Not content to let Philadelphia’s significantly lower housing prices sell themselves, a developer in the City of Brotherly Love is using Big Apple brokers to lure New York commuters to its properties.
Ron Blum, a longtime New Yorker, recently joined Philly-based Zukin Realty, owner of 210 Washington Square, which is now being converted into a high-end luxury condominium called the Ayer. In his new sales agent position, Blum plans to tout the advantages of living in Philadelphia and working in Manhattan.
A promotional event scheduled for Sept. 13 at the Center in Chelsea is indicative of developers getting more aggressive about attracting New Yorkers to Philadelphia to fill new projects in posh areas like Rittenhouse Square, already popular with former Manhattan residents, and up-and-coming neighborhoods along the Avenue of the Arts.
The promotion is being co-sponsored by Chelsea-based DG Neary Realty and the Greater Philadelphia Tourism and Marketing Corporation. Blum said he is expecting to draw about 80 prospective buyers who are all likely to be New York City residents.
Gil Neary, DG Neary Realty’s president and a friend of Blum’s from Fire Island, where each man has a summer home, said his company doesn’t own property in Philadelphia, but now mentions it as an option for customers priced out of Manhattan.
“If you don’t have the product they want, you can at least tell them where the product is,” he said. “It’s just like telling someone, ‘Hey, did you think about Brooklyn, or did you think about Harlem?’ And, helping a client find a residence in Philly could, down the road, lead to a sale in New York.”
In Rittenhouse Square, in the heart of Center City, high-end studios can go for up to $400,000 and one-bedrooms can fetch up to $1 million, about half of what comparable properties would fetch in Manhattan. Rittenhouse Square and Fitler Square, the neighborhood around the Art Museum and historic Old City, are desirable for their proximity to a thriving cultural scene and to the train stations. The commute to Manhattan is about 90 minutes.
Allan Domb, president of his own Philadelphia-based real estate firm, explained the city’s draw: “Philly has the restaurants, retail and theater of a big city, but it is all condensed into 25 blocks of a downtown neighborhood village.”
New Yorkers are not the only ones who are flocking to Philadelphia, of course. Center City’s population increased 12 percent from 1990 to 1995 and is expected to rise another 15 percent by 2010. But New Yorkers in particular are being lured by high-end condos that offer the kind of amenities and square footage that would cost significantly more in Manhattan.
Greg Dwornikowski, a vice president at the Philly-based Pitcairn Properties, said New Yorkers who work in finance are being drawn to Philly to live as well as work because of the city’s growth as a business hub. Cable operator Comcast, headquartered downtown, is developing an office tower with 1 million square feet of space to keep pace with the company’s growth. He also said the nationally renowned Children’s Hospital is undergoing a major expansion, as is the University of Pennsylvania. “The growth of all of these businesses have certainly been key to our sales.”
Many buyers, Dwornikowski said, also want to get into the Philly market sooner as opposed to later. “I think people, especially investors, have recognized, when you look up and down the East Coast, that Philadelphia is an anomaly. It’s significantly cheaper than Boston, New York and Washington, and people think this gap in pricing will close soon.”
Pitcairn converted the Ellington, a 1920s-era former office building, into 160 luxury condo units last year. There are six residents there who commute to New York, according to Heidi Urena, who is handling marketing for the development. Urena added that interested buyers from New York come into the sales office on a weekly basis and many are attracted to the complex’s bells and whistles.
In addition to adjacent parking, the Ellington, a Center City building at 1500 Chestnut Street, offers a 24-hour concierge, a state-of-the-art fitness center and a club room complete with plasma-screen television and a library. Dwornikowski said the complex is currently 80 percent sold out, and units range from $555,000 for a one-bedroom to $1.3 million for a three-bedroom duplex penthouse.
A decade-long tax abatement for new and renovated residential buildings, which expires this year, was a major catalyst for the city’s revival, said Craig Spencer, founder and CEO of the Philadelphia-based development company the Arden Group.
Former mayor Ed Rendell also cleaned up the town during his tenure from 1992 through 1999. He lent his support to Center City’s special services, which brought additional trash removal, street cleaning and security patrols, among other things, to the area. Now, the Avenue of the Arts, which boasts a collection of the city’s premier restaurants and cultural centers — among them the Kimmel Center, Merriam Theatre, Wilma Theatre and the Academy of Music — is getting new residential development. Spencer said that by 2009 there will be more than 2,000 units on the lengthy street, which extends from Glenwood Avenue in the north to Washington Avenue in the south.
Spencer’s company is behind the Residences at the Ritz-Carlton, Philadelphia, a luxury condominium complex expected to be completed by 2008. He said that the Avenue of the Arts (where the Ritz is located) could soon challenge Rittenhouse Square as Philly’s hottest spot.
The Ritz will be the tallest residential building in the city when it’s finished. One-bedrooms will hit the market at $650,000 to $750,000, two-bedrooms from $800,000 to $1.2 million, three-bedrooms from $1.5 million to $3 million and penthouses for up to $12 million. Spencer said the building will feature a dramatic custom-designed glass curtain wall and crystal spire. At an estimated cost of $300 million, the development is the most expensive residential building the city has ever seen.
Developing in Philly is also a bargain compared to Manhattan. While Spencer acknowledged that it’s become more costly to develop there in the past few years — he said the cost of commodities has risen — construction costs are 10 to 15 percent cheaper there than in Manhattan. “The biggest difference between New York and Philadelphia is land,” he said. “New York can be up to 10 times more per FAR [floor-area ratio] foot.”
For renters, Philadelphia residential prices also beat out Manhattan, with asking prices at $25 per square foot for a rental with a doorman, as opposed to $65 per square foot for a similar apartment in Manhattan.
According to Luis Cozza, a principal at the real estate firm Time Equities who resides in Center City and commutes to Manhattan, studios in Philadelphia average $1,000 per month and one-bedrooms go for $1,500 per month. Last year, the average monthly rent for a Manhattan studio was $1,825, according to Citi Habitats. The average rent for a one-bedroom was $2,477.
“There are a lot of people locked out of the Manhattan real estate market who are still better off putting their money into some real estate,” Neary noted. “We’d all like to live in a penthouse overlooking the park, but it’s good to have an alternative.”