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It's Happening: Breaking ground at the Divine Lorraine

What does it take to redevelop a massive, beautiful and long-vacant Philadelphia landmark? Sixteen years of financial and political wrangling, a welter of speeches from some of the city’s top politicians and developers, and no less than six very shiny ceremonial shovels.

On September 16, a large crowd gathered at Broad and Fairmount to celebrate an event many Philadelphians thought would never actually materialize: the redevelopment of the 10-story Divine Lorraine Hotel.

Designed by noted Victorian-era architect Willis Hale -- many of whose Philly buildings were later reviled for their ornate "Philadelphia grotesque" style and demolished -- the Divine Lorraine was completed in 1894 at a time when city buildings without elevators rarely reached more than three or four stories high. It’s an architectural landmark as well as an economic and cultural one, serving first as apartments and then as a hotel for Philly’s richest denizens in the manufacturing boom of the early 1900s. Later in 1948, it was purchased by controversial religious leader and social reformer Reverent Major Jealous Divine and became the city’s first racially integrated hotel.

The site was closed and abandoned in 1999, gutted of its furnishings and left looming over North Broad with more graffiti than windowpanes. Developer Eric Blumenfeld of EB Realty Management Corporation purchased the site in 2012. A few years later, thanks to another $44 million in financing through partnerships with real estate lender Billy Procida, the PRA, the State of Pennsylvania and PIDC, construction is finally commencing on a new mixed-use incarnation.

The 21st century Divine Lorraine will feature 109 apartments and 20,000 square feet of retail and restaurant space. As Mayor Michael Nutter noted in his remarks at the groundbreaking, developer Robert Levine is also building two new apartment towers and a supermarket on the plot behind the old hotel.

Both Mayor Nutter and Deputy Mayor of Economic Development Alan Greenberger -- who also spoke -- called the projects a major "tipping point" in the revitalization of North Broad Street as a whole.

Greenberger described the groundbreaking as a historic day in the city’s life, dubbing the project was "one of Philadelphia’s most transformative developments."

"We’re all in this together…I’m the luckiest guy in the world, because this building has a mystique and a spirit unlike any other project I’ve seen," enthused Blumenfeld. "This building is an organism. It’s alive. It has a heartbeat."

Nedia Ralston, director of Governor Wolf’s Southeast Regional Office, expressed the Governor’s office's enthusiasm for the new Divine Lorraine, which will maintain its historic exterior.

"We can renew a part of history and renew economic opportunities for a community who needs it," she added.

Writer: Alaina Mabaso
Sources: Mayor Michael Nutter; Deputy Mayor for Economic Development Alan Greenberger; Eric Blumenfeld, EB Realty Management Corporation; Nedia Ralston, the Governor’s Southeast Regional Office. 


High Point Wholesale brings new life to a former post office in Mt. Airy

In April, High Point Wholesale, a new branch of Mt. Airy's beloved High Point Café, officially cut the ribbon on its repurposed early-20th-century space at 6700 Germantown Avenue. The building was once home to Mt. Airy's original post office.
While it’s born out of the café -- which celebrates its tenth anniversary this year -- High Point Wholesale isn't a retail or restaurant location. It will house office space, a bakery for High Point's signature treats (including a self-contained gluten-free kitchen), coffee roasting and a shipping operation -- something that wasn't possible in the tiny original space. 

"I created High Point Wholesale as a separate business from the café," explains founder by Meg Hagele, a Mt. Airy native. "We recognized we had to raise money. I couldn’t do it on a wing and a prayer."

An initial round of fundraising from investors netted $365,000, and after searching throughout the northwest neighborhoods for a space, renovations began in winter 2014.

But the road was harder than Hagele and her supporters predicted. The site's first contractor proved incapable of handling the job and securing the necessary permits -- High Point Wholesale seemed destined to fail.

They were "emotionally and financially devastated," recalls Hagele. "It was a dark and hard time to get through...There was a real crisis of conscience. Do we walk away?"

She decided to push forward.

"We were so excited and invested in being on Germantown Avenue and being a part of the revitalization of the Mt. Airy corridor," she explains. Hagele jumped into reworking the numbers, and a new round of fundraising amassed close to $200,000.

"All of our investment is 100 percent from customers of the café," Hagele says proudly.

Early this year, a Kickstarter campaign for smaller-scale and more far-flung supporters added almost $40,000 to that total; the funds will go towards final construction costs.

High Point Wholesale now occupies the building's main floor (3,300 square feet); building owner Mt. Airy USA is on the lower level (1,900 square feet).

The site's second contractor had a creative mind -- the space boasts the original basement beams repurposed as windowsills and a partial wall around the offices, lamps salvaged from a 1950s Cincinnati airport, and natural hewn Lancaster County white oak office desks. A National Endowment for Democracy grant administered through Mt. Airy USA helped outfit the space with a specialized electrical system that’s expensive to install, but will save money and energy on the business' commercial ovens down the line.

An April 11 party in the revamped space was expected to draw about 300 people -- the turnout topped 500.

It told Hagele a lot about how her businesses impact the local community.

"They were invested," she muses, "whether or not they were investors."

Writer: Alaina Mabaso
Source: Meg Hagele, High Point Wholesale  

With success on the ground, Center City looks up for more office jobs, high-rise renovations

There are some richly exciting things happening with Center City residential, commercial, and transportation development, but there are also areas that beg for improvement. This was one of the takeaways from last week's panel, "The Next Cycle of Downtown Development," held by the Central Philadelphia Development Corporation (CPDC).  The program was moderated by CPDC and Center City District executive director Paul Levy, and featured executives at Liberty Property Trust, Brandywine Realty Trust, Pennsylvania Real Estate Investment Trust (PREIT), and the Parkway Corporation.

Levy delivered opening remarks that ought to have provoked optimism. These remarks served to preface the release of the Center City District's "State of Center City Report," which is expected this week. Levy defines the "Center City core" as being the neighborhoods between Vine and Pine St., while he ambitiously defines "Center City extended" as being the communities between Girard Ave. and Tasker St. Levy reports that residential prices in the "extended" Center City zone are quite healthy, with the average value being $310,446. 

The opening remarks contained more points of pride for those who live, work, take classes, shop, or play in the extended downtown. Levy saysthis area is second to only New York City in terms of the number of "cultural institutions." He adds that the hospitality sector is performing strongly in Center City, as job growth in this field "is outpacing the suburbs." Finally, Levy is ecstatic that sustainable transportation is becoming a more and more appealing alternative to driving for downtown inhabitants, as 74% of Center City "core" residents commute to work without a car.  

While the executive director's remarks accentuated the positives in both the core and extended parts of Center City, they also drew attention to the area's bleeding of high-rise office jobs. Levy says that 39% of private sector jobs in Center City are in office buildings, which is the highest percent of private sector employment. Even with population growth in Philadelphia and its suburbs, these Center City offices continue to lose jobs, even while offices in Radnor, Great Valley, and elsewhere are gaining positions.

After Levy wrapped up his report, the executives on the panel began discussing how the city can draw more office jobs. John Gattuso, the senior VP and regional director at Liberty Property Trust, hinted at a new office high-rise to be proposed within the next couple of years. He also mentioned that Three Franklin Plaza, which currently houses GlaxoSmithKline, will be undergoing a "significant" $30 million renovation, with the installation of new bathrooms and elevators, for when Glaxo moves out. This anticipates the building at 18th and Race "will be coming to market in 2014," says Gattuso.   

Joseph Coradino, president of PREIT, also imparted some nuggets of hope on the audience. While he spent considerable time talking about PREIT's suburban development, such as at the Cherry Hill Mall, he also said good things were in store for PREIT's Gallery at Market East. He said Philadelphia Media Network's move to 8th and Market coupled with the new digital sign allowance for Market East could signal a rebirth for the beleaguered strip. He expressed a desire to "activate The Gallery at the street level," which would mean opening sidewalk cafes at the mall. 

Sources: Paul Levy, Central Philadelphia Development Corporation; John Gattuso, Liberty Property Trust; Joseph Coradino, PREIT
Writer: Andy Sharpe

Redevelopment riff: Brandywine Lofts approved for former Paul Green School of Rock

The Broad St. corridor between Spring Garden and Ridge has seen some of the trendiest redevelopment in the city in the past few years, with residential development at Lofts 640 and culinary development at Osteria. It looks like this redevelopment is about to rub off on surrounding blocks. The Regis Group has obtained necessary zoning approvals to convert the erstwhile Paul Green School of Rock into the Brandywine Lofts apartments. Construction is expected to begin shortly at 15th and Brandywine, and the apartments should be up in four to five months.

The design firm JKR Partners, which is also working on a number of other projects across the city including North 28 in Brewerytown and 777 S. Broad, is handling the design elements for the Brandywine Lofts. Glenn Felgoise, the director of marketing at JKR, says the lofts will include 10 apartments on the second and third floors of the old music school. Five of these apartments will be on the second floor, three will be on the third floor, and two will be on both floors.

Felgoise says the first floor will be marked by a parking garage, game room, kitchenette, and garden space for residents. He confirms that each apartment will have its own parking space, and there will also be storage for at least 18 bicycles. The units will be sized from 813 to 1,043 sq. ft., and will include one or two bedrooms and one or two baths. Eight of the apartments will be fitted with decks. No word on price points yet.   

One reason why JKR was chosen to work on Brandywine Lofts is because of its expertise in adaptive re-use. Indeed, the design firm will strive to preserve some of the historical elements of the structure, especially on the second floor. “Units at [the] rear of second floor have exposed heavy timber trusses in space,” he reports. JKR is looking to preserve these trusses.

Given the recent development proposals on North Broad, Brandywine Lofts is in a great location. According to Felgoise, the best perks of the location are access to the Broad Street subway line, the Community College of Philadelphia (CCP), and other new and proposed developments on Broad. The proposed Lofts are only one block from N. Broad and two blocks from the Spring Garden subway station. In addition, it will also be just a one-block bike ride to get to the conceptual Spring Garden St. Greenway.    

Writer: Andy Sharpe
Source: Glenn Felgoise, JKR Partners

How Brandywine Realty Trust is exceeding profit forecasts while others struggle

Despite the poor economic climate for development, Radnor-based Brandywine Realty Trust continues to exceed profit forecasts. This has been evidenced through out 2011, and has been true in the Delaware Valley and across the country. In fact, Brandywine has been able to execute almost 2.5 million square feet of leases through June of this year. As a result, "all operating and financial metrics equaled or exceeded our business plan targets," says Gerard Sweeney, President and CEO of Brandywine.

One major reason for Brandywine Realty's success in attaining leases can be found in Center City. This is where the realty titan inked a long-term lease with Janney Montgomery Scott at Three Logan Square, located on the 1700 block of Arch St. Brandywine "executed a 146,321 square foot, 15-year lease with Janney Montgomery Scott LLC at Three Logan Square," says Sweeney.

While Brandywine expanded its leased space in Center City, it also sold unloaded property in South Jersey. "During the second quarter of 2011, we completed the sale of Three Greentree Center, a 13.9-percent occupied 69,300 square foot office building in Marlton, NJ," says the CEO. The company was able to use considerable profits made on this sale to reduce their credit balance.

Brandywine Realty Trust is one of the largest comprehensive real estate companies in the country. It has properties in Pennsylvania, New Jersey, Virginia, Texas, California, and elsewhere. They are well known for sustainable building practices, as many of their buildings nationwide are either LEED or Energy Star certified.

Brandywine's success shows that developers can still meet profit forecasts, even with the present economic uncertainty. Judging from Brandywine, sustainability seems to be one key to succeeding in leased properties. Another key seems to be the ability to know when to sell unprofitable properties.

Source: Gerard Sweeney, Brandywine Realty Trust
Writer: Andy Sharpe  

Hova haven: Jay-Z buys into NoLibs with The Lighthaus

Not long after some members of the creative class in Philadelphia began referring to the city as the sixth borough of New York, a crackerjack New York real estate developer by the name of Dawanna Williams decided to enter the market here. If her name sounds familiar, that may be because her inaugural Philadelphia project, a seven-story low-rise condo building in Northern Liberties known as L'eau (pronounced "low"), was so unusually high-profile.

The rapper Jay-Z was the project's solitary financer, but as the Cityspace agent Michael Garden explains, "It hit the market right when everything was tanking." And although some of the 1,400-square-foot 2BR/2BA units came on the market in the $600,000 range, says Garden, "everyone referred to the building as 'Lou.' Which is not the French word you want on your new building!" he adds, with a laugh.

Once the market slowly began to right itself, however, Williams and Jay-Z chose to give NoLibs real estate another shot. They changed the name of their $8 million building, which sits at 603 N. American St., and which now has FHA financing, to the Lighthaus. They made a few minor upgrades, including a concierge desk in the lobby. And this time, they seem to be succeeding, thanks in large part to the price-downgrade: The 24 units -- each with soaring floor-to-ceiling windows that reveal either the city or the Delaware River--are now listed between $377,000 and $488,000. Which isn't an unreasonable price, especially considering that Erdy McHenry--the same group responsible for the nearby Piazza at Schmidts--was the building's architect.

The Lighthaus, says Garden, "makes a statement in terms of contemporary architecture" in the city. "We're starting to turn towards an architectural challenge (in Philadelphia)," Garden adds. "We should encourage that."

Source: Michael Garden, Cityspace
Writer: Dan Eldridge

Do you know of a new building going up, a business expanding or being renovated, a park in the works or even a cool new house being built in the neighborhood? Please send your Development News tips here.

Culinary incubator sets the table for West Philly's top food entrepreneurs

International foods company Bertoli began in a Tuscany basement as an olive oil stand. The company now known as Progresso Soup started with two families importing Italian food to the U.S. for their families and friends. In an effort to pull Philadelphia's next foodie phenom out of a rowhouse kitchen or barbecue pit, West Philadelphia's Enterprise Center Community Development Corporation has launched Philly Food Ventures, a development program for home-based food entrepreneurs looking to take their businesses to the next level.

"When we grade applicants, we are looking for three things: managerial capability, the strength of their business idea and then we are looking for what we call entrepreneurial spirit," says Enterprise Center Managing Director Greg Heller. "People who come in with small or home-based food businesses and have the ability to run the business and take it to the next level but they don't necessarily have the know-how or the resources to get there."

Philly Food Ventures serves as a precursor to TEC's forthcoming Center for Culinary Enterprises, a 13,000 square foot food incubator with three community kitchens, urban farmland, and a training restaurant. The project is slated to transform a long-vacant grocery store at 48th and Spruce into a results-based food venture program, creating 130 new permanent jobs within its first two years and 20 new food ventures yearly.

"We are rolling this program out slowly so we can build up a client base so when our Center for Culinary Enterprises is open, we have a program and a set of clients and we can just plug and play," says Heller. "Every week, I get calls from folks who are trying to start food businesses, who have existing businesses and need assistance so this type of program is very timely."

Source: Greg Heller, The Enterprise Center
Writer: John Steele
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