In the late 1990s and early 2000s, real estate investors in Philadelphia and elsewhere were licking their chops over telecom space, buying up unassuming properties and converting them with the hopes of charging some very pricey rents.
One of them was 1500 Spring Garden St., a hulking 12-story, 1.1-million-square-foot former GlaxoSmithKline manufacturing building that was converted and marketed as an ideal spot for telecom companies. It didn’t take long for the market to shift sharply downward and the owners of 1500 Spring Garden changed its strategy. They decided to focus on attracting more conventional tenants rather than just on telecom companies. It was the right move.
Now 88 percent occupied with a roster of marquee office tenants, Square Mile Capital Management, the New York-based owner of 1500 Spring Garden, has put the building up for sale. The property could trade for as much as $200 million, or roughly $180 a square foot. Amerimar Enterprises Inc. of Philadelphia manages the property.
The building, which takes up an entire city block, is home to Day & Zimmermann, Independence Blue Cross, Thomson Reuters and CBS Broadcasting.
“It’s probably the best rent roll of any office building in Center City,” said Jim Vesey, a broker with Jones Lang LaSalle who is marketing the property for sale. “The nine largest tenants account for 78 percent of the rent roll, they are large well-known names and have an average lease term of 8.7 years remaining.”
Though a bit on the fringe of the Central Business District, 1500 Spring Garden makes up for that in attractive rents in the low $20s a square foot and power and other redundancies that tenants want, Vesey said.
“I think it will appeal to a wide range of investors who will be attracted to the credit and term of rent roll,” he said.
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