Parkway Takes Liberty for an Exit

Parkway Properties Inc. is one step closer to departing the Cradle of Liberty, thanks to a critical renewal.
Two Liberty Place
Two Liberty Place

By Keith Loria, Contributing Editor

Parkway Properties Inc. is one step closer to departing the Cradle of Liberty, thanks to a critical renewal by Cigna Life Insurance Co. The big insurance provider renewed a 322,000-square-foot lease in its home at Two Liberty Place in Philadelphia.

“The early renewal of Cigna at Two Liberty Place secures the asset’s anchor tenant through 2027 at a positive mark-to-market,” M. Jayson Lipsey, Parkway’s executive vice president & COO, said in a prepared statement. “With this important renewal, we have further stabilized the asset and believe we are well positioned to exit Parkway’s one remaining non-core market.”

Cigna’s renewal stabilizes nearly 34 percent of the Class A+ building constructed for its occupancy through Oct. 31, 2027. Parkway expects Cigna to vacate the space it did not renew on or about May 31, 2016.

The 57-story office tower is the third-tallest skyscraper in Philadelphia, and the 33rd tallest building in the U.S., totaling 848 feet. The property is located in the heart of historic downtown Philadelphia, connected to The Shops at Liberty Place, an enclosed upscale mall. It is also connected to a 290-room luxury Westin Hotel. Parkway Properties purchased it four years ago in partnership with the Teacher Retirement System of Texas.

According to JLL’s Philadelphia CBD Office Insight for the second quarter, rents in the CBD increased from the first quarter by 0.4 percent, although they were down imperceptibly from last year (0.1 percent). Large blocks remain scarce across the inventory, so the renewal by Cigna makes sense.

Two Liberty Place features state-of-the-art building infrastructure, including 23 high-speed elevators in three banks, two freight elevators, 24/7 on-site security, advanced telecommunications infrastructure and service, and after-hour HVAC through remote dial.

As of July 1, Two Liberty Place was 99.2 percent occupied, or 89.4 percent occupied pro forma for Cigna’s contraction. The Cigna lease represents an approximately 4 percent positive cash renewal spread from the expiring rate.