From Unlicensed Horse Stables To Gleaming Biotech Campuses: PIDC Sets A Course For Philly's Industrial Future
When Angie Fredrickson arrived with a marketing team to take pictures of a crucial development site in Southwest Philadelphia, the Philadelphia Industrial Development Corp. vice president of real estate services ran into several things amiss in the public park and nursery known as Bartram’s Garden.
To start, they found a fence with a locked gate — a curious, and illegal, sight in a public park — and just beyond it, a horse grazing comfortably.
It was a scene that distilled the essence of Philly, especially outside of the commercial hub of the city: A combination of lack of resources and benign neglect had allowed a local man to keep at least one horse, one miniature horse and one goat on public land for some time, carving a little pastoral niche for himself nestled between one of the city’s most beautiful public spaces and one of its low-income communities of color.
PIDC, the pseudo-public body that seeks to guide development on industrial land in the city, owns the site that abuts Bartram’s Garden on one side and public housing development Bartram Village on the other. But Fredrickson still had to get on the phone with someone at the city’s Department of Parks and Recreation to get the fence unlocked and help address the “unlicensed horse stable” on city property.
The incident served as a symbol of the line PIDC will try to tread as it seeks to encourage development in places like Kingsessing, the neighborhood that contains Bartram Village and borders Bartram's Garden.
“Folks in Southwest Philadelphia see development coming and they have mixed emotions, because they want improvements for the neighborhood, but fear being displaced," Fredrickson said. "Our goal is to enrich the existing neighborhood, not displace it.”
In whatever form it takes, new industrial development in Philadelphia is likely to push up against residential neighborhoods, and the neighborhoods with the most readily available land are often low-income and made up primarily of people of color. To figure out the most effective and equitable form of that process, PIDC is looking for outside help.
"A lot of people worked very hard to position these sites," Fredrickson said. "We’ve put so much effort into workforce development, making sure there [will be] jobs and adequate training for community members. There’s so much potential here, why not get a little bit of professional support to make sure we’re getting the exposure we need from the market?”
In December, PIDC issued a request for proposals seeking a firm (or group of firms) to craft the agency’s next Industrial Land Use Strategy report, a document that will help set the direction of how PIDC will create and preserve industrial development for the city going forward. The previous such report, published in 2010, primarily focused on identifying the extent of industrial land in the city. Since then, the industrial sector has rocketed through the stratosphere to become the hottest asset class in commercial real estate and a key element of e-commerce’s rise to prominence worldwide.
“In the run-up to what was the Great Recession, there was a really strong pressure on industrial land to be reused or rezoned, which was largely driven by retail,” PIDC Senior Vice President of Real Estate Services Tom Dalfo told Bisnow. “Ten years later, the wheel has turned, and it probably turned faster than anyone thought.”
Even in 2018, new distribution centers were just beginning to get built within city limits. Now, virtually all of the likely plots for those centers, such as in Far Northeast Philadelphia, have been claimed. What is left, like the former PES refinery that Hilco Redevelopment Partners is converting into the Bellwether District, is much closer to residential portions of the city than what has already been built. With the refinery, as well as the land that has been an ad hoc pasture directly across the river, the sites neighboring these areas have borne the environmental and socioeconomic brunt of the previous generation of heavy industry and its decline.
“There’s a sensitivity that has to be taken into consideration” when getting closer to population density, Dalfo said.
Even before the strategy report is conducted, PIDC is looking to take the former industrial land next to Bartram’s Garden into the next generation of heavy industry, one that the city hopes will be more environmentally friendly while creating jobs at every salary level: biomanufacturing.
After issuing an RFP last year, PIDC selected a team formed by Colliers and local firm Little Giant Creative to market the land, along with a lot to the north, for developers as the Lower Schuylkill Innovation District. After marketers from both Colliers and Little Giant toured all three sites on Jan. 19, they began creating a package to attract firms from across the country to apply for a request for qualifications, from which a shortlist of applicants will be selected to apply for an RFP. PIDC hopes to select a developer for the Lower Schuylkill by the end of the year, Fredrickson said.
It took years of acquiring smaller plots of former factory land on the western bank of the Schuylkill River, then a process of environmental remediation that is still ongoing, along with infrastructure improvements, for PIDC to gather an assemblage complete enough to lure a developer. Now, that developer will have an unprecedented opportunity to build what will ideally be manufacturing space for life sciences companies like those based in University City, where innovations in cell and gene therapy caused an explosion of investment.
"We're the folks who took the challenge of a really hard site to develop," PIDC Director of Real Estate Services Troy Mandy said.
Without PIDC’s involvement, developer Plymouth Group is converting a former manufacturing plant in North Philly to life sciences manufacturing, with its search for tenants led by Colliers Executive Vice President Joseph Fetterman. Fetterman, who leads the life sciences practice for Colliers in the Philadelphia region and is also heading the search for developers for the Lower Schuylkill, pointed to the recent announcement that gene therapy darling Spark Therapeutics is planning its own, $575M biomanufacturing plant in University City as a milestone in proving the longevity of the gene therapy and cell therapy boom.
“It’s a huge accelerant,” Fetterman told Bisnow while touring the site known as Bartram South. “It’s a really impressive commitment to manufacturing, which makes me really optimistic, because there are a lot of companies that are really not that far behind [Spark].”
Part of the criteria for selecting a developer at the Lower Schuylkill will be a plan for advancing racial equity, which includes engaging Kingsessing residents, including those of Bartram Village. A plan by affordable housing developer Pennrose to redevelop Bartram Village into a modern, mixed-use community has yet to begin construction after being announced in 2018. But since that time, a mix of nonprofits such as the Knight Foundation has been leading community engagement efforts to understand what Kingsessing residents want for their neighborhood and what they fear, Fredrickson said.
A key component of both the Lower Schuylkill developer search and the strategy plan RFP will be integrating businesses owned by women and people of color. PIDC’s last major decision was awarding master developer rights for the next phase of the Philadelphia Navy Yard to a partnership of Ensemble Real Estate Investments and Black-owned Mosaic Development Partners, and it will seek to re-create those results multiple times going forward.
Little Giant Creative, Colliers’ partner in marketing the Lower Schuylkill, is also owned by people of color, including co-founder Tayyib Smith, who also co-founded The Collective, the Black-led commercial real estate investment group that debuted last year.
“About 44% of Philadelphia’s population identifies as African American, but only 2.3% of companies are Black-owned, so we have to be bolder and more imaginative with our choices,” Smith said of finding a developer.
For PIDC, being more imaginative partly means bringing in consulting teams like Colliers and Little Giant, as well as whoever the agency selects from the strategy plan RFP. But a large part of the need for outside consultants is that PIDC's ambitions aren't matched by its internal capabilities.
"We're small but mighty," Fredrickson said of PIDC. "I don’t think we feel that we necessarily need or require [consultants]. At this time last year, the market was hot, and I drafted most of an RFQ for developers and was almost ready to go, but we decided to take a step back because, for one thing, we paused and wondered how critical it was to push right now. Once we took a step back, we brought in someone to help us with community engagement, and we’ve really been looking to address long-standing pain points in the community.”
Once developers are selected for both the Lower Schuylkill sites and for whatever arises out of the strategy plan, PIDC will move on to identifying and assembling the next plot. For all the strategizing and long-term planning it has to do, the agency ultimately has to leave the final product up to others.
“We drive growth for Philadelphia through financing and real estate, and, well, here is the real estate," Fredrickson said.
CORRECTION, FEB. 1, 2022, 12:45 P.M. ET: A previous version of this article misstated Little Giant Creative's role in the marketing process for the Lower Schuylkill Innovation District. This article has been updated.