Houston development company Hines and the locally based Goldenberg Group are marking the start of work on their 1213 Walnut apartment project, a sign of Center City's mounting success in attracting big, nationally focused developers for residential ventures.
The companies, along with Bethesda, Md.-based equity partner ASB Real Estate Investments, plan a groundbreaking ceremony Tuesday for the 26-story, 322-unit project in the city's Midtown Village neighborhood.
Hines has developed large projects in 27 states and the District of Columbia, and in Canada, Europe, Asia, and South America. It is the latest major out-of-town developer to join a local partner here on an upscale apartment project.
"Center City Philadelphia had popped up as a place where we needed to think more about spending some time," Hines managing director Daniel Moore said. "Not only was the population getting bigger, but we started thinking of it in a broad sense of getting bigger, better, smarter."
The population of the area bounded by Tasker Street, the Delaware River, Girard Avenue, and the Schuylkill increased 16 percent between 2000 and 2014, the Center City District says.
Household incomes in Center City's core, mostly between Vine and Pine Streets, averaged more than $107,000 in 2013, with 76 percent of residents holding a bachelor's degree or above, compared with a nationwide average of 29 percent, according to the Center City District. Millennials, the 20- to 34-year-olds considered a target market for new apartments, made up 47 percent of core Center City population.
Those numbers have attracted developers such as Washington-based Dalian Development, which joined Philadelphia's Rodin Group on the $160 million Rodin Square apartment and shopping complex near the Philadelphia Museum of Art.
Washington's Federal Capital Partners, meanwhile, teamed with Cross Properties and Alterra Property Group on the $50 million conversion of a 1929 office building into the Icon luxury apartments.
Moore said Hines had been scouting for projects in Philadelphia when the opportunity arose to help Goldenberg develop the land it bought years earlier on Walnut Street into their $125 million apartment project. It was Hines' second foray into Philadelphia, after managing a $75 million renovation and restoration of 30th Street Station in 1988.
Robert Fahey, an executive vice president at the commercial real estate services firm CBRE in Philadelphia, said the company's return is a vote of confidence.
"Hines has an ability to go wherever they see the most opportunity," Fahey said. "They're truly a global firm, and they have chosen to make a major investment in Philadelphia."
The 1213 Walnut project will include about 7,200 square feet of ground-floor retail, some of it alongside Fergie's Pub, on the property's Sansom Street edge.
Like many new apartment buildings in New York City, 1213 Walnut is being built without a parking garage, in anticipation of tenants who prefer to walk or cycle to nearby jobs, Moore said. It will have ample bicycle storage, with a ground-floor repair and maintenance room, he said.
Tenants who need cars can use a separately owned parking structure next door.
Said Seth Shapiro, chief operating officer for the Goldenberg Group: "Partnering with someone like Hines allowed us to strike that perfect balance between understanding the nuances of Midtown Village, but also understanding what are all the different things going on around the world that we can bring here."