Local Developer Buys Portion Of Hahnemann Campus Occupied By Drexel As School Mulls Move To Suburbs
In the absence of new development within city limits, the life sciences market in Philadelphia is growing impatient and looking beyond.
Drexel University is the last remaining occupant of the former Hahnemann University Hospital campus that ceased operations in the fall of 2019, operating out of the 107K SF New College Building at 15th and Vine streets. Even as local firm Iron Stone Real Estate Partners has agreed to purchase the building with the intent of keeping Drexel around long-term, the university is considering pulling up stakes for the suburbs when its lease expires in 2022, The Philadelphia Inquirer reports.
The suburban destination Drexel is considering is the 1.6M SF sprawling life sciences campus in King of Prussia known as The Discovery Labs owned in full by Brian O'Neill's MLP Ventures, the Inquirer reports. Drexel has expressed interest in leasing 300K SF at the property, the college's new Vice President of Real Estate and Facilities Alan Greenberger told the Inquirer.
Iron Stone has agreed to purchase 800K SF of the Hahnemann campus from Harrison Street Real Estate Capital, including the New College Building. Harrison Street was the joint venture partner with Joel Freedman's Paladin Healthcare in purchasing Hahnemann and St. Christopher's Hospital for Children in 2018. Paladin still owns the complex's main building.
Paladin and Harrison Street structured their ownership so that each company held on to a portion of the real estate portfolio even after Philadelphia Academic Health System, the management company Freedman formed to operate the two hospitals, went bankrupt. Iron Stone purchased St. Christopher's in early 2020 at a bankruptcy auction and then leased it to Drexel and Tower Health, the Inquirer reports.
Iron Stone will look to redevelop the 800K SF it is under contract to purchase as lab space for life sciences either for Drexel to remain in or to backfill should Drexel decide to leave, the Inquirer reports. Iron Stone is in the process of renovating the former Provident Mutual building at 46th and Market streets into a multi-tenant medical office building. The property had previously been tabbed to be a new headquarters for the Philadelphia Police Department.
As with all the major institutions in Philadelphia, Drexel is hungry for more life sciences space and short on options that will be ready by the time its lease at the New College Building expires in 2022. Drexel requires more modern space and eventually wants a purpose-built facility near its University City campus but is deciding between staying in place for a renovation or finding somewhere else for the next few years, Iron Stone partner Jason Friedland told the Inquirer.
If it is indeed looking for a facility of its own, a logical partner for Drexel would be Brandywine Realty Trust, which recently broke ground on the first of at least two new developments with major life sciences portions at Schuylkill Yards. Brandywine has a long-term ground lease with Drexel for the land on which it is building Schuylkill Yards. Brandywine also recently purchased a former Hahnemann building of its own in October.
The Discovery Labs is the only location where Drexel's Greenberger confirmed interest to the Inquirer, though he claimed interest in multiple undisclosed locations.
Made up of a 1M SF former GlaxoSmithKline complex and a neighboring 600K SF former office campus, The Discovery Labs will grow even larger once MLP Ventures redevelops recent nearby purchases of office buildings from Brandywine Realty Trust and a newspaper printing plant owned by the Inquirer.
Though Brandywine has been connected with several other users, the only current occupants are GSK (in a leaseback deal) and WuXi Apptec, the contract manufacturer that also has extensive facilities in the Philadelphia Navy Yard, the Inquirer reports. In addition to Drexel's professed interest, the University of Pennsylvania is reportedly exploring leasing the vivarium at The Discovery Labs campus to expand its animal testing capabilities.