Tuesday, July 2, 2013

Primo property on Rittenhouse Square up for sale

They always say in the real estate game that location means just about everything. Here is a case where that couldn’t be more true.
The building that houses the flagship Anthropologie store on Rittenhouse Square is up for sale.
The 23,598-square-foot property at 1801 Walnut St., owned by ARC Properties, is fully leased to the retailer until May 2016. Anthropologie, an Urban Outfitters’ brand, occupies the entire building. There are no renewal options on the lease, giving a prospective buyer the chance to either try to keep Anthropologie and strike a new lease deal or lure another tenant at higher rents.
Anthropologie has a sweet deal on the space since it signed the lease back when the market wasn’t as strong. It is paying about $14 per square foot, which is well below what the market is commanding these days.
In fact, the Center City retail market is on fire, especially in the prime corridors of Rittenhouse Row.
“The retail market in Center City is the best retail market in the Delaware Valley, bar none,” said Steven H. Gartner, president of Metro Commercial Real Estate. “The vacancy is nominal.”
That’s for the Rittenhouse Row retail corridor along Walnut Street.
“We don’t have product to lease,” he said. “I need space and in the right spaces. It has gotten so that retailers are looking at Chestnut and Market Street West to find space.”
There are just about two or three “legitimate” vacancies around Rittenhouse Square and Walnut Street, Gartner said. The lack of supply has meant rents have spiked for anything that does come available along Walnut Street. Landlords are being picky about who they want in their space.
“There’s virtually nothing under $100 a square foot and rents north of that for ground/floor space,” Gartner said.
As for 1801 Walnut, the location is great but the space can be a little tricky.
“While it’s a phenomenal corner, the building is extremely challenging because it’s multilevel and it’s up steps. It will have appeal only to a limited number of retailers that can make that configuration work,” said Gartner, who is not involved in either leasing or selling the space. “However, for such as good location, a chain might adapt to its unconventional configuration.”
Retail properties in this area of Center City have also become a hot investment commodity and have traded at high numbers.
For example, Allan Domb added to his Center City retail holdings in April and bought for $17 million the commercial condominiums at 10 Rittenhouse Square that contain the Barney’s clothing store and Serafina, a restaurant.
Some estimates have 1801 Walnut trading as high as $40 million. Jones Lang LaSalle is marketing the building for sale while Sierra USA is marketing the space for lease. The property was originally constructed as a residence in 1898 and designed in a Beaux-Arts style by Peabody and Stearns, a Boston architectural firm.

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