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 : http://www.philly.com/philly/business/real_estate/commercial/HFZ-mixed-use-development-temple-north-philadelphia-amtrak-station-district.html