Bloomberg News

Philadelphia Meets Manhattan at 10 Rittenhouse Square

December 13, 2013

15 Central Park West

The dual limestone towers of 15 Central Park West, which was completed in 2007, have set the standard in New York’s trophy market. Photographer: Richard Drew/AP Photo

Three years ago, Comcast Corp. (CMCSA:US) Chief Executive Officer Brian Roberts paid $8.5 million for a condo in Manhattan’s most exclusive high rise -- 15 Central Park West.

He was just warming up.

Last year, Roberts bought a 6,900-square-foot high-rise penthouse in Philadelphia -- 100 miles away from the epicenter of conspicuous consumption in New York. His purchase of the 32nd-floor condo at 10 Rittenhouse Square, a tower with a Mercedes Benz car and driver, pool and a wine storage room, is a signal of Philadelphia’s emergence as a beacon of luxury living.

The 33-story red-brick tower, completed in 2009, brings a dollop of Manhattan-style luxury to a city whose most famous resident, Ben Franklin, espoused frugality. Robert A.M. Stern, the architect behind 15 Central Park West and the George W. Bush Presidential Center in Dallas, also designed 10 Rittenhouse Square -- one of about eight luxury residential towers in the area.

Stuart Weitzman, Swarovski and Ulta boutiques recently have sprung up near Rittenhouse Square in Center City, part of a transformation of the area that’s increasingly catering to wealthy executives and celebrities. Philadelphia Phillies pitcher and Cy Young Award winner Cliff Lee bought a $4.85 million condo at 1706 Rittenhouse, a 31-story luxury tower across the square from Roberts’s building that was finished in 2010. Residents of 1706 Rittenhouse can summon their cars by elevator with an electronic key card.

Tower Defaults

“It’s a premiere luxury shopping district,” said Michael Barmash, senior vice president at Colliers International in Philadelphia, who handles sales and leasing of retail space. “It wasn’t like that years ago. It changed totally because of all the residential” units that have been constructed in Center City.

The rise of 10 Rittenhouse Square began with a default. In 2010, the owner of the building was foreclosed on by junior lenders from a regional pension fund. The new owners then defaulted on a $240 million senior mortgage that came due that September, and attempted to place the entity into bankruptcy to delay a foreclosure by senior lender iStar Financial Inc. (SFI:US) A judge invalidated the bankruptcy in June 2011, allowing iStar to appoint Dranoff Properties, a luxury developer, as the receiver and eventually take title to the property.

IStar, which invested several million dollars more to complete the building, decided to market the units solely to luxury buyers, said Cynthia Tucker, senior vice president at iStar’s asset management division

Premier Building

“We made a conscious decision to position the building as the premier building in Philly,” Tucker said. “The fact that it was analogous to 15 Central Park West was not lost on us.”

The dual limestone towers of 15 Central Park West, which was completed in 2007, have set the standard in New York’s trophy market. The building, designed to evoke the Art Deco luxury of the early 1900s, weathered Manhattan’s two-year property rout in style. Some original buyers sold their units in 2012 and saw the value of their investments double on average, according to an analysis of 12 deals by StreetEasy.com

The building’s residents include Goldman Sachs Group Inc. CEO Lloyd Blankfein, Sting and Third Point LLC founder Daniel Loeb. The tower set a record for the largest completed residential deal in Manhattan last year, when former Citigroup Inc. Chairman Sanford Weill sold his apartment for $88 million.

Carl Dranoff of Dranoff Properties said the similarities between his Philadelphia tower and the New York landmark are striking. Rittenhouse Square, which is in the middle of Philadelphia’s urban grid, is anchored by a tree-lined park that boasts artworks, diagonal walkways and a reflecting pool.

Mimic Manhattan

“They’re on the park, we’re on the park,” Dranoff said. “They’re Robert Stern-built, we’re Robert Stern-built. They have a beautiful entrance off a side street. We have a beautiful entrance off a side street.”

The apartments at 10 Rittenhouse Square have sold briskly, mostly in cash deals. All but six of the 143 units have been purchased, and 60 percent of the closed agreements were paid for in cash. In January, Eric Foss, CEO of food services company Aramark Holdings Corp., paid $2.7 million for a 3,200-square-foot three-bedroom apartment, according to property and building records. Three years earlier, an entity named JEMA 10/33 purchased three units totaling 12,000 square feet for a $14 million, according to public records.

At 1706 Rittenhouse, a $144 million project, each of the 31 units takes up the entire floor. The top-floor, a 7,725-square-foot penthouse, sold for $12.5 million in June 2010. It was the highest price ever paid for a single residential property in Philadelphia, according to developer Tom Scannapieco. The buyer was Theodore Aronson, founder of Philadelphia quantitative investment firm AJO Partners, according to property records.

Record Price

As the economy in the Philadelphia region improves, luxury developers are planning for growth. Business activity rose at a modest pace since October, with residential construction, retail sales and tourism showing some expansion, according to Federal Reserve’s Dec. 4 Beige Book.

Dranoff and iStar are now attempting to set another sales record, marketing the 9,165-square-foot Rittenhouse Club, a three-story residence attached to 10 Rittenhouse Square, for $15 million.

“We’re positioning it as one of the most exclusive and unique homes in Philadelphia,” iStar’s Tucker said. “You can have your own exclusive mansion residence.”

The buyers at these towers are a mix of Philadelphia homeowners who want the convenience and amenities of a luxury condo and suburbanites seeking an urban lifestyle after their children have left.

Buying Pressure

“We have people locating back into the city because they’re empty nesters, their children have moved,” said Mary Genovese Colvin, a broker with Berkshire Hathaway Home Services, Fox & Roach Realtors in Philadelphia, whose office is based on Rittenhouse Square. “They’re trading their multi-million dollar properties in the Philadelphia suburbs for a multi-million dollar condo in Philadelphia.”

After selling his townhouse in the city’s Society Hill neighborhood, Stephen Pearson spent two years looking for a luxury property in the city before committing to a two bedroom unit at 10 Rittenhouse Square in 2012.

“There was a feeling of confidence from the people who bought there. I felt the momentum that I needed to get in quickly,” said Pearson, 49, a member of the building’s condo board, on which Comcast’s Roberts also sits.

Pearson, co-CEO of Mt. Laurel, New Jersey-based Contemporary Staffing Solutions, bought a 2,300-square-foot unit on the 24th floor for $1.85 million in September 2012. That was after the Comcast CEO made his purchase. Roberts declined a request for comment through his spokesperson.

Philadelphia Orchestra

“If Brian feels good about it, so do I,” Pearson said. “Being on Rittenhouse Square, in a high-end building, I felt it was the best long-term investment and home.”

Sales more than $1 million in Philadelphia climbed 31 percent to 122 deals in the 12 months ending September 2012, according to data from Zillow Inc. (Z:US) Nine of those agreements were for properties priced more than $3 million, the most since at least 2007. This year so far, eight units at $3 million or more sold at either 10 Rittenhouse Square or 1706 Rittenhouse Square, according to Philadelphia property records.

Philadelphia, unlike New York, is not attracting foreign investors who can bid luxury apartment prices to stratospheric highs. Dranoff says there is still enough demand to keep him busy and set local records.

Lap Pool

Last month, he announced plans to build a “New York-style” tower at Broad and Spruce Streets across from the city’s Kimmel Center for the Performing Arts, where the Philadelphia Orchestra plays. The 125-unit condo tower will be attached to a 150-room hotel and include an 85-foot lap pool. It will be the first condo-hotel property to be built in Philadelphia in more than two decades, Dranoff said.

Scannapieco, whose company, Scannapieco Development of New Hope, Pennsylvania, is now negotiating to acquire another site in the Center City area where he plans to build more luxury condos, with a single unit per floor.

“There are a lot of high end people who don’t want to go to Florida and New York City and want to stay in the community where they have memberships and business interests and kids,” said developer Scannapieco.

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net

To contact the editor responsible for this story: Rob Urban at robprag@bloomberg.net


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Companies Mentioned

  • CMCSA
    (Comcast Corp)
    • $50.68 USD
    • 1.09
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