RAIT Financial Trust leaving Cira Centre, wants to be back in Center City: Brandywine has already replaced RAIT in Cira Centre

RAIT Financial Trust has signed a lease to move out of Cira Centre and will relocate back to the Central Business District.

The real estate investment trust signed on to 21,000 square feet at Two Logan Square in Center City Philadelphia. It will move by spring 2016, said Andres Viroslav, a spokesman for the company.

“We wanted to be back downtown,” Viroslav said about the decision to move out of Cira Centre. It also wanted to have the ability to be on a single floor. Viroslav declined to answer additional questions about the lease. CBRE Inc. represented RAIT (NYSE: RAS).

The building that RAIT is relocating to 100 N. 18th St., owned by Brandywine Realty Trust, which developed and also owns Cira Centre. The vacancy brought on by RAIT's pending move from Cira was short-lived.

“Always good to keep a great customer within the Brandywine family,” said Jerry Sweeney, CEO of Brandywine (NYSE: BDN) about RAIT's move. “We have already released their entire space plus some more for a term exceeding 10 years.”

Whether there is more significance to RAIT’s move out of Cira Centre and back to the Central Business District couldn’t be determined, but when the company moved about 10 years ago from 1818 Market St. to Cira Centre, it received benefits under a Keystone Opportunity Zone program that gives companies breaks on certain state and local taxes.

Cira Centre is in a KOZ, which was a big attraction to tenants that moved there when it opened. Those tax breaks at Cira Centre are scheduled to expire in 2018 and can’t be extended, said Lyndsay Kensinger, spokeswoman for the Pennsylvania Department of Community and Economic Development.

“Only unoccupied parcels are eligible to be extended,” she said, noting that the opportunity zone was extended on nearby 2930 Chestnut St. in 2009 and that expires in 2025. This property, owned by Brandywine (NYSE: BDN), was subdivided and consists of the Evo building, a parking garage and the FMC building under construction and all three fall under the 2025 expiration, Kensinger said.

Many in the real estate community have wondered how tenants who occupy space in the building will react to the opportunity zone’s expiration and how it will affect Cira Centre’s occupancy. If the RAIT lease serves as an indicator, it appears that vacancies might get shored up fast by either existing tenants needing more space or new ones who want to be in the building.

Since the office tower was constructed, University City has become a hotbed of development activity and is on track to become an even more attractive neighborhood. Brandywine has invested tens of millions of dollars in developing that area and Drexel University, likely in partnership with Brandywine, has plans to construct additional buildings in that part of University City.

If getting the tax breaks aren’t the single biggest reason to be in a space, tenants have options, as detailed in an earlier article, Among those are:

Remain in Cira Centre, which has excellent access to 30th Street Station and an appeal to those who regularly visit New York for business;

• The suburbs, which don’t have the wage and other taxes of Philadelphia;
• New Jersey, which has an aggressive tax incentive program;
• Center City, where trophy and Class A space is getting tighter; and
• FMC Tower across the street from Cira Centre or the Navy Yard, which has a KOZ designation and is being developed by Liberty Property Trust (NYSE: LPT).

Source: Philadelphia Business Journal