Travel to even a few major cities in America, and you’ll
see explosive real estate development in a variety of neighborhoods. Much of
the surge is allegedly attributed to Millennials, their desires, values,
and lifestyle. According to one article, 23 out of 25 country’s largest
cities are seeing growth specifically due college-educated adults under the age
of 45. Yet other reports completely contradict this view. The truth is,
the demographic is far too large and varied to operate as monolith. Thus, what
is important to understand is that a significant portion, rather
than all or none, of the demographic is adopting the urban lifestyle.
Indeed, the portion seems to be large enough to even inspire a new approach to
the modern skyscraper. It’s called the “vertical neighhorhood,” meaning a
mixed-use property trend. And one example that can’t be ignored just hit
the market.
FMC Tower at Cira Centre South is
Philadelphia’s first vertical neighborhood, and is a mammoth 862,000 square
foot that is impressive. Located at 2929 Walnut Street, the 385
million investment project is set to impact the city on a variety of
levels. A select group of insiders were privvy to an exclusive event that
included both a panel discussion with key design and architectural leaders on
the project as well as hard hat tour afterward. Hosted by Brandywine
Realty Trust, the development spearhead behind FMC, and AKA, the
company that will provide the residential portion of the project, the evening
provided a variety of insights.
The event and building seem to be another element to
further put Philadelphia back on the map.
Larry Korman, President of AKA and co-CEO of Korman
Communities stated during welcoming remarks at the panel, “Philadelphia is
truly undergoing a renaissance. We’ve hosted some of the most important
events in the country within a short span of time. The Pope has visited.
The 2016 Democratic National Convention was held here. Comcast is driving
new ideas, and spaces. The FMC Tower is another step in demonstrating the
compelling nature of this amazing city.”
Indeed it seems that the tower is a gateway
structure-of-sorts that will connect some of nation’s top universities and
hospitals and create an entirely new neighborhood in the process that may
actually shift Philadelphia’s center of gravity.
An 18 month project, the Tower is a slender building
engineered and designed by Pelli Clark Pelli Architects with public spaces and interiors
by Piero Lissoni Associati. The building is LEED certified and includes a large
elevated park which will serve as public space with event programming once
fully opened. Edward Asfour of Asfour Gouzy Architects which also worked
on the project said, “The park is designed to function as an extension of
public space, like piazzas in Europe. It literally engulfs and inspires.” In
fact more than 25% of the Tower is open space. Designed with sustainability in
mind, a variety of technology was used to create not only an aesthetically
pleasing, but also “intelligent” building. Storm water system includes storage
tanks and a filtration system to capture and pre-treat rain water before it’s
discharged into the city system meeting many Millennial/new era concerns and
values. Reduction of excess urban heat is achieved through the use of
light colors for roofing materials, paving, and planting. High efficiency
lighting and lighting controls are integrated throughout the building. Fresh
outside air is also supplied utilizing a heat recovery system for recaptured
energy from the exhaust air.
What seems to be compelling about the property are the
exposed lobbies, and unique and separate entrances to residential,
retail, and office spaces. Mark Shoemaker of Pelli Clark Pelli explained,
“The different lobbies actually create different identities. They are
integrated but separate. There are multiple entry points. Everything
generates motion and fluidity, but with a sense of calm.”
Once completed in early 2017, FMC will also include
restaurants and retail shops, but the residential space may be what captures
the most awe. Located from floors 30 to 46 is the collection of AKA
hotel, extended-stay, and traditional rentals and will be known as AKA
University City. Totaling 268 luxury hotel and apartment residences, guests and
tenants will be treated to panoramic views and 10-foot ceilings.
The design is modern yet, somehow, calming. The floor plan
of each is designed to be unique and very functional. True to the era of
customization and personal preference, one can select accommodations according
to color, furniture types, and more. Luxury features include Carrara
marble, and a true feel of the spirit’s brand can be experienced remotely via video.
Amenities will take on a new definition as this building
offers a full 28th floor of offerings complete with an outdoor
deck the full length of the building. Amenities will include a pool,
screening room, Technogym equipment, yoga studio, dedicated dining and
conference areas, a 3-D indoor golf simulator, and an indoor/outdoor
restaurant sure to to become a favorite given AKA’s dining locations as
consistent top picks by Food & Wine such as its latest, Rarest at
the company’s Washington Square .
AKA University City is also the first residential hotel
in Philadelphia to offers residents and guests exclusive access to its house
car, a 2017 Tesla
Model X, as a luxury transport amenity. Guests can reserve the
private driver service to take them anywhere within Philadelphia, 7 days per
week, for a small cost that ranges between a Taxi and Sedan Service.
Though some might say that developments such as these
help to create a greater divide between classes and incomes in a city, local
restaurateur Anthony Masceri who owns Plenty Cafe
said, “The challenges exist in some of the neighborhoods where inevitable price
increases both in rent and cost of goods in retail and food & beverage can
create a strenuous environment where some residents maybe are not in favor of
dramatic change and cost increases. But I think whenever you have such a large
corporation investing so much infrastructure in Philadelphia it will inevitably
create more business and jobs both directly and indirectly. It will also
attract talent form other cities who otherwise would not have considered Philly
an option to live and work.”
“There is significant investment from people from New
York,” he told me, “on all fronts both in real estate and food and beverage.”
Andrew Margulies, Vice President of Investments
at Marcus
& Millichap confirms, “Purchasing commercial real estate can be
a savvy diversification tool for most investment portfolios. When comparing
commercial real estate to the alternative yields in stocks, bonds and other
investments, the annual returns for commercial real estate properties can range
from 4% to 10% depending on the level of risk with each asset.”
Margulies added, “Over the past several years there has
been a significant shift in the investment strategies for many Institutional
and Private Buyers from suburban locations to urban, in-fill properties which
typically have high barriers to entry. As a result, prices have risen sharply
in areas with ‘vertical neighborhoods’ and yields have continued to compress
which means that buyers have less margin for error.”
“In many markets around the country, a mixed-use project
(ground floor retail with apartments above) in a downtown location can generate
annual returns 4% to 6% depending on the size of the market and the quality of
the project, compared to annual returns of 7% to 8% for a shopping center or
apartment building in a suburban location.”
Allen Shayanfekr, Founder and Principal of Sharestates
adds further clarity on the trend. “Vertical neighborhood investment is
completely dependent on the stage of growth. Cities like Manhattan for example
have peaked – meaning investors are paying a premium for what is supposedly the
most stable investment,” he said. “Our investment groups have found it
best to identify vertical neighborhoods that are still in the process of being
built up – meaning municipalities are constantly rezoning and allowing for additional
air rights. Ultimately this would deliver the best of both worlds – giving the
investor the ability to not only invest in a better market but also capture
long term upside in future development.”
One thing is certain, this particular development is
intended to accelerate growth in Philadelphia. Jerry Sweeney, President,
CEO and Trustee of Brandywine Realty Trust said, “We fully intend for FMC
to provide lasting value for the city. What we hope to have done is to create
new way to live, work, and play for 2017 and beyond.”
Source: Forbes.com
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