Here’s how the Wanamaker Building’s new owner plans to transform the colossal department store into loft apartments

The new owner of the Wanamaker Building says that Philadelphia today is akin to New York City in the 1990s, but with better building codes.

As TF Cornerstone embarks on the redevelopment of the historic department store — with newly announced local partner Alterra Property Group — they plan 600 loft-style apartments similar to units they created in Manhattan’s former industrial neighborhoods 40 years ago.

The partners will transform the colossal former department store, now largely vacant office space, into a mixed-use building with apartments that range from studios to three-bedrooms units.

There are difficulties of geometry in a building the size of the Wanamaker, which is over 2 million square feet when the 660-car parking garage is taken into account.

But the developers believe the issues can be solved without substantial interior demolition by creating units that stretch deep into the structure, allowing for apartments with a lot of space even if much of the square footage is far from the windows.

“Back in the day, we did a lot of these conversions in New York with very deep units in the Meatpacking District and the West Village,” said Jake Elghanayan, senior vice president of TF Cornerstone. “People loved them, and they led to a lot of the loft units that people think of when they imagine living downtown in New York.”

TF Cornerstone has deep experience in adapting historic buildings into new uses, but the Wanamaker building will be their first foray into redevelopment in Philadelphia. They partnered with Alterra because of the company’s long pedigree of turning older offices into residential buildings, most recently at the former Morgan Lewis headquarters at 1701 Market St.

Elghanayan says that his company has humility about entering a new city and that Alterra brings valuable local market and political experience to the project.

For Alterra’s part, the company’s leadership says that TF Cornerstone’s owners appreciate Philadelphia for its urban qualities, which few other cities in the United States share with New York.

“Most time when you see New York developers come to Philadelphia, they [see us] as a little brother,” said Leo Addimando, Alterra’s managing partner.

“But [TF Cornerstone] really appreciates Philadelphia for what it is, not because it’s cheap relative to New York,” Addimando said. “If you just want to buy cheap, you’re not going to undertake a quarter-of-a-billion-dollar project.”

The Wanamaker Building presents unique challenges for redevelopment due to its sheer scale. As the building’s office space emptied out following the pandemic, outside observers said the size of the floor plates presented substantial challenges to residential renovation because so much of the interior is devoid of light and air.

Many believed the building might need to be cored out, with very expensive interior demolition required to allow in more light.

But Addimando said the developers are not currently planning such radical alterations. Instead they hope to remove a steel platform that is currently above the Grand Court — added during a renovation several decades ago to allow more office space — which currently covers an older decorative glass roof that will allow in more natural light.

That change presents a particular challenge because the steel platform currently serves as the pre-function space for the storied Crystal Tea Room, which is used as an events hall that the developers want to try to keep open during renovations.

“Presently, we’re not looking to core the building out,” Addimando said. “There was originally a light well at the center of the building. We’re looking to bring that back, but that’s going to require a fair bit of construction and logistical maneuvering. Nothing has been finalized yet.”

The building’s soaring ceiling heights, with a minimum of 16 feet, give the developers the opportunity to provide a uniquely spacious product in Center City with floor plates more reminiscent of warehouse or factory conversions than the units usually available in old office buildings.

Coring out the building would cannibalize some of that extensive residential space, which the developers see as a competitive advantage.

“It’s for someone who’s looking for true loft-style living, with very high ceilings, and large amounts of space,” Addimando said. “There will be units all the way up to three bedrooms. I don’t know that we’re going to have four bedrooms, but there will definitely be some apartment homes in the building.”

Addimando argues that demand for studio apartments has been shrinking. Their plans for 1701 Market initially included 50 studio apartments, but Alterra decided to scrap them and settled on 299 larger units.

TF Cornerstone obtained the portion of the property that held Macy’s in 2019 — ”It was a quirky asset, but we sort of fell in love with the bricks” Elghanayan said — and they anticipated retaining the company as a tenant.

Then the pandemic struck, and many of the building’s office and retail tenants fled, including Macy’s earlier this year.

TF Cornerstone announced its plans for the Wanamaker last week after winning complete control of the building at auction. A couple floors of offices will be retained, as the remaining tenants would like to remain in the building, Elghanayan said. The former Macy’s will be carved into multiple retail spaces.

The Wanamaker Building is a key to reviving East Market Street, which has struggled since the pandemic. Mayor Cherelle L. Parker’s administration has promised to pay special attention to the corridor following the Philadelphia 76ers’ surprising abandonment of plans for a Center City arena between 10th and 11th on Market Street.

Elghanayan says the Wanamaker project won’t need much from City Hall to move forward. It benefits from the property’s extremely flexible zoning, the 10-year property tax abatement that applies to renovations, and a permissive building code that allows more windowless residential space than its New York counterpart. The developers plan to apply for national historic tax credits.

But Elghanayan says he would like to see City Hall address East Market Street’s retail woes with some kind of policy to transform it back into a dynamic shopping area.

While 95% of TF Cornerstone’s business remains in New York, Elghanayan says his business is bullish on the Wanamaker project and Philadelphia more broadly.

“From somebody who grew up in New York in the ’90s and early 2000s, Philadelphia feels legible to me,” Elghanayan said.

“It has walkability, it has great architecture, it has a great cultural scene, and it’s much more affordable than New York,” he said. “It’s a bit grittier than New York today, and I don’t want to minimize its challenges, but Philadelphia has great opportunities, too.”