PHILADELPHIA-In partnership with a national real estate equity fund, locally based Walnut Street Capital has acquired the 1.5-acre parcel at 1800 Arch St. with plans to turn the current surface parking lot into a mixed-use development. The seller, Verizon, once planned to use the property for a sister tower to its 53-story Bell Atlantic building at 1717 Arch.
The price for the 70,000 sf of land is undisclosed. Joseph Grasso, who heads Walnut Street Capital, formerly named J. Grasso Properties, tells GlobeSt.com, “Verizon paid $26 million for the property, and we paid more than that. We think we got a bargain,” he adds. Robert Fahey and Lizann McGowan of the local office of CB Richard Ellis represented Verizon in the sale, and Walnut Street Capital was represented in house.
The lot is located across the street from the nearly completed 57-story, 1.2-million-sf Comcast Center, which Grasso terms “breathtaking, deserving of a better neighbor.” The parking lot is zoned for approximately 750,000 sf of retail, residential, office and/or hotel.
The buyer's plans are in their infancy, but Grasso says will include “a 600-vehicle, below-grade parking garage, 200,000 sf of retail, and one or two towers for either office, a hotel or a combination of both.” As for the current limit of 750,000 sf, he says, “we'd love an opportunity to build more” and will pursue that opportunity. Regarding height, he says, “that has to be worked out with the city and the surrounding neighborhood.”
“We've already had tremendous interest in the retail space,” he says. Although no contracts have been signed, “we could have tripled what we plan in retail space. There's big demand for high-end retail.” The retail rent rates, he says, will range from $45 per sf for a large-space user to as much as $200 per sf for smaller space units.
“There's need for hotel rooms,” he adds, citing the expansion of Pennsylvania Convention Center, which, despite a slow start, is currently under way. “I believe there's need for office, too,” says Grasso, “and we're working to put together a large chunk of office space. The goal for groundbreaking is within 24 months. The money is fully committed, but the timeline depends on approvals. We're interviewing architects and looking for an iconic plan.” He declines to estimate a cost “before we know the plan.”
Meanwhile, Grasso reports the Curtis Center and the Public Ledger Building, which his company acquired for an aggregate of $137 million in late 2006, are 98% leased. Walnut Street Capital has invested $5 million in renovations. An Italian bistro will open on the Sansom Street side, he says, and a restaurant facing Washington Square Park is also planned when the ground-floor space becomes available.
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