Three Philadelphia commercial real estate investors have quietly purchased buildings in the Philly office space market in Center City’s east end, investing over $300 million in what they believe will be the next hot market in Philadelphia, according to the Philadelphia Business Journal.
Keystone Property Group and Mack-Cali Realty Corp., which acquired the Curtis Center this week, have together invested just over $210 million in two buildings in the Philadelphia office space market’s Independence Square submarket in under a year, the newspaper said. Keystone and Mack-Cali have focused their interests on the Market Street East area of the Philly office space market, according to the Journal. Another transaction involving office space in Philly in the CenterCity east end came with Keystone and Mack-Cali’s recent acquisition of the Dow building at 6th and Market street, just a short distance from the CurtisCenter. The $20 million renovation of that building will include a beer garden slated to open soon.
Brickstone Realty Cos., owner of the Lits Building, also has been growing its portfolio of buildings in the same area, investing $105 million along the 1100 block of Chestnut Street in the Philadelphia office space market, the newspaper reported. The company now owns 1112-1128 Chestnut Street and has a 192-square-foot redevelopment project underway that will feature 95,000 square feet of retail space and 112 apartments.
Brickstone also is looking at acquiring other mixed use and office space in Philadelphia and currently has three buildings on Chestnut Street or 11th Street under agreement, according to the Journal. Plans call for that space to be converted into loft apartments, creative office space and co-working space, adding an unknown amount of square footage to existing office space in Philly.
Keystone and Mack-Cali, which paid $125 million for the historic Curtis Building, will invest another $25 million to transform the building into a mixed-used complex with 90,000 square feet of office space in Philadelphia, as well as 90 upscale apartment units and a restaurant with outdoor dining, both overlooking Independence National Historic Park and Washington Square Park. The company said more apartments might be added once existing office leases roll over and only a small portion of Philadelphia office space might be kept in the long term.
Other Philadelphia commercial real estate investors also are showing increased interest in CenterCity’s east end. In March 2014, a partnership sponsored by Rubenstein Partners purchased the 850,000-square-foot Penn Mutual Towers for an undisclosed amount. Penn Mutual Towers — actually three buildings that overlook Independence Mall and Washington Square — will be modernized to create high-quality Philadelphia office space. The purchase was the company’s first investment in the Philly office space market in years, an apparent sign of their confidence in the Center City east end submarket.
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