Center City residential developers build on the 'wow' factor [The Philadelphia Inquirer :: ]
(Philadelphia Inquirer (PA) Via Acquire Media NewsEdge) Aug. 17--Arthur "Art" Elwood Jr., cofounder of Christian Street Partners with Virgil Procaccino, is an accountant-turned-real estate developer.
He and Procaccino have just completed their latest residential project, 501-507 S. 12th St. at Lombard in Center City, former site of the Pain Center, a medical office. After the property's owner was arrested for insurance fraud, Christian Street Partners bought the corner lot and developed it into six homes priced at $1.675 million to $2 million each.
"It took us a year to get this project going," Elwood said.
The old Pain Center sign is now "hanging in the bar down the block," he said, laughing. "It's very appropriate there."
The developers retained the Philadelphia-based firm Harman Deutsch as architect, and in place of the Brutalist-style two-story brick office structure now stand sleek single-family homes of 5,200 square feet, with two decks and two-car parking facing west on the side street.
A recent tour of one of the homes revealed a living room with large, wraparound picture windows and a gas fireplace, and a kitchen featuring modern Poggenpohl cabinetry with some sliding-door features.
Each house has an elevator and a trademark design that includes skylights, blond-wood floors, and wooden railings on the staircases.
The $10 million project was financed by Bryn Mawr Trust and is the latest in a string of Center City East developments in the booming neighborhood.
Christian Street Partners' first development was a 13-unit condominium project built in 2001 on the 200 block of Christian Street (hence the company's name). Others followed, at 741-59 S. Second St., 1537 Pine St., 22d Street between Locust and Spruce, and 21st Street between Lombard and Pine.
Procaccino was once an accounting client of Elwood's, and they became business partners. They have the same philosophy of working as general contractor and developer, buying the materials themselves and saving that money to put back into the business.
"Our subcontractors like that also, because they don't have to carry inventory and all they have to worry about is payroll," Elwood said.
Christian Street Partners is a family operation, too: Two of Elwood's three sons -- oldest son Garrett and youngest son Hunter -- have worked as accountant/bookkeeper and construction-management coordinator in recent years. John Duffy Jr., Procaccino's son-in-law, is their real estate agent. (John Krause of Century 21 Alliance also represents the 12th and Lombard property.)
For future projects, Elwood said, "we're looking in the Art Museum area and south of that area."
Christian Street Partners tries to differentiate itself.
"It's not a big field [of developers] in the $1 million-plus market," he said. "Our first four buyers looked at other developments and chose ours; maybe we are lucky because our neighborhoods are better. I do the closings, and all of our buyers said the designs were similar to other developers -- two-car parking in the rear, for example. But we put the living space and kitchen on the second floor, with a rear deck as the outdoor space."
Almost all similar projects are more than 4,000 square feet and start in the $1 million-to-$1.5 million range, Elwood said. "But our buyers come in, and it's the 'wow' factor. For example, we add an extra six to eight inches in ceiling height. We don't skimp on that."
The million-dollar market for condominiums is alive and well in Philadelphia, as recent property transactions demonstrate. Interest rates are still low, and the city's tax abatement continues to bring in new residents from the suburbs.
A $1 million, 30-year mortgage can be had at 3.5 percent, Elwood said, with the remainder of the purchase price in cash.
"That is huge in driving the $1 million-plus market," he said. "It is a very hot market here."
In some cases, for jumbo mortgages (in the Philadelphia region, those greater than $417,000), "the banks are holding the mortgages themselves, which speeds approval," Elwood said. "And it takes as much work for the bank to do a $1 million mortgage as it does a $250,000 mortgage."
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