Luxury condo market still rising

THURSDAY, SEPTEMBER 4, 2014
PHILLYINQUIRER | CITY & SUBURBS | C
WWW.PHILLY.COM
Luxury condo market still rising
Dranoff switches plans for One Riverside.
Condos will range from $700,000 to $6M.
By ALAN J. HEAVENS
INQUIRER REAL ESTATE WRITER
Armed with evidence of increasing demand
for new and larger high-rise condominiums
in Center City, Carl Dranoff has shifted gears
on plans for his One Riverside development at
25th and Locust Streets.
Instead of 147 luxury rental apartments, the
22-story, $100 million-plus building will have
88 condos, including two penthouses, that he
said will be priced at $700,000 to $6 million.
Groundbreaking for One Riverside is scheduled early next year, “depending on permit
issuance, which is hard to predict,” said Marianne Harris, Dranoff Properties’ Sales and
Marketing Director.
If that schedule holds, the first buyers will
move in by fall 2016, she said.
One Riverside will be the first from-theground-up high-rise condo building started
since the financial crisis derailed the 2004-08
construction boom, which produced nearly
2,500 new units, according to Dranoff’s calculations.
Tom Scannapieco, developer of 1706 Rittenhouse Square Street, is set to break ground
in the spring on a $150 million, 26-story, 40unit condo tower at Fifth and Walnut Streets
scheduled to open in 2017. Pre-sales of that
building are in the multimillions of dollars, he
said.
ELIZABETH ROBERTSON / STAFF
Carl Dranoff will tap a market for high-rise condos.
His plan for 147 luxury rentals will now be for 88
condos. He cites a scarcity in the market for that
type of housing.
Scannapieco was able to sell out 1706 Rittenhouse, albeit more slowly than he anticipated. But many other high-rises, including
10 Rittenhouse - which Dranoff was brought
in by lender iStar Financial to finish and sell navigated troubled waters until the economy
began to improve.
In recent years, developers, including
Dranoff, had shifted to building high- and
mid-rise luxury apartment buildings to take
advantage of demographic changes in the real
estate market. Apartment development continues in Center City, spurred by demand and
continued reluctance by lenders to finance
major for-sale projects.
Dranoff announced the change Wednesday
at an invitation-only dinner for real estate
agents at Sbraga in Symphony House at Broad
and Pine Streets, the developer’s first groundup luxury condo high-rise.
Yet Dranoff said his experience at 10 Rittenhouse, where condo prices topped an
unprecedented $1,000-plus per square foot as
the market was just starting to recover, convinced him that taking One Riverside condo
would meet a demand.
“There is a scarcity of this kind of product
on the market,” he said. “At 10 Rittenhouse,
we continue disappointing buyers looking for
new and larger condominiums.”
Economist Kevin Gillen said market indicators suggest that “now looks like a great time
for multifamily development to shift from
rentals to owner-occupied condos.”
Rents had experienced exceptional growth
since the housing downturn and subsequent
recession, Gillen said, as house and condo
prices fell.
“Now that housing is recovering and rents
have peaked out, the cost of owning is practically equivalent to renting, and also offers the
additional benefits of home equity and asset
appreciation,” he said.
Many households have shifted from owning to renting, or have just continued to rent,
since third-quarter 2007, when the housing
bubble burst in the eight-county Philadelphia
region, and “current fundamentals indicate
that the pendulum has begun to swing the
other way,” Gillen said.
Demand for larger condos, a trend that
started in Manhattan, spurred Dranoff to limit
One Riverside to seven one-bedroom units,
which he described as either starter homes or
“nanny suites” for providers of child care to
families in larger units.
The larger units (two-, three-, and fourbedroom) have more square footage to accommodate families with children or visiting
grandchildren, he said.
The trend was already noteworthy in the
Philadelphia market, though. For example,
Weichert Realtors agent Susan Yannessa said
today’s buyers at Beaver Hill condominiums
in Jenkintown included families with two or
three children that prefer the units to singlefamily homes.
The 16 four-bedroom, 4-1/2-bath units
planned for One Riverside range from 1,964 to
3,611 square feet - about the size of typical detached house in both city and suburbs. Dranoff
says he expects that his buyers will be a mix of
city dwellers and suburbanites.
One Riverside also will have 110 underground parking spaces and a private park to
complement adjacent Schuylkill River Park.
RON TARVER / STAFF
10 Rittenhouse Square had troubles until the
economy improved. The project’s lender brought
in Carl Dranoff to finish and sell units. Dranoff said
his experience there convinced him there was
demand for condos at One Riverside.
“I’ve learned that people, especially those
from the suburbs, want open space,” said
Dranoff, adding that all units would have terraces and balconies.
View remains an important ingredient in
high-rise-condo buying decisions. One Riverside is on a curve of the Schuylkill, so all
the north-facing units will have unobstructed
views of the Art Museum, he said.
Dranoff, whose first foray into the neighborhood along the river was with Locust on
the Park more than 15 years ago, said the
Schuylkill had exhibited more potential as
a waterfront destination than the Delaware
River.
One Riverside’s sale office will open Oct. 1,
but for the next 30 days a Philadelphia Trolley Works vehicle will serve as a mobile sales
office in front of Locust on the Park, making
field trips into the suburbs, as well.
That was Harris’ idea, he said.
“We call it the Dranoff One Riverside Road
Show.”
__________________
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