Philadelphia's Naval Square a condo success story

One Liberty Place looms over the Naval Square development, built on a 20-acre site.
One Liberty Place looms over the Naval Square development, built on a 20-acre site.
Posted: August 30, 2010

After almost four decades as Cherry Hill homeowners, Arthur and Rebecca Silver considered moving back to New York - but they opted for Philadelphia instead.

A renter in University City, Gregory Fridman - with a down payment he began accumulating after a promotion - wanted a home "near bars, but not in them," as he jokingly puts it.

Ultimately, the Silvers and Fridman bought condos at Naval Square earlier this year. Indeed, the 66 sales at the complex, at the 20-acre site of the former U.S. Naval Home at 24th Street and Grays Ferry Avenue, constituted more than 10 percent of the 604 condo sales recorded by the city from March 1 to June 30.

During a real estate downturn in which even tax credits couldn't always guarantee new homes would sell, Naval Square managed to buck the trend with what buyers cited as a combination of location, security, and newness.

"Though Naval Square is not for everyone, I think its popularity is evidence that it filled a void in the Center City housing market," said Jeff Block of Prudential Fox & Roach Real Estate.

Buyers paid prices ranging from $308,900 for the least expensive, 938-square-foot, one-bedroom condo to about $900,000 for a three-bedroom, two-bath unit with a den.

Some, like Fridman, were first-time buyers. Others were way past that, like the Silvers, who lived for "391/2 years" in a condo at Chanticleer in Cherry Hill, which they sold at the end of May.

Selling in a down market was very difficult, said Arthur Silver, 74, a retired marketing executive: "We took a bath . . . at least a very short haircut."

The couple - Rebecca Silver, 70, is a retired school administrator - spent $756,834 for a three-bedroom, two-bath condo, city records show.

"I spent $365,000 for mine," said Fridman, 32, a research assistant professor of biomedical engineering at Drexel University, where he obtained his doctorate in 2008. "I tell all of my friends that I paid $600,000, and they never question it."

Fridman's parents, who lived in Marlton, liked his unit enough to buy their own in May for $576,400.

Naval Square's population of about 900 includes singles, empty nesters, and a growing number - estimates are 30 percent - of families with children.

"A baby boom started two years ago," said Tami Dimmerman, 37, who in 2007 bought a $408,000 townhouse with husband Harper, 38, a lawyer. "It seems half the families have little children."

The Dimmermans have contributed to the boom: They arrived with Chloe, now 4; Sienna, 18 months, came later.

Civil engineer Jack Smyth, 37, who commuted to Center City for 15 years from Montgomery County, settled on his $403,655 two-bedroom condo in March.

"It has exceeded my expectations," said Smyth, engaged to be married in July.

All 425 condos and townhouses completed thus far in the Toll Bros. complex have been sold, and 402 are occupied, said Brian Emmons, assistant vice president of Toll's City Living division.

When Naval Square is built out by 2013, there will be 601 units, down from 1,000 once planned.

The City Living division also builds in and around New York City, including old industrial towns such as Hoboken, N.J.

In an earnings conference call Wednesday, Toll chief executive officer Douglas C. Yearley pointed to the company's New York-area high-rise projects as "another bright spot" in the builder's third quarter.

Emmons, relocated by Toll in 2007 from Naples, Fla. - "ground zero" in the housing downturn, he said - deems Naval Square and the Philadelphia region "amazingly isolated" from the industry's troubles elsewhere.

"We have been selling 70 to 80 units a year since the first one closed in October 2005," Emmons said.

Up to 35 prospective buyers a week walk the tree-shaded grounds, he said, checking the progress on 47-unit Bainbridge Court, due for completion in April. Half the units there already have been sold.

Few people dispute that the development has been as good for the neighborhood as it has for Toll Bros.

Naval Square "helped extend the boundaries of Center City," said Center City District president Paul Levy.

Econsult Corp. vice president Kevin Gillen, who tracks housing trends in the city, said: "There is clearly a larger pattern of demand flowing outward from Center City to the neighborhoods that touch it, and Southwest Center City is part of this. Rising house prices have driven younger households out to nearby neighborhoods, where they've helped initiate a revitalization of their own."

Home prices in Southwest Center City remained well below the citywide average until 2000, Gillen said. Then "they took off like a rocket."

Omit Naval Square sales so they don't skew prices upward, he said, and "everyone in that area gained in the last 10 years - and, moreover, they haven't lost much in value since the downturn."

Tami Dimmerman observed: "I know the market has been affected, but they continue to sell units here."

Toll Bros. has been eager to add incentives to win over buyers. For example, Smyth's condo's price was cut to move it quickly, to help the builder start next-phase construction.

Said Arthur Silver: "The fact that they were willing to combine a unit to give us two entryways, two air-conditioning units, and two baths pulled the trigger for us."

Still, early Naval Square owners now looking to sell are not getting the prices they want, which Prudential Fox & Roach agent Block said was typical today with new Center City construction.

That reflects a 7 percent decline in city prices since the market's peak here in 2007.

"I had several owners call me about selling," Block said. "Once they realized the size of the check they'd have to write to get out, they decided to rent their unit instead."

For Toll, which made millions building in the suburbs over four decades, Naval Square is a sea change.

"A historic renovation of an urban-infill property is a very atypical project for Toll Bros.," said Gillen. "I would love to know why they chose to do it."

There were moments when now-executive chairman Robert I. Toll wondered why, too.

At its 2005 dedication, he said that at times he had lost patience with the project. President and chief operating officer Zvi Barzilay, who envisioned it, urged him on.

Toll built Naval Square, but two decades of diligence by the neighborhood and preservationists shaped it. Neighbors lost one battle, however, over the thing all the buyers interviewed mentioned when asked why they had picked Naval Square:

The Gate.

Locals argued, recalled Terry Gillen, executive director of the Philadelphia Redevelopment Authority, that "you either are a part of the neighborhood, or you aren't."

The gate still makes longtime residents angry, even as Southwest Center City improves and buyers point to the security it seems to ensure as a major attraction.

Said Silver: "Even though things change for the better every week, it is still a transitional neighborhood."

Yet many prospective buyers object to the gate, Block noted, saying they tell him: " 'I am not interested in Naval Square because I want more of a real city neighborhood feel, not the feel of a suburban gated community.' "

Terry Gillen, who has lived in Grays Ferry for 25 years, was among the local advocates and preservationists who battled Toll for more than two decades to "make sure they did it right."

When the Naval Home closed in 1976, a ward leader first proposed the site for public housing. Toll optioned the site in 1981, buying it in 1988 for $1.2 million.

Because the site is a national and local historic landmark - the neoclassical Biddle Hall, designed by William Strickland in the 1833, is one reason - Toll's plans were subject to extensive review.

"They wanted to demolish everything and build suburban houses," said Terry Gillen. "Then they wanted to build a high-rise at Grays Ferry Avenue and Bainbridge Streets. They even wanted to take down all the trees."

They didn't, and the parklike quality of Naval Square's grounds is cited as a factor in buyers' decisions. As is the recently opened pool.

"It seems to have encouraged people to interact with each other even more," Smyth said.


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

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