March 1, 2008
Where recession recedes
Luxury is bright-hot at the city's new upscale clubs, prosperity just around the corner in pricey private rooms.
By A.D. Amorosi
On a daily basis, Americans are reminded that things are not good.
We're told that the economy is on the downswing, that mortgages need to be saved, and that if we're not necessarily headed for another Great Depression, we should be ready for a bad recession.
That doesn't sound like news that would make you break out the Cristal.
Yet this city's club scene is having its own boom, one geared toward pricey hangouts and luxurious surroundings, where drinks aren't cheap, VIP areas are roped off, and the air of exclusivity wafts as elegantly as premium perfume.
Here's what's opened in just the last few months: Pearl, a two-story lounge/restaurant at 19th and Chestnut; Vango, a dance club/dining lounge on South 18th that boasts a $450,000 fiber-optic chandelier; and G Lounge, a club on South 17th with VIP access and $350 bottle service.
And there's more to come, straight down Chestnut. Union Trust, a steak house/lounge housed in the Jack Kellmer jewelers building at Seventh Street, and Del Frisco's at the Grande at 15th Street, are supposed to open by late spring.
None of these places are joints where dollar PBRs will be served or backward baseball caps will be allowed. So how can this city's recession-minded majority afford these places?
In the minds (and pockets) of the owners of these new spaces where exclusivity is key, they're not supposed to.
"This is a high-end product where, when you pay for a drink, you'll see and feel what you're paying for," said Pearl owner Brett Perloff, a lawyer and a promoter.
"I don't know that it's the best time to open, what with America heading for recession," he added. "But this is the product which I'm an expert at. This is what I do and wanted to open. Surely those other venues feel likewise."
Diaa Sawan does. He was looking for his Vango to offer a posh brand of nightlife with top-notch bottle service and Japanese delicacies, topped by an immense roof deck. "I wanted to offer an experience with the best things life had to offer," Sawan said, "to the best patrons."
With $14 cocktails, bottles going for $150 to $350, and a price tag estimated at $2.5 million, G Lounge bucks the recessionary trend.
These sorts of posh hot spots have been opened before when times were good - such as the original Mansion in Rittenhouse and Suede in Old City - but failed as luxe hangouts due to lack of support. So why should they succeed now, when times are tougher?
To G Lounge owner Mark Marek, a West Philadelphia native who came to nightlife entrepreneurship after working in the luxury-goods business for Govberg Jewelers, there's no time like now to build Philly finery.
"Philly is 20 years behind," he said. "If you compare Philly to any other major metropolitan area - yeah, we're definitely that behind. Maybe more."
Marek meant that it's only now that Philadelphia is getting high-rise towers in Rittenhouse Square and tiny boutiques lining not only Walnut Street but other areas of Center City. People saw opportunity in 2007 when luxury enterprises such as 10 Rittenhouse, 1706 Rittenhouse and the Parc Rittenhouse, as well as the new Comcast building, broke ground or finished.
Still, Marek noted that when Paris Hilton came to Philadelphia to promote her movie, "she took the first limo out of here." And Marilyn Manson was supposed to visit G while in town for his recent concerts, "but his press people texted me at 1:45 a.m. reminding us that Philly closes at 2. And that's when celebs are out."
Marek blamed the city's developers for the lack of hot spots, along with a Philly tendency to remain loyal to the old guard.
"There isn't any turnover," he said. "Georges Perrier's been here forever and he'll continue to be. Same with 32 Degrees and Shampoo. Once you open shop, unless you're terrible, you'll stay the same concept indefinitely."
But at a time when the economy is on such a downturn, how can these luxe lounges continue to percolate? As someone with experience in the luxury-goods business, Marek knows that the rich stay rich - or get richer.
"When it comes to the high end, you're pretty much insulated from perceived downturns in the economy," he said. "The wealthy don't care. When gas prices go up, it doesn't affect them. At all. And if you deliver a consistent, quality product, they'll support you."
High-end Realtor Laurie Phillips confirmed this belief. Her recent sales have included a condo in Old City 108 for $2.75 million; a Delancey Street townhouse on 18th for $2.375 million; and numerous Rittenhouse Square penthouses for $2 million to $3 million.
"Companies such as Comcast and Unisys are bringing in a lot of businessmen who want the convenience of location to both D.C. and N.Y.C.," she said.
Jason Binn is counting on that. The founder and chief executive officer of Niche Media - publisher of lifestyle and fashion magazines such as Gotham, Hamptons, Los Angeles Confidential, and Aspen Peak, aimed at professionals with incomes of $250,000 or more - bought Philadelphia Style from its owner, Dana Spain-Smith. The first issue under the new ownership comes out in May.
"This is a top-five market and for us, it's a priority for Niche to be here," says Binn, who had scouted Style since 2000. "There's always been luxury here and those who wanted it. It's just at a head now."
Expect Style on Binn's watch to have the same mix of lifestyle articles about the rich and famous that his other magazines do, coupled with events that connect advertisers and patrons.
"There is a group of Philadelphians with tremendous earning power, financial security, and tremendous desire to have the best of the best," he said. "People will always want that escape, that connection to what we call the good life."
That's true for Peter DelloBuono, 50, a Center City pharmacist whose tastes lean toward pricey suits by Paul Smith and shoes by Cesare Paciotti. He sees hitting sophisticated clubs as a necessity, not a luxury.
"If you're dressing the way that I like to dress, wouldn't you prefer to be in a similarly appointed atmosphere?" he said. "People look and act more refined in places like that."
Realtor Phillips has noticed a few bumps. Buyers looking to purchase some of her properties are having difficulty getting loans if they do not have a sufficient credit score ("over 740," she said). Then again, a lot of buildings, like Washington Square's Ayer Building, are considered investments. And investment is what the nightclub owners are doing in the first place.
"The economy is cyclical," Perloff said. "If right now isn't the best time, maybe two years from now will be. It's an investment."
