Philadelphia Riverfront Plan in Low Gear
By David J. Wallace
This city's plan for a single cohesive riverfront development has been ambushed by a recession, slack demand for new housing and the travails of a real estate market in decline. Instead of high-rise apartment and office towers at the Delaware River's edge, the parcels have sprouted smaller, less expensive projects that go up quickly, like restaurants, nightclubs and open-air markets. They provide a modest income for some owners of property that otherwise would have lain fallow, as well as jobs in what is emerging as a regional playground and shopping center. Two years ago, a city agency, the Philadelphia Industrial Development Corporation, envisioned not only the complexes of high-rise office and residential towers, but also office buildings and hotels. These were to have bracketed Penn's Landing public space and to have been connected by an esplanade. But after Willard Rouse, the Philadelphia development company, withdrew in early 1989, convinced there was no way to make the 37-acre project profitable, smaller developers took on parts of the development. Five new nightclubs or restaurants have opened this summer. And two weekend flea markets have opened, the larger covering an acre beneath multicolored tents at Vine Street and the north side of the Benjamin Franklin Bridge, which spans the river between Philadelphia and Camden, N.J. The other, on the river's edge near Tasker Street and Delaware Avenue, opened during the Fourth of July weekend and has not yet reached its peak. At least two planned residential developments have been shelved. One, Portside, envisioned as 286 high-rise condominium units, ran aground for lack of financing even before any physical work was done. And at Liberty Landing, a $300 million mixed-use development that last year was being re-evaluated for the combination of office, housing and hotel elements, weeds have nearly obscured the optimistic blue sign announcing the project, which also never even reached the groundbreaking stage. The only housing actually built was not started from scratch but was a renovation at two municipal piers, 3 and 5, which jut into the river with a marina between them just south of the bridge. The former was converted into 96 fee-simple town houses, the latter into 172 rental apartments, by a joint venture of three Philadelphia partners, Silver Harting & Company, the Edward S. Brown Group and the Radnor Corporation. The rentals range from one to three bedrooms, with rents of $700 to $3,000 a month. Rudy Hanisch, a Radnor senior vice president, said that six town house units were presold and that they got a lukewarm reception when they went on sale shortly after completion in 1990, selling out only after prices were cut to below market value. "This case is illustrative of the cyclical nature of real estate," he said. "We made the decision to go forward in 1987, real estate values peaked in 1988 and by the time we delivered the units in 1990 the cycle was declining." Instead of the $300,000 market value the company predicted, the units sold for an average price of $170,000 earlier this year, part of a $1.3 billion write-off taken by Radnor's parent company, the petroleum giant Sun Company, Mr. Hanisch said. From its peak in 1988, real estate values dropped by 30 percent by 1991 in Center City. Sales of luxury condominium units slowed at the same time, to under 200 closings downtown at more than $150,000, he said. "We came to the conclusion that we had a disproportionate percentage of the market and had to sell them below cost," Mr. Hanisch said. "I'm personally bearish on real estate values and levels of activity in the Delaware Valley for the rest of the decade. America's appetite for the good life has slowed." Mr. Hanisch said the grand riverfront plans predicted for 30 years by city officials were expensive and came apart just as demand for new offices and housing was softening throughout the region. The downtown feeling of Philadelphia neighborhoods like Rittenhouse Square and Society Hall is not available on the waterfront because it is severed from the city by Interstate 95, despite bridges for pedestrians and vehicles. A brief drive along Delaware Avenue offers many sights that suggest the state of flux on the riverfront. Tropical theme bars look out on dredge barges moored on the New Jersey side and on a state prison in Camden. Orange and tan self-storage lockers line one side of the six-lane street across from the tony Katmandu nightclub. One pier near Spring Garden Street is used for a trash transfer station and storage yard for city garbage trucks, another is the city's main impounding lot for towed cars. Still, the Comfort Inn, with 180 rooms at the south end of the Ben Franklin Bridge near Penn's Landing, about a 10-minute drive from Center City, had an occupancy rate in 1991 somewhere above 70 percent, when the rest of the city was in the mid 60's, said a hotel industry analyst, Peter Tyson, of Peter Tyson & Associates. Even the name Delaware Avenue was changed to Columbus Boulevard by the City Council, despite public opposition, to commemorate the 500th anniversary of Columbus's voyage. Yet most highway signs still direct motorists to Delaware Avenue and there is no plan to change them. Highway access has been the lifeline for such projects as the Riverview Plaza, a $30 million retail center farther south near warehouses and plants that once served the city's thriving port and manufacturing, both of which have been withering for years. Bart Blatstein and Marc Haber, principals of Tower Investment, bought a narrow parcel between Tasker Street and Washington Avenue on the landlocked side of Delaware Avenue knowing that an exit ramp from I-95 would be able to bring motorists to their doorstep. The 150,000-square-foot center includes a multiscreen movie theater that opened last November and draws people from both states. There are 30,000 square feet of occupied offices space in Riverview Plaza, with a potential for 220,000 more in a vacant warehouse, according to Mr. Blatstein. There is also a Staples office products store and several restaurants, food shops and small stores. Plans have been drawn for a second retail component across Delaware Avenue in a former sugar refinery. "There were no movie theaters at all in South Philadelphia, so people went over the Walt Whitman Bridge to South Jersey," Mr. Blatstein said. "Residential may not be an important part of the waterfront. The holding actions may be a year, it could be 10 years. If they're making money, why tear it down to build housing?" Indeed, although planning maps still indicate that Marina Towers will rise where the Katmandu nightclub now stands, the club's owners are fashioning their own long-term expansion plans. Three partners, Stuart Harting Lance Silver and David Preefer, were involved in the Pier 3 and 5 project and said they see potential for new hotel or conference center facilities, but not residential growth. Among the factors that have fueled growth along the riverfront are Camden's aquarium, which opened in February, and a new ferry service linking the two cities. Most vital was last year's opening of half a dozen new I-95 off-ramps up and down the riverfront and of the Vine Street Expressway, which offers quick east-west travel to the city's other major highways. Seeing the crowds of cars bouncing over the freight railroad tracks that still rut Delaware Avenue and slow traffic, Marvin Venable started Venable's Philadelphia Water Taxi, using three 26-seat boats to ferry passengers north and south among the clubs and restaurants and the Camden ferry. Only three restaurants now operate all year, but the success of summertime clubs that close has prompted some restaurateurs to explore year-round ventures. A Texas-based nightclub company, Dave & Buster's, is negotiating to open a recreation center in an enclosed pier owned by Bell Atlantic Properties and, several blocks inland, a 4,000-seat concert hall and an adult-entertainment nightclub are under construction.
