Philly skyscraper project battles cloudy economy

Philadelphia presses ahead with plans to build one of the world’s tallest buildings.

PHILADELPHIA (AP) — At City Hall, leaders of the nation’s sixth-largest city are warning about painful cuts as the recession slices deeper and deeper into the budget: library cuts, pool closures, less snow removal and layoffs.

But on an empty lot six blocks away, private developers are pushing ahead with plans to build a 1,510-foot skyscraper that would be one of the tallest buildings in the world.

In the midst of the worldwide financial crisis, the developers of the American Commerce Center envision a massive construction project that would employ hundreds of idled construction workers — and, by 2012, an iconic structure that would funnel many more jobs into the city.

But like a slew of sky-high building projects in the works from Chicago to Dubai, the building faces huge challenges: Credit is hard to find and potential tenants are gun-shy.

“There is more risk than there was a year ago or two years ago,” said Peter Kelsen, an attorney for the developers, Hill International Real Estate Partner, who are fine-tuning plans for final design review and hope to begin construction late this year.

Philadelphia City Council has already approved zoning changes to clear the way for the $1.1 billion project, which includes plans for a 63-floor office tower, along with a hotel, retail, parking and other amenities downtown.

But getting tenants, Kelsen said, remains the “big gorilla” for the monstrous project.

He would not identify any potential tenants, but he said they aren’t involved directly in the financial industry. The development group had talked previously with potential tenants who were in financial services, but they backed out amid the economic crisis.

Kelsen said it is a tough market, and companies are hesitant because of the recession.

Just last year, the 975-foot Comcast Center opened a few blocks from the site of the proposed new skyscraper. In Dubai, a tower called the Burj Dubai — expected to top out at more than 2,600 feet — is expected to open later this year and take over the mantle of “world’s tallest building.” Last year, the 1,600-foot Shanghai World Financial Center opened in China.

The Philadelphia developers don’t have to look hard to find evidence that it’s easier to plan a project in tough economic times than to build it.

In Dubai, work has been halted on the proposed 200-story Nakheel Tower. In Moscow, construction on the 1,968-foot Russia Tower began in 2007, but work was suspended late last year because of the global financial crisis.

Back in the U.S., the Chicago Spire, a planned 2,013-foot residential tower, has been stopped amid the economic downturn. The architect also says the developer owes him more than $11 million. But officials say they’re confident the project will move forward, in part because a financier behind the project has already invested $170 million of his own money.

The foundation has already been built and more than 30 percent of the units have been sold, said Kim Metcalfe, a spokeswoman for the developer, Shelbourne Development Group.

“There’s a lot of skepticism now because of the market,” said Metcalfe, who said the developers are still talking to potential investors. “The financing economics situation is clearly the biggest mitigating factor right now.”

The estimated cost of the project has not been released.