Is Centre Square next to hit market?

It appears the owner of Centre Square, the largest office complex in Center City, is on the verge of putting the two-tower complex up for sale, according to market sources.

This comes just about a month after the owner, Equity Commonwealth (NYSE: EQC), leased additional space to the University of Pennsylvania Healthy System in the office property and essentially filled nearly every vacant space in the 1.8-million-square-foot complex – a feat that took 12 years to accomplish, said sources familiar with the building.

Equity Commonwealth has reportedly made overtures to some in the brokerage community that it’s interested in exploring a potential sale. A company representative couldn’t be reached for comment.

The last time the property traded was 14 years ago and it sold for about $100 a square foot. The office complex could trade for a big number this time around and some insiders have pegged it at $350 million to $400 million.

To those in the Philadelphia real estate community, it’s not surprising Equity Commonwealth would consider unloading the property. Aside from Centre Square, it owns three other office properties in Center City. The Chicago real estate company also owns 1525 Locust St. – which it put up for sale in November, Mellon Bank Center and 1600 Market St. It's been speculated that once it fills the vacancy at Mellon Bank, that building will also likely hit the market.

The company has publicly initiated a program to sell assets it owns across the country. Beginning last spring, it decided it wanted to unload $2 billion to $3 billion in office properties over the next two to three years.

Centre Square has a lot going for it. It’s at the epicenter of Center City at 15th and Market streets, right across from City Hall, and has direct access to the subway. It has a strong roster of tenants from Penn Health, Radian Group Inc., Public Health Management Corp. and Obermayer Rebman Maxwell & Hippel, among others.

Comcast Corp. had made its headquarters in the building before it moved into its new Comcast Center tower. When the cable company departed, it punched a big hole in the building, but the space has slowly and steadily been leased up.

The complex, though, is expansive and aging even though its prior owner invested upwards of $50 million making various improvements. The sale price is also large, which might deter some investors from taking a stab at it even though it is one of Center City's notable office properties.

In 2002, HRPT Properties Trust , a predecessor to Commonwealth Equity, bought Centre Square, which is commonly referred to as the Clothespin building because of the giant sculpture by Claes Oldenburg in front of it.

At that time, it had been owned by Metropolitan Life Insurance Co. The insurer had owned the property since it was developed in 1975 and after all those years, decided it was time to move on.

Source: Philadelphia Business Journal