Philly Office Towers Trade At Steep Discounts As Pandemic Freeze Thaws
The period ahead of Labor Day can be a sleepy time for CRE, but that hasn’t been the case for Center City this year. The neighborhood’s office market has been absolutely buzzing.
Several skyscrapers along Market Street traded at steep discounts in recent days following years of extending and pretending in Philadelphia’s central business district. Valuation drops and special servicing updates in the neighborhood have also made headlines this week.
CSB Holdings and Tide Realty Capital are buying the 29-story 2000 Market St. for $45.5M, the Philadelphia Business Journal reported Friday. That is a 58% drop from the nearly $108M the building sold for in 2018.
The new ownership told the outlet they plan to continue operating the 68% occupied tower as-is, making it the largest office property to trade in Philly postpandemic without a residential conversion plan.
Friday also came with news of Ten Penn Center’s sale to PMC Property Group for $30M, according to an unnamed source cited by The Philadelphia Inquirer.
The firm known for its residential conversions, including nearby Three Parkway, spent $30M. That’s just 40% of what the building at 1801 Market St. traded for in 2006.
Earlier in the week, news broke that Philadelphia’s largest office property at 1500 Market St. will be marketed as a conversion opportunity by court-appointed receiver CBRE.
The 36% occupied property known as Centre Square is expected to fetch $100M, less than one-third of the $328M Nightingale Properties and InterVest Capital Partners bought it for in 2017. The property was foreclosed on in 2023.
Other developments include a hefty valuation drop next door at Accesso Partners’ 1515 Market St. The building, which is in special servicing, is now worth just $28M, down 68% from 2014.
The building’s largest tenant, Temple University, reportedly plans to move out after buying a nearby former University of the Arts building for $18M.
Shorenstein Properties’ 1818 Market St. also entered receivership this month, with the owner owing almost $240M on the 37-story office tower, according to the PBJ.
Hilco Real Estate Senior Vice President Matthew Mason is the court-appointed receiver for the tower, which was 69% occupied earlier this year.
