Richer people are moving to downtowns.
Pete Fader often looks eagerly out the window of his office in West Philadelphia, where he is a marketing professor at the Wharton School of Business at the University of Pennsylvania, at the rising One Riverside, a 22-story luxury condominium building across the Schuylkill.
It will be several months before the condo he and his wife, Mina, have bought on what will be the 11th floor of One Riverside will be ready, but he admits he is like a little boy awaiting Christmas.
“My wife and I are city people, but we knew we couldn’t move back until the kids were finished — sports, school, out of the house,” said Fader, 54. The units in One Riverside all sell in the mid-to-low seven figures. “We are doubling down here — no second home, just the best of what the city has to offer.”
One Riverside is one of several high-end Philadelphia condominium projects either recently completed or in progress, something new for the city. A Drexel University professor, Kevin Gillen, produces a city-housing report each quarter, and it said that in 2015’s third quarter, there were 34 sales of more than $1 million — there had never been a quarter with more than 24 before.
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While $100 million Manhattan condos are the talk of high-end urban real estate, Philadelphia’s experience is being repeated in a quieter way all over the country, according to figures from the National Association of Realtors. Residential sales of $1 million or more in downtown sections of cities have been 2.2 percent of sales since 2013, compared with 1.8 percent in the 2009-12 period.
Richer people are moving to those downtowns, Gillen said, to judge from population increases there along with the expansion of expensive residential projects. Center City Philadelphia’s population has increased 16 percent since 2000 and the price of housing in Center City is $307 per square foot, up from about $200 a decade ago. It is $90 per square foot in the city overall.
Like Fader, who lives in Bryn Mawr, west of Philadelphia, most of these new high-end buyers are coming from the suburbs, developers say. This is a group that loves its mansions and large homes but is finally, not so reluctantly, trading them in for high-end city adventure.
“Things just lined up in the last few years,” said Patrick Phillips, the global chief executive of the Urban Land Institute, a research organization in Washington. “The peak of the baby boom is right around 60 and these wealthy folks have a lot of embedded equity in their homes. They have the wherewithal to move into something with space in the city.”
And cities have prepared for people with money, at least in their downtowns, Phillips said. They have concentrated theaters, arenas, upscale shopping and refurbished or new parks and museums there.
“We see it everywhere from San Francisco to what I call the ‘villes: Nashville, Louisville, Asheville — smaller cities as well,” Phillips said. While lower or middle-income suburban families may not be able to purchase something with enough space or close enough to walk to downtown attractions, the wealthier are diving in.
Jack Halpern, a shopping-center developer, never thought he would move from his “big house on a big lot with a beautiful swimming pool” in Sandy Springs, a northern Atlanta suburb, despite his children having grown. A friend who was developing a hotel/condo in trendy downtown Buckhead had been asking him to come look, but Halpern kept putting him off.
“Then he happened to catch us on a day when the plumber, the pool guy, a landscaper and a couple of other contractors were parked at our house,” said Halpern, 66, who now has a three-bedroom penthouse on the 26th floor of the St. Regis hotel/condominium. “My wife and I listened to the description of a walkable lifestyle, the security that comes with living in a high-rise when we are doing more traveling. All of life is timing.”
Halpern said he would not have considered moving a decade ago, when the center of Atlanta was more or less a ghost town, but Georgia State and Georgia Tech Universities have spread out, and other businesses, retail stores and restaurants have proliferated.
It was the same for Kenneth Sweder, a top business lawyer and philanthropist in Boston. Sweder and his wife, Gerri, lived in Lexington, a 35-minute commute to his downtown office. He had grown up in Queens and his wife in Washington Heights, and had always loved the bustle of cities.
Their two children had graduated from college and were clearly not coming back to their big house, so Sweder knew it was time to get back to his urban roots. The two now live in a huge apartment on the sixth and seventh floors of the former Somerset Hotel in the Back Bay.
“I even have a longer commute, the most beautiful commute in the world,” Sweder said. “Down Commonwealth Ave. through the Public Garden and then Boston Commons. It is a joy to go to work that way every day.”
Carl Dranoff, the builder of One Riverside in Philadelphia, said he was in the high-end game for good now, after years of mostly middle-class residential development.
“In the past five years, Center City has become much more trendsetting, desirable, full of promise,” he said. “The population is exploding — restaurants, the orchestra, the ballet, the stadiums — most all of it walkable.”
He added, “The suburban-housing market was depressed during the recession, but once that was over, the wealthy all seemed to want to be downtown — like they were kids again. I don’t think that will slow down for a long time.”