Philadelphia-Area Office Asset Trades for $200 PSF
- Apr 08, 2020
Kairos Real Estate Partners and Artemis Real Estate Partners have sold 518 Township Line Road, an approximately 123,000-square-foot, Class A office asset in Blue Bell, Pa. With the assistance of JLL Capital Markets, the partners secured Apex Financial Advisors as a buyer for the suburban Philadelphia property.
JLL’s Doug Rodio, Brett Segal and Brett Grifo represented the sellers in the transaction. Kairos and Artemis had owned 518 Township since buying the asset at a steep discount from lender CW Financial Services in a $3.3 million deal in 2016. The partners’ transformation of the building paid off in profits, as Apex took over ownership in exchange for $24.9 million, or just over $200 per square-foot, according to the Philadelphia Business Journal.
Developed on a 6.5-acre site in 1970, 518 Township underwent a sweeping renovation in 2001 to accommodate a corporate user, and benefited from a two-year, $3.2 million modernization program that just reached completion in 2019. The recent upgrades, which included the addition of a new conference center, café and state-of-the-art fitness facility, spurred the completion of 85,000 square feet of leasing activity, pushing the property’s occupancy level to 80 percent. Global Accounting firm RSM and Jefferson Blue Bell Surgery Center anchor the building with a respective 45,000 square feet and 18,000 square feet of space.
Despite having sold 518 Township, Kairos and Artemis remain drawn to Blue Bell as the region evolves into a leading employment center for the Montgomery County area. In 2017, the partners joined forces on the acquisition of 980 Jolly Road, a 150,000-square-foot office asset in Blue Bell. Kairos and Artemis are presently in the process of modernizing the property through a capital expenditure program involving as much as $6 million.
Safe in the suburbs
The suburban Philadelphia office market got off to a good start in 2020, recording positive net absorption of 321,300 square feet and an increase in direct asking rents to $29.21 per square-foot in the first quarter of 2020, according to a report by JLL. And the future looks stable as well, despite the coronavirus-inspired economic turmoil.
“Suburban Philadelphia [is] well positioned to face the uncertainty of the evolving reality of COVID-19,” according to the report. “The Pennsylvania suburbs absorbed nearly three times as much space as the CBD.” In addition to strong absorption, the suburban Philly office market is expected to benefit from a growing population. “Preliminary Census estimates also indicate that the suburbs are sustaining population growth while the city is experiencing a slowdown. If this bears out through 2020 and beyond, then the suburban office market will likely see an uptick in demand reflecting this shifting preference,” according to the report.