Need your help : FISHTOWN opportunity - Do you know the area?

Question

Hello Fellow BP'ers! I am a Brooklyn based investor currently weighing an opportunity in Fishtown. Specifically, near the Frankford Ave/Richmond St intersection.

Since I am completely unfamiliar with Philly (I've only been there a handful of times - all 12+ years ago) I'd greatly appreciate your input on this location.

Here are some basic questions I would love to know your opinions on, if you would be so gracious, but would greatly appreciate any insights you were willing to share...

Solid upside for Ground-Up? (Assuming expert construction mgmt & decent cost controls)
Any downsides or extraordinary risks that you anticipate or forsee? (Zoning, Regulations, Taxes, etc..)
How does the trend in the demand curve look? Trending up? Starting to soften? Near the top, or still upside?
Is the market over-saturated with supply for Residential? How about commercial?
What are Resi / Commercial rents per Sq/Ft or for 1 / 2 BRs in this immediate area now? Are they trending up or down? Why?
Vacancy rates? Trend?

Also, If there are any commercial / resi brokers here willing to chat, pls PM me with your contact info.

Thank you all so very much!

Matthew Teter · Answer

Joe offered some great insight. Our office and team works with developers and investors and we are located in Fishtown. If we can help you further with this or schedule a call please let me know. Here is our insight: Solid upside for Ground-Up? (Assuming expert construction mgmt & decent cost controls)That location is in a somewhat less desirable pocket however it will sell. A lot of variables come in play here. Is the project shovel ready? How many units are you building? If its one unit what outdoor space do you have and can you add parking? If its multi-unit whats the square footage footprint and what can be built into the property? What would the size of each unit be? If its mixed use there will be different questions. Any downsides or extraordinary risks that you anticipate or forsee? (Zoning, Regulations, Taxes, etc..)Zoning if the property is not shovel ready could be an issue. We have a team member that works in a capacity where we could help with this. There are not any extraordinary risks however there are certainly considerations depending on the opportunity. How does the trend in the demand curve look? Trending up? Starting to soften? Near the top, or still upside?Near the top and yet this is based on price and location. Depending on the unit and project there are comps that will tell the whole story. In this area, demand for residential is highest between $250,000 and $400,000 (this is a generalization due to lack of project detail) and days on market in that range are often less than 30. We have sold several in less than 7. That being said, we worked with a buyer that negotiated 4 blocks from your intersection at a $480,000 list and we were able to negotiate for the better part of a month with the house already at 40 days on market. The demand will rise with outdoor space, parking, and higher end finishes as well as technology. The better product that can be delivered the faster it will sell. If the project is standard new construction the project will not move quickly because our market is flooded with a basic new build. Is the market over-saturated with supply for Residential? How about commercial? The market is not over-saturated. That area in commercial will be more challenging based on location and again depends on zoning. What are Resi / Commercial rents per Sq/Ft or for 1 / 2 BRs in this immediate area now? Are they trending up or down? Why?To put it into that language, which typically is not how we look at properties in Philadelphia, your rent varies from $1.35 to $1.50 for residential and slightly higher for commercial. Those numbers are general because finishes and actual location will drastically impact them. Fastest rent would be 2 bed 2 bath under $2000 a month for residential. Commercial is space by space and dependent on the build out. Vacancy rates? Trend?My suggestion would be to sell the property. This depends on the deal and your investment criteria. Let me know if this was helpful or if I can help further.

Joe P. · Answer

I'll kick us off. Interesting area - definitely a ton of appreciation thanks to hipsters moving in around 10 years ago, yuppies around 5, and some serious development in-between. People are paying a ton of money for what was a warzone years ago. Sugarhouse is around the corner, which has its benefits and its drawbacks. The Fillmore, Barcade, etc...lots of fun stuff to do in that area. Again, those things have their appeal and drawback for the type of property you may be looking to build.Brings me to my next point -- it sounds like you are into some new construction opportunity? Is it a develop from ground up and sell? Or are you building a multi-unit apartment building to hold and rent? I think the type of property is important there. A million dollar townhome would probably sit on the market, but a bunch of 350k smaller townhomes might move quickly. Young professional renters would probably be drawn to the area.To answer your specific questions: Solid upside for Ground-Up? (Assuming expert construction mgmt & decent cost controls)I am not a builder/developer and have no experience here. But I think I know enough about the area to know ground-up might work if you build to the type of people who want to live there. I don't see it being a great area for super expensive large homes, but maybe a development of a multi-unit building or several townhomes on a lot would move quickly to young professionals/yuppies/hipster types?Any downsides or extraordinary risks that you anticipate or forsee? (Zoning, Regulations, Taxes, etc..)Philly has its challenges; I could see zoning and permits being a PITA for you, also stringent neighborhood requirements now that the area is saturated. Crime is odd there; given its proximity to Sugarhouse its not a perfect area.How does the trend in the demand curve look? Trending up? Starting to soften? Near the top, or still upside?Haven't consulted any trends, but it is relatively saturated. A REI or REA might be able to provide more specific details for the area.Is the market over-saturated with supply for Residential? How about commercial? My understanding is inventory is at historic lows. If you can build and turn it around in 6 months, you should be able to sell and get what you want.What are Resi / Commercial rents per Sq/Ft or for 1 / 2 BRs in this immediate area now? Are they trending up or down? Why?Haven't consulted any trends, but it is relatively saturated. A REI or REA might be able to provide more specific details for the area.Vacancy rates? Trend?Haven't consulted any trends, but it is relatively saturated. A REI or REA might be able to provide more specific details for the area.Apologies I couldn't be of more assistance, I'm just an interested viewer of this thread with knowledge of the area, having lived in the area my entire life. Keep us posted with your news!

Nikolai Skhirtladze · Answer

I live and flip houses in the area. Fishtown is red hot and demand is rising not just in this area but surrounding as well

Matthew Teter · Answer

@Brooklyn R. Call me when you are free to do so. Also, if you would like my cell number please private message me so if I happen to miss you I can reach back out to you. Let me know if you have any additional questions.

Michael G. · Answer

@Matthew Teter @Joe Papp Gentlemen: This is supremely helpful. Greatly appreciated. Matthew, either I or a colleague may reach out shortly to chat if you don't mind. Thanks!