Owner of 3535 Market St. in Philadelphia looking to sell

Once called the Gateway Building because of its location in West Philadelphia, 3535 Market St. is about to hit the market.

The 18-story, 436,000-square-foot building is expected to trade for a big number but does have some vulnerabilities, according to people familiar with the property.

The property is part of the 17-acre University City Science Center complex in West Philadelphia and is fully leased to two tenants — Children’s Hospital of Philadelphia and the University of Pennsylvania Health System. CHOP occupies about half of the building and its lease runs until May 2017 — at which point it is anticipated it will relocate to a building it is constructing. That will put a dent in 3535 Market's occupancy. Penn’s lease expires in 2030.

The Science Center will have new space that will potentially compete with any vacancy that hits 3535 Market.

The building was originally constructed for the General Services Administration in 1973. It was renovated in 1999 and the improvements included upgrading all of its mechanical systems as well as completely redoing the lobby and other areas with marble and granite.

Not many buildings in University City are privately owned, which makes the property desirable for an investor that wants to have a presence in a submarket that is not only experiencing employment growth but also unprecedented construction activity.

ProMed Properties has interviewed brokers who it would hire to sell the property. ProMed bought the building in 2006 for about $110 million. It traded in 2003 for $80 million. The property is expected to trade north of $110 million, according to people familiar with the 3535 Market and University City.

Source: Philadelphia Business Journal