For as long as we’ve been blogging about real estate, we’ve been complaining about the fact that City agencies own thousands of properties, scattered across town. Don’t get us wrong- it’s well and good for the City to own certain types of properties, like municipal buildings, parks, rec centers, and the like. Our aggravation is instead tied to all the random properties that the City has acquired over the years and the fact that it has generally done a poor job in maintaining them and an even worse job selling them off in a structured and sensible fashion. This is part of the reason that the Land Bank was created, but in the three years it’s been around, we’ve only noticed a slight uptick in the pace at which the City sells off properties and a disposition system that remains incredibly murky at times.
Despite all these frustrations, we were pleased to get an email from the PRA the other day, announcing that they are looking to sell off a couple dozen properties. On the list of properties are lots in East Kensington, Whitman/South Philly, Port Richmond, and Fishtown. Objectively, this is great news, as these properties are almost exclusively random little vacant lots on otherwise complete blocks which would have surely been developed years ago if they were privately owned. Here are photos of a few of the properties on the list:
The property on Frankford Ave., which measures nearly 3,000 sqft and is zoned CMX-2, is probably the best of the bunch, and its redevelopment would be a great addition to the commercial corridor. As a result, figure there will be heavy competition for this one, and the party that ultimately buys it might have to overpay. On the other end of the spectrum are some properties that are quite small (a twelve footer on Hagert Street) or poorly located (the property on Kensington Ave., a block from Harrowgate Park), and we don’t know how much competition to expect for those parcels, if any.
While it’s great that the City is offering these properties for sale, there are still some serious roadblocks in the RFP process for a casual investor. Submitting a bid to the City requires preliminary design plans, evidence of developer experience, and evidence of financial capability. You would need all these things if you wanted to develop a property you bought in a private sale, but not until later in the process, when you already have the property under agreement or have completed the purchase, not when you’re still unsure whether you’ll buy the property in the first place. Further complicating things, the RFP listing doesn’t provide any guidance for a minimum bid price, which forces anyone making an offer to throw darts in coming up with prices.
At the risk of sounding self serving (since this website is owned by a real estate company), what would be the harm in the City hiring a realtor and listing its properties for sale on the open market? This would eliminate paperwork and streamline the process, and would ostensibly open up the opportunity to a wider group of potential investors and theoretically increase the sale prices for these properties. We’ve even seen PHA take this approach in recent years, and if they can do it, why can’t the PRA?