PHILADELPHIA-With Mayor Michael Nutter in attendance, a groundbreaking ceremony was held Thursday for Dranoff Properties’ 777 South Broad, a $70-million, 218,000-sf mixed-use three blocks south of its successful Symphony House condominiums at Broad and Pine streets. Unlike Symphony House, however, the LEED-registered project is comprised of high-end rental units along with 18,000 sf of ground-floor retail, and developer Carl Dranoff tells GlobeSt.com the market—and his company’s direction—have moved away from for-sale residential.
“It’s no great secret that the condo market has been soft in recent years,” says Dranoff. “Because so many condos have been erected, virtually no one has been focused on rental housing. Over the next three to five years, we see a scarcity of rental housing being developed, and two years ago, we made a decision to shift our development to all-rental.”
He adds that in a few years, the company’s development pendulum may shift back to for-sale housing. “But the market forces right now favor rentals.” For rental housing, the economics are “very different” compared to those for condos, “but we were able to cobble together the right combination of factors to make this project feasible and secure the financing.”
Moreover, Dranoff says the rental format made sense given 777 South Broad’s proximity to Symphony House. “It gives people a choice of for-sale or rental,” he says.
The five-story 777 South Broad is reportedly the first LEED-registered residential mixed-use building in Philadelphia as well as Dranoff’s first green project. “That’s something we wouldn’t have contemplated five years ago, when Symphony House was being designed,” he says, adding that LEED certification for multifamily buildings is a more recent development. He ticks off some of the new project’s sustainable aspects: “more fresh air, more sunlight, better ventilation, recycled materials, higher-efficiency air conditioning and heating equipment.”
Dranoff says Nutter, who recently appointed Mark Alan Hughes as the city’s first director of sustainability, is “particularly proud” of the new project “because it shows that Philadelphia is a leader in sustainable buildings.” He adds, “One of our motivations is that we think this is a trend; it’s not a fad and people genuinely want to be more eco-friendly.”
Building green does increase construction costs by about 3%, Dranoff acknowledges. “It does cost more to recycle materials, to send them to different landfills, to have higher-efficiency equipment and to use local materials that don’t have to be trucked in from across the country,” he says. “We expect the premium to be going down in future years.”
With 777 South Broad, Dranoff aims to continue the process of revitalizing the city’s Avenue of the Arts district which runs one block east and west of Broad Street and is bordered by Washington Avenue on the south and Glenwood Avenue on the north. When Symphony House was proposed, the district, created in 1993 by then-Mayor Ed Rendell, was known for arts and entertainment attractions but not for residential.
“Symphony House was the most successful ground-up high-rise condominium in the history of Philadelphia, and it certainly validated the attractiveness of the Avenue of the Arts as a place to live,” Dranoff says. “It might be the most attractive one in the city right now.”