Parkway Corp., shifting strategy, looks to sell lot at 20th and Arch

Parkway Corp. has carved its development niche amassing Center City property, banking it as paid parking, then building it up when the time is right.

But it's trying something new at the former car-rental lot it owns at 20th and Arch Streets, which it is now looking to sell as undeveloped land.

"It is a little bit of a different thing from our strategy," Parkway president Robert Zuritsky said of its move to market the former Avis Rent a Car System L.L.C. lot it acquired just over a year ago. "We're just exploring to see what the market is."

The shift comes amid concerns that Center City's rising real estate values may be losing some momentum.

Developers are due to complete more residential units in the area than would be filled under current growth rates, the Center City District business association said in a report last month. That potential oversupply, combined with expected higher interest rates that would make financing projects more expensive, could conspire against the market, said Michael Silverman, a managing director at Integra Realty Resources in Philadelphia.

"The music's going to stop at some point," he said. "But it's still pretty strong."

Parkway's red-and-blue logo is a common sight at paid parking lots in Center City and beyond. Its corporate offices are on the top deck of a parking structure north of City Hall.

Buildings that have risen at former Parkway lots and parking structures include the Home2Suites hotel at 12th and Arch Streets and the Penn Medicine Washington Square tower at 800 Walnut St.

Last month, Parkway and a partner began work on a pair of apartment buildings on former surface parking lots at Broad and Callowhill Streets. It is also partnering on a proposed residential high-rise at the 709 Chestnut St. lot.

Bill Luff, founder of newly formed commercial brokerage CRE Visions, said Parkway probably decided to sell the 20th and Arch Street site to free up cash for its existing projects, rather than risk running down the clock on the current real estate growth cycle while it works on a proposal of its own.

"With the uncertainty of the timing of the cycle, why not try to capitalize on the value that's been created in this period of upswing and use those dollars for other projects they really want to sink their teeth into," Luff said.

A Parkway affiliate acquired the 33,000-square-foot parcel for $8.4 million in December 2014.

Since then, real estate values have continued their upward march. Rents in central Philadelphia's highest-end apartments, for example, rose more than 3 percent between 2014 and 2015, according to market tracker Delta Associates.

Office rents in western Center City, where Parkway's 20th and Arch Streets site is located, rose nearly 5 percent over that time, according to calculations based on data from commercial real estate services firm JLL.

Parkway's site could prove especially valuable given speculation Comcast Corp. plans a third Center City office tower on land it and a partner have acquired nearby, said James Galbally, a JLL managing director marketing Parkway's parcel.

Not much open land is left in the city's core, Galbally said, adding that he's been getting interest from residential, office, and retail developers.

"There aren't a lot more sites available in Center City, and that's what drives the pricing," he said.

Source: Philly.com