Friday, November 20, 2015

Grasso Holdings to develop Rivage site into mixed-use complex



Though it may sound cliché at this point, it appears the Rivage site in East Falls will finally get developed.

Grasso Holdings in partnership with Onion Flats, both Philadelphia real estate companies, plan to construct a $70 million, 6-story, mixed-use project that will have 200 apartments, a 200-space underground garage and 15,000 square feet of restaurant and retail space.

A rendering of how the project could look though parts of it are still being tweaked.

There are still some loose ends to tie up, but if the approval process is finalized by year-end or early next year, the developers expect to break ground next summer and have it completed by early 2018.

Keep your fingers crossed.

Develop the Rivage, and the site itself, have been nothing short of a saga. What has been lost in the fits and starts of getting the site developed can't quite be calculated, but this may be its best chance yet. What is hoped, as has been all along, is a little easier to measure.

“This project will be an anchor and incredible gateway for East Falls,” said David Grasso of Grasso Holdings. “It will be transformational for East Falls.”

A self-proclaimed optimist, a trait that runs through just about every developer, Grasso is confident the project that has been designed thus far, and under his guidance will get completed and be a financial success. That wasn’t always the case.

Grasso got involved with the Rivage, a reference to an old catering hall that had once been on the site, about two years ago. “It seems like forever now,” he said.

That’s when Onion Flats, who couldn't be reached for comment, decided it needed help with the project, according to Grasso.

In 2011, Onion Flats was selected by the Philadelphia Redevelopment Authority to construct a proposed $26 million, net-zero energy project on the property that originally would have stood five stories and have 126 apartments along with 8,700 square feet of retail space along Ridge Avenue. The development would have had 138 parking spaces.

The community, who was involved in the selection, was elated. Finally, the Rivage would be developed. But those hopes were dashed as they were before.

This wasn’t the first time the redevelopment authority had picked a team to develop the property that is at the intersection of Kelly Drive, Ridge Avenue and Calumet Street.

The redevelopment authority, which has controlled the property since 1998, selected a development team in 2007 but by the time it went to get funds to break ground, the financial crisis and credit crunch had killed the market for new construction. The plans stalled and the site reverted back to the redevelopment authority until the selection of Onion Flats.

Despite its strong location and size at nearly two acres, the site has failed to get developed for over a decade. Some observers blamed neighborhood groups, saying they had been demanding. Others had said the site was a challenge. According to Grasso, that is an understatement.

There are enormous grade changes, a portion of the property sits in a flood plane, there are nagging traffic issues surrounding it, as well as unsuitable and contaminated soils.

But that wasn’t all.

“The location doesn’t command the kind of rents you get in Center City, but you are still spending the same amount of money you would spend if you were building in Center City,” Grasso said.

Rents in that part of Philadelphia are about two-thirds of what they are in Center City.

Onion Flats had already designed the project when Grasso became involved.

The property was going to have a single-loaded corridor with apartments just on one side. Typically, as in a hotel, apartment buildings have double-loaded corridors with corresponding units on both sides of a hallway. Onion Flats had also designed it to be very energy efficient and constructed with modular materials.

Grasso spent the better part of a year studying the plans, getting a handle on using a modular building system and meeting with manufacturers of these materials. He also brought in Carlyle Group of Washington D.C., as an equity partner. It seemed as if things were moving along until, out of nowhere, they weren’t.

“We were about to close on the property and we were notified by PennDOT and the Streets Department that they had decided to rescind their verbal approval of the access plan we had been discussing with them for over a year and a half,” Grasso said. “We had received nothing but positive feedback from them but at the 11th hour, they changed their minds. Closing was in two weeks. What were we to do?”

The closing date couldn’t be postponed so they settled on the property and went back to work trying to figure out a solution for a better way to access the property. One idea to share an entrance with a nearby property owner didn’t work. There was also an issue of trying to find a way to ease some of traffic congestion that bottles up Ridge, Kelly and Calumet during rush hour. After some impasses, it was decided to have an entrance and exit on Kelly.

“That really opened a Pandora’s Box and started to unravel a lot of things,” Grasso said.

The parks department was worried about that design, as well as for the safety of pedestrians and vehicles along Kelly Drive, but it worked out.

The entrance was put at the far western edge of the site but that was problematic. That part of the property sits 13 feet below grade and a parking deck off of Ridge that was part of the design would now need a 13-foot high ramp from Kelly in order to access it. Other scenarios were considered, but all caused other issues, such as taking up a third of the parking or becoming way too expensive and, at the least, were unattractive.

“We had to study this issue long and hard,” Grasso said. “We came to the conclusion that the only way to make this really work was to increase the density of the project to generate more income. We would have to add 50 apartments and go from 150 apartments to 200. How would we do that? We would have to add two more floors to get the additional density that we needed, but that was problematic. The community would be upset about adding two more floors.”

Not only that, it changed the construction type from wood-frame to non-combustible materials such as steel and concrete. Once that happens, the cost to build goes up even more and that meant even more units would have to be added to offset those costs.

It was one thing after another, but Grasso stayed committed. It meant making a drastic decision, though.

“At that point, I said we needed to redesign the whole thing,” he said.

That was six months ago. Morris Adjmi Architects of New York was brought in and started from scratch. It had knowledge of all of the issues that were making the project difficult. Whatever was designed also needed to comply what the intent of the original plans, such as making it energy efficient and maintaining a certain scale, and had to be acceptable to the redevelopment authority.

Finally a design was worked out.

The development is now six stories and with double-loaded corridors. That allowed for the density that was needed and stayed below the level where wood-frame construction could be used, making it more economical to construct. The new design also kept the initial sustainability goals, has below-grade parking as well as pays more respect to the park across the street and Kelly Drive. Access issues have been worked out and final approvals in the works.

“I’m confident that we have finally wound up with a design that accomplishes a lot of things that we set out to do,” Grasso said.

While a small grocery store is part of the retail space, the last piece of the project Grasso wants to pay extra attention to is making sure he secures the “right” restaurant or cafe in the retail space that will face Calumet and Kelly. The plans are to make that a focal point of the whole project, which doesn't have a formal name yet.

“That will set the tone for the overall development,” he said.

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