Real estate magnate Ziel
Feldman’s properties are in some of Manhattan’s poshest neighborhoods.
Now, he wants to build in one
of Philadelphia’s most destitute.
Feldman’s HFZ Capital Group
is part of a consortium of New York investors planning a complex of homes,
offices, labs, and start-up work spaces in what is now an enclave of vacant
warehouse properties and empty lots around Amtrak’s North Philadelphia station.
The $162 million first phase
of North Philadelphia District LLC’s proposal calls for two new buildings on
what is now the train station’s parking lot, and the renovation of a hulking
dilapidated factory site nearby, said Michael Shenot, who is leading the
project as a managing director with the real estate services firm JLL, in an
interview Friday.
Work could begin before the
end of the year if the investor group is granted its request for a $20
million state redevelopment grant to cover parts of the project, said Shenot,
who previously participated in developing the World Trade Center Transportation
Hub. He is now working on an expansion of New York’s Penn Station involving a
historic postal building to its west.
If the group’s plan is
successful — no sure thing in an area that has shown few apparent signs of
readiness for revitalization — its impact on this North Philadelphia
neighborhood could be enormous, said Harris Steinberg, who directs Drexel
University's Lindy Institute for Urban Innovation.
The site could capitalize on
the train station’s citywide access via SEPTA’s Regional Rail system and its
Amtrak link to New York, as well as its location barely a half-mile north of
Temple University’s main campus and just a few blocks south of its Health
Sciences Center complex, Steinberg said.
“This could be the holy grail
that could jump-start revitalization in North Philadelphia,” he said. “Whether
the market is there for this kind of development is another question.”
Development
Plans Near North Philadelphia Station
SOURCES: Investor presentation; Pa. Redevelopment Assistance
Capital Program grant application; Michael Shenot, JLL; aerial image by Google
Earth Pro
Staff Graphic
The “North Station District,”
as its planners call it, would sit within the fifth poorest of Philadelphia’s
46 zip codes, where the median income is $23,380, according to 2015 U.S. Census
estimates.
The project would represent a
second recent shot at revitalization linked to the Beaux Arts station, across
Broad Street from the former gym — now a discount furniture shop
— where heavyweight boxing champion Joe Frazier trained.
In the late 1990s,
Philadelphia’s Posel Management Co. unveiled a new $7 million shopping center,
anchored by a suburban-sized Pathmark grocery store, just outside the station’s
entrance. That Pathmark store is now a vacant box, shuttered by the 2015
bankruptcy of A&P, its parent company.
The new proposal’s
train-station orientation recalls steps taken by Brandywine Realty Trust to
build its Cira Centre office tower on property just north of 30th Street
Station back in the early 2000s, when the area — then a no-man’s land
between Center City and the Drexel University campus — seemed an unlikely
spot for high-end development, Steinberg said.
It also echoes the projects
now springing up on other vacant and disused University City parcels, such as
the Schuylkill Yards development planned west of
30th Street Station by Brandywine Realty Trust and Drexel, and uCity Square,
which Wexford Science & Technology LLC is building with the
University City Science Center, he said.
Like those projects, the
North Station proposal includes a mix of uses complementary to nearby
university campuses, including apartments aimed at young professionals and work
spaces for those in technological and creative fields.
“You’ve heard of Oakland
being hot, you’ve heard of Brooklyn being hot,” Shenot said. “There’s no reason
these same trends wouldn’t apply in North Philadelphia, particularly given the
existing institutional investment in that neighborhood.”
The project appears to be a
break from business as usual for Feldman's Manhattan-centric HFZ, which is
perhaps best known as the owner of One Madison Park, a tall, svelte condo tower
in the Flatiron District where NFL quarterback Tom Brady and wife Gisele
Bündchen, as well as News Corp. founder Rupert Murdoch, are said to own units.
Joining HFZ on the
Philadelphia project are the Arete Group, a New York-based developer whose
principals include attorney Michael Bailkin, previously a New York City
government official, and former Trenton Mayor Douglas Palmer; and Amtrak, which
holds a minority stake in the venture. The investment company Merchant Equity
Group LLC of New York is a part owner of the development site.
The group envisions up to 1.7
million square feet of residential, office, and retail space at full build-out,
bounded by Broad Street and 17th Streets, between Glenwood and Indiana Avenues,
according to its application for a state Redevelopment Assistance Capital
Program grant.
The grant is for work on
nonresidential portions of the project’s first phase, which would center on a
roughly four-acre parking lot north of the train station that was acquired from
Amtrak and SEPTA for $2.1 million, Shenot said. About $7 million had been spent
by the group over several years on site surveys, engineering studies, and other
preconstruction work prior to the acquisition, he said.
Planned for the site are a
six-story, 105-unit apartment building and a 21-story tower with 128 apartments
on nine floors above about 214,000 square feet of offices, Shenot said. Both
buildings would feature ground-floor retail spaces that open onto a pedestrian
plaza.
Also part of the initial
phase is the transformation of the 180,000-square-foot decayed industrial
building on an adjacent parcel to the west into work spaces for start-ups and
light manufacturers. The developers have that parcel under agreement, Shenot
said.
Improvements to the station
itself include the restoration of an underground tunnel linking it to SEPTA’s
Broad Street Line subway platforms just to the south, he said.
Completion of the apartment
building and factory rehab are envisioned in September 2019, with the
residential-and-office tower being finished in October 2021, according to the
grant application.
Jackson Marsteller, a New
York real estate market analyst with the CoStar Group, said the buildings’
apartments could attract tenants from among the physicians and others working
at Temple’s Health Sciences Campus, while also appealing to a broader base of
area residents unable to afford high-end living spaces in pricier parts of
Philadelphia.
“You’re right next to the
train, which then takes you straight to work,” said Marsteller. “Why not be in
a nicer place that’s a little bit edgier?”
Later phases of the project
are seen in an investor presentation reviewed by the Inquirer to include an
area now occupied by dozens of individually owned rowhouses — some of them
vacant, windowless shells — and empty parcels on the 2900 blocks of
Hicks and Sydenham Streets.
At full build-out, the
development footprint also is seen as including what is now a cluster of vacant
lots and industrial properties under private and city ownership east of 16th Street
south of Indiana Avenue and a portion of Posel Management’s shopping center.
Shenot declined to discuss
any possible further land acquisitions. A spokeswoman for Philadelphia
planning and development director Anne Fadullon had no immediate comment on the
plan.
Marsteller said seeing
the project through could pay off for the development team, which likely sees
Philadelphia as a respite from the competition among international investors
that is making real estate deals less lucrative on their home turf in New York.
“They’re getting a higher
return based on the risk here than they would be able to at one of their condo
developments in Manhattan,” he said. “They feel this asset will appreciate over
time.”
Source:
Philly.com
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