State Signs 224,000SF Lease at Historic Philly Building
- Jun 24, 2008
The Commonwealth of Pennsylvania has signed a deal with Pennsylvania Real Estate Investment Trust for 224,000 square feet of office space at the former Strawbridge & Clothier building in Philadelphia. PREIT is renovating the historic property where the state will occupy three floors located atop retail space. Located at 801 Market St. in Center City’s Market East section, the Strawbridge property is surrounded by premier retail options, including PREIT’s 1 million-square-foot Gallery at Market East shopping center. Strawbridge & Clothier originally made its debut at the locale in 1868, and later redeveloped the site to encompass two structures that are now physically linked. Constructed in 1902 and 1928, the buildings, which are also connected to PREIT’s Gallery at Market East property, are currently listed on the Philadelphia Register of Historic Places. The Commonwealth will consolidate 22 agencies currently located at 1400 Spring Garden St.–which has been sold to Tower Investments in a $25 million deal–into space on the 13-story Strawbridge property’s fourth, fifth and sixth floors, which, along with the first through third floors, are owned by PREIT. Floors seven through 12 are separately owned by Gramercy Capital Corp. PREIT, which is seeking LEED Silver certification for the renovation endeavor, plans to lease the first three floors to retail tenants. Large chunks of available premier office space in Philadelphia are rare. “Vacancies have dropped over the last several years and there hasn’t been a lot of construction,” Kevin Gillen, PhD, research fellow with global real estate advisory firm the Staubach Co., told CPN today. “In terms of large amounts of square-footage, it’s just not available.” Comcast recently completed a new 1.3 million-square-foot office property, but any opportunity for other large tenants to take up residency there evaporated mid-way into the project when Comcast decided to expand and take up almost all of the office space. The Commonwealth’s lease with PREIT is for a 20-year term with the option for two five-year renewals, but the deal is not yet set in stone as it is currently under legal review. Financial details of the transaction have not been revealed, however, the average rate for Class A office space in Philadelphia’s Central Business District is $29.48 per square foot, according to a first quarter report by real estate services firm Grubb & Ellis Co. If all goes as planned, the Commonwealth will establish its regional office at the former Strawbridge building in the summer of 2009.