On September 12, 1995, Bob Gorgone stood on a pier with hundreds of fellow shipyard workers and watched his career slip away.
As the John F. Kennedy floated out of the Philadelphia Navy Yard, the aircraft carrier’s speakers played the theme from “Rocky,” but the workers—many of them wearing black t-shirts that read “Doom on the Delaware”—felt anything but triumphant. The $491-million retrofit they had just finished on the Kennedy was the last paying job for the nearly two-century old shipyard. Then the ship fired an 11-gun salute to the yard and its now unemployed workers.
“You could hear a pin drop,” recalls Gorgone who was a top manager at the time. “People just looked at one another and hugged one another and said, ‘Have a nice life,’ and went home.”
The Yard was already a ghost town, its workforce having fallen from 12,000 to 2,000 over two years as the curtain slowly came down on a facility the post-Cold War military no longer needed.
Twenty-one years later, the 1,200-acre Navy Yard is booming. At the base of Pier 6, a thousand workers are assembling 50,000-ton tankers at a state-of-the-art $400 million, Norwegian-owned commercial shipyard. Thousands more work in swank new office and laboratory buildings a quarter-mile to the west that house T-cell cancer therapy researchers, investment advisors and a large chunk of drug giant GlaxoSmithKline’s North American operations. There’s a brand new 4.5-acre park designed by renowned landscape architect James Corner (of New York City High Line fame), with a running track, ping pong tables and hammocks among the benches and Adirondack chairs; a trendy Marc Vetri restaurant in one of the base’s former gatehouses; and, across a canal, the teeming 340,000-square foot Tastykake bakery, an iconic Philadelphia institution transplanted to in 2010 from its 88-year old North Philadelphia factory.
Even the John F. Kennedy is back, decommissioned and tied up in front of a campus of 13 century-old brick industrial buildings repurposed as the ultra-cool headquarters of clothing company Urban Outfitters, whose move here from downtown anchored what has become one of the country’s most ambitious and successful military base redevelopments. More people work at the base now—12,000— than did when its closure was announced in 1991. The 150 employers—from Penn State’s smart energy education center to the on-site hotel—have invested more than $1 billion in the Yard, which is located less than half a mile from the Wells Fargo Center, where the Democratic National Convention opens next week.
“There’s been all this angst and sadness that went on as a result of the base closure process, and it was difficult for people to adjust,” says Philadelphia Mayor Jim Kenney, a South Philadelphia native who represented the Navy Yard area on the city council in the 1990s. “But with a lot of work and determination, this has become a jewel of the city.”
Base conversion doesn’t always turn out so well. Fort Ritchie, a 500-acre Army garrison in Cascade, Maryland, closed in 1998, causing the town’s population to fall by half. Fourteen years and several plans later, Sen. Ben Cardin announced the redevelopment of the base as a mixed-use complex by a private developer had failed, forcing the property back into public ownership. In northern Maine, the development director of the former Limestone Air Force Base—once home to atomic-bomb carrying B-52s—estimates the on-site businesses only generate about a third of the economic impact that the base did when it closed two decades ago; many vacant buildings on the property are falling into critical disrepair.
When fully built out over the next decade, backers expect the Yard will become a second Center City—a commercial hub for businesses ill-suited to downtown high-rises and a model for what the 21st century urban campus should be. Four hundred acres – the weed-covered remnants of what was once a naval aircraft factory and airfield – are slated for millions of square feet of new commercial buildings, port facilities, plazas, parks and a canal, while a historic marine barracks and other new and repurposed buildings in the base’s historic core will contain 1,000 units of apartments, creating the demand for one and possibly two subway stations. If it all comes together, the Yard could end up employing over 40,000, nearly as many as it did at its height in the middle of World War II.
“The magical thing about the Navy Yard is that it’s a really beautiful but dissonant place with all of these wonderful layers,” says Prema Gupta, who manages the Yard for the Philadelphia Industrial Development Corporation, the quasi-public agency that owns and manages the area. “There’s industrial and post-industrial, and maritime, amazing new construction by some of the best architects around and these parks and big open sky.”
And it all came together around an alliance between the city, a developer and a handful of companies that looked on a forlorn naval base and saw the future.
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It was the United States’ first federal naval shipyard, founded in 1801 a few miles to the north in Southwark and tasked with the repair and maintenance of the Navy’s early frigates and, during the War of 1812, the construction of a 74-gun ship-of-the-line, the Franklin. The shipyard moved to its current location in the 1870s, when the area at the confluence of the Delaware and Schuylkill rivers was called League Island, and separated from the mainland by a shallow channel.
The base rapidly expanded during the world wars. In World War I, the shipyard built minesweepers and a hospital ship, and the eastern end of the island became a seaplane manufacturing facility; employment grew six-fold during the war to 12,000. Bigger cranes and additional dry-docks paved the way for the construction of more and larger vessels in the 1930s, including the heavy cruiser Wichita and the 36,000-ton battleship Washington, both of which rushed to reinforce Britain’s Home Fleet after the attack on Pearl Harbor.
World War II was the peak of activity at the Yard, when employment hit 47,000 as the United States rapidly expanded its Navy, making it for a time the world’s largest naval shipyard. Dozens of ships slid down its ways, from tank landing craft to fleet aircraft carriers, and more than 1,200 underwent overhauls during the conflict. Two of the largest class of U.S. battleships in history—the Wisconsin and New Jersey—were built during the war, and at one point in the summer of 1944 the yard launched the Essex class aircraft carrier Antietam and two heavy cruisers on the same day. Much lower profile was the secret enrichment of uranium for the Manhattan Project in one of the boiler workshops, site of an accident in 1944 where two workers lost their lives.
Ironically, the Philadelphia Yard did not develop an expertise in nuclear propulsion, which placed it at a disadvantage as the Navy added nuclear vessels to its fleet during the Cold War. Only 10 vessels were built here after World War II— the last a command ship completed in 1970—and progressively fewer vessels needed Philadelphia’s prime expertise: overhauling conventional boiler systems. Nuclear ships went to naval yards in Virginia, California and Washington, which gave the Navy ample capacity without the expense of retrofitting Philadelphia’s dry docks. “Also the fossil fuel Navy was changing,” says Gorgone, who was an engineer in the 70s and refit manager in the 80s and 90s. “We were experts in big steam boilers that needed to be rebuilt every three years and have the ship at the yard for 18 to 24 months. The new guided-missile frigates needed an overhaul every two years and it took just two months.”
The saving grace, thanks in part to the ample congressional delegation in Pennsylvania, New Jersey and Delaware, was a multi-billion dollar assignment to comprehensively refit five 61,000-ton aircraft carriers that had been built during the Eisenhower and Kennedy administrations. The program, which lasted from 1980 until the Kennedy pulled away from Pier 6 on that fateful day in 1995, kept up to 12,000 of the Yard’s workers employed in mid-1980s. As other military bases began to close at the end of the Cold War, more than 7,000 continued at the Yard, upgrading the Kennedy’s 4-acre flight deck to carry F-18 jets.
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With the Soviet Union gone and foreign policy experts announcing the “end of history,” Philadelphia’s day of reckoning could only be forestalled so long. Bill Hankowsky, then the head of Philadelphia Industrial Development Corporation, was sitting in then Mayor Ed Rendell’s office on April 12, 1991, watching Defense Secretary Dick Cheney on C-SPAN as he announced his proposed list of base closures. “We were one of them,” he says. “The Navy planned to keep some acreage, but 11,000 jobs were going to be lost and we in the administration would have to face what we would do with the shipyard.”
At the shipyard, the mood was somber. Mayor Kenney, then an aide to a state senator, attended a meeting on the base around this time. “There must have been 600 or 700 people in this room, all blue collar, and the [base] commandant was a Vietnam veteran and asked if there were any other Vietnam vets in the room,” he recalls. “Two-thirds of them raised their hand. It was a real punch in the stomach.”
Philadelphia’s political leaders fought tenaciously to convince Congress to reject the proposal, with Representative Curt Weldon promising to wage a “war bigger than the Persian Gulf” and Senator Arlen Specter accusing the Pentagon of “declaring war on Pennsylvania.” When the Base Realignment and Closure Committee (BRAC) endorsed the plan anyway, Specter, Weldon and other elected officials sued BRAC and the Pentagon in a case Specter personally argued before the Supreme Court in 1994. They lost.
Meanwhile, Mayor Rendell’s administration was preparing to take over the nearly 1,000 acres of the yard the Navy was abandoning. The top priority—one to be tackled long before the years-long process of actual transferring of property was completed—was to find someone who still wanted to build ships in Philadelphia.
“For Philadelphians, the Navy Yard was always the place where a blue-collar guy could make good,” the Philadelphia Inquirer reported at the time. “They bought houses. Put their kids through school. Paid alimony. Now they were looking at the end of all that.” The city had recently lost several major manufacturing employers— Breyers Ice Cream, Whitman’s Chocolate and Scott Paper among them—and didn’t want to lose another. “So there was this crash course on what you do with an old shipyard,” recalls Hankowsky, who as head of the PIDC, had a front seat in the effort.
The bad news was that most private U.S. shipyards did defense work, because nobody could compete with foreign yards for commercial construction, especially those in Japan and Korea. The good news: the Jones Act of 1920 prohibits foreign-built vessels from domestic shipping, creating a small but protected market for U.S. shipbuilders supplying ships for trade up and down the coasts or between the mainland and Alaska, Hawaii, Guam, Puerto Rico, the Virgin Islands and other possessions. “So off we went to try to find a shipbuilder who might have an interest to come to Philadelphia and build some ships,” Hankowsky recalls.
Miraculously, in February 1995—with seven months to spare before the retrofit on the Kennedy was scheduled to finish—the city signed an agreement with Germany’s Meyer Werft to build cruise ships at the Yard. It was a $497-million conversion project that was expected to employ as many as 6,000. In return, the city, state and New Jersey would foot $167 million in costs, a plan that by summer everyone appeared to have signed on to. But just days after the Kennedy cast off from Pier 6, Pennsylvania Governor Tom Ridge torpedoed the deal, calling it “pure fantasy” and holding a press conference at which he mocked the German firm by holding up two pennies meant to symbolize its paltry equity investment. Meyer walked and the shipyard went dead. “We were like, OK, what is the next plan?” recalls Hankowsky.
Two years later, the city landed a new prospect: Europe’s biggest shipbuilder, Kvaerner, with 13 shipyards in six nations and headquarters in Norway. Kvaerner was also willing to oversee a half billion-dollar updating of the yard and start building merchant vessels there. The catch was the price tag: $300 million in city, state, and area port authority subsidies, nearly twice what Meyer Werft had required. Governor Ridge endorsed the deal, even though it promised only 1,000 jobs. ("He needed this for reelection," state Representative John Lawless, like Ridge, a Republican, later told a reporter.) The June 1998 ribbon cutting ceremony had ill portents. Poor weather stranded Kvaerner CEO Eric Tonseth at the Pittsburgh airport and the oversized scissors Mayor Rendell wielded couldn’t cut the ribbon. “We’re better at breaking champagne bottles,” the mayor quipped.
Soon even that seemed in doubt. Ten months later, as Kvaerner was in the early phases of transforming the 120 acres of the shipyard they had leased into a replica of their state-of-the-art yard in Rostock, Germany, the company’s new CEO announced he would close or sell all of its shipyards and focus on engineering and construction. The company plunged to the brink of bankruptcy, alarming Philadelphia’s political class, before being taken over in 2001 by another Norwegian firm, Aker, which called off the shipyard sales. It’s now the only shipyard in Aker’s portfolio and does business as Philly Shipbuilding.
“It’s a fantastic, state of the art facility,” says the shipyard’s CEO, Steinar Nerbovik, who now has 700 employees at the Yard and has at least eight ships on its order list. “Philadelphia is definitely the place to be building ships in the U.S.”
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At the time of Aker’s 2001 rescue, PIDC was taking ownership of most of the rest of the Yard, including 250 buildings, miles of roads and hundreds of acres of empty lots where buildings, storage yards or airfields had once been. There were clusters of turn of the 20th century buildings, several dry docks and multiple piers that remained outside Aker’s parcel, along with 19th century mansions, row houses and barracks that once housed various levels of naval personnel. The property had its own utilities and electrical grid and its roads, sidewalks and sewers now belonged to PIDC, not the city. It fell on the public corporation to figure out what to do with it all.
PIDC had been transforming industrial sites since its founding in the late 1950s, and had in-house expertise in financing, site planning, remediation and property management. But it had never taken on anything of the scale of the Yard, a property as large as Center City itself. “Even though we’re a city, 1,000 acres is an enormous area of ground, and they probably hadn’t invested in infrastructure since the Vietnam era,” says John Grady, who headed up PIDC’s Yard project until becoming the organization’s president in 2011. “Because it was federal property, there was no land use zoning, no city streets, no information about buildings and permits and certificates of occupancy, all those things we take for granted when we buy a house or take a deed.”
Over the nine years it had taken to complete the formal transfer of the property, cities had started to undergo a renaissance. Initial plans drawn up in the early 1990s embraced the Yard’s separation from its urban surroundings— a safe, enclosed office park that happened to be located close to downtown. But by the early 2000s, the national mood had changed: Walkable urban centers were hot; isolated, car-centric, single-function suburban pods not so much. “We started to think about the property as not being separated from the city, but connected to it, with amenities and transit and a residential component,” Grady recalls. In the new master plan, a suburban-style industrial park became a mixed-use urban campus that would ultimately have a 24/7 vibe. There were plans for single-family homes, a marina, retail and restaurants, all in a district where companies could build new, purpose-built structures that would be impossible to find space for in Philly’s built-out suburbs or Center City.
“We didn’t want it to be a potpourri of things, and we fought against the early interest in having gaming sites there because that wasn’t the vision,” says George Burrell, who was then an aide to Mayor John Street. “But the key was getting a leading developer in there with a national footprint and innovative ideas.”
That would be Liberty Property Trust, a publicly traded, Philadelphia-based real estate investment group that already had a portfolio of 51 million square feet and a reputation for innovative, green buildings. The firm responded to a 2002 request for proposal for the development of 70 acres at the gates of the Yard with what became the 2004 master plan for the whole complex. The firm had a leg up, having hired Hankowsky when he stepped down as PIDC president in 2000. “We didn’t want to put our money into the 70 acres if we didn’t know what was going to happen to the land around it,” Hankowsky, now Liberty’s president and CEO, explains.
Liberty won the right to build and own the 70-acre office complex and has been expanding southward in phases ever since, constructing award-winning office and laboratory buildings on the margins of the old naval airfield. “With a project of this scale it takes a public entity and sponsor that has continuity and doesn’t change every time there’s an election to be the steward of the vision and a private player who has the endurance and financial wherewithal to stay the course.”
Having a vision was one thing. Getting the first big tenants to sign on to populate it was another, especially given the Yard’s lack of visibility, amenities and public transportation. As Liberty prepared to build its first building on spec on a small, crescent-shaped park at the Yard’s main gates, nobody was sure who would show up, if anyone.
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Ironically, the breakthrough came not on Liberty’s land at all, but amidst the abandoned and deteriorating brick industrial buildings along the waterfront east of the Aker shipyard fences. The historic core of the shipyard back when William McKinley and Teddy Roosevelt sat in the White House, this complex of former propeller, boiler and pipefitting shops had been overwhelmed by rats, immature trees and the elements in the decade since the Navy had packed up Windows were broken or boarded up and some ceilings were falling in.
That’s the scene that greeted David Ziel in 2004, as he explored the site with his boss, Dick Hayne, founder of URBN, the apparel group comprising Urban Outfitters, Anthropologie and Free People. Hayne had opened his first Urban Outfitters across from the University of Pennsylvania in 1970, but the firm was now awkwardly scattered across 100,000 square feet of Center City high rises. The leases were up for renewal and, at one critical property, the landlords were unwilling to concede to a key URBN demand. “Believe it or not, negotiations fell through because they wouldn’t let us have dogs,” Ziel, URBN’s chief development officer, says.
Hayne and Ziel liked what they saw: a complex that matched Urban Outfitter’s urban/industrial ethos, one where the entire company could be together in one location, and with ample room to grow. Building 543, a cavernous, three-story-tall pipefitting hall could make a perfect campus center commons. The overhead cranes could become décor, the edges of Drydock 1, a park-like terrace. “At one point Dick turned to me and said: ‘Can you do this project?’” Ziel recalls. “And I said yes.”
Repurposing the distressed buildings was going to be considerably more expensive than building from scratch, but the Yard and structures had some incentives. The site was a Keystone Opportunity Zone, a state development incentive that gave a substantial property tax break, and its buildings qualified for federal historic tax credits, which redeem 20 percent of eligible costs. “These helped justify making the enormous investment in restoration,” Ziel says, although the process can be frustrating. “You want the historic renovation, but you also have to meet energy and building codes to make them compatible for office use, and it becomes pretty obvious that the different government jurisdictions don’t get together to talk about it much.”
Shaw Sprague, director of government relations at the National Trust for Historic Preservation says the credits were crucial. “Without them, complicated historic redevelopment projects would be extremely difficult or impossible to complete,” he says. “Banks and lenders see historic rehab as riskier and more complicated, so these provide gap financing that is needed for these kinds of projects to pencil out.” To date, fifteen Yard buildings have qualified for $35 million in credits, the Trust says, attracting $140 million in private investment, much of it at URBN’s complex.
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The retailer’s November 2004 decision to purchase six of the buildings, take options on others, and relocate its headquarters was a turning point. Mayor Street lauded it: a “validation of the Navy Yard as a great business location.” Grady told reporters it allowed PIDC to claim credibility for their ambitious master plan, which envisioned 30,000 people working at the Yard.
As the chic URBN campus opened in stages, it became a shopping display for prospective investors in PIDC’s other legacy buildings and Liberty’s empty lots alike. One of those whose executives were tempted was GlaxoSmithKline, whose Philadelphia operations were split between Center City high rises. In 2009, company officials visited the site, had lunch at URBN’s food court, where industrial cranes hung overhead and a mothballed aircraft carrier loomed outside the windows. “We could feel the vibe there,” says Ray Milora, head of design and change management at the drug maker. “But we jumped at the opportunity to work with Liberty to build exactly the building we wanted.”
Now 1,200 Glaxo employees work from its 205,000-square-foot, $140-million glass building near the gatehouse, with an atrium and skywalks modeled on the company’s London headquarters. The interior is fitted out for “smart working,” where nobody has an assigned desk, but move around untethered, plunking laptops down at desks, coffee lounges or other spaces. “We’d been doing this for years in Europe, but this was the first time we could literally develop it from the ground up, rather than a refit,” Milora says.
Across the street, Franklin Square Capital Partners was lured to build a four-story headquarters for much the same reason. The financial investment advisors swapped digs in five suites on four floors in Center City for a facility built around their innovative work culture, with a ground floor fitness center staffed by performance professionals, customized snacks delivered to eating areas on each floor, and engaging artwork displayed throughout. “It's a vibrant and inspiring place to be,” says Mike Gerber, an Executive Vice President at Franklin Square. “We look out our windows everyday and see creativity, innovation and hard work driving meaningful job creation and the rejuvenation of an important historic asset,”
Gerber’s windows now look down on the Central Green, a 4.5-acre park designed by James Corner, the landscape architect behind Manhattan’s celebrated High Line. The park, lush and unstructured, is a playground for adults, with a fifth-of-a-mile track lined with lounge chairs and encircling a fitness station, hammock grove, amphitheater, bocce court and tall grass. “The Yard had been developing as a corporate campus, but now it’s being conceived as urban fabric with hotels and restaurants and places to live,” says Corner. “Instead of being a passive green, we wanted to make it really active, to get people out of the offices and turn it into something social, to communicate the long term associations of the Navy Yard as a real sort of town.”
The park is nearly ringed by new buildings, including a Courtyard by Marriott and a mesmerizing building by Danish architectural sensation Bjarke Ingels, whose angled façade creates the optical illusion of a giant wave about to break over the sidewalk. On the north, a DIGSAU-designed building built for Iroko Pharmaceuticals—one of the biomedical research firms that has moved here—has a wall of irregularly spaced and shaped windows. To the south, an abandoned Colonial Revival Marine barracks is slated for conversion to rental apartments.
“What’s made this successful is it’s not the government saying ‘We will make these infrastructure investments by themselves and leave them to be made to work,’ and it’s not the private sector saying ‘This is all the market supports,’” says Grady. “It’s an alliance that creates employment and production and fills in a gap for what is going on in the city.”
As urban fabric, however, the Navy Yard still has some holes.
For now, Central Green is empty, and most of the neighborhood effectively closes at 8 p.m., when guards appear at the gates to check for after-hours passes. Dining options are few, retail and entertainment non-existent—largely because, for now, nobody actually lives here. Public transit doesn’t reach this far, so commuters and visitors rely on a free shuttle to the terminus of the Broad Street subway, half a mile from the gates, or the vast seas of free parking, which remain a part of the revised 2013 master plan, but give the Yard a commuter campus feel, rather than a New Urbanist one.
Density is expected to help, as Liberty pushes eastward into the former airfield, currently an expanse of overgrown lots, some of them occupied by great fleets of brand new Hyundais and KIAs newly arrived at the adjacent port and awaiting transfer to dealers. Proposed residential developments would bring upward of 3,000 full-time residents, creating a market for stores and other amenities, and sufficient traffic to justify the extension of the subway line. But these remain on hold until PIDC negotiates an agreement with the Navy, as the current one prohibits residential development.
The Navy’s still a small portion of the campus, home to its propeller shop, an engineering research station and, of course, the Kennedy and dozens of other ships assigned to the Inactive Ship Maintenance Facility. A Navy spokesman didn’t respond to an interview request, but PIDC and Liberty say the department’s primary concern is to avoid incompatible uses close at hand, presumably an issue that site planning can get around. Best guess, Grady says, is that a subway station is still five to 10 years away.
George Burrell, now a government relations advisor at a downtown law firm, isn’t worried. “They’ve created a momentum that’s now building on itself,” he says. “It’s no longer a question of ‘Can it succeed?’ but rather ‘Just how big it will become?’”