Evo struggled a little at first as well, but that was because they missed their construction deadline for completion to start leasing before the school year started.

I still think there is room for more apartment buildings, especially as the job base and population are growing in Philadelphia. There is still demand.

The one thing about this development though, is 600 units all at once will be tough to absorb within 13 months. Philadelphia is still a slow growth market. I think if they take the East Market route, and start one tower first, then start of the second tower 13-15 months out, this will allow the first tower to lease up before the second tower is complete.

where is tower place?

I wasn't saying I knew for sure the market was saturated. I was making that comment based on numerous articles I've seen speculating that we are close to oversupply. The CCD had a paper about this recently suggesting that without significant increase in job and population growth there would be a glut in apts. Now the facts on the ground may not support this, but many have predicted we are getting closer to being in a market that is going to favor tenants over landlords.

[iheartphilly]

Originally Posted by 1487

where is tower place?

I wasn't saying I knew for sure the market was saturated. I was making that comment based on numerous articles I've seen speculating that we are close to oversupply. The CCD had a paper about this recently suggesting that without significant increase in job and population growth there would be a glut in apts. Now the facts on the ground may not support this, but many have predicted we are getting closer to being in a market that is going to favor tenants over landlords.

I would think "drivers" such as continued job growth would be the biggest factor to fill up this newly constructed apartments. Tower Place to me is kinda in a no man's land since they are on the fringe and not in the core of center city. I think the best thing going for it is the proximity to the broad street subway line.

http://www.towerdev.com/tower-proper...wer-Place.html

[jsbrook]

Originally Posted by summersm343

^^I meant to say $2200-$2300+, that was a typo. Correct that 700+ square feet for a one bedroom in 1911 Walnut would easily fetch $2500+. It all depends on views though too.

Condos here will easily be $1M+, depending on size. This building has potential too to fetch the highest price-per-square foot in the city for a condo. That's due to the location and the height of the tower. Those top floor, 3-bedroom condos could easily fetch $20M+. I doubt many millennials would be buying these... maybe those in their 30s. The rest would be wealthy empty nesters/retirees or suburbanites looking for a pied-a-terre. They're aiming for about 60 condo units here, but I would bet it would be less than that as people will likely buy and combine condos like what is happening at One Riverside.

There is a lot of money in the Philadelphia metro for sure. The metro ranks 7th in the country for millionaires after NYC, LA, Chi, San Fran, DC and Boston. This ranks ahead of markets like Houston, Dallas, Seattle, Atlanta, Miami, etc. which are seen as wealthy places. Philly outranks them all.

Hopefully, they get the show on the road, and we see exactly what they list the units for at both Riverwalk and 1911 Walnut sooner rather than later!

[summersm343]

Originally Posted by 1487

where is tower place?

I wasn't saying I knew for sure the market was saturated. I was making that comment based on numerous articles I've seen speculating that we are close to oversupply. The CCD had a paper about this recently suggesting that without significant increase in job and population growth there would be a glut in apts. Now the facts on the ground may not support this, but many have predicted we are getting closer to being in a market that is going to favor tenants over landlords.

Tower Place is the old State Office building at Broad and Spring Garden that Blatstein redeveloped into apartments a few years back.

The market is not seeing an oversupply - we're not even close. That's the typical negadelphian, fear we're not good enough attitude coming out in those articles. Philadelphia is a generally underserved apartment market for a city it's size.

The current vacancy rate in Philadelphia is about 3.5%. We could have another 10 apartments buildings built with zero occupancy/leases and our vacancy rate would still only be about 4-5%. That is EXTREMELY good for a major city. Most "fast growing" markets like Atlanta, Miami, Houston, Dallas, etc. have ~90-92% apartment occupancy rates currently. Philadelphia is sitting around 96%. The majority of new buildings have been meeting their lease up numbers. Mack-Cali Realty group backing out of 709 Chestnut has little to do with the market. I suspect they weren't able to get financing and get things going, so instead of looking like idiots, they tried to blame the "market." Basically what we're seeing is financing tightening up across the country - this isn't something unique to Philadelphia right now.

Philadelphia is growing in jobs, and the market is simply keeping up with that pace. Apartment development is not outpacing job growth. This is indeed a slow growth market however. A city of our size should be growing faster. I don't buy into the doom-and-gloom attitude of Paul Levy and the Center City district that if we don't grow jobs faster and build a better school district, that our city will fall into disrepair again.

Now, I do believe we need a better business tax structure to draw in and grow more jobs in the city, so we can have a faster growth market... but I don't think they city is going to start losing again. The market across the country is shifting back to a urban lifestyle. These are preference of life changes we are seeing which is driving booms in cities across the country. It's a more European way of thinking and living. A better school system could of course be a positive as well, but this isn't a make or break. Cities like LA, San Francisco and NYC have weak school systems, but still draw in a lot of people. Where these cities lack in public schools, they excel in private schools.

On top of there still being a demand for apartments, there is a hot market for condos and townhomes right now in the city. There is also a shortage and high demand for office space, and hotel rooms in the city.

[1487]

Originally Posted by summersm343

Tower Place is the old State Office building at Broad and Spring Garden that Blatstein redeveloped into apartments a few years back.

The market is not seeing an oversupply - we're not even close. That's the typical negadelphian, fear we're not good enough attitude coming out in those articles. Philadelphia is a generally underserved apartment market for a city it's size.

The current vacancy rate in Philadelphia is about 3.5%. We could have another 10 apartments buildings built with zero occupancy/leases and our vacancy rate would still only be about 4-5%. That is EXTREMELY good for a major city. Most "fast growing" markets like Atlanta, Miami, Houston, Dallas, etc. have ~90-92% apartment occupancy rates currently. Philadelphia is sitting around 96%. The majority of new buildings have been meeting their lease up numbers. Mack-Cali Realty group backing out of 709 Chestnut has little to do with the market. I suspect they weren't able to get financing and get things going, so instead of looking like idiots, they tried to blame the "market." Basically what we're seeing is financing tightening up across the country - this isn't something unique to Philadelphia right now.

Philadelphia is growing in jobs, and the market is simply keeping up with that pace. Apartment development is not outpacing job growth. This is indeed a slow growth market however. A city of our size should be growing faster. I don't buy into the doom-and-gloom attitude of Paul Levy and the Center City district that if we don't grow jobs faster and build a better school district, that our city will fall into disrepair again.

Now, I do believe we need a better business tax structure to draw in and grow more jobs in the city, so we can have a faster growth market... but I don't think they city is going to start losing again. The market across the country is shifting back to a urban lifestyle. These are preference of life changes we are seeing which is driving booms in cities across the country. It's a more European way of thinking and living. A better school system could of course be a positive as well, but this isn't a make or break. Cities like LA, San Francisco and NYC have weak school systems, but still draw in a lot of people. Where these cities lack in public schools, they excel in private schools.

On top of there still being a demand for apartments, there is a hot market for condos and townhomes right now in the city. There is also a shortage and high demand for office space, and hotel rooms in the city.

Its all good news from my perspective and I tend not to believe the agenda driven negative predictions of Levy and CCD. I have read other stories saying that too much of the new product is aimed at the upper end but that is probably the case in most cities with high construction costs. Perhaps less applicable in southern cities with cheap land and labor.

[Flyers2001]

Philadelphia's growth is slower than some other cities, but that's not necessarily a bad thing. If the housing market stays pace with the job market or vice versa, there will not be a "bubble burst."

The steady growth of Meds/Eds and Comcast/Technology in our city is huge. Hopefully the city can do its part to help private growth. ::Business Tax, Fix::

[summersm343]

^^Agree 100%

[SEFTA]

edit

[Knight Hospitaller]

Originally Posted by Flyers2001

Philadelphia's growth is slower than some other cities, but that's not necessarily a bad thing. If the housing market stays pace with the job market or vice versa, there will not be a "bubble burst."

The steady growth of Meds/Eds and Comcast/Technology in our city is huge. Hopefully the city can do its part to help private growth. ::Business Tax, Fix::

I've long said something similar. We've never been a boom town, and, therefore, not really a "bust" town. Not that we haven't had highs and lows, but they are not overly dramatic pendulum swings and are more tied to macro economic conditions. It can be a good thing to plod along. Slow and steady wins the race.

[Philly Fan]

Originally Posted by Knight Hospitaller

I've long said something similar. We've never been a boom town, and, therefore, not really a "bust" town. Not that we haven't had highs and lows, but they are not overly dramatic pendulum swings and are more tied to macro economic conditions. It can be a good thing to plod along. Slow and steady wins the race.

Put another way, after 334 years and counting, I guess you could say that Philly has staying power.

[1487]

Originally Posted by Flyers2001

Philadelphia's growth is slower than some other cities, but that's not necessarily a bad thing. If the housing market stays pace with the job market or vice versa, there will not be a "bubble burst."

The steady growth of Meds/Eds and Comcast/Technology in our city is huge. Hopefully the city can do its part to help private growth. ::Business Tax, Fix::

there is no magic fix, just shifting of the burden. The problem with that is whomever feels the brunt of the increase is against the "fix".

[summersm343]

Originally Posted by 1487

there is no magic fix, just shifting of the burden. The problem with that is whomever feels the brunt of the increase is against the "fix".

The fix is to lower the wage tax, and either lower or get rid of the business privilege tax and the use and occupancy taxes entirely. This would go a long way. In exchange, we raise commercial property taxes. This is the model NYC follows, and it obviously works very well.

[Knight Hospitaller]

Originally Posted by Philly Fan

Put another way, after 334 years and counting, I guess you could say that Philly has staying power.

True! I have to modify my comments, however, because we clearly were a boom town at the beginning - from nothing to second city of the Empire in a relatively short period.

[City Wide]

Originally Posted by summersm343

The fix is to lower the wage tax, and either lower or get rid of the business privilege tax and the use and occupancy taxes entirely. This would go a long way. In exchange, we raise commercial property taxes. This is the model NYC follows, and it obviously works very well.

I don't think comparing the business climate between NYC and Philly is really fair, not apples to apples.
And just to keep the non skyscraper talk going----its always easy and cheap to come up with a list of bad taxes, and/or taxes that hold back development, but I would also add to this mix that you've got to also factor into the conversation how our City is run, how well does it spend the money it has. And in the case of Philly I would say its run poorly. For the last number of years the City has been in a period of increasing revenue, so there hasn't been much pressure to change, but not to sound too much like Lord Orange, I believe there is great waste in how the City is run. Cut out this waste and suddenly cutting taxes and/or increasing services (like school funding) becomes possible.
Also, in any attempt to attract new business to our fair city, we also need to acknowledge that 'quality of life' issues plays a big part.

[El Duderino]

Originally Posted by City Wide

Also, in any attempt to attract new business to our fair city, we also need to acknowledge that 'quality of life' issues plays a big part.

What quality of life issues are you referring to? Perhaps I'm misinterpreting your comment, but most people I know who live in major East Coast cities (NYC, Boston, DC) all think that the quality of life in Philly is great - between the cost of living, access to other cities, and the depth and breadth of cultural/social/music/art/dining offerings here, it seems that the "quality of life" is one of the best things that Philly has going for it.

There are clearly tax issues limiting the city as a business destination, but I've head nothing but effusive praise for Philly from young-to-youngish professionals up and down the East Coast and beyond.

[1487]

Originally Posted by summersm343

The fix is to lower the wage tax, and either lower or get rid of the business privilege tax and the use and occupancy taxes entirely. This would go a long way. In exchange, we raise commercial property taxes. This is the model NYC follows, and it obviously works very well.

as you know that has been illegal in PA so it's not like it's an option that was on the table but being ignored. So easier said than done. The recently passed legislation will allow differentiation between commercial and residential rates- but I believe they will only be able to raise the commercial rate by 15% relative to the residential rate.

[1487]

Originally Posted by City Wide

I don't think comparing the business climate between NYC and Philly is really fair, not apples to apples.
And just to keep the non skyscraper talk going----its always easy and cheap to come up with a list of bad taxes, and/or taxes that hold back development, but I would also add to this mix that you've got to also factor into the conversation how our City is run, how well does it spend the money it has. And in the case of Philly I would say its run poorly. For the last number of years the City has been in a period of increasing revenue, so there hasn't been much pressure to change, but not to sound too much like Lord Orange, I believe there is great waste in how the City is run. Cut out this waste and suddenly cutting taxes and/or increasing services (like school funding) becomes possible.
Also, in any attempt to attract new business to our fair city, we also need to acknowledge that 'quality of life' issues plays a big part.

All that stuff sounds good, but it's not based in reality. City is better run than the state- hence the better bond rating. Major costs are labor and pensions and debt- period. None can be addressed easily or with some magic wand. The government today is paying the price for poor decisions made as far back as the 70s in terms of pensions. There is no easy, legal solution to this problem and it's a major consumer of revenue. "Waste, fraud, abuse" are always mentioned by politicians who lack a plan or won't face reality. City budget is over $4B- you aren't going to find significant amounts of money that would lead to NOTICEABLE tax cuts by eliminating those things. If it was that easy it would've been done and taxes would be low.

[1487]

Originally Posted by El Duderino

What quality of life issues are you referring to? Perhaps I'm misinterpreting your comment, but most people I know who live in major East Coast cities (NYC, Boston, DC) all think that the quality of life in Philly is great - between the cost of living, access to other cities, and the depth and breadth of cultural/social/music/art/dining offerings here, it seems that the "quality of life" is one of the best things that Philly has going for it.

There are clearly tax issues limiting the city as a business destination, but I've head nothing but effusive praise for Philly from young-to-youngish professionals up and down the East Coast and beyond.

a few would be lack of street cleaning (which other cities have apparently) and lack of proper funding for parks and rec centers- Philly lags competing cities by a significant margin per capita. Hopefully Kenney addresses both.

[Insoluble]

Originally Posted by 1487

a few would be lack of street cleaning (which other cities have apparently) and lack of proper funding for parks and rec centers- Philly lags competing cities by a significant margin per capita. Hopefully Kenney addresses both.

Don't forget schools. That's a big one. The other two you mentioned are definitely important as well. There is a noticeable difference between QOL issues in Center City/University City and the outlying neighborhoods though. I don't think there are any real big "quality of life" issues in the more central parts of the city.

Also, don't forget that job growth has outpaced population growth in the city for the past few years. Business tax reform would be great and all, but we still seem to be doing pretty well at the moment.