1409-13 Fitzwater St. has been home to an auto shop since the 1960s, with a business called Mina Motors operating out of the triple-wide building for at least the last couple decades. This more or less made sense for many years, as auto shops were quite common in residential neighborhoods for a long time, falling out of fashion relatively recently. In addition, the neighborhood now commonly known as Graduate Hospital suffered from considerable disinvestment and vacancy from the 1960s through the early 2000s, so it’s not like developers were clamoring to redevelop this property for an extended stretch of the 20th century.

But times have changed in this neighborhood, and in a big way. These days, Graduate Hospital is effectively an extension of Center City, with home prices for new construction kissing $2M in some pockets. Over the last twenty years, developers have bought up almost every property that could be redeveloped, building homes and apartments and revitalizing the neighborhood’s business community. So when this property was listed for sale a couple years ago for $2M, we figured it was only a matter of time before the old garage was demoed and replaced by three high end homes or an 8-10 unit apartment building.

In a somewhat surprising turn, the building has not sold, but is being rented out by a small local gym chain called On Track Fitness. This company has a couple locations in the burbs and also has spots in Rittenhouse, Passyunk, and Queen Village. This appears to be their largest location, at over 4,500 sqft. This gym has an interesting approach, offering membership and training on the lower end of the cost spectrum, and also providing 24/7 access to their facility.

The fact that developers didn’t come forward to buy this building tells a story about the state of housing development in downtown Philadelphia. A combination of a wobbly economy and high interest rates has materially impacted the market for high end townhomes in the last couple years. What might have been a no-brainer in 2019 is a much tougher nut to crack in 2025. To put a very fine point on it, a former surface lot on the corner of Broad & Fitzwater got redeveloped into ten luxury townhomes, starting back in 2019. That project is much tougher to underwrite today.

With demand for these types of homes depressed at the moment, we’re seeing homes sit on the market for longer and as a result there are deals to be found. But real estate moves in cycles, and eventually the inventory will get absorbed and rates will come down. When that happens, we predict prices for these types of homes will soar, as supply will suddenly be constrained by a lack of new projects in the pipeline. For the sake of the business, we hope that On Track has a similar run at this location as Mina Motors. But we wouldn’t be the least bit shocked if a developer steps forward a few years from now and pays top dollar for this property with an eye toward luxury housing.