CBRE Global Investors Takes 2 in Philadelphia
- May 15, 2015
Calling Philadelphia an area of focus, a fund sponsored by CBRE Global Investors has purchased two Class A office buildings in the city’s central business district–United Plaza and 1650 Arch St.
The Los Angeles-based investment management firm did not disclose the price, but the Philadelphia Business Journal reported that Tier REIT sold the properties for about $200 million.
United Plaza is a 20-story, 617,476-square-foot building located at 30 S. 17th St., and 1650 Arch St. has 27 stories and 553,349 square feet of space. Both are located in Center City’s premier Market Square West corridor and are 94 percent leased.
“Philadelphia is a focus market for us and is projected to be a top 10 rent growth market over the next five years,” Vance Maddocks, president, Strategic Partners, U.S., for CBRE Global Investors, said in a statement. “These buildings are high-quality properties in a market that is in high demand. With Class A vacancy at 9.1 percent and limited new supply coming into the market, we believe these properties will appeal to a wide range of tenants.”
Tenants at United Plaza include Duane Morris, a law firm that leases about 257,000 square feet. The United States Environmental Protection Agency is the main tenant at 1650 Arch St. with approximately 304,255 square feet, according to the Philadelphia Business Journal.
CBRE Global Investors said the buildings have been extensively renovated and maintained. The buildings feature “highly efficient floor plates with minimal columns and excellent, multi-tenant elevator exposure,” according to the statement.
The team’s capital plan includes pursuing LEED certification, base building systems upgrades and cosmetic work. It also plans to implement CBRE Global Investors’ proprietary 5-Star Worldwide service and amenity program, which includes high-quality and service-oriented property management, concierge services and a video-linked conference center.
Colliers International’s 2014 Year End Office Research & Forecast Report for the region noted that Philadelphia’s central business district gained national investors last year.
“Investment activity should remain strong in 2015 based on the number of properties on the market. REITs will continue to refine their targeted geographic areas, and private equity funds may begin spinning off stabilized assets,” the Colliers report stated.
For CBRE Global Investors, the deal marks a return to Philadelphia, where it had previously owned 2000 Market St. before selling it two years ago.
Tier REIT, formerly known as Behringer Harvard REIT I Inc., still owns two office buildings in the city: Three Parkway and the Wanamaker Building. The REIT focuses on office properties in strategic U.S. markets, including Washington, D.C., Dallas, Louisville, Ky., and Baltimore, where it sold 250 West Pratt St. to Corporate Office Properties Trust in March for $63.5 million.
Last month, CBRE Global Investors purchased two office buildings–Metropolitan Park East and West–in Seattle’s South Lake Union submarket for a reported $273 million. Other 2015 investments include Park 80 West, two Class A buildings in Saddle Brook, N.J., and 700 Broadway, a multi-tenant office building in Denver. The firm has about $87 billion in assets under management.