In condos, retail businesses getting in on ground floor

Posted: August 05, 2007

There are days when you just don't want to go outside. Or if you must, you want to stay close to home. Because it's too hot or too cold, or it's raining or snowing. Or just because it's Saturday.

But what if you need milk, or have to make a bank deposit? Or you want to get a haircut, or drop off dry cleaning, or spend a half-hour on a stationary bike to work off some of the week's angst?

If you make your home in an apartment or condo in Center City, your answer may be as near as the ground floor. Whether they're rehabbed structures or new construction, most residential buildings have large ground-floor or basement spaces that are proving more valuable as commercial or retail environments than as living units.

That's because buyers see easy access to shops and services as a valued amenity, local market observers say. And developers are responding accordingly.

"When you buy a condo, you buy lifestyle, and being able to take the elevator to the lobby to run into the 7-Eleven or to get your hair done is a big part of it," said Bari Shor, an agent with Prudential Fox & Roach. "It adds to the convenience."

Ground-floor amenities are as important to buyers as whether the building has a 24-hour doorman and a concierge desk, Shor said. "They need to see that they are getting a lot of extra services for the condo-association fees that they are paying."

Shor added: "I've been showing condos at the Western Union Building at 11th and Locust Streets, and one of the advantages being touted is the Walgreen's in the lobby."

Also on the ground floor will be Union Gourmet Market, a take-home/sit-down eatery with outdoor dining operated by chef Felix Martin and Theresa Fera of the Downtown Club, said Bruce Lang of Coldwell Banker, who is handling sales for the Western Union.

Carl Dranoff, developer of Symphony House at Broad and Pine Streets and other residential properties throughout the city, said getting the retail combination right is important.

"The perfect mix of residential and retail goes together like socks and shoes and bacon and eggs," he said.

When Dranoff opened his Left Bank luxury rental in University City, the nearest cluster of shops was three blocks away. So in 18,000 square feet of ground floor, he leased space to Italian and Japanese restaurants, a beauty salon, a coffee bar, a gourmet grocery store, and a bicycle shop.

At Dranoff's Victor building on the Camden waterfront, where retail tends to be at a distance, the 341 rental apartments are served by a sports bar, an Italian restaurant, a 2,000-square-foot grocery store, and a Subway.

With Symphony House well-positioned in Philadelphia's central business district, "I settled on food," Dranoff said: Girasole, an Italian restaurant, and a gourmet takeout restaurant and sit-down cafe.

"A bank approached us for the 1,600-square-foot space to be occupied by the cafe," he said, "but I decided that I'd much rather have that corner lively after 5 p.m."

One way to guarantee the success of any residential building is to stay on top of the needs and wants of your potential buyers.

That's why Jon Orens, sales manager for Orens Bros. Real Estate, solicits comments and opinions from those interested in his firm's buildings.

"When we started 2200 Arch three years ago, the two questions we always heard from potential buyers were, 'Will there be a doorman?' and 'Are you going to have a health club?' " Orens said. "So we went with the doorman, and we decided to set aside almost 5,000 of the 20,000 square feet on the ground floor for the fitness center."

Still, 80 percent of that space will be commercial, and Orens has been actively looking for tenants while keeping a portion of it for a real estate office.

"We have a dentist signed up, and we've been approached by a dry cleaner's and someone with an idea for a cafe," he said.

When prospective buyers are asked about retail, Orens said, "a few of them say that they would prefer there not be any, but most of the responses we get are in favor."

The residential buildings that Allan Domb has opened in and around Rittenhouse Square have been developed with space on the ground floor for retail and commercial, he said - with a primary interest in restaurants.

"At the Parc Rittenhouse at 225 S. 18th St., there is space available for two restaurants and two retail tenants, and, at the Warwick at 1701 S. Locust St., there are three restaurant spaces available."

Ground-floor retail and commercial space in residential buildings is as old as the city itself, of course. Mid-20th-century buildings such as Hopkinson House on Washington Square and Society Hill Towers had it then and have it today.

Currently, Hopkinson House has a bank, a convenience store, and a beauty salon. Society Hill Towers has a mini-shopping center, with a restaurant, a grocery store, a salon, and offices. Independence Place has a ground-floor drugstore (relocated from Hopkinson House years ago), a hair salon, and offices.

At the residential project at 777 S. Broad St. near Catharine that Dranoff plans to announce officially in the fall, there will be an entire ground floor of commercial, "to complement the urban lifestyle," he said.

But sometimes, buyers want more than a developer can physically supply.

"When some of our buyers asked about a health club, they also asked if there would be a swimming pool," Orens said. "We only had about 5,000 square feet for everything, so a pool was out of the question."

Each of 2200 Arch's high-end condo buyers was offered a hot tub, but one of them turned it down.

"So we put it in the health club," Orens said. "It's kind of a swimming pool."


Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.

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