Originally Posted by We Got Five
Trump postpones Philadelphia development
By Suzette Parmley
INQUIRER STAFF WRITER
Developer Donald J. Trump has postponed construction of his $300 million Trump Tower Philadelphia project because of tightening market conditions.
The 45-story, 263-unit tower is proposed for Penn Street near the foot of Spring Garden Street. Construction had been previously delayed because Trump needed riparian rights - or underwater development rights - from the city.
Now the credit crisis and crumbling economy are further stalling the project, where units were to start at $700,000.
"With the current market conditions as they are, we have decided to continue construction in a more favorable environment," said Trump's daughter, Ivanka Trump, who is executive vice president of development and acquisitions for The Trump Organization in New York, which handles Trump's real estate ventures.
Trump had originally projected Trump Tower Philadelphia to be completed by the middle of this year. He spent more than a year acquiring permits and building rights from the city. Then the real estate market tanked.
This follows Trump's building problems in other major cities where he has similar luxury condo hotel towers going up, including Chicago, Miami and Las Vegas.
The credit crisis has affected the availability of financing for such projects, and buyers have become much more cautious.
Ivanka Trump declined to say when construction would proceed on the Philadelphia project, but she said today: "We are committed to this project, want to build the best one possible, and will continue construction when the market allows us to do so."
In Center City, Trump is competing against a slew of other high-end residential projects, including 1706 Rittenhouse, where 31 units start at $4 million.
Real estate broker and developer Allan Domb, the so-called "Condo King of Philadelphia," said Trump's waterfront location was not a slam dunk.
"I've always thought a Trump Tower property should be located in and around Rittenhouse Square," he said today.
"The waterfront area has still not developed the amenities that luxury condo dwellers seek, such as the ability to walk to restaurants, supermarkets, coffee shops," Domb said. "That location is not a walkable location unless you're a marathoner."
According to the Center City District, projected new housing units scheduled for construction this year in an eight zip code areas between the Schuylkill and Delaware Rivers and from Girard Avenue to Tasker Street was 1,933 units. Of that, 330 units are rentals, and the rest - 1,603 units - are condos and single-family homes.
Since Trump first announced his Philadelphia project in January 2006 that was to include landscaped gardens and a high-end spa, Ivanka Trump said it had received "a substantial response internationally." She said today in a statement that "a significant number of reservations for units had been taken," but she declined to say how many of the 263 units had been sold.
Figures show that sales of upscale residential units in Center City have slowed compared with a year ago.
According to the Prudential Fox & Roach HomExpert Report, 94 homes priced $500,000 or more sold in the second quarter of this year, compared with 105 homes in the second quarter of 2007. For the first nine months of this year, 275 homes priced $500,000 or more sold, compared with 299 homes in the same period of 2007.
Steve Storti, senior vice president of marketing for Prudential Fox & Roach Inc., said there were a number of factors for the decrease.
He said in the previous cycle, from 2003 to 2006, potential Center City condo buyers felt obliged to find a new home before selling an existing home in the suburbs, because they assumed the suburban house would sell quickly.
"What's happening now is you don't want to own two homes for a prolonged period of time," Storti said. "It's a stall on the marketplace that didn't exist a couple of years ago."
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