Developing property in Philadelphia resembles running an obstacle course. There are numerous permits a builder must receive in order to start even a project that can be built by right. And if a zoning variance is required, the builder needs to jump through several more hoops involving community groups and a zoning review board.
When Sean Schellenger decided to go into the development business, he knew that the key to his success would be to create a system where he could build a large number of homes in a short period of time. So he sought to streamline the whole process from initial land purchase to turning over the keys. The business he formed to do all this is called — what else? — Streamline Solutions.
Streamline prides itself on doing it all: construction, property management, and brokerage services for both buyers and sellers. On the buying side, the company’s in-house team looks primarily to acquire properties that it can redevelop to reduce blight and vacancy while providing the best possible return for the seller.
Right now, the places the company is looking to acquire and build are largely on the fringes of “Greater Center City” — the ring of neighborhoods where vacant and decayed properties can still be had for reasonable prices. “Most of our volume is in South Kensington, Point Breeze, Francisville,” Schellenger said. “We’re also looking to potentially get into the Brewerytown market.”
Volume and efficiency are key to affordability
The thing these neighborhoods all have in common is surging demand for homes, which Streamline seeks to fill by keeping its construction crews busy. This, in turn, gives the company the ability to take advantage of economies of scale. “We’re getting to the point where last year we built 125 homes,” Schellenger said. “This year we should do about 350 homes, and as we’ve grown, we’ve been able to get better pricing for supplies, subcontractors and so on.
“So it’s purchasing at the right price, and then obviously being able to get your approvals quickly and getting your [project] turnover fast.”
To do that, it uses both its in-house staff and strategic partnerships with outside firms that have expertise in turning around projects quickly, like Harman Deutsch Architecture. The firm that designed Streamline’s “Techadelphia” live/work/learn project in South Kensington is popular with developers because of its expertise at running the permitting gauntlet.
The end result for the buyer is a home that has many attractive features at an equally attractive price. “We’re focusing on affordable luxury,” Schellenger said, and with an average sale price of $350,000 for the company’s single-family homes, Streamline largely delivers.
Letting the buyer choose how much home to buy also helps
It also delivers by focusing on density and letting the buyer figure out just how many frills the home should have. “We’re working towards a Toll Brothers or Ryan Homes model, but with an urban twist,” he said. “We offer a base house with [the extras] stripped out — we’re not going to spend your money for you, we’ll let you figure out what you want.”
The base houses are still nicely outfitted: granite or quartz countertops, GE appliances and 42-inch cabinets in the kitchens, hardwood floors on the main floor, Kohler plumbing fixtures. Want hardwood floors upstairs? You can upgrade. GE Profile appliances? Fancier Kohler faucets? Ditto. “You can always add a significant amount to the price point if that’s what you’re looking for, but if you’re looking to keep the price point low, you still get your home.”
The focus on efficiency, however, can also work to the benefit of renters as well as buyers and to those looking for more affordable housing. Schellenger said that Streamline plans on selling 250 of the 350 homes it builds this year and offering the remainder as rentals.
Schellenger figured out that real estate was his passion while he was an undergraduate at Penn State. After graduating, he went to work for Ryan Homes, where he learned many of the principles he follows at his own company now. This, he said, was a valuable learning experience: “When you work for Ryan, if you make mistakes, you aren’t making mistakes that cost you money. You’re making mistakes that cost your boss money.”
The current residents get something out of the bargain too
Even though Streamline is aiming for the middle of the market, Schellenger is cognizant of the need to address the needs, hopes and desires of those below that level, especially where they constitute the current residents of neighborhoods where the company wishes to build. Techadelphia, which has as a major element an apprenticeship program that will pair local youth with entrepreneurs housed in its work spaces, is an example of the community consciousness Schellenger and his company aim to bring to the neighborhoods where they do business, both directly and through its nonprofit affiliate, Helping Hands Philadelphia.
“We want to improve the economic and educational circumstances for residents of neighborhoods that are experiencing gentrification,” he said. Streamline does this both directly, through hiring contractors from the neighborhoods where they build, and indirectly, through building and equipping spaces where community residents can acquire skills that can lead to greater opportunities. In addition to Techadelphia, for example, Streamline is building a project at 24th and Federal streets in Point Breeze that will consist of a community computer lab on the first floor and three affordable residences on the upper floors.
Those affordable residences also represent Streamline’s approach to providing housing for those of more modest means. Schellenger is also interested in building workforce housing — and, he says, it can be done without subsidy by private-sector builders like him. Density is the key, he said: “If you’re going to build workforce housing using private money, the only way to do it is to increase the density. Any other way requires subsidy, and that’s tossing money into the wind. I’m building housing that qualifies as workforce housing, and I can do it because of the density.”
Having scaled up to this point, Schellenger aims to replicate his model in other locations both within and beyond the region. “We’ve been looking at [potential building sites in] Montgomery and Chester counties, and Camden we’ve been looking at too. Baltimore will be the next city we’re expanding to; we hope to be there in the next 12 months.
“We hope that once we’ve been able to standardize the model we’ve developed in Philadelphia, we can take it to several other cities simultaneously.”
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