Murano success a sign of Market Street West's rise

The 43-story Murano condominium building on Market Street settles the last of its 302 units next month. (CLEM MURRAY / Staff Photographer)

The story of the Center City condo market's turnaround stands 43 stories tall at 2101 Market St.

That's the address of the Murano, the bluish glass-and-steel high-rise that in June 2009, as the real estate bust choked the life out of sales, was the first locally to resort to an auction.

Next month, the last of the Murano's 302 original units will go to settlement - a milestone that local real estate observers consider not only a measure of market strength but a 180-degree turnaround in the perception of the viability of that Market Street West.

"The area between 20th Street and the Schuylkill River is clearly filling in the dead zones with new residential and mixed-use projects," said developer Carl Dranoff.

"Look for the Schuylkill River to become a connector instead of a divider between University City and Center City," said Dranoff, who is building One Riverside, a luxury-condominium high-rise at 25th and Locust Streets.

Over the last year or two, "the Murano has experienced a favorable confluence of factors: competitive prices, a decent selection of inventory, a rebounding market and economy, and an improved location," said Kevin Gillen, chief economist of Meyers Research and senior research fellow at Drexel University's Lindy Institute for Urban Innovation.

"The cliche about real estate is 'Location, location, location,' but the story of the Murano shows that it can also be 'Timing, timing, timing,' " Gillen said.

The final unit sold near its $895,000 asking price. Sale prices in the building have ranged from $400,000 to $2.5 million, according to Joanne Davidow, vice president of Berkshire Hathaway Home Services Fox & Roach, whom the developers brought in in 2013 to sell the last 52 units.

In 2008, the Murano was completed at a cost of $165 million. Co-developed by P&A Associates' Peter L. Shaw and Alan E. Casnoff and Thomas Properties of Los Angeles, its site was in an area where Thomas owned One and Two Commerce Square and had co-developed the old After Six Tuxedo factory with Philadelphia Management Co. as apartments.

The choice of location fit the spirit of the times, Gillen said: "The construction of an upscale glass tower with 270-degree views on a dead strip of Market Street whose only immediate amenities were a Trader Joe's and an adult theater was perfectly emblematic of the irrational exuberance of the housing bubble."

The adult theater, the Forum, has since been torn down, and the land was part of a series of property sales in the 2100, 2200 and 2300 blocks of Market Street by STB Investments Corp. to Brandywine Realty Trust, Parkway Corp., and PMC Property Group or their affiliates.

Is that stretch of Market truly about to change?

Robert Zuritsky, Parkway Corp. president, said that a lot at "2300 Market Street was the first property I bought when I graduated from college, and we've tried to develop it three times."

Although "Philadelphia is more active than I have ever seen it, all the conditions have to be right," Zuritsky said. "There are still challenges to 'Go west' " on Market Street."

The Murano's opening coincided with the financial meltdown of September 2008 and the Great Recession that followed. Condo sales stumbled.

Though other new high-rises - the Aria, 10 Rittenhouse, and Waterfront Square - suffered slumps that resulted in foreclosure for the original developers, the Murano's builders chose to auction 40 units on June 27, 2009.

Jon Gollinger, president of Accelerated Marketing Partners, of Boston, which handled the auction, saw it as a way to let the market, rather than the developer, set value.

"In that period of accelerated marketing programs, auctions, our programs, established base pricing from which conventional marketing programs could spring off of," Gollinger said Monday.

His market analysis put that base at $249,000, and set the reserve published minimum bid at $250,000.

In 105 minutes, there were contracts for 42 of the 178 remaining units. Not one sold for the minimum in any price range.

"It was a damn good day," recalled Center City real estate agent Mark Wade, who sold four units.

"The sell-out of the Murano illustrates that buyers can be swayed away from the Grade A location if you can offer such things as a tax abatement and parking in a new-construction condominium building," Wade said.

(The Reef, the last tower in Waterfront Square, is "almost" sold out, said David Grasso of Grasso Holdings, who took over the building - also once considered out of the way - from the original developer, who had auctioned some of the units.)

Gollinger said he "never doubted for a moment" that the Murano would sell out.

"It was an excellent building with well-conceived floor plans," he said.

Some original Murano buyers were not pleased with the auction, and, in August 2010 51 of them sued the developers, accusing them of inflating sales figures to boost unit prices.

In February 2011, Common Pleas Judge Allan Tereshko dismissed the suit "with prejudice" - meaning it could not be refiled.

In the months after the auction - and with others underway regionwide - "a funny thing happened," Gillen said: "The high-income segment began to recover, with properties priced in the million-dollar range rebounding sharply."

He attributed that to the "smart money recognizing bargain-basement prices and realizing they wouldn't stay low forever."

Then, fortuitously, the neighborhood also began to show improvement, Gillen said: The Forum closed, Trader Joe's expanded, the Barnes Foundation completed the relocation of its art collection to the city, and Schuylkill River Park was renovated.

Bill and Joan Goldstein bought a 24th-floor unit at the Murano in summer 2008 "as an experiment to see if we liked living in town," she said.

They sold that unit quickly. But then they bought another, and then the one next door on the 37th floor.

"We've finally finished" combining the units after a year's work, Joan Goldstein said.


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