Questions about Land purchase and Development

[Jorge Lee]

Hi everyone, I'm interested in land development in Philadelphia and have a few questions. I have some experience in multi-family fix and hold but am new to new construction (ground up). 

I'm considering purchasing a vacant land in 19123 and would appreciate your guidance: 

1. Where can I find detailed zoning information (beyond just the code, such as max building height, maximum percentage for building size, etc.)? The current code is CMX2. 

2. What is the purchase process for vacant land? What should I be careful about compared to buying an existing property, and are there any key differences? 

3. How many permits do I need to apply for a commercial project, and how many plans will I need from the engineer? 

4. I plan to hire a general contractor but would like to understand the basic process. Can anyone briefly describe the steps involved in building from the ground up? 

Thank you in advance for your help! Your insights will be greatly appreciated.

[Stuart Udis]

@Jorge Lee A lot to unpack here:

1. CMX2 properties in Philadelphia must have a ground level commercial use for the first 30 feet of building depth on the ground level and the number of residential units is dependent on the lot size. You can build up to 38 feet and on 75% of the lot area (80% for corner parcels). There are height bonuses but not likely applicable for the parcel you are contemplating. Secondary egress can trip up a lot of developers, especially if you are planning bedrooms in the rear of the building which most do. If it's not a corner parcel and there's no access to an easement alley on the side or rear you will also require a breezeway on the ground level which narrows the ground level footprint and depending on the width of your parcel, can make the commercial space less marketable. Beyond that, with 38 fet of height you can avg. out to about 8.5 feet ceiling heights if you are to build 4 stories but that usually short changes the commercial space, so you may conclude 3 stories is more prudent (depending on the marketability of the commercial space and number of residential units you can build).

2. No different than buying an existing building you should be conducting diligence. Here, you should be obtaining a geotech report and reviewing the title report and the zoning  to verify there are no deed restrictions or zoning overlays. Furthermore, depending on what was last on this site, or in close proximity a phase 1 may be necessary. 

3. The permits and approval process, particularly the pre-requisites really depends on the size of the lot and lot orientation. You will need a zoning permit, possible streets approvals, utility plans, excavation plan, building permit, MEP's, then sub contractor permits for all of the MEP's. You will require a civil engineer, architect, structural engineer and MEP' engineer for coordinating all of the plans.

4. GC should be the last of your worries since you don't have plans.

I would caution you that a CMX2 project as your first ground up project may be a tall order. They are more difficult to finance than a single family or multi-family project and have a number of building code requirements that add cost and many smaller GC's who you likely will be reliant on aren't familiar with these requirements. If you have no track record it makes the process more difficult and you should expect to receive lower bank leverage. My advise is to start with single family or a small multi-family ground up project first but this market environment is truthfully not the time to be completing any ground up projects unless you are self performing the construction which it doesn't appear you are in a position to do.

There was a recent Philadelphia  forum chain started by someone else who was contemplating ground up in a similar fashion to what you are proposing and I cautioned they would be better off buying something that was newly built and believe after conducting their own diligence realized it was too cost prohibitive at this time to build with 3rd party GC's in Philadelphia when also accounting for the interest rate environment and cost to build.