Philadelphia—The Avenue of the Arts is about to get a little longer, according to Carl Dranoff, founder and CEO of Dranoff Properties.
In June, the company broke ground on 777 South Broad, an environmentally sensitive building that will extend the center for shopping, restaurants, and luxury housing that lies just south of City Hall into new territory. It's Dranoff's second building in the expanding Avenue of the Arts district, and there's more planned.
“Our vision is to continue marching down the avenue,” said Dranoff. His eponymous company built one of four performance venues on the Avenue of the Arts at its Symphony House mixed-use condominium tower. Today, the avenue's bustle stops at South Street, the traditional boundary between the Central City area and the neighborhoods of South Philadelphia.
Past South Street, except for the occasional church or Philadelphia's grand High School for the Creative and Performing Arts, the avenue's proud limestone buildings vanish, and the strip is dominated by gas stations, parking lots, and check-cashing outlets. On its two-acre site, 777 South Broad's 146 new apartments are replacing vacant lots and run-down row houses. The building's 18,000 square feet of retail space will help light up the block with cafÃ©s and restaurants, said Dranoff.
There are benefits to building on the frontier of a growing neighborhood: For $7 million, Dranoff was able to assemble a site that fills a city block, pulling together a $6 million package of city-owned lots plus a group of dilapidated private houses that cost $1 million. The state supported the $70 million project with a $4 million grant through its Redevelopment Assistance Capital Program.
Dranoff expects to charge monthly rents averaging $2.50 per square foot, starting at under $2,000 for a one-bedroom unit. The five-story building should benefit from a tight apartment market in Philly when it opens in March 2010, with relatively few new projects in the works, according to a market analysis from real estate brokerage Marcus & Millichap.
In the midst of the crisis in the capital markets, Dranoff's strong track record helped the project close its $56 million five-year construction loan with Citizens Bank, one of the lenders to Symphony House. Dranoff put $10 million of its own equity into the deal.
Dranoff also decided to spend a little extra in an effort to make 777 South Broad the first property in Philadelphia to win a certification in Leadership in Energy and Environmental Design from the U.S. Green Building Council (USGBC).
The building will include measures to improve its air quality and save more than 30 percent on its electricity and water costs. The apartments also win points with USGBC for being located a few blocks from a subway station and a bevy of bus lines. The green features will add about 4 percent to the approximately $250 per square foot cost of constructing the 200,000-square-foot building.
Dranoff plans to use green design ideas on all of its future buildings. The developer also plans to continue its march down the Avenue of the Arts. It's considering new sites a few blocks south of 777 South Broad.