Over 1,600 new apartments planned for Kensington

A long-neglected section of Philadelphia is seeing an impressive residential boom, as more than 1,600 units of housing are proposed, under construction, or have been completed north of East Lehigh Avenue along an imposing railway embankment that has long served as a defining barrier between the neighborhoods to the north and south.

This railbed has historically been lined with junkyards, tire shops, and, recently, homeless encampments beneath the nearby overpasses. But now between Emerald Street and Aramingo Avenue and Lehigh and Somerset Street, at least seven new residential projects are at various stages of development.

“These projects are taking what was formerly pretty heavily industrial areas, and in some cases land that had been vacant for many, many decades, and bringing it back into active use,” said Andrew Ortega, president of the East Kensington Neighbors Association.

In terms of access to amenities, the location is desirable, despite its proximity to open-air drug markets and history of towering tire fires. The area is close to I-95 and SEPTA’s Market-Frankford Line, as well as being a short walk or bike ride from many of the city’s most exciting new bars and restaurants.

Just south of Lehigh, almost 500 units are planned for the old Woods Bros. Building Materials site at 2756 Frankford Ave., but other opportunities for large projects amid the sea of rowhouses have been limited.

As a result, the real estate industry has turned to this barren tract in Kensington near the epicenter of the city’s opioid crisis, marking the northern frontier of the development wave that crested after the pandemic — and may now be stuck here as rising interest rates make builders and lenders more conservative.

The Riverwards Group leads the development push around the rail lines, with 161 units completed in Kensington Courts at 2037 E. Lehigh Ave. and 535 under construction near the Somerset Station at 2200 E. Somerset St. on the other side of the railbed island. A further 231 units are planned at 2750R Aramingo Ave., although that part of the Riverwards Group’s plan is caught up in a legal dispute with Conrail.

The attraction to this desolate industrial land? It was cheap and close to flourishing Fishtown.

“What drew us to the area is that we are able to get land in a large quantity and density,” said Mohamed “Mo” Rushdy, managing partner of the Riverwards Group. “[That allows us] to target the middle person who is making $50,000 to $80,000 a year in terms of household income.”

Rushdy said these run-down parcels allow for developers to build projects of large scale — in contrast to neighborhoods such as Fishtown, where the development boom was more limited to building individual homes where there happened to be gaps in the rows and 10- to 20-unit apartment buildings.

And Rushdy’s firm isn’t the only one betting on the area north of Lehigh.

Kensington Courts is flanked by two other projects in the works: 275 apartments at The Pump House at 2157 E. Lehigh are under construction from a group called B.S.K.M., and developer Isaac Singleton has proposed a 157-unit apartment building on a former tire yard at 2001 E. Lehigh Ave.

At 2201 E. Somerset, 128 homes are under construction facing the rail embankment by Somerset LLC, and 132 units are approved at 2740 Amber St., directly behind Kensington Courts, although the lot is now for sale.

Rushdy argues that these kinds of projects allow for “naturally occurring affordable housing.” Building in this way — with large numbers of units on cheap, formerly undesirable land — allows for a far lower price point than the new construction seen around Center City or in nearby Northern Liberties.

Given the scarce resources available for publicly funded low-income housing, he argued, this is a scalable alternative. “Because it’s in mass,” he said. “It’s in hundreds of units.”

But affordable housing developers and other neighborhood advocates argue that these units are still out of the price range for many people who already live in the neighborhood. To the north and west of this rail hub lie some of the poorest communities in the city.

“You can’t afford that here,” said Bill McKinney, executive director of the New Kensington Community Development Corp., who notes that the average income in the area’s census tracts is $30,000 a year. “Who is this for? They can say whatever they want, it is not for people from here.”

McKinney wants to see some of these formerly industrial sites earmarked for affordable housing accessible to the neighborhood’s low-income residents. He also argues that the projects’ design often feels fortresslike, intentionally cut off from the surrounding community.

“You can literally lock yourself in and do your thing,” McKinney said. “You’re entering a compound; you’re not really entering the neighborhood.”

Given the competition for scarce subsidized housing resources for affordable development, defenders of the development boom argue that its unlikely community development corporations or other builders would have the resources to undertake the construction of this much new housing. The alternative, they say, would have been for the area to continue to languish.

For Ortega’s East Kensington Neighbors Association, the appeal of these projects is threefold.

Large new residential developments on isolated formerly industrial lots on the neighborhood’s edges are less disruptive to current rowhouse residents. They hope the proximity to the Market-Frankford Line will also drive more traffic to the Huntingdon and Somerset El stops. And lastly, the projects could be a boon for traffic-calming measures on the Lehigh Avenue corridor — a five-lane speedway that has long posed a threat to pedestrian and cyclists.

Residential projects on Lehigh “will move the needle in terms of the city improving the conditions for all users of the street,” said Ortega, adding that the new residential area could easily be linked to the Delaware Riverfront and its trails via the railbed behind the buildings.

Like the nearby projects, the latest proposal by Singleton includes a six-story building, consisting mainly of one-bedroom units. It sports a roof deck, a gym, and 59 underground parking spaces. It will also feature two ground-floor commercial spaces with a total of 7,763 square feet available for retail.

Singleton’s plan will require zoning variances from the city to move forward, as the land is designated purely for industrial use and the structure is a little taller than what is allowed.

Also, the developer, who declined to comment, will face a more challenging development environment than the one that confronted his counterparts five years ago when developer interest began to form around the Conrail railbed.

Specifically, the strength of Philadelphia’s 10-year property-tax abatement for projects that didn’t get their permits before the end of 2021 is half of what it had been. Construction loans today are burdened with far higher interest rates, and materials costs remain elevated.

Speaking more generally of development in the area around the embankment, Rushdy said the current environment was not so favorable for new projects. The city’s construction boom may be paused and would be unlikely to advance beyond the embankment for now.

“This was made possible by the full 10-year tax abatement and the low interest rate environment,” Rushdy said. “If a project hasn’t closed on a construction loan and is not currently under construction, I’m not sure when it’s going to start. It can get approved and become a job on paper. But whatever is not started, don’t hold your breath.”