Philly Setting Itself Up For an Apartment Crash?

[billy ross]

Has anyone considered that the condo market - that is, for sale apartments - has completely collapsed and is both moribund and impossible to finance? The corollary to this is that the apartment market is on fire and thus easy to finance. Connect the dots, people.... If you could build condos today with cheap money and cheap labor, get them financed easily by calling them 'rentals', and when they're done or within a few years of completion sell them into a recovered condo market, wouldn't you do this? Of course you would. We're about to walk into a gigantic shortage of condos appropriate for Baby Boomers to spend their pre or immediate-post retirement years. They've driven our economy since they were born, and they'll continue to drive it. Their kids are out of the house and they're ready to party like it's 1974 again, except that bedtimes will be at 10pm. By the time that everyone figures out that Baby Boomers want single level urban living, these 'apartments' will have become condos, and the owners/developers will make a very quick buck.

Fundamentally I see a shortage of nice condos, not a surplus of nice rentals, as we go into the future. Considering that they're somewhat interchangeable, I see very many rentals going condo. I know when I'm ready to cash out that's the way I want to retail my apartments.

[the mule]

Ugh, you do realize these buildings are all being proposed because the owners expect to make a quick buck, right?

Gee, they want to make money? There's nothing quick about it either. It's a lot of work that doesn't pay off until they're leased up or sell their stake. Of course low rents aren't in the developer's interest because construction costs haven't gotten any cheaper, but that's the developer's problem, not the consumer's. Even though there are some small scale developers on this forum the discussion here largely is among consumers, for whom a larger housing supply is a boon.

Well, Point Breeze for sure... but is that true everywhere? My mortgage costs a lot more than it would cost to rent my house, and even if you take off the PMI I'm paying on my note, owning is still costing more.

I said it is true in quite a few parts of the city, not everywhere. Point Breeze is definitely a stark example. Brewerytown, Kensington, and Fishtown are others, though to a lesser extent. It's not limited to gentrifying neighborhoods either, you can also buy in Roxborough/Manayunk/East Falls more cheaply than renting.

The Build-It-They-Will-Come syndrome. I understand that CBD residential rental is always approached without a worry of oversupply, but it's total folly to assume limitless demand. And this will be an interesting experiment since this is the highest rate of supply coming online since... well... 2000 when Ron Caplan was buying tons of sh*t up in Center City and converting them to apartments as fast as he could. I lived in a Ron Caplan rental--he opened the building before it was even finished or got permits. The rents were cheap cheap cheap because there was so much competition back in 2001/2002. That wasn't until the condo conversions started to pick up the following year.

No doubt this is a lot of units coming online at the same time, more than we've seen in quite a while. I don't know that nobody is worried about an oversupply either, but it's more of a concern to those spending the money than to your average Philadelphian. Are there risks to the developers? Of course, that's why they make money.

I think all these proposals are coming with uber-parking.

That doesn't change the fact that you can't walk out your door to any kind of neighborhood businesses except Delilah's.

That's the other thing that has me wondering--where exactly are the incomes coming from that these futuristic tenants are going to be scraping up to pay their landlord? Is it coming from healthcare inflation? That's my guess---with so many folks being hired on by the pharma/hospital industrial complex in Philly, the only thing I can think of is that this is one of the benefits to national healthcare cost inflation--is that Philadelphia indirectly gets the benefits of the rising cost of healthcare in so much as both the providers and the payors are growing and inflating in size and scope.

Just last month in the elevator I'm seeing ads for Penn's new proton laser to treat cancer. I'm like... "wow good to know. I'm sure part of the cost of the procedure is to also pay for this Captivate ad."

This is the biggest question, where the hell are all the new residents working? How much reverse commuting is going on?

[thoth]

This is the biggest question, where the hell are all the new residents working? How much reverse commuting is going on?

I would remind everyone that there are a lot more self-employed folks in this town than people like to believe. There's no doubt our commercial growth is lagging behind residential by a tremendous amount, but I'm not really worried about lots of people moving here with no clue as to how they're gonna make a buck.

[Dayman]

I don't have a problem with that. Rents in Philly are out of control.

Talk to someone from NYC and say that with a straight face.

[phillyaggie]

I for one also enjoy a change of pace as far as architectural form goes. This city is chock full of rowhomes, and it could use a more wider mix of housing options... the riverfront doesn't need to swamped with more rowhomes just to fill out an urban planner's wet dream of how a city "should" look like. High rises could also be urban in design...so long as these developers can bring that urbanity to their designs and make the riverfront around their properties accessible publicly, that's good for me.

I wonder how the Dockside Apartments are doing as far as vacancy goes.

All these buildings up and down Delaware could also potentially make a case for that trolley line the DRPA was thinking about... whatever happened to that project? Is it dead in the water, or there's still some life there? Imagine living in one of these buildings and being able to take the trolley down to the big box stores in South Philly, watch a movie at the Riverview, take the line to center of town as well.
(yeah i know, it's a pipe dream! )

[Naveen]

Building that many units on the Delaware is a headscratcher though. That is an awful lot of apartments in one location that's poorly served by public transit and city infrastructure.

given the proximity to an El stop it certainly does seem like a good location for a large scale tod...which this project is. Hope it moves forward

That doesn't change the fact that you can't walk out your door to any kind of neighborhood businesses except Delilah's.

I don't know why you're clinging to this idea that it's a bad location b/c of the aforementioned points. As eldondre points out, it's right by the Spring Garden Station. It's very well served by public transit. Plus it's not hard to get a cab in that area. Plus as AS pointed out, it will probably have a lot of parking. And you're wrong, there's more than just Delilah's in waking distance; it's in walking distance of the heart of Northern Liberties. It's closer to North Bowl or the Piazza than the Marina Club apts in South Philly are to Passyunk Ave, and I don't think anyone would argue Marina Club is far from things.

This is the biggest question, where the hell are all the new residents working? How much reverse commuting is going on?

There is no such thing as a "reverse commute". It's just a commute. Yes, a lot of people live in the city and work outside of it. Not that unusual these days, and I don't see why people regard that as odd, when no one thinks of living in the suburbs and working in the city as odd. It's the same thing. It's commuting to work.

The only reason the residential construction boom that we're seeing seems troubling is that it's happening in the face of so little development of office space.

Lack of office development is trouble, but why would that make residential construction troubling?

[Naveen]

I for one also enjoy a change of pace as far as architectural form goes. This city is chock full of rowhomes, and it could use a more wider mix of housing options... the riverfront doesn't need to swamped with more rowhomes just to fill out an urban planner's wet dream of how a city "should" look like. High rises could also be urban in design...so long as these developers can bring that urbanity to their designs and make the riverfront around their properties accessible publicly, that's good for me.

+1. And this is exactly what this project does.

[ArcticSplash]

I for one also enjoy a change of pace as far as architectural form goes. This city is chock full of rowhomes, and it could use a more wider mix of housing options... the riverfront doesn't need to swamped with more rowhomes just to fill out an urban planner's wet dream of how a city "should" look like. High rises could also be urban in design...so long as these developers can bring that urbanity to their designs and make the riverfront around their properties accessible publicly, that's good for me.

I wonder how the Dockside Apartments are doing as far as vacancy goes.

All these buildings up and down Delaware could also potentially make a case for that trolley line the DRPA was thinking about... whatever happened to that project? Is it dead in the water, or there's still some life there? Imagine living in one of these buildings and being able to take the trolley down to the big box stores in South Philly, watch a movie at the Riverview, take the line to center of town as well.
(yeah i know, it's a pipe dream! )

The problem is that every residential proposal that has gone up on the waterfront has been a tower of insolence--ensuring that residents and citizens who don't live in the residence rarely interact with each other. Dockside has zero public space in its design. It's an ugly looking fake cruise ship with banners hanging off of it that before said "NOW RENTING" and now say "FOR LEASE!!!"

The only interaction the Waterfront Square complex gets is the few joggers who venture out of the building to do their run up and down the piers. That's about it.

Contrast with the Piazza that does at least try to make an attempt at creating some pedestrian life.

I'm not saying rowhomes need to go up next to the waterfront, but we could do with some mid-rises and low-rises that engage the street a whole hell of a lot more. These towers almost always demand huge parking pedestals and they always seem to do the ground floor so poorly that they wind up creating a no-man's island around them.

[ArcticSplash]

It will be remarkably uninteresting and not even an experiment. Basic supply and demand mechanisms are nothing new.

I'm not sure what your goal is.

I don't have a goal.

I just think it's a bit queer that there's this sudden huge upsurge in throwing tons of new rental units into the mid-range and high-range rental market that's far outstripping Philadelphia's population increase.

We haven't seen this rate of rentals being added to the system since 2000 before the zoning code was fixed to allow for more condo conversions (that's also when the rental build-up in Center City stopped and rents started going back up, as a bunch of rentals went back offline and got turned into condos, only to see some conversions go back to rentals again as condo owners were renting them out).


I didn't realize we had all these $85,000/yr people banging down our door who couldn't find an apartment around here.

[eldondre]

Talk to someone from NYC and say that with a straight face.

what does NYC have to do with anything?

[the mule]

I don't know why you're clinging to this idea that it's a bad location b/c of the aforementioned points. As eldondre points out, it's right by the Spring Garden Station. It's very well served by public transit. Plus it's not hard to get a cab in that area. Plus as AS pointed out, it will probably have a lot of parking. And you're wrong, there's more than just Delilah's in waking distance; it's in walking distance of the heart of Northern Liberties. It's closer to North Bowl or the Piazza than the Marina Club apts in South Philly are to Passyunk Ave, and I don't think anyone would argue Marina Club is far from things.

You can't rely on the El to get everywhere in the city. Distance to Northern Liberties is not the issue, at this point in time it's a barren landscape and not a very appealing walk. Marina Club is at least on a part of South Broad that has lots of foot traffic and eyes on the street. It's not a BAD location, and it may very well improve, but it doesn't do a lot to attract enough people to fill 1,400 units.

I'll be clear, I'm for the project and I hope it's successful. I like tall buildings, and I think it will be good for the waterfront. I just don't have a lot of confidence that they fill those units very quickly.

There is no such thing as a "reverse commute". It's just a commute. Yes, a lot of people live in the city and work outside of it. Not that unusual these days, and I don't see why people regard that as odd, when no one thinks of living in the suburbs and working in the city as odd. It's the same thing. It's commuting to work.

Reverse commute - Wikipedia, the free encyclopedia

Lack of office development is trouble, but why would that make residential construction troubling?

Context.

[eldondre]

You can't rely on the El to get everywhere in the city. Distance to Northern Liberties is not the issue, at this point in time it's a barren landscape and not a very appealing walk. Marina Club is at least on a part of South Broad that has lots of foot traffic and eyes on the street. It's not a BAD location, and it may very well improve, but it doesn't do a lot to attract enough people to fill 1,400 units.

it's a quick walk to the el, an easy drive to Target, and right off 95. I'd guess it would be built over a few years. if, as estimated, philly added 10k people last year, then yes, they can be filled.
Arctic-it's happening all over the country. builders build and what they're building are apartments. if you want to know why the sudden influx of waterfront projects? the answer is zoning.

[Naveen]

You can't rely on the El to get everywhere in the city. Distance to Northern Liberties is not the issue, at this point in time it's a barren landscape and not a very appealing walk. Marina Club is at least on a part of South Broad that has lots of foot traffic and eyes on the street. It's not a BAD location, and it may very well improve, but it doesn't do a lot to attract enough people to fill 1,400 units.

What el dondre said. It's a good location transit wise. And even if it's not perfect, the Art Museum area is worse when it comes to public transit, but nothing has stopped people from moving there.

In regards to the somewhat desolate landscape, the barren spaces disappear as more people move in. More people = more foot traffic. And that attracts other businesses. Not just that, the area itself is already growing somewhat, and is primed for more growth.

But I do think someone (the city? the developer?) should improve the landscaping between the pier side of delaware ave and the spring garden side. It's not terrible as is, but it certainly could be better and encourage more foot traffic.

I'll be clear, I'm for the project and I hope it's successful. I like tall buildings, and I think it will be good for the waterfront. I just don't have a lot of confidence that they fill those units very quickly.

But they're building it in phases. So it's not like there are going to be 1458 units in one shot. (In fact, one of the concerns of the Alan Greenberger is that the won't make it beyond Phase One...always a possibility...which is why he's pushing for the public space to happen in that phase.)

Reverse commute - Wikipedia, the free encyclopedia

Regardless of what Wikipedia might say, or anyone else for that matter, there's no such thing as a "reverse commute". It's like "reverse racism", the implication being that "racism" is only when white people target non-whites. It's all racism. But I digress...

[raider.adam]

Regardless of what Wikipedia might say, or anyone else for that matter, there's no such thing as a "reverse commute". It's like "reverse racism", the implication being that "racism" is only when white people target non-whites. It's all racism. But I digress...

I know what you're saying, but the term "reverse commute" is used to refer to someone who is commuting in the opposite direction of the main flow. It is used as a way to denote the direction of the traffic. I agree with you that, from a terminology stand point, it is not the most accurate term to use, but when it is used, people tend to know exactly what the person is referring to.

Best way to put it is that it is a poor word use that everyone understands. And honestly, I can't think of a concise word or pair of words to use in its place that would be more accurate.

[Naveen]

I know what you're saying, but the term "reverse commute" is used to refer to someone who is commuting in the opposite direction of the main flow. It is used as a way to denote the direction of the traffic. I agree with you that, from a terminology stand point, it is not the most accurate term to use, but when it is used, people tend to know exactly what the person is referring to.

Best way to put it is that it is a poor word use that everyone understands. And honestly, I can't think of a concise word or pair of words to use in its place that would be more accurate.

Agree on it's practicality, but I think it's increasingly used to denote the general concept of commuting out of the city, as opposed to specifically going against the flow of traffic. I suppose my problem is when the word is used in the former context.

[raider.adam]

Agree on it's practicality, but I think it's increasingly used to denote the general concept of commuting out of the city, as opposed to specifically going against the flow of traffic. I suppose my problem is when the word is used in the former context.

Well, because people are assuming that cities are where the vast majority of the people in the suburbs should be heading to to work.

Of course as anyone who lives in Philly and has to to the Schuylkill Expressway knows, that isn't always the way anymore.

[forkiks]

I don't have a goal.

I just think it's a bit queer that there's this sudden huge upsurge in throwing tons of new rental units into the mid-range and high-range rental market that's far outstripping Philadelphia's population increase.

We haven't seen this rate of rentals being added to the system since 2000 before the zoning code was fixed to allow for more condo conversions (that's also when the rental build-up in Center City stopped and rents started going back up, as a bunch of rentals went back offline and got turned into condos, only to see some conversions go back to rentals again as condo owners were renting them out).


I didn't realize we had all these $85,000/yr people banging down our door who couldn't find an apartment around here.

that is your opinion...that it's a bit queer. And that it's a huge upsurge on new rental units...
like mentioned earlier, more options is better for consumers. And as far as your 'concern' about someone making a quick buck, etc...i don't see anything quick about it, and it is the risk of the market, and the free choice to partake. If you don't like it, don't partake.

[raider.adam]

Yeah, I just don't see what the concern is over being anti-development to preserve other property owner's rents.

That's like saying we should be concerned over new social networking sites because it can have a negative effect on Facebook's and Groupon's shares.

[OffenseTaken]

Well, because people are assuming that cities are where the vast majority of the people in the suburbs should be heading to to work.

Why do you think cities exist in the first place: so we can all peep into each other's windows?

[the mule]

Regardless of what Wikipedia might say, or anyone else for that matter, there's no such thing as a "reverse commute". It's like "reverse racism", the implication being that "racism" is only when white people target non-whites. It's all racism. But I digress...

Perhaps not in your lexicon, but it is a widely accepted term in the economic, planning, and development worlds used to differentiate commuting out of the city (a more recent phenomenon) from the more traditional commute into the city. Wikipedia didn't make it up, it simply explains exactly what I just said.