At a cost of $230M, first phase of Market East to get under way

Demolition of what many know as Girard Square in Center City will begin this summer and construction of a new development called East Market will begin in earnest.

The 4.3-acre site takes up an entire city block bound by Market, Chestnut, 11th and 12th streets. The building fronting Market Street will be taken down and the first phase will rise in its place. It will total $230 million and encompass 650,000 square feet.

That initial phase will include constructing a 17-story tower that will have the first two levels dedicated to 160,000 square feet of retail space and the remainder an apartment structure with 322 units. It will also involve renovating the 200,000-square-foot family court building and preparing that for retail space on the street level and office space above.

The market will dictate when the subsequent phases get developed and how, said Daniel Killinger, director of development at the union-backed National Real Estate Development, one of the partners in the project.

NREA is part of National Real Estate Advisors, which had previously been known as the National Electrical Benefit Fund. It was involved in the construction of the new apartment tower at 2116 Chestnut St.

The other stakeholders in East Market include Joss Realty Partners, Young Capital and SSH Real Estate.

The pace of development will be steady and respond to market forces.

“What’s important to use is to be bold in our vision but also successful in each of the phases,” Killinger said.

An interesting aspect of the development, which I have written about before, is how it is designed. The block will be bifurcated and a pedestrian walkway will stretch from Market Street all the way to Chestnut Street and Midtown Village. Retail and restaurants will line the walkway.

The developer also plans to relocate all of the service activities, such as trash, that happen along Ludlow Street and Clover Lane, so that vehicular traffic can move freely through those alleys.

At build out the project will cost an estimated $500 million and total 2 million square feet.

“It’s been a long-time coming,” said Michael Young of Young Capital. “Finally, we’ve been able to bring in a strong partner with the IBEW to allow us to go forward. You need someone who can help for the long-term and that is what they do.”

Young, Joss Realty and SSH arranged a 75-year lease with an option to extend it another 75 years, on the site in 2008. At one point, Target was going to move in but that fell through. The recession also delayed progress.

However, those six years weren’t all a loss. A zoning ordinance to allow digital billboards along East Market was put in place as a revenue generator for landlords, a financial partner with deep pockets was brought in and urban living in apartments has taken off in Philadelphia and many other metropolitan areas.

“There’s no question that timing gives you an advantage in the real estate development industry,” Young said.

Source: Philadelphia Business Journal