A blank canvas and suite dreamsThe lure of ‘raw space’ can blind buyers to its costs and challenges.
By Alan J. Heavens<br />Inquirer Real Estate Writer<br /> <br /> More images Most urban condo buyers are happy with – or at least resigned to – how the developer has set up the space. That may be because, for buyers in the lower and middle price ranges especially, the cost of customizing every detail of one’s surroundings can quickly zoom out of reach. <br />Then there are those who seek out “raw space” that can be configured any way they want. They may be buyers at the higher end of the market willing to spend big bucks to get the look they’re after. Or they may be professionals – designers, architects and builders – who enjoy the challenge and have the expertise needed to fill in a blank canvas.<br /><br />But building your own lifestyle isn’t much fun unless it’s a hobby you can devote six to nine months to. Given the potential expense involved, and the dislocation that will result, a prospective condo buyer might ask: Is buying space you can completely individualize worth it?<br /><br />Raw space comes in many shapes and sizes, typically one-half to a full floor of a building. What the space costs per square foot varies from neighborhood to neighborhood in Center City – from $300 in Old City to $1,000 in Rittenhouse Square, says Allan Domb, president of Allan Domb Real Estate and the developer of several high-end condo buildings.<br /><br />Add in construction costs of $200 to $250 a square foot – up from just $150 per square foot two to three years ago, Domb said – and “from experience, I’ll tell you that only 10 to 15 percent of buyers can even deal with the energy, time and expense involved in it.” <br /><br />According to data compiled by economist Kevin C. Gillen at the Wharton School and published two weeks ago in the 2007 State of Center City Report, the average price of a condo in 2006 ranged from $194,391 in Northern Liberties to $513,057 in the southwestern part of the city’s central business district. <br /><br />Domb said the lion’s share of raw-space buyers are in the price range that starts at $1.5 million. He’s been dealing with more than his share of such buyers lately at Parc Rittenhouse, the Barclay, the Lanesborough, and the 421 Bank Building, among others.<br /><br />Bruce Lang, an agent with Coldwell Banker Realty Corp. on Columbus Boulevard, said only about 5 percent of his buyers were interested in raw space.<br /><br />”Even the first consult with the architect is enough to scare them,” said Lang, who listed the difficulty of obtaining financing for converting raw space at the top of his list of deterrents in the market below the $1.5 million mark.<br /><br />”There are no regular mortgages readily available, so what developers sometimes do is put in a cheap kitchen or a bathroom,” said <strong>Fred Glick, a Philadelphia mortgage broker, Realtor and developer</strong>. “And after the buyer obtains the mortgage, they’ll be torn out.”<br /><br />The usual process for raw space, Domb said, is to buy the unit with an acquisition loan, build it with a construction loan, and then, when it’s finished, get a mortgage that pays off the first two loans.<br /><br />As bargain real estate goes, raw space generally isn’t it, observers of the Center City market said.<br /><br />Though the raw-space buyer in the upper end of the market will usually pay less for the space, “the buy-it-as-you-find-it condo in most buildings under conversion will result in only a minimal discount in price,” said Prudential Fox & Roach associate broker Mark Wade, who specializes in mid-range condominiums. <br /><br />”Very rarely do I get requests for raw space,” Wade said. “Rehabbing a place is a full-time job. The typical Center City condo buyer is paid well enough so that [he or she] isn’t looking for a discount for space in need of renovation instead of move-in condition.<br /><br />”In addition,” he said, “if you are moving in from out of town, you are going to have to deal with the permit process, as well as find contractors and sources of materials. Most people don’t want to deal with that kind of an unknown.”<br /><br />It’s complicated, Glick agreed.<br /><br />”It’s a lot easier if your parents own a kitchen-remodeling business,” he said. “Even if raw space is a bargain, there’s a lot more involved than just signing a check.”<br /><br />When architect John Claypool bought his raw space, it was all about smaller bathrooms.<br /><br />Not all exactly, but that was one of the reasons why Claypool, executive director of the Philadelphia chapter of the American Institute of Architects, went the raw-space route seven years ago with the 2,000-square-foot 11th floor of a former office building west of Broad Street.<br /><br />”With a developer, you have to buy a Jacuzzi and have big bathrooms,” Claypool said. “But we don’t live in the bathroom. We wanted a country house in the city with a lot of space for the family. We wanted large, open spaces.”<br /><br />The developer of the building had put in new systems, but the space was raw and, therefore, easy to put a personal stamp on, Claypool said. In fact, everyone who bought in the building purchased raw space.<br /><br />Though he suggests that raw space is a niche market in the Center City real estate universe, Claypool readily acknowledges that most buyers aren’t totally enamored of what the developers are offering, either.<br /><br />”Developers often give them a choice of models, and in every case, the buyer wants to tweak what he sees – the dishwasher in another place, or the dining room located over there,” he said.<br /><br />But most buyers have a hard time imagining what raw space can become, Claypool said.<br /><br />”In reality, people will walk into raw volume and be baffled by what they see,” he said. If you buy raw space, he added, you’re going to need a team of professionals who can figure out how to make what you want fit that space.<br /><br />Domb offers models to buyers, but he said that “what many of them are looking for are finishes three or four times higher than the standard.” <br /><br />He’s not offended by the implication that what he’s offering is not enough. In fact, when people buy raw space instead of his space, Domb said, he’s off the hook when anything goes wrong with the finished product.<br /><br />”There’s an owner of a unit I did in the Barclay several years ago who still calls me when there’s a problem with the toilet,” Domb said.<br /><br />”She’s 90 years old, so I just fix it.”