Shirt Corner, a $22 million apartment project on the site of the former haberdashery that went under the same name, has been one of the most challenging projects for Leo Addimando’s Alterra Property Group.
What Addimando didn’t account for were the multiple cracks discovered in the facade. Two structural engineering firms were brought in to determine whether those fissures could be repaired and the project move forward as planned. Not so fast. Those cracks were irreparable. The structures posed imminent danger, forcing the initial plans to be scrapped.
The buildings were razed and the entire project was redesigned though done with an eye toward the original plans. Shirt Corner was also the developer’s largest project and, complications aside, it appears the project has comfortably found its place along Market Street in Old City. Though some finishing touches are still being worked on, the project opened in August and its 59 units are half leased up. Rents run between $1,300 to $3,000.
The project is different from some of the other residential developments Addimando has been involved in such as 1616 Walnut St. and Avir at 15th and Chestnut streets in Philadelphia, both of which were conversions of office buildings. What each project has in common is the approach Addimando takes.
“We generally build to an audience,” he said. “We’re always asking: Who is my renter and why would they rent here with me and not someone else?”
At Shirt Corner, that person is a young professional who doesn’t necessarily have a big budget to blow on rent and doesn’t need to be coaxed with an overabundance of amenities. At 1616 Walnut, the target renter is willing to spend a little more on a location close to Rittenhouse Square and wants a whole menu of amenities. There’s vitamin infused water in those apartments.
Addimando is also keen on ground-floor retail in each of his deals, saying that having that component can make a development a financial success. Shirt Corner was no different.
“The CVS made the project viable,” he said about the pharmacy that occupies 10,000 square feet of the ground floor. “We built the whole project around it.”
In June, while the project was still under construction, Alterra sold that retail condominium involving CVS for $10 million.
Alterra started out in 2005 under a different name with different investors. It was first 806 Capital, which was named after Addimando’s street address in college. Under the new name, Addimando’s partners are Doug Jordan and Jeff Pustizzi.
Addimando’s first project was Lofts at 1234 Hamilton, which is the same area his uncle, Alex Generalis, pioneered as Philadelphia’s loft district. The company has grown from there and has amassed a portfolio of 1,000 residential units. It is exploring two other residential projects in Society Hill but, at this point, Addimando is looking to diversify the company’s holdings. Ninety percent of its real estate is multifamily.
“I’m a little concerned about the number of apartments in town,” he said. “I think everyone is, but I may be the only one willing to admit it.”
A lack of job growth in Center City is one reason for his concern. The other is what he called a “day of reckoning” for the city that will come in five to seven years when the millennials now occupying many of the apartments have school-aged children and need to make a decision to either stay or relocate to better school districts in the suburbs.
In the meantime, Addimando has started to round out Alterra’s holdings. Last month, it joined with Stockton Real Estate Advisors to pay $20 million to buy 1760 Market St., an office building that they plan to renovate.
Natalie Kostelni covers real estate and economic development.