Avenue of the Arts building up for sale

A portion of Avenue of the Arts building in Center City has come up for sale and presents an opportunity for a developer to swoop in and convert it into apartments or a hotel.

Floors 4 through 17 totaling 209,095 square feet of the entire 283,126-square-foot building at the corner of Broad and Chestnut streets has been put on the market. The space is currently used as student housing by the Art Institute of Philadelphia, which has its lease expiring next September.

“We expect to get a lot of interest from multifamily and hotel developers and investors,” said Jim Galbally of Jones Lang LaSalle, who is handling marketing of the building. “This has a lot of infrastructure in place and someone can easily come in and convert the existing student housing into market-rate housing.”

The property sits along the Avenue of the Arts, a lively stretch of South Broad Street between City Hall and the Kimmel Center for the Performing Arts and beyond. While this part of South Broad had traditionally been an office hub, residential uses have also crept in over the last decade beginning with Symphony House, 777 South Broad, South Star Lofts and a pending conversion of 260 S. Broad St.

The structure has been in a state of flux for a couple of years and, at one point in 2011, marketed for sale in the $60 million range by its owner, Ashkenazy Acquisition Corp. of New York. However, litigation between the Art Institute and the landlord made any prospective buyer hesitant to strike a deal. That has been eliminated now that the legal entanglement has been resolved and the Art Institute’s lease is expiring. The Art Institute uses the building as its primary residential hall with 176 one-, two- and three-bedroom units that can accommodate up to 660 students.

What’s not part of any prospective sale is the retail portion and floors one through three. That the sale price to about $150 a square foot, or around $32 million.

Capital Grille occupies 11,000 square feet fronting South Broad and is in the space until 2015. Olive Garden takes up 7,500 square feet along Chestnut Street.

The property was constructed in 1898 as an office building. A partnership between Lubert-Adler Partners and Philadelphia Management Co., both of Philadelphia, bought the building in 2000 and spent $18 million converting it into residential use for the Art Institute.

In December 2004, Ashkenazy paid $45 million for the entire building.

Source: Philadelphia Business Journal