Friday, April 25, 2014

$60-$70 million Chestnut Street residential development set to begin




In what would transform a bedraggled slice of central Philadelphia, demolition crews are weeks away from dismantling nearly an entire side of the 1100 block of Chestnut Street, part of a $60 million to $70 million redevelopment tapping the soaring apartment market and surging appetites to shop and live east of Broad Street.

Zoning approvals and permits are in place, additional property was acquired as recently as Thursday, and a large section of sidewalk has been closed as lead development partner Brickstone Co. prepares to build a complex of loft-style apartments above towering, three-story retail spaces.

The development will stretch almost the length of the south side of Chestnut between 11th and 12th Streets, Brickstone managing partner John J. Connors said.

Connors would not discuss what tenants are being courted, but the project could include a supermarket if rumors swirling among civic activist circles are true.

The project is pushing forward just months after Brickstone purchased from separate landlords a slew of mismatched storefronts and a long-decommissioned department store on the two-lane street, a once-thriving commercial stretch orphaned despite Center City's surrounding redevelopment boom.

If all goes as planned, by next summer, pedestrians will no longer pass a blur of concrete facades, vacant storefronts, and discount merchants that had made this one of the less-traversed, if more intimately walkable, blocks of Center City. Brickstone's vision is for a Brooklyn-style six-story redevelopment catering to young, affluent urbanites.

The properties under Brickstone's control as of Thursday - 1116 to 1128 Chestnut - will be refashioned into 96 apartments and 80,000 square feet of retail through new construction as well as restoration of one large, historically arresting building.

Brickstone was hoping to acquire even more property, which would make it a $68.5 million project of 115 apartments and 90,000 square feet of retail, Connors said Thursday.

"What we have is the hole in the doughnut," Connors said of the block's proximity to Rittenhouse Square a mile to the west, big changes afoot nearby on Market Street East, redevelopment near Washington Square, and the blazing 13th Street corridor of Midtown Village.

"I challenge you to find a neighborhood with better demographics, income, education, age, or otherwise," Connors said.

Connors, who in the late 1980s helped refurbish the old Lit Bros. department store on the 700 block of Market Street - an example of meticulous historic restoration, and location of Brickstone's Philadelphia office - said the company had its eye on 1100 Chestnut for years but had been thwarted until recently in buying the properties it coveted.

"We've been tracking it for years," Connors said, even losing a bid in 2012.

A large chunk, however, including the six-story former Oppenheim Collins & Co. store, hit the market after a lender took possession of it. Brickstone picked up the batch, 1122 to 1128, last June.

The company then bought 1118 to 1120 in October, and sealed a deal for 1116 on Thursday, Connors said. One more deal was in the works, he said.

The project would reimagine the lost luster of Chestnut, while building on redevelopment at the Gallery, where a major new retailer was announced Thursday, plus buzz surrounding a proposed casino at Eighth and Market Streets and other reinvestment east of Broad.

"Chestnut was once the preeminent retail and residential street in town," Connors said, citing a 2005 report by the University of Pennsylvania School of Design. "Chestnut Street once had status, glamour, and allure."

The project, which requires no Historical Commission review, has been blessed by the Washington Square West Civic Association, said zoning committee chair Jonathan Broh.

"We thought it was a good development," said Broh, an architect, who called the loft design unusual and said the block had "always felt underdeveloped" until now.

Brickstone, whose financing partner is a major Wall Street investment bank whom Connors declined to name publicly, is pursuing a market of high returns on leased housing as the market has tightened for first-time home buyers. A record number of new rentals are flooding Center City.

"People are trying to find opportunities to develop here," Broh said of Washington Square, whose neighborhood bounded by Broad and Seventh Streets, and South and Chestnut Streets, had historically been untouched by such large-scale development.

Brickstone has spent $2.5 million on asbestos removal. Demolition cranes arrive in a few weeks.

All buildings will come down except for the Oppenheim building. In their place will rise a single structure that connects to and emulates the height, architecture, and other features of the Oppenheim building. In all, there will be four visible storefronts.

No walls will separate the large retail footprints being crafted from the basement through the second floors. Residential units will occupy floors three through six and will start at $2,000 a month for a one-bedroom apartment.

The Oppenheim store, a mid-1920s-era building, has towering concrete columns and ceilings 21 feet high on street level, 15 feet high on the second floor, and 14 feet in the basement.

And despite a battered interior, it is in better shape than was Lits, which had a 35,000-square-foot hole in the roof when work began, Connors said.

"There were mushrooms in the basement and subbasement as big as basketballs," Connors said. "There were six-inch stalagmites. It looked like Village of the Damned."

Each new storefront will be narrow by suburban retailing standards. But the sales floors will extend hundreds of feet to Sansom Street, where there will be other entrances and streetscaping.

Larry Steinberg of CBRE|Fameco is representing Brickstone in courting retailers.

Source: Philly.com

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