Brickstone Cos. has more apartments planned for Center City's Market East, a quiet-after-dark district of shops and medical buildings it's helping to transform into one of Philadelphia's fastest-growing residential neighborhoods.
Brickstone anticipates two towers - at least one of them a residential high-rise with ground-floor retail - at a site at 12th and Sansom Streets that it bought last year, managing partner John Connors said.
The plan joins at least five projects by Brickstone and others that will more than double the amount of housing in Market East, as the area's nascent retail renaissance and large number of workers draw developers' interest.
"It's going to radically change the neighborhood," said Harris Steinberg, who directs Drexel University's Lindy Institute for Urban Innovation. "When you infuse former commercial or business districts with residential, you start to get a 24/7 environment."
Residential real estate is heating up across Center City, with rents in its highest-end apartment towers averaging $2,191 a month, according to Delta Associates, a market tracker. That was an increase of 3.1 percent over 2014, up from a five-year average increase of about 1 percent, said William Rich, Delta's multifamily practice director.
But Market East's development is playing catch-up with the rest of Center City, which saw an overall population increase of more than 26 percent between 2010 and 2014, according to data compiled by the Center City District business association. In that time, Market East saw no major residential development.
That's about to change.
The five new projects planned or under construction, not including Brickstone's latest, would add 1,400 apartments to an area bounded by 13th, Filbert, Seventh, and Chestnut Streets. That's an increase of nearly 123 percent over the 1,140 units of housing there during the U.S. Census tally in 2010.
Developers are flocking to the area as the onetime shopping mecca regains some of its lost retail luster with the $325 million renovation of the Gallery at Market East and other projects, Steinberg said.
"The level of investment that we're seeing wouldn't have happened without some of these first steps," he said. "They feed off each other."
Builders also are conscious of Market East's emergence as a center of medical employment, anchored by Thomas Jefferson University with a Center City workforce of more than 12,000. Wills Eye Hospital employs 350 at its main campus building and could boost its head count as it considers an expansion.
"Having residential in close proximity to those institutions would let you have a captive audience of potential renters and buyers," Rich said. "So developing in that area makes sense."
Coming residential projects include a 300-unit high-rise at 709 Chestnut St. that Philadelphia's Parkway Corp. and partners aim to start building this year. And Houston developer Hines broke ground last month on a 322-unit apartment tower at 1213 Walnut St. it is building with the locally based Goldenberg Group.
Washington's National Real Estate Development is building a tower with 322 apartments - due for occupancy in early 2017 - and 105,000 square feet of retail at 1100 Market St. as part of its massive East Market project.
Just to the south, Brickstone is finishing work at its 1112-1128 Chestnut St. development, which includes 112 apartments over a Target store and other retail. The developer also has permits for a 342-unit tower at 701 Market St. beside the Lit Bros. building, which it owns.
Brickstone's latest plan would pair residential units with offices, a hotel, retail, or some combination at a 26,550-square-foot site now occupied by a parking structure, Connors said in an interview.
The company is leaning toward two towers to avoid deadening the streetscape with a single "monolithic" building, he said, adding that the parcel could accommodate building heights over 300 feet.
"It's filling in very quickly," Connors said of the neighborhood earlier this month at a Cornell Real Estate Council panel in Philadelphia. "It's going to get very dense."