IN THE HEART of lower North Philadelphia, amid weeded lots, graffitied walls and mammoth abandoned warehouses, Tim Patton is betting on a renaissance.
Patton and business partner Christina Burris last year opened Saint Benjamin Brewing Co. inside an old warehouse on 5th Street near Cecil B. Moore Avenue. By the end of the year, they plan to open a brewpub there, anticipating that new development - and the young, hip residents who often come with it - will seep east from Temple University, north from Northern Liberties and west from Fishtown.
Unlikely as it may seem, welcome to the epicenter of the city's next big housing boom: North Philly.
"I really see big things coming to this neighborhood. I've been a big fan of it," said Patton, 38, who grew up in Delaware County and once worked in computer science. "One thing it could definitely use is more amenities - and we're hoping to be one of them."
Patton's wager is a risk that more and more developers, entrepreneurs and homebuyers are taking in neighborhoods like lower North Philly, Kensington and western Point Breeze. In those less-developed sections - many plagued by crime, blight and poverty - land and housing costs have remained relatively low, creating opportunities that are increasingly scarce in booming areas like Northern Liberties and the eastern portion of Point Breeze, where real-estate prices have skyrocketed.
Developers, experts and residents note a handful of characteristics that make those neighborhoods stand out as likely places for the next big booms: easy access to public transit, proximity to Center City, hip amenities and real estate that's still affordable for young adults.
'Proximity to the El is huge'
Patton isn't the only one putting his chips on North Philly. Since 2009, developer Chad Ludeman, of Postgreen Homes, has been buying up land and building trendy, environmentally conscious housing in the neighborhood and along the outer fringes of Kensington and Fishtown, where empty lots once dotted many blocks like missing teeth. Ludeman's vision, he said, is to keep buying and building in areas within short walking distance of the Market-Frankford Line.
"Proximity to the El is huge for us. That makes us comfortable going into an area that's still on the upswing," Ludeman, 36, said recently as he sipped coffee at La Colombe's new Fishtown outpost on Frankford Avenue. He said Postgreen plans to continue to press north along the train line, building smart, residential housing that sticks "as much as possible" to city zoning code, so as not to crowd neighborhoods and impede on residents who've been there longer.
How did he and his partners settle on some of their first few sites in fringe areas? Simple, Ludeman said: "We literally just watched where people felt comfortable walking."
Postgreen's latest is a set of bright, modern-design weathering-steel-fronted duplexes on Hope Street near Thompson in lower North Philly.
Across the city, in Point Breeze, John Longacre, of Longacre Property Management Group, is taking advantage of a similar set of geographic characteristics for his latest venture. Longacre has his sights set on the underdeveloped southwestern edge of the neighborhood for his next project, a mixed-use development of residences and commercial spaces he plans to build on a formidable chunk of vacant land along Point Breeze Avenue between Tasker and Moore streets.
"It's real easy," said Longacre, whose claims to fame include the South Philadelphia Tap Room and American Sardine Bar - and the neighborhood that has cropped up around them during the past several years. "In order for a neighborhood to work, it has to have physical assets. We're not just going to go into the middle of nowhere and say, 'Oh, we're going to build this really cool thing here and it's going to work.' Because that won't happen."
Longacre said he's taking a gamble on the far edge of Point Breeze because it needs just a few more amenities to take off.
"If you can find a neighborhood that maintains a decent amount of physical assets but is suffering from disinvestment, there's probably a pretty good likelihood that you can fix it by virtue of changing maybe just the thought process, the identity, putting in a couple new businesses, doing some residential infill," he said. "And then it'll happen."
Three big ZIP codes
If U.S. Census data for the areas on which Longacre, Patton and Ludeman have set their sights are any indication, their bets are good ones: The numbers show promising trends with increases in median income and residents with bachelor's degrees evident in three ZIP codes that cover the neighborhoods - 19145 in Point Breeze, 19122 in North Philadelphia and 19125 in Kensington.
In Point Breeze's ZIP code, according to census data and American Community Survey's 2009-13 five-year estimates, the number of residents older than 25 with bachelor's degrees or higher increased from 10 percent in 2000 to 18 percent in 2013. In North Philadelphia, the number of residents with at least bachelor's degrees increased from 9 percent to 14 percent. In Kensington, an even more impressive jump: Compared with 8 percent of residents 25 and older holding bachelor's degrees or higher in 2000, an estimated 31 percent had that level of education in 2013.
Median income and declining poverty levels paint a similar picture: From 2000 to 2013, the median income increased 44 percent in Kensington's ZIP code, 34 percent in Point Breeze's area and 28 percent in North Philadelphia.
Percentages of residents living below the poverty line in the areas - all of which had more than a quarter of their populations below poverty in 2000 - decreased, but with less drastic changes than the increases shown. In Point Breeze's 19145 ZIP code, 26 percent of residents lived below poverty as of the 2000 census, while the estimate in 2013 sat at 24 percent. In 19125, covering Kensington, the percentage living below poverty dropped from 28 percent in 2000 to 26 percent in 2013, and in North Philadelphia's 19122 ZIP code, the percentage dropped from 44 percent in 2000 to 39 percent in 2013.
In 2006, Candace Gallagher bought a house near the South Philadelphia Tap Room, where she works as a bartender. She was among the early adopters of the swath of South Philly - now called "Newbold" by many residents - where Longacre focused his earlier development efforts.
Gallagher, 36, said that during her more than a decade in that neighborhood - she rented before she bought her house - it has changed drastically.
Before, "it was a lot of renters and very transient, and it was kind of a no-man's-land," Gallagher said. "There wasn't really too much of a sense of community when I first moved here, but the businesses started coming in . . . and once people started buying instead of renting, they became more invested in the neighborhood."
In Kensington, modern, new homes stand in stark contrast to old brick rowhouses steps from the rumbling El - and a stone's throw from many still rough-and-tumble blocks that show obvious signs of the neighborhood's longtime struggles.
David, 36, a welder, moved from Brooklyn to Kensington a year and a half ago. He bought one of the homes built by Ludeman's company on York Street a few blocks east of the York stop on the Market-Frankford El.
"We like that stuff, the subway is walking distance, and we're also close to [Interstate] 95," said David, who asked that his last name not be published. "This reminded us of our neighborhood in Brooklyn. Between money and size, it made sense."
Longtime residents of that pocket of Kensington said development has sprung up recently. Before David's house and two other brand-new ones that flank it were built, the land they're on was a vacant lot.
"It seems like every empty space is getting filled in," said Steven Tobin, 51, who lives about a half-block away and bought his house in Kensington eight years ago. Tobin, originally from Southern California, said he and his wife bought in Kensington after renting in Fishtown became too expensive and the neighborhood got too crowded.
"We could get a better house for less money just by crossing Frankford Avenue, which is ridiculous but true," he said.
City officials say it's that displacement from neighborhoods that are skyrocketing in price that propels new development in fringe neighborhoods.
"Most of it is developers responding to what they perceive to be market demand, which comes from a burgeoning population, particularly of younger people who want to be here, are getting jobs here and can't afford to be buying $600,000, $700,000 properties at this point in the neighborhoods that fringe Center City," said Alan Greenberger, deputy mayor for economic development. "Let alone in Center City, which is even more expensive."
Greenberger pointed to pricier neighborhoods just outside Center City - like Queen Village, Southwest Center City, Fairmount and Northern Liberties - as examples of how development has tended to push outward from the core. He said that he couldn't speculate on exactly where the next big boom might bring new young residents and development, but that some areas are under pressure because they're still affordable and are not far from the hubs where people work.
"There's certainly development pressure on both the east and west sides of South Philadelphia, and there's development pressure in Fishtown/Kensington," Greenberger said. "It's a constant sort of stream of transitions, and [in] those areas, [they] are happening faster."
Still, those venturing into largely uncharted territory say being among the first is risky.
"What we do, there are no [comparable projects] for," Longacre said. "So, I've got to go to the bank and say, 'Oh, yeah, by the way, I've got to borrow this money, and I understand there are no comps around that will substantiate our crazy idea, but here's why it'll work.' "
For Ludeman, it's about sticking to a business model that keeps Postgreen's houses affordable for young people looking to buy. He said finding inexpensive land and keeping house prices below $350,000 is a sweet spot that Postgreen has found.
"Stuff really moves in that price range," said Ludeman, whose new duplexes on Hope Street near Thompson are priced between $275,000 and $335,000, according to Postgreen's website.
The neighborhood where Patton will open the pub at Saint Benjamin Brewing Co. is home already to a handful of housing hubs and attractions, including Crane Arts on American Street and the Lamp Factory Lofts, which share a wall with the brewery. Still, when the brewpub opens, it likely will be the only place of its kind in the area - and where it's situated remains sort of barren.
"Part of the issue is, if you're going to come visit us, your main corridors are 5th, Germantown or Cecil B. Moore, and there are a lot of gaps with vacant buildings and stuff, and it's kind of dark in the evening," Patton said. "If there were a few other projects between us and some of the other hubs, that would help draw people to us. I'm sure they will be coming over the next few years, and that is sort of one of the things we are gambling on happening."
Despite the challenges and the risk, Patton looks forward to seeing what the future has in store for the neighborhood.
"We like that [the brewpub] might bring some people over here and showcase what's great about the neighborhood," he said.
"It would be really nice to get tourism in Kensington that doesn't just involve looking at falling-apart factory and brewing buildings.
"We want to be part of that."
On Twitter: @morganzalot