In an essay from the past, I shamelessly stretched the definition of the term “land banking” to suit my
own purposes. How? By showing two examples of the
deliberate assembly of contiguous parcels with the purpose of building
something new, but the problem is, neither attempt at parcel assembly consisted
of vacant land, as is the customary use of the term. The land banking was (as I indicated) retroactive, because
the parcels themselves already had structures resting on them. The owners of contiguous
buildings had let the buildings remain vacant, long enough that some were
falling into disrepair. But these
two examples were in the heart of walkable downtown Bloomington, Indiana and
auto-oriented Greenwood, Indiana—economically healthy environments where it
made no sense to abandon the real estate, since the landowners could easily
find reliable tenants. In due
time, I knew that these dowdy buildings would get demolished, once parcel
assembly was complete, and the developer would ideally rebuild something better
than was there before, making a higher and better use of this coveted land.
Well, I was wrong.
I guess I learned my lesson in speculation. Or did I? The
example in urban Bloomington warranted a follow-up essay about five months later, because the developer, who had hoped to build a large
condo building on Kirkwood Avenue on the site of multiple smaller structures,
ultimately decided simply to upgrade and improve the appearance of the existing
structures when the condo market went bust. In truth, I wasn’t wrong about the land banking process—it
just didn’t work out the way the developer had anticipated. Meanwhile, the suburban Greenwood
example simply foretold the replacement of old retail outparcel buildings
(mostly drive thru restaurants) with newer, flashier ones, like a contemporary Chick-fil-A. So I was wrong on that, but maybe the intention was for a
larger retail structure that again flopped, since the economy made it harder to
secure financing for more ambitious projects.
Either way, I’m at it again, speculating on another land
banking initiative, exploiting the term once more. I may be wrong once more, but I’m more confident than ever
about my guesswork because of the setting: this time it’s in densely populated
downtown Philadelphia, usually referred to by the locals as Center City.
By most measurements, the squat, nondescript building in the
photo above appears to be in good enough condition, but it sure doesn’t seem to
have much luck at securing tenants.
It sits at the intersection of South 15th Street and Walnut
Street, and its prime storefront is glaringly vacant:
And the first photo was misleading; it revealed the entire
frontage along South 15th Street, but despite the various signs for
a coffee shop, hair salon, and Korean restaurant, the reality is far less promising:
The Panache salon has vacated the first group of windows on
the photo above, while Elixir Coffee House—
Gone as well, relocated a mere half-block to the west. Finally, it would appear that Miga, the Korean restaurant at the end, has closed altogether.
However, a small sign in the window indicates that the
business hopes to reopen soon…presumably in a new location. Meanwhile the second floor of the
building doesn’t look much more active:
The pictures don’t fully capture this, but in the few places
where the curtains are drawn, it is clear that the offices are empty, and the
thickness of dust across all the windows suggests that they haven’t been used
in quite some time.
The frontage on Walnut Street is no better.
Lush, the upscale purveyor of soap and cosmetics, used to
occupy that street-level space in the adjacent two-story building, but it has
apparently relocated as well. And
a bit further down the street, the furniture rental store has also relocated,
in yet another low-rise structure.
The first floor apparently used to contain a Rite Aid
Pharmacy, but it too has terminated its lease. In short, the building appears to be completely vacant. The absence of pedestrian traffic along
15th Street only confirms the building’s lack of appeal. An outsider might draw the conclusion
that this is succumbing to blight and disinvestment, but anyone remotely
familiar with Philly would know otherwise. 15th and Walnut just blocks from the heart of
Rittenhouse Square, long Central City’s most vibrant park space and the name of the prestigious surrounding neighborhood.
Meanwhile, Walnut Street is the most heavily-trafficked retail
corridor, widely sought after by national upscale brands. If anything, it seems a bit strange
that a low-end furniture rental company would voluntarily pay the exorbitantly
high rents along Walnut Street, especially considering that directly across the
street from this building is the following tenant:
It’s hard to think of many retailers choosier than Armani
Exchange.
In short, this group of three vacant buildings in a posh
part of town bespeaks the quiet transfer of titles among speculators who no
doubt believe this corner deserves a higher and better use. The tenants didn’t depart because the
location was bad. A Google
Streetview from reveals that both the 15th Street segment and the WalnutStreet cluster of three façades were fully
tenanted as recently as August of 2009.
More likely than not, the owner(s) did not allow them to extend their
leases into a new term. In this
case, the land speculator has assembled multiple adjacent parcels with the
hopes of building something with potential to earn greater income, no doubt
benefiting from a higher Floor Area Ratio (FAR) than the meager two and three
stories that the current buildings offer.
In order to build anew, this developer will need to demolish the
existing structures; in order to demolish, he or she will obviously have to
vacate.
I have based this entire essay on a hunch that I barely
noticed in passing through the city briefly one afternoon, in which I guessed
what was about to happen by peeling back the layers, thereby figuring out the
current phase of an ongoing development trajectory. I was first taken by the conspicuous absence of pedestrian
traffic around the building fronting 15th Street—
—particularly in comparison to all the streets around it, or
even the opposite side of 15th:
Moments later, it occurred to me that most if not all of the
storefronts were vacant, despite the signage. Then I noticed the architectural details of this building,
or the lack thereof. I’m hardly
the most well versed architectural historian, but usually I can at least
approximate the date of a building from its appearance. Not this time. It almost seemed as though the designer
had eschewed any ornamentation (or even a deliberate absence of ornamentation,
which can be an enhancement in itself) that could give it away or distinguish
it. The landlord even let Miga,
one of the former tenants, paint its section of the façade black.
Ugly ugly ugly.
My suspicion is that this building comes from a time when the economy of
urban Philadelphia was so feeble that even Rittenhouse Square was struggling,
and the risk-averse developer chose unimaginative and low-slung construction,
because that was all the weak market could support. The 1970s or early 1980s, perhaps? Since that time, Rittenhouse has
reclaimed most if not all of its luster, and the time is right to build bigger
and better. Am I right? Will these buildings soon face
demolition?
A modest bit of internet research vindicated my suspicions: all those other tenants left because these buildings will
soon come down. The
replacement? A four-story
mega-structure, with each floor devoted to a separate retail tenant. The buzz on the Naked Philly website reveals,
not surprisingly, a fair amount of disappointment: a premier corner such as 15th
and Walnut could easily support a 16-story mixed-use building, octupling the
FAR rather than merely doubling it.
But we are still in the midst of lean economic times, forcing developers
and their equity partners into far more modest decisions than they otherwise
would make. At the very least,
this latest example of “retroactive land banking” demonstrates that the
machinations of a relatively unregulated land market are helping new
construction to chug along, against all odds. If a blighted blemish sits squarely in a sheet of polished
platinum, rest assured that someone with deep pockets has already pounced on
the disparity, ready to invest in a way that could level the playing field…even
if only aesthetically.
2 comments:
according to the scuttlebutt the new retailers will include a Cheesecake Factory and an Unquli store.
Thanks for the comment, Lou. Yeah, what you're saying seems to coincide with the report from Naked Philly. Also a Sovereign Bank on the ground floor, which no one's too excited about, except probably for the future property manager--banks tend to make for good, reliable tenants.
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