Rivals end condo war and both will build

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Posted on Fri, Mar. 10, 2006
Rivals end condo war and both will build Work is scheduled to begin next month on the first of 2 residential skyscrapers that are planned across from City Hall. By Henry J. Holcomb Inquirer Staff Writer The long condo war across from City Hall is over. The rival developers who have held up each other's skyscrapers since 2002 have agreed - in court - to sue no more, and to support each other's projects. Craig Spencer, chief executive officer of the Arden Group, said construction on his 48-story building would begin next month. Timothy Mahoney said his 58-story project, destined to be the city's tallest residential skyscraper, would be under construction by early next year. Both said their projects would take about 30 months to complete. The two towers will be built side by side on the half-block across from City Hall at 15th Street that was cleared after a 1991 fire in the 38-story One Meridian Plaza that killed three city firefighters and damaged adjacent buildings. Spencer's will face City Hall; Mahoney's, Chestnut Street. The men have blocked each other's towers with battles before city agencies and in court. Two of the city's top real estate lawyers have been involved - Michael Sklaroff for Spencer and Carl S. Primavera for Mahoney. After months of negotiations, both agreed to modify their building plans. "Craig agreed to maintain a 65-foot separation between his tower and ours so our residents will have views of City Hall," Mahoney said. Mahoney, in turn, made the high-rise portion of his building narrower east to west to give Spencer's condos better views. Spencer co-owns the Philadelphia Soul arena football team with singer Jon Bon Jovi, and has an interest in the adjacent Ritz-Carlton hotel, which occupies the domed former Girard Bank and an adjacent former office building on South Broad Street. His tower will be called the Residences at the Ritz-Carlton, and will share amenities with the luxury hotel. In the settlement, Mahoney and his partner, Brook J. Lenfest, won the right to operate a 150-room luxury hotel on 10 floors of their tower. "We had played around with the idea of providing hotel amenities without the hotel, but that would have been very expensive," Mahoney said. Now, he said, the hotel market "has firmed up," and the ability to add a hotel component not only lessens the cost of adding amenities but also lowers the project's financial risks. The two sides differed on how their long feud was settled. Mahoney said John J. Dougherty, head of Local 98 of the International Brotherhood of Electrical Workers, put pressure on the two sides. Asked to elaborate, Mahoney said only that Dougherty "used subtle pressure... . He can be a very convincing guy. It was clear Doc wanted both projects, as he should, to provide work for his members." Spencer said he never spoke personally with Dougherty. Dougherty said that he "just provided some good old-fashioned Irish mediation" to work out several issues that had kept the two parties apart. He got involved, he said, because their long dispute was slowing development in that part of Center City. After years of fighting, the two had only nice things to say yesterday. "Tim has a much more elegant building than before. His architects did a real good job," Spencer said. "Craig's project, and his hotel, are an asset to us," Mahoney said. Mahoney was ready to build long before Spencer. If Spencer had not waged the vigorous fight, Mahoney's building could have been completed last year. Now, because Mahoney had to redesign his building to get the agreement, Spencer's building will open first, by nine months or more. "I can't believe I'm saying this, but I'm grateful to Craig for causing the delay," Mahoney said. In 2002, research said there would be a market for upscale condos selling for $800 per square foot and penthouses at $1,000 per square foot, Mahoney said. "The market moved up while we were fighting. Chestnut Street is now viewed as a good residential location. So we're going to use some of the most expensive designs and construction materials available to us," Mahoney said. Spencer set up a marketing office in August on a balcony overlooking the Ritz-Carlton lobby. He said he had reservations for 65 percent of his planned 300 units. There have been cease-fires before in this long war. This one, both men said, is backed by a binding agreement, signed this week in court. This time, they say, construction really will start. "We're building the best of the best. I think Craig is, too," Mahoney said yesterday. "The city is going to get two world-class towers." Contact staff writer Henry J. Holcomb at 215-854-2614 or hholcomb@phillynews.com.