The Have-Mores!

$200,000 bar mitzvahs, six-figure-earning personal shoppers, 30,000-square-foot gigamansions, and utterly lavish Sweet 16 parties: How the super-rich conquered Philadelphia.

ONCE TOM SCANNAPIECO had worked out the math, crunched the numbers, whipped out the number-two pencil and done the long division, the answer was obvious: He would be a dope not to build jillion-dollar condos in Center City.

"I read somewhere that there are about — don’t quote me on the exact number here — but something like 50,000 people in the United States with a net worth of $30 million," he says. "So I tried to figure out roughly how many of them might live near Philadelphia."

It’s a rainy Friday morning in Atlantic City, and 57-year-old Scannapieco, founder and head of the Scannapieco Development Corporation, a New Hope-based real estate company that’s done projects up and down the East Coast, is inside the sales office of Bella, an A.C. high-rise he recently converted from low-income apartments into super-swank condos. Lean and balding, with a ring of wiry hair, an easy grin, and the affable charm of a parish priest, Scannapieco is talking not about this project, but about his next one: a 32-story condo in Center City called 1706 Rittenhouse Square Street, which he’s developing in partnership with Philly parking garage pooh-bah Joe Zuritsky. Located near the corner of 17th and Locust streets (not technically Rittenhouse Square, you say? Hey, what’s a block among friends), the structure will in many ways be the cherry atop Center City’s still sweet — if not quite as sweet as it was a year ago — luxury condo boom. With prices starting at $3.5 million, each unit takes up an entire floor, features 10-foot ceilings, and has a private elevator (the faster to get you to the building’s pool and fitness/yoga/Pilates center). In short, each will be the kind of place where any self-respecting tri-deca-millionaire will feel comfortable recharging his BlackBerry and checking the price of his Google stock every night.

"I figured out," Scannapieco continues, "that there should be somewhere around 1,200 people in Philadelphia worth $30 million. If there had been a hundred, it might be tough to sell 30 units. But 1,200?" Scannapieco is smiling, and his meaning is clear: fish in a barrel. Exotic fish in a platinum-plated barrel, but fish in a barrel nonetheless.

Tom Scannapieco is an interesting character — a physicist by training, a man who got into real estate almost by accident 30 years ago when he began fixing up and flipping houses in the Art Museum area. Is there a part of him that wishes he was building something other than high-rise palaces for the super-rich? He doesn’t say so, but you get the feeling maybe there is. He grew up in Northeast Philly, after all, and he’s probably more reflective about wealth and its implications than your average real estate developer. On the upside, for example, he notes that wealth makes grand projects possible. On the downside? "Paris Hilton," he offers dryly.

Airheaded heiresses notwithstanding, Scannapieco knows a smart business move when he sees one. The top is where the juiciest part of the market is these days, so he’s put out the FOR SALE sign on 1706’s units and begun taking orders. "We have a few reservations already," he says happily. "We took one the other day for $6.1 million, which is the highest price ever for a unit in Philadelphia."

Long division rarely lies.

IF YOU’VE BEEN PAYING much attention at all to Philadelphia recently, it’s probably no shock that Tom Scannapieco has found customers for his project — that there are, in fact, people out there with That Kind of Money. The $30 million crowd may be at the top, but they’re really just the tip of a large and affluent iceberg that’s been floating through the region. You see evidence of it everywhere, from cocktail-party and soccer-game-sideline chatter ("Did you hear David Cutler’s Shore house is going for $27 million?") to the pages of this magazine, where in the past couple of years we’ve brought you news of $200,000 bar mitzvahs, five-figure "push presents" for women going through labor, six-figure-earning personal shoppers, 30,000-square-foot gigamansions, and utterly lavish Sweet 16 parties. Simply put, we are in an era in which more people have — and are willing to spend — more moolah than ever before.

The evidence isn’t only anecdotal, by the way — statistics chronicle precisely the same phenomenon. According to the research firm Claritas Inc., there are now more than 101,000 people — the equivalent of a small city — in the Philadelphia region whose investable assets total a million bucks or more. And that’s not including what their houses are worth. Toss in the tens, if not hundreds, of thousands of people whose home equity boosts their net worth into millionaire range, and it’s clear that affluence isn’t just in; it’s epidemic.

Now, it’s true that the rise of the rich is a phenomenon that started 25 years ago, when Ronald Reagan was living in the White House and Ivan Boesky was proclaiming "Greed is good" up and down Wall Street (with Wharton grad Michael Milken singing backup). But if the ’80s and ’90s were about the growing gap between rich and poor — the oft-spoken-of Haves and Have-Nots — the early years of the 21st century have brought us the next logical act. Having left the poor in the dust decades ago, the affluent are now opening a sizable lead on the people in the middle. According to a recent study by the Keystone Research Center, of Harrisburg, the only Pennsylvanians whose incomes have risen during the Bush 43 era are those in the top 20 percent; the other 80 percent — including plenty of people with college degrees — have seen their incomes stay flat or fall. And the trend is only becoming more pointed: In 2005, just the top five percent — those Pennsylvanians with taxable incomes of $130,000 and up — had fatter paychecks. We are witnessing, it would seem, Income Inequality, The Sequel: The Haves Get Eaten by the Have-Mores.

To be fair, this does not mean Philadelphia is suddenly in danger of becoming Brazil or some other South American oligarchy, where five guys named Raoul live in opulence while everyone else wonders where the next chalupa is coming from. But the phenomenon is having a very real impact on the way life is lived here. For starters, those with money — meaning, roughly, those with incomes of $250,000-plus per year — increasingly inhabit a different world from everyone else. I mean that not only metaphorically — in the sense that they have different things and different experiences — but also literally. This past summer, the Brookings Institution released a study of how wealth breaks down by neighborhoods in various cities across the country. The study found that over the past three decades, the number of middle-class neighborhoods in the Philadelphia region has fallen 22 percent, while the number of high-income neighborhoods has jumped 11 percent and the number of low-income neighborhoods has jumped 12 percent. The Have-Mores, in other words, now live largely with other Have-Mores, while Haves and Have-Nots live with other Haves and Have-Nots. We are developing a new kind of segregation — and we aren’t even finished with the old kind yet.

Just as important, though, is that big money is physically changing the city and the suburbs — whether it’s 30,000-square-foot houses in Gladwyne, or the super-luxe condos Tom Scannapieco and his ilk are constructing in Center City. More and more, Philadelphia is being built in the image of the affluent. The rest of us? We just work here.

ON A RECENT SATURDAY MORNING, my four-year-old daughter and I are sitting inside the Starbucks at Ardmore’s Suburban Square, watching the ballpark. I went into the stadium through a special club entrance (bypassing the security pat-down to which regular schmoes are subjected), took a special elevator, and then emerged onto the Hall of Fame Club ­level — a carpeted, air-conditioned corridor with piped-in music and play-by-play of the game, plasma-screen TVs, and special high-end food offerings. (I opted for the $14 teriyaki-glazed salmon salad.) Sitting in my seat, enjoying my salmon, I realized this was the perfect microcosm of Have-More life: pricier, plusher, and separate from the masses.

For those in the middle class, the rise of those on top presumably triggers one of three reactions. The first is anger and resentment, though, curiously, not too many people seem to feel that. Al Gore’s “lockbox” economic populism didn’t win him the White House in 2000, and John Edwards’s “two Americas” theme didn’t even earn him the Democratic nomination in 2004. In part, that might be because a number of people have opted for reaction B — a.k.a. denial. “There are a lot of people out there living beyond their means,” says David Rankin, a Jersey-based financial planner who co-hosts a financial advice show on WWDB-AM. “And the real estate boom has made it worse. People are taking money out of their houses and spending it on all sorts of stuff that they really can’t afford.” (As the real estate market cools, Rankin foresees a boom in foreclosures and bankruptcies.)

The third possible reaction among those in the middle is simply to play catch-up — to suck it up and work harder. It’s tough to argue that this is bad, but it’s worth remembering that it has its own costs — specifically, time spent away from other parts of your life. In fact, as I sat watching the Phillies play, it occurred to me that if I could work, say, 10 hours a week more, I could find a way to swing Hall of Fame Club season tickets for my family and me. The problem, I realized, is that Phillies games would then be the only place I’d see my family.

So this spring I’ll return to my usual cheap seats, comforting myself with the fact that life at the Hall of Fame level comes with its own set of challenges. Indeed, the biggest problem with the Have-Mores’ hermetically sealed lives is that they only get to compare themselves with other Have-Mores — which can, and in many places around Philadelphia already has, set off a crazed cycle of Keeping Up With/­Staying Ahead of the Joneses. After all, if everyone on your upscale block has Corian countertops in their kitchens, you look a little low-rent if you only have Formica. And if you were the first neighbor to install Corian? Well, now you must upgrade to granite lest you look like a mere Have. It’s as if a corollary has developed to Moore’s Law, which states that every 18 months, technology will get twice as fast and half as small. We’ll call this the Have-More’s Law: Every 18 months, luxury goods will get twice as expensive and half as useful.

“I sometimes look around at all the stuff we have in our house and think how ridiculous it is,” says one South Jersey Have-More whose husband has rarely seen a cool car, appliance or electronic gadget he could live without. “And what’s really ridiculous is that two years from now, we’ll have all new stuff that basically does the same thing.” Others are less conflicted about their purchasing prowess. As one local attorney puts it, “I worked my ass off to get where I am.” The Have-­Mores’ consumer showiness and one-upsmanship have caused psychological tumult among some mere Haves, with those whose incomes are in the $100K-to-$150K range often feeling like they’re living hand to mouth. And even some Have-Mores feel their pain. I was recently having a conversation with a septuagenarian acquaintance of mine — a man who’s built a successful business, drives a Mercedes, and has two beachfront homes. As we discussed the ever bigger and more lavish mansions being built on the Main Line, he got a pained look on his face. “Where do people get all this money?” he wondered aloud.

I was tempted to put my arm around him and tell him it would be okay, he’d done just fine. But I couldn’t quite work up the nerve to give the owner of this magazine a hug.

STILL, IT’S A fair question: Where do people get all this money? Here’s some perspective: In the mid-1960s, one in 25 families made the equivalent of $100,000 per year. Today, it’s one in six.

Broadly speaking, economists say that various societal and global changes have shifted how income and wealth get distributed. “There’s been a decline in manufacturing jobs and the power of unions in the U.S.,” says Mark Price, labor economist for the Keystone Research Center. “Globalization plays a role. And education. And changes in the tax code.” The result is that while the overall pie has grown consistently, fewer and fewer people are getting bigger and bigger slices of it. In 1989, the richest one percent of Americans had 30 percent of the wealth; in 2004, their share had grown to 33 percent.

Individually, of course, fortunes get made in a myriad of ways, but a seat-of-the-pants analysis of wealth around Philadelphia suggests two paths to Have-More-type money. Most of the really big bucks, it seems, are made by entrepreneurs, people who’ve built — and in some cases sold — successful businesses. Michael Pouls, the guy who is rumored to have shelled out $27 million for David Cutler’s Shore house in Longport, made his money with a business that provided credit cards to college students. Mitchell Morgan — owner of one of the showiest and most chattered-about houses on the Main Line — earned his fortune in the real estate business. Brian Tierney — Have-More leader of a group of Have-More investors now running the Inquirer and Daily News — got rich building and selling not one but two advertising and public relations firms. And then there’s the Roberts family, who’ve made billions convincing people that they simply can’t live without 100 channels of television.

In many ways, these entrepreneurs are simply 21st-century versions of the industrialists who’ve always made money in Philadelphia. What’s new are the educated elite who generally fall just below the entrepreneurs on the Have-More scale — the corporate executives and professionals whose incomes have also soared in recent years. Forty years ago, the average CEO in America made 24 times what the average worker made. Today, according to the Economic Policy Institute, that number has grown more than tenfold: The typical CEO now makes 262 times what the average worker makes. Lawyers, particularly at the most prestigious firms in Philadelphia, have also seen a significant increase in earnings.

Why? Because that’s what the labor market says they should make. But at the same time, many Have-Mores make a lot of money because they think they should or they need to. It’s keeping up with the Joneses on the supply side: If the attorney sitting next to you in the Hall of Fame Club at the Phillies game pulls in 500 grand a year, it’s tough to tell yourself you should try and squeeze by on half that.

Not everyone is comfortable with this mine’s-bigger-than-yours phenomenon — not even all those who benefit from it. In recent years, large law firms in Philadelphia have released yearly reports on profits per ­partner — the equivalent of a public corporation’s annual report — and it has one lawyer in Center City embarrassed. “We’re private partnerships,” he says. “There’s no reason we have to publicly rub our clients’ noses in how much money we’re making off of them.” That said, he knows why his firm and others do it — it’s a way of keeping score, of figuring out how well you’re faring compared to everyone else.

It’s not only lawyers who feel that need; it’s everyone. Financial planner David Rankin says almost all his new clients ask the same question. “They want to know how they’re doing,” he says. “Some are doing a lot better than they thought; others aren’t doing as well. But they want to know how they stack up.” At a certain point, wealth is all relative.

THERE’S LITTLE TO suggest that the gap between Haves and Have-Mores will do anything but grow. There are few signs of the luxury market slowing down, for example. Meanwhile, Claritas projects that the number of millionaires in Philadelphia will grow by 50 percent in the next five years.

The biggest impact will probably be in ­Center City, which is already becoming the most conspicuous Have-More haven of all. The average home price in the 19103 zip code is now over half a million dollars, while most of the condos currently in the planning stages or under construction fall in that price range or above. While a glut in the market could cause those prices to plummet, few expect that to happen. Instead, Center City is likely to become a place where only the well-off can afford to live. What will follow — what’s already following — are high-end stores filled with high-end products. Center City will be a living, breathing Luxury Market.

“I think that’s as it should be,” condo developer Tom Scannapieco says when I ask what he thinks of that possibility. He notes — ­accurately — that there’s generally less friction when people of the same income live together. A moment later, though, after pondering it more, he backtracks. He’s never been a fan of the suburbs, because the suburbs can be so homogenous. A city filled with only Have-­Mores has the same potential pitfall. “It could be as boring as the suburbs,” he says.

He isn’t the only one expressing ambivalence about the separation of the Have-­Mores from everyone else. Even as they send their kids off to elite private schools — which will, of course, give them a leg up on being the Have-Mores of tomorrow — some parents are concerned their children will never know anything but affluence. “Looking back, one of the things that was great about my childhood was that I knew kids from different income levels — I went to school with doctors’ kids and electricians’ kids,” says one Main Liner. “I think that’s harder and harder to find.”

That said, it’s a pull — keeping up with and staying ahead of the Joneses — that’s tough to resist. Recently, a couple I know, both nicely paid professionals, took their daughters to the American Girl store in Manhattan. American Girls are a series of hundred-dollar-plus dolls — Barbie for the luxury market — and the experience at the American Girl store proved to be equally lavish. For $22 apiece, the family sat down to lunch, with the girls’ dolls seated at small chairs right next to them. Then there was shopping in the American Girl boutique, where the girls could buy pricey outfits that would match their dolls. Finally came a beauty makeover — not for my friends or their daughters, but for the dolls. For $25, each one got a new hairdo, nail decals and a facial scrub.

My friends’ first reaction was how absurd it all was — in this age of affluence, even eight-year-olds and their dolls are living the luxe life. But then, maybe well aware of how much money it will take to keep on keeping up, one of them suddenly had a different thought. “I kept asking myself,” she says, “why didn’t I think of this?”

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