Two Center City Philadelphia office buildings for sale for $200M

Two more Center City office buildings are coming on the market, adding to a growing list of downtown office buildings that are up for sale as investor interest in the Central Business District strengthens.

United Plaza and 1650 Arch St. are being packaged as a portfolio and anticipated to sell for as much as $200 million, according to an estimate. Though the buildings are being marketed together, they could be sold individually to the right buyers.

The strategy to sell them together came about since they have the same owner (TIER REIT) and the properties have a very similar profile that will attract similar buyers, said Doug Rodio, an investment broker with JLL who is teaming up with NAI Geis to sell the buildings. “We believe there are synergies in owning both assets, basically economies of scale.”

Both buildings are well leased with significant credit and lease terms, he said. Debt markets are as healthy as they’ve been in recent memory, which will help generate aggressive pricing for the portfolio or on an individual basis, Rodio added.

TIER REIT, which is formerly Behringer Harvard REIT I Inc. of Dallas, Texas, is the seller.

United Plaza stands 20 stories and totals 617,476 square feet. It is 93.7 percent leased. Duane Morris, a law firm, occupies 257,000 square feet of the building for its headquarters. Its lease doesn’t expire until August 2019.

When the building was first acquired in 2002 by another company, Oaktree Capital Management, it spent $31 million conducting a total renovation of the building at 30 S. 17 th St. At the time, the property was dated, having been constructed in 1975, and had lost an engineering firm that took up nearly half of the building. It was also renamed United Plaza from United Engineers.

The story is similar with 1650 Arch St. The 27-story, 553,349-square-foot building was stable and nearly fully occupied until Wolf Block, a law firm, dissolved in March 2009. That immediately punched a 170,000-square-foot hole into the property’s occupancy.

This vacancy and the building’s age (it was constructed in 1974) prompted the landlord to invest $9 million in a series of renovations to the lobby, corridors, mechanical systems and other parts. It is now 95 percent occupied. The EPA is its main anchor and leases 304,255 square feet.

As a package, the two properties total 1.17 millions square feet of office space and are 94 percent occupied.

Source: Philadelphia Business Journal