PHILADELPHIA-Transwestern Investment Co. and the Blackstone Group have put the office building at 1700 Market St. up for sale. Chicago-based Transwestern acquired an 89% stake in this building and another at 1601 Market St. in November 2004 from Equity Office Properties Trust, also based in Chicago. The 1601 building may also be in play.
EOP, which was later acquired by Blackstone, retained an 11% share of the two-building portfolio. The Transwestern/Blackstone partnership has enlisted Jones Lang LaSalle to market the 841,172-sf, 32-story asset at 1700 Market St. It is going out unpriced. On condition of anonymity, an area office specialist tells GlobeSt.com it could command up to $200 million.
If so, that would put it close to $237 per sf and represent a significantly profitable flip. According to GlobeSt.com's report on the 2004 acquisition, Transwestern paid $172.2 million for its 89% stake in both properties. They have an aggregate of 1.5 million sf, which means at a 100% aggregate price tag of $193.5 million, the price per sf of the duo was about $129 per sf.
Thomas Beneville, managing director, and Jay Miele, VP in JLL's New York City office, are leading the marketing team, working with Bill Luff, EVP and managing director, and Josh Sloan, SVP, in JLL's local office. Beneville says the partnership may consider adding the 1601 Market St. asset “to the offering for the right buyer.”
Regarding the reason for the sale, Miele tells GlobeSt.com, “they invested more than $6 million in capital improvements, including a lobby renovation at 1700 Market St. The building had some rollover issues, and they had a good lease-up program. They think the timing is right to move on.” He says the building is now 95% leased and the market rent rates are between $23.50 per sf and $25 per sf. Among the tenants are Deloitte Touche, Independence Blue Cross, AIG, Xerox and Commonwealth Land Title Insurance Co.
Of the 36-story, 681,000-sf building at 1601 Market St., Miele says, “the thought is to market that at some point to a separate buyer. It is not on the market now, but, if a buyer has interest in both, we'll talk.” It, too, has had good lease-up, and he says it is 94% occupied. Its rent rates “are probably slightly lower than at 1700,” he says, because the latter building “has more open views north and south.”
Meanwhile, the JLL team is marketing 1700 Market St. broadly, “nationwide and to offshore prospects,” according to Miele. “There is appeal here now among offshore buyers.”
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