East Kensington has flourished over the last several years, mostly because it’s directly adjacent to Fishtown, and its lighter home prices have attracted buyers that want to live in this part of town on a lower budget. After years of disinvestment thanks to the departure of industry, there was a considerable amount of vacant land in East Kensington, and developers have bought up most of it and built hundreds of new homes. Also due to the industrial history of the neighborhood, there remain a few sizable vacant lots in East Kensington, properties that were once home to warehouses and factories but have sat empty for many years. Two such properties, the 21K sqft 1929 E. York St. and the 30K sqft 1924 E. Hagert St., were both owned by the Providence Dye Works back in the day. That business closed down many years ago and the old industrial buildings came down roughly two decades ago. Little has changed at these properties since then.

Almost exactly a year ago, we shared the news that development finally appeared to be on the horizon for these parcels. Developers had posted zoning notices and had plans for roughly a hundred new units. More specifically, the plans called for 9 duplexes and a five-story mixed-use building with 28 apartments and a pair of commercial spaces on York and 25 duplexes on Hagert. Both projects required a variance, and the ZBA was gracious enough to grant both variances last summer. Alas, nothing has happened at the properties since then- but plans have changed dramatically.

Earlier this month, developers presented new plans at Civic Design Review, showing the renderings above by JKRP Architects. For the Hagert Street property, they’re planning a six unit building with 143 apartments, 18 artist studios, and 45 underground parking spaces. On York Street, look for a slightly smaller building, with 105 apartments, 13 artist studios, and 20 underground parking spots. That’s a significant change from the original plan and we can only think of one reason for the change – the fact that these properties are located in a Federal Opportunity Zone.

As we’ve told you before, Opportunity Zones were created as part of the 2017 tax cuts. Any developer that buys a property in one of these zones is able to defer capital gains invested into the project and won’t have to pay taxes on any of the gains from selling the property after it’s developed. The only catch is that the developer needs to hold onto the property for at least ten years to yield all of the tax deferrals and savings. The duplexes in the previous plan were probably tabbed for sale, which would have left a considerable amount of money on the table. Instead, build and hold apartment buildings will allow the owners to take full advantage of the benefits of the Opportunity Zone.

While the revised plan may be beneficial to the developer in terms of future tax obligations, we think that this new plan is also a win for the neighborhood. As we’ve said many times over the years, Philadelphia desperately needs more density, and considering the fact that these properties are quite close to the El as well as the bustling Frankford Avenue corridor, these buildings are wholly appropriate for this location. We’d have maybe appreciated a commercial amenity or two in the buildings, but beggars can’t be choosers, and to be honest there’s plenty of retail within a few blocks.

One more thing we should mention – these projects appear to be completely by right. After they get through CDR (which is non-binding, remember), they’ll have a clear path to permits. If things go well, we could see one or both of these projects break ground before the end of the year. And the fact that new owners will be developing these properties and that they’re coming in at a combined asking price of $20M should strongly incentivize things to move as quickly as possible.