Proposed Tallest Building in Philly May Shrink

PHILADELPHIA-Welcome to the Philly 411, our monthly column on real estate happenings in the Metro area supplied with intel from David Jacobs, a director at Llenrock Group, a local commercial real estate investment-banking firm. You can also follow their blog here.

Changes to American Commerce Center?

After the Comcast Center’s completion in 2008 came the news that it would soon be eclipsed as Philadelphia’s tallest building if developer Hill International and architect Kohn Pedersen Fox had their way through zoning hearings. Their grandiose plans for the mixed-use spire have recently changed given the landscape of the hospitality industry. Rumor has it that they are currently redesigning the plans for the building and are axing the hotel component, which leaves us to wonder how they will lease that vast amount of square footage. Or, will American Commerce Center not be the tallest in the town after all? We can only eagerly await Hill International to unveil the new plans.

Brokerage

Local brokerage firm GVA Smith Mack has been in the news recently after two top brokers opted to leave for rival broker/operator Seligsohn Soens Hess (SSH). Shortly thereafter, there was a shakeup in management, and President Tim Pulte was let go to pursue other opportunities. Now, rumor has it that the senior partners at the firm are exploring other franchise options, including selling themselves. One likely buyer/franchise affiliate may be Newmark Knight Frank, who does not have a local Philadelphia presence. However, after GVA’s New York City counterpart recently sold to Colliers with much success, there appears to be more than one option for the principals.

In response to this rumor, a representative from GVA Smith Mack said: “GVA Smith Mack has been independent for 25 years and intends to remain so. As the landscape of the brokerage world changes, we are always monitoring what is the best alignment for GVA Smith Mack and its clients. Furthermore, GVA Smith Mack’s management team periodically reviews its management structure to leverage talented partners who are top performers in their markets and fields of expertise. This new model insures that the partners remain close to both our internal and external clients, seeking opportunities to deliver even more value to them.”

Piazza Grand Opening

This past weekend marked the opening of the Piazza at Schmidt’s in Northern Liberties. It is an 80,000 square foot plaza where culture and community converge. Free to all, The Piazza features a never ending stream of live programming including films, dance, sports and music beaming out from a 40 foot stage and a 26 foot high definition TV. Lining The Piazza are 35 dynamic boutiques, galleries, eateries.

Credit Crunch

Local developer CREI and joint venture partner “The Local Real Estate Company” are facing foreclosures in Northern Liberties, Old City, and the “Blocks Below Broad”. Their business model was to buy land/shells, obtain approvals, and then flip them to developers for a profit. While some of the projects ownership entities have filed for bankruptcy, the principals have not excluded buying back some of the projects through different ownership structures at sheriff sale. The projects on the chopping block may include American Lofts, Le22, 1200 Chestnut and 500 Walnut (a proposed high rise condo/office).

Phil -ebrities

Among the many condo projects scattered throughout Northern Liberties, only one has New York rapper/entrepreneur Jay-Z’s fingerprints on them. The project, known as L-Eau Condominiums, is located at American and Green Streets. From what sources tell me, the condo project is now going rental. Acclaimed Restauranteur Stephen Starr is also rumored to be re-opening the old Washington Square restaurant location under a new name with a new motif.

Retail

The Philly retail world is off to Vegas for ICSC, where rumor has it attendance this year is off more than 60% locally and almost 50% nationally. Clearly there weren’t too many Philly retail brokers getting deals done in 2008, and this year doesn’t look to be too promising either. Despite the emergence of some fresh blood to the Walnut Street shopping corridor with Barney’s COOP and ESPRIT, others like Theory retracted their long rumored deal for new Walnut Street digs, with no immediate plans to enter the market.

Casinos

Sugarhouse Casino received an extension, but still needs a $150M construction loan to get started with their proposed casino development. Sugarhouse claims to be in advanced discussions with lenders, but many local residents hope they don’t find the funding.

For more thoughts from Dave Jacobs on the commercial real estate industry, please visit www.llenrock.com/blog.