Is 10 Rittenhouse a Luxury Flop or an Economically Insulated Masterpiece?

After two years of legal battles and nearly an extra $100 million in associated costs, 10 Rittenhouse, the ultra-luxury condo development on Rittenhouse Square, opened its doors last week to give dignitaries, developers and future residents a grand tour. The 33-story, 135-unit building developed by ARCWheeler and designed by Robert A.M. Stern broke ground in April 2005 and was supposed to have been completed by the summer of 2007.

However, a protracted legal battle regarding the fate of three neighboring four-story buildings delayed the completion by over two years. With units ranging from $600,000 luxury studios to multi-million dollar two- and three-bedroom "estates" to full floor penthouses, it will likely be the median price points that will have the most difficulty selling. Empty nesters, who are having trouble selling their suburban homes, are the target market for the "estate" units. According to the developer, only 50% of the building's units are currently sold or under contract. That was roughly the percentage of units sold at the ill-fated Murano Condominiums right before a forced auction took place.

Despite the horrible timing given the current state of the economy, 10 Rittenhouse does have several nuanced features that the rest of the competition does not. First and foremost is its unbeatable location. Situated at 18th and Walnut streets, it is literally sandwiched between Rittenhouse Square and the Walnut Street shopping corridor. Furthermore, 10 Rittenhouse's design is of a Park Avenue pre-war aesthetic, rather than the chic ultra-modern looks of many of its competitors. Being in the most mature and coveted area of the city, the project is poised for success, though it will take it longer than expected to achieve.

Liberty Property Trust Gets $90 PSF for Flex Property

Liberty Property Trust sold a 126,800-square-foot flex building in West Chester, PA for $12 million dollars. The property, located at 905 Airport Rd., is leased to Cephalon Inc. and Keystone Foods Corp. on long-term leases. The asset garnered a superb showing in an otherwise grim investment-sales market with more than 12 offers from prospective buyers. The winning bid came from a private investor based in Florida, and this asset was their first Philadelphia-area acquisition.

Fallout From the Capmark Bankruptcy

There is word that in addition to the Warren Buffet led team angling to acquire Capmark's mortgage banking and servicing platform, there will be another, undisclosed bidder involved in the process. Rumor has it, however, that this bidder plans on full-scale internal layoffs, which suggests that it is an existing competitor.

According to local media outlets, that competitor could be a unit of PNC Financial Services Group, whose commercial loan servicing arm, Midland Loan Services Inc., has been asking questions about the auction. However, a government sponsored enterprise (GSE) peripherally involved in the bankruptcy process has voiced concern over the potential merging/integration of competing firms' service lines, so it will be interesting to see this process unfold.

In July 2009, Capmark sold off the management contracts of various Capmark-sponsored CDO's to Ventras Capital Advisors, LLC. This gave Ventras assets under management worth over $5.2 billion dollars. The company was founded by former principals of Capmark's CDO management team (Jimmy Parsley, Scott Roth and Patti Unti) and just three weeks ago added ex-Capmark CFO Greg McManus. Ventras, who is headquartered in Philadelphia, may have plans to expand as they look for a second local office. "With Greg on board, Ventras is poised to aggressively expand into the commercial real estate asset management arena," said Roth. "This is an ideal time for us to be integrating and expanding our presence in the marketplace."

Movers & Shakers

Jim McCahon, formerly of Patriot Equities, has joined Jones Lang LaSalle as vice president in the Philadelphia office. His responsibilities will include site selection, tenant representation, and disposition/acquisition of industrial properties in the tri-state area. McCahon served as vice president of acquisitions at Patriot Equities, and oversaw origination, underwriting and acquisition of corporate real estate for the firm.

After spending six successful years with the Newtown Square-based boutique commercial brokerage shop Zommick McMahon, Jim Jacobs has decided to start his own firm - Jacobs Realty Group. The firm will be headquartered in Wayne, PA and will be a full-service brokerage. Jacobs' ability to source off-market transactions for investors should play well in a low velocity marketplace.

Stephen G. Nave, a founder of Nave Newell Inc., a King of Prussia-based professional consulting firm, is retiring 17 years after founding the company with partner Greg Newell in their basements in 1992. The company, which specializes in land development, planning, civil engineering, and landscape architecture, has grown to over 30 employees. Nave now plans to pursue other development interests.