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Chestnut Street's Renaissance Speeds Sale

PHILADELPHIA-As retailers spill over from pricey Walnut Street, the tiny Payless ShoeSource location on Chestnut sells within two weeks.

By Marita Thomas | Updated on December 06, 2007

PHILADELPHIA-The three-story, 11,516-sf building at 1604 Chestnut St. has traded for nearly $2.5 million, or 212.75 per sf, at a cap rate just shy of 5.4%. Payless ShoeSource currently leases the entire building, but occupies just 2,876 sf on the ground floor plus the basement for storage, while the top two floors are vacant. Payless has just exercised its final option of five years on a triple-net lease.

The Taylor-Zang retail group of the local office of Marcus & Millichap, led by senior associate Dean Zang and Mark Taylor, senior investment associate, represented both the buyer and the seller. Both are entities identified only by the property’s address. Dean Zang says there were a half-dozen offers within the first week of marketing, and within two weeks, the winning offer was struck at 98% of the listing price.

This is despite his acknowledgment that the market is “slowing or correcting itself due to the changes in the capital market,” he says. “The buyer-types ranged from a New York City 1031 buyer to several well known local groups, and it exemplifies that assets in A locations are still in high demand.”

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