Monday, October 8, 2018

Kensington's Inevitable Development Boom Is Beginning

Northern Liberties is well into the infill phase of its development, and Fishtown has grown from hipster enclave to white-hot commercial corridor with skyrocketing home prices. It is no surprise, then, that development is continuing farther north along the Market-Frankford Line.

For those outside the development community, Kensington is perhaps best known right now for its place at the center of Philadelphia's opioid crisis. The still-pervasive sights of addicts on the street and needles on the ground are not viewed as a danger on the level of violent crime, which is a key distinction for developers such as The Riverwards Group. “Most interested people know of [the opioid issue], they’re aware of what’s there,” said The Somers Team Realtor Julie Hankins, leasing agent for the Rivewards Group. "But they know that the more involvement they have with the community, and the more routine [new move-ins] become, it’ll move out."

The lure of the Frankford Avenue corridor and the scarcity of land in Fishtown has driven home and rental prices through the roof there and, at least in the case of rentals, Kensington as well. The combination of rising rents and the anticipation of long-term growth has led most developers in the area to focus on for-sale townhouses and condos in their developments. Riverwards Group principal Mo Rushdy noted that while rents have risen to the point where "you can’t get anything respectable for less than $1K/month," the available housing inventory in Philadelphia dropped by 26% in the 12-month period ending in this year's second quarter. Despite the constraint on supply, home prices have remained reasonable in Kensington thanks to the availability of land, Rushdy said.

 “A single-family home in Kensington can be $369K with a 3% or 4% interest rate, so the obstacle is the $25K at closing, which is a real obstacle," Rushdy said. "But the monthly mortgage is about $1,500 per month, since the abatement takes care of the taxes.” In South Kensington, the area that sits north of Girard Avenue and west of Frankford Avenue, the Riverwards Group has begun construction on N5 Square, a 57-unit development made up of single-family townhouses, townhouses split into multiple condos and condo units sitting atop ground-floor retail at Fifth Street and Cecil B. Moore Avenue. The cheapest units are selling for $250K, and they are selling — the first phase is 50% sold before construction is complete. Hankins and Rushdy both told Bisnow that incoming residents have targeted for-sale units as a safe way to build long-term value in a neighborhood that seems assured to grow for years to come. “Our buyer is on average 32 or 33 years old, making $85K per year with a household of 1.5 people, single-income or double-income with no kids,” Rushdy said. The relative lack of children is notable, according to Rushdy, because it makes new residents less alarmist about the persistent presence of opioid addicts rendered permanently or temporarily homeless in the area. The opioid crisis and related homelessness has gotten so bad that Mayor Jim Kenney declared a state of emergency in Kensington in the first week of October.
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