Parkway Corp., Chubb Finalize Deal To Develop New 438K SF Center City Office
Despite seemingly every trend in commercial real estate not being in its favor, Parkway Corp. is weeks away from breaking ground on a new construction office tower.
At a press conference on Friday, Parkway officially announced that it will build an 18-story, 438K SF office tower that will be entirely occupied by insurer Chubb, confirming what had been rumored for years.
With construction financing in hand and only "a permit or two" left to secure, the $430M project is set to break ground in mid-January, Parkway President and CEO Robert Zuritsky told Bisnow after the event.
"We wouldn't have held this big event if there was a chance it wasn't going to happen," Parkway Chairman Joseph Zuritsky said.
In order to get to Friday's announcement, Parkway required the support of local and state officials as well as community representatives, said speakers at the event, including Gov. Tom Wolf, Mayor Jim Kenney and Chubb President and Chief Operating Officer John Keogh. They addressed a packed tent on the site of the building, which currently is a parking lot owned and operated by Parkway.
A key part of that support came in the form of two grants given by the Pennsylvania Department of Community and Economic Development: a $10M grant from the Redevelopment Assistance Capital Program and a $3.39M grant from the PA First program, Wolf said. But the majority of construction financing came in the form of a loan from Prudential Financial facilitated by Bellwether Enterprise, Robert Zuritsky said.
Separate JLL teams represented both Parkway and Chubb in lease negotiations, and a third JLL team will serve Parkway through the construction process as its tenant representative, the services firm announced in a separate press release.
Chubb has been one of the most highly sought-after tenant requirements in Philadelphia since at least 2019, when Parkway and Brandywine Realty Trust were rumored to be competing to land Chubb as anchor tenant for their respective development plans. Brandywine has since pivoted the use of the building it reportedly had in mind, with life sciences now slated to occupy the nonresidential portion of the building under construction at its Schuylkill Yards site in University City.
Parkway's parking business set it up to own several desirable development plots in Center City, which gave it the inside track to land not just Chubb, but Morgan Lewis & Bockius. The 19-story build-to-suit that Parkway is developing for the law firm at 2222 Market St. is on budget and on time to deliver by the end of next year, Zuritsky said.
The largest property and casualty insurance company in the world, Chubb lays claim to a presence in the city that started in 1792 when the Insurance Company of North America, one of its predecessor entities, was incorporated at Independence Hall. In its current form, Chubb owns and occupies the 361K SF building at 436 Walnut and leases 140K SF less than a block away, at Keystone Development & Investment's The Washington building.
Though its footprint will be shrinking, Chubb plans to hire at least 1,250 new employees to work at 2000 Arch when it opens, which is scheduled to occur in the second quarter of 2026. When combined with Chubb's 1,900-strong workforce in Philly today, an estimated 3,200 will call 2000 Arch their place of business, Keogh said.
"We know much has been made recently about the risks and rewards of planting bigger flags in cities," he told the crowd. "But we are true believers in the power of relationships and face-to-face interactions."
A key component of that hiring spree, touted by every speaker, will be a paid apprenticeship program to give on-the-job training at Chubb for Philly residents who did not attend four-year colleges. Clarke and Pennsylvania House Democratic Whip Jordan Harris specifically called out the apprenticeship program as central to their decision to back the project. But even then, it apparently wasn't an easy sell for Clarke.
"I know Robert is the president and CEO [of Parkway], but Joe Zuritsky is the one with my unpublished number," Clarke said. "And he kept calling me and calling me. And not just for a couple of weeks. It was a dogged pursuit to get this deal done."