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PHILADELPHIA-Two New Jersey firms, Mt. Laurel-based Paradigm Realty Alliance and Red Bank-based Robertson Douglas Group, have acquired National-East, the second phase of the National, a multi-building condominium development of approximately 300 units in Old City. The development takes its name from the 1940s Art Deco National Products Building on N. Second Street.
The National was initially unveiled in January 2004, as GlobeSt.com reported, by a partnership between Cranbury, NJ-based Matrix Development Group and K. Hovnanian Cos., a national homebuilder based in Red Bank. This March, the original partnership put the east portion, approximately half of the total, up for sale. At the time, on condition of anonymity, a local condo developer told GlobeSt.com it would probably trade for about $15 million.
Meanwhile, Steve Patron, a former Matrix principal, left that company to form Paradigm. As its president and CEO, he led a buyout of the second phase. He declines to disclose the purchase price, which "was a part of the ongoing rewind of my partnership with Matrix," he says. More than 80% of the 153 units in the western portion are sold, according to Patron. The phase-one experience, he says, "gave us an opportunity to talk with real buyers about what they wanted."
As a result, the new development team went back to the drawing boards. "We found that there is demand for smaller units at a price below what is being offered in the new Center City condos. It's a segment that is not softening," he says. "Our target is first-time buyers, who are especially attracted to this neighborhood."
Unlike the opening phase, this one will include one-bedroom units, beginning at about 720 sf to sell in the mid-$300,000s, according to Patron. "We'll have units of up to 2,000 sf selling in the $800,000s," he adds, "and there is potential for combining units, which would reach past $1 million and may be competitive with what's left on the westside, but that's not the market we're targeting."
This phase includes preservation of the National building facade, with construction of a six-story building containing about 60 units behind it; a new 10-story building of about 80 units and 10 three-story townhouses at the center. The design includes more and larger windows, a tenant-desire Patron discovered during phase-one sales. The east portion contains 35% open space and includes renovation of the park fronting the neighboring historic Elfreth's Alley, plus underground parking and approximately 20,000 sf of ground-floor retail.
Construction costs have risen since 2004, which raises the estimated cost for National-East to $50 million, versus about $47 million for phase one. Demolition will begin this winter. Patron expects to be "out of the ground by early summer 2007," and a sales center will open the prior spring.
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