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Wells Fargo Building Unifies Ownership, Adds Foreign Investor

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Wells Fargo Building Unifies Ownership, Adds Foreign Investor
123 South Broad St. in Center City, Philadelphia

123 South Broad St. and the neighboring Witherspoon Building have come under unified ownership after being split into upper and lower condos for years.

SSH Real Estate and Young Capital had jointly owned the upper portion of both buildings, starting with the sixth floor, since 2008, but purchased the basement through fifth floors of each from New York-based Jack Resnick & Sons in a transaction valuing the two buildings at $100M. The JV brought in Luxembourg-based Quilvest Private Equity as a partner on 123 South Broad, also known as the Wells Fargo building, but not the Witherspoon Building.

Philly-based firms SSH and Young have been renovating their portion of 123 South Broad for over four years as they have brought occupancy up from 79% to 95%. Wells Fargo occupies 225K of the building's 880K SF, including a retail branch in part of the three-story lobby that featured in the 1983 movie "Trading Places." SSH's offices are in the building as well, and law firm Montgomery McCracken Walker & Rhoads LLP occupies 110K SF between the 24th and 30th floors but will be vacating in June.

With the infusion of capital from Quilvest and a loan from Guggenheim Commercial Real Estate Finance, brokered by HFF, SSH and Young will further renovate the building by upgrading its mechanical systems, adding some delicate touches to the iconic lobby, and figuring out what to do with its two-story penthouse and roof.

“We’re exploring the space, since it lends itself to event space, co-working or tenant lounge-type space," SSH partner Peter Soens said. "We’re talking to a lot of different groups about partnering for the best use for that space, especially since we have the top floors of the building available for the first time in 20 years.”

Wells Fargo Building Unifies Ownership, Adds Foreign Investor
The Witherspoon Building on Walnut Street, beside 123 South Broad St. in Center City, Philadelphia, as of November 2017

The asking rent for the top floors is currently $28/SF plus utilities, which is a small step below the bulk of the Class-A office stock in Center City. But whereas much of that class is in 1970s-vintage towers along Market Street, 123 South Broad was built in 1927 and has the high ceilings, large windows and architectural distinction that newer buildings cannot match. It also benefits from the immediate surrounding area of Walnut Street and Midtown Village.

“[Having] a lot of the cultural amenities immediately near us is a big advantage, and that just happens to be where the historic buildings are," Soens said. "Whereas Market Street is purely office buildings, without as much of a blend.”

SSH and Young plan to add to that blend by converting the Witherspoon into a multifamily building, a move made possible by Wells Fargo having vacated the building years ago. Also informing the residential conversion is the 11-story building's long, narrow floor plates, which are better suited for multifamily than modern office, according to Soens.

SSH and Young are still hashing out the details of the multifamily plan, as well as the exact usage of the 123 South Broad penthouse. The roof will be converted into a panoramic roof deck, capitalizing on the unobstructed views that Soens said buildings on Market Street can't match. With an architect in hand for the roof deck, Soens estimated more details to be finalized for that and the penthouse in the next few months.