Hotel plan axed, Two Liberty to convert empty space into condos

A plan to put a luxury hotel in the top 10 floors of Two Liberty Place has been shelved and the owner has decided to build out that raw space with residential condominiums.

The move comes as the condo market in Center City is making a nascent comeback, prompting developers to consider going for-sale rather than rental with residential projects.

IStar Financial Inc., a New York firm that has the title to the undeveloped portion of the 58-story skyscraper, is partnering with Dranoff Properties of Philadelphia to convert the space into 60 condos and complete what is known as the Residences at Two Liberty. The units will go on floors 48 through 57. (The 58th floor stores mechanical equipment.)

A sales office is being set up to roll out the new units next year.

“It will be pretty spectacular,” said Carl Dranoff, president and chief executive officer of Dranoff Properties Inc. “Talk about the views.”

An executive with iStar Financial couldn’t be reached for comment.

In early 2013, iStar had retained JLL (formerly called Jones Lang LaSalle) to market the undeveloped floors of the 1.2-million-square-foot tower as a 150-room hotel called Liberty Tower. That apparently wasn’t successful.

Two Liberty at 1601 Chestnut St. was originally constructed as an office building for Cigna Corp.’s headquarters. The insurance company’s space needs shrank over the years and the building's owner in 2005, America’s Capital Partners, decided to convert the top 20 floors, or roughly 400,000 square feet, from high-end office space into luxury condominiums.

The condo market was hot at the time. America’s Capital and its partner, Falcone Group, planned to put in about 130 units from floors 37 through 57.

By 2006, the conversion was underway and well-heeled buyers shelled out millions of dollars for a condo at Two Liberty. When the housing boom came to a smashing halt, just 56 of the condos had been sold.

IStar Financial, which had lined up a construction loan for America’s Capital and Falcone Group for the condo conversion, took title in 2012 to 16 unsold units and the raw floors that had never been built out. An early analysis by iStar had determined the market could use a high-end hotel and it tried to sell the space as such. While there was interest, a deal was never made.

Source: Philadelphia Business Journal