Friday, June 17, 2011

PMC seeks apartments in former AAA headquarters

by Natalie Kostelni

"PMC Property Group would like to convert the former headquarters on Market Street in Center City into an apartment complex, a project that entails expanding the building vertically.

The Philadelphia developer’s concept, submitted to the Philadelphia Planning Commission, calls for the construction of eight additional stories atop the existing five-story, 150,000-square-foot building. The extension is far from what current zoning allows, which would permit as much as 750,000 square feet to be built on top of it under certain conditions. Under PMC’s plans, it would add about 120,000 square feet to the building.
Approvals are already in place for an underground garage and PMC plans to construct 205 below-grade spaces. The proposed project, which would cost more than $50 million, would include 270 apartments and 15,000 square feet of retail space.
“We think it’s a strong area for residential development,” said Jonathan Stavin, executive vice president at PMC. “It’s closer to Rittenhouse Square than the Pepper building and it’s proximity to universities is strong.” (The Pepper building is an apartment complex at 1830 Lombard St., which PMC converted and recently sold for north of $50 million.)

PMC is targeting young professionals to occupy the apartments, Stavin said, adding: “We aren’t building student housing. These are market-rate apartments.”

The project was reviewed by the zoning committee of the Center City Residents Association, which saw the concept before the final plans had been developed, said Tim Kerner, an architect on the association’s zoning committee.

“We’re still in the process of reviewing it,” Kerner said. “There are several variances they need, the biggest is they are building a bigger building than [residential] zoning permits.”

The addition would be on top of the building as well as in the back of it, Kerner said. PMC is scheduled to return to CCRA June 28. It was presented before the planning commission earlier this week. While current zoning would allow for additional space to be constructed atop of the building, approvals are needed to convert the property to a residential use from an office.

Though it has taken some time, far West Market Street has gradually made the transition from an all-office corridor to one with a mix of residential projects. It began with the conversion in 2002 of the old After Six tuxedo factory by PMC into 168 apartments. Later, Thomas Properties constructed with P&A Associates the Murano, a $165 million, 42-story condominium tower, and Orens Brothers converted the former Daily News building at 2200 Arch St. into condos. Other residential projects tried to follow, such as Opus East’s proposed development at 1919 Market that was killed because of a softening residential market.

There is room for additional rental housing in Center City. The vacancy rate in Center City dropped to 1.9 percent, and rents have risen, according to Delta Associates, a research firm. Monthly rents have shot upward by 7.4 percent to an average of $1,918, or $1.88 a square foot.
The AAA building has been vacant since 2005 when the auto club moved to Delaware. Built in 1967 for AAA Mid-Atlantic, the unoccupied property had started to look shabby on the edge of the city’s Central Business District.

PMC, which bought the building for a little more than $8 million, has already started some interior demolition work. If it receives the approvals it is seeking, the developer anticipates completing the conversion in about 18 months."

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