Brandywine has acquired the main post office building from the university for $28 million. In addition, it has signed a 90-year ground lease with Penn for the post office truck terminal annex, which now occupies a full block. That will be demolished to make way for the Cira Centre South mixed-use components. These properties are one block from the existing Cira Centre, which is north of 30th Street Station.
Redevelopment of the five-story postal service building and construction of a 733,000-sf, 2,400-vehicle parking garage represents the opening phase of the project. The building will be converted into offices for 5,000 employees of the Internal Revenue Service. The US General Services Administration has signed a 20-year lease, beginning in 2010, for the entire building.
The renovation will preserve the building's facade, lobby and designation as a national historic site. The redevelopment cost is estimated at $265 million, prior to any historic tax credits, which may be applicable. The new garage, half of which will be reserved for the IRS, is expected to cost $110 million. This phase is scheduled for completion in 2010. During redevelopment, the US Postal Service will continue to occupy portions of the building under three short-term leases for 220,000 sf through fourth-quarter 2008.
Plans for Cira Centre South new construction are preliminary and "subject to market conditions." Initially they call for two towers. One, on Walnut Street, is projected for as many as 50 stories, containing up to 500,000 sf of office space, a 225-room hotel with conference and ballroom space, and a 50-unit residential condo aggregating 125,000 sf. A tower on the Chestnut Street side of the parcel is projected to stand up to 30 stories high and contain approximately 225 residential rental units in a total of 300,000 sf, with 20,000 sf of street and lobby retail.
Jerry Sweeney, Brandywine's CEO, tells GlobeSt.com that the towers are estimated to cost in the range of $400 million, depending on the final interior configurations, "which will depend on market and financial conditions." They are initially scheduled to follow phase one and be completed in 2012. Penn has agreed to lease 100,000 sf in the office tower for a 20-year term. Like Cira Centre, the Cira Centre South complex is a designated Keystone Opportunity Improvement Zone, which provides a 15-year abatement on city and state taxes through 2018.
For Penn, Cira Centre South represents the opening stage of its previously announced master plan, called Penn Connects, designed to expand athletic fields, offices and open space that connects University City and Center City. "This marks a milestone for both our institution and the Philadelphia region," says Amy Gutmann, president of the university, in a statement. "It will improve the urban infrastructure and character of University City, bridge the divide between the campus and Center City and create a vital new center of commerce for the region."
For Radner-based Brandywine, the project completes CEO Jerry Sweeney's initial vision for Cira Centre, the award-winning tower, which was completed in 2005. "As a fully leased redevelopment, the new IRS facility accelerates the continuing renaissance of University City, enhances the value of our existing Cira Centre office project and acts as a catalyst for future activity in the surrounding area, including our proposed mixed-use development," adds CEO Jerry Sweeney, in a statement.
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