Holliday Fenoglio Fowler, L.P. (HFF), on behalf of the owner, is marketing for sale 1600 Market Street, an 825,968-square-foot, 39-story Class A office tower in Philadelphia’s thriving Central Business District. 1600 Market is a rare, Class A value-add opportunity to acquire and stabilize the property by implementing a strategic amenity-enhancement plan and targeted leasing effort aimed to capitalize on the building’s superior “main and main” location in Market Street West, where ever-improving leasing fundamentals, including Class A, 12-month rent growth of more than 7.6 percent continues to bolster demand for the CBD’s most institutionally desired submarket.
1600 Market Street has been anchored by PNC Bank’s regional headquarters since 1996 and is currently 82.1 percent leased to a variety of legal, financial, consulting and professional service firms. PNC Bank currently leases 362,843 square feet at the property, which, until recently, was scheduled to expire on May 31, 2021. PNC Bank amended its existing lease agreement such that on January 1, 2019, the tenant will downsize to 233,411 square feet in a rightsizing lease contraction that comes in tandem with a stabilizing lease extension that runs through May 31, 2031. The amended PNC lease agreement provides more then 13 years of term from the property’s anchor and largest credit tenant.
Excluding PNC’s give-back space from the equation, the property boasts an impressive 9.1 years of weighted average lease term and contributes more than 36 percent of the building’s annual in-place income as of January 1, 2019. The new owner will benefit from more than 12 months of lead time to plan and implement the strategic repositioning of the office building for sale from as-is condition to the top-of-the-Class-A competitive set. Implementing a tenant-focused amenity enhancement plan will position 1600 Market Street at the leading edge of its Class A competition. The increased tenant demand from over 3.8 million square feet of existing, expiring leases totaling more than 20,000 square feet during 2018 and 2019 will drive competition and allow the new owner to push rents to new highs as the CBD’s most desirable tenants as they compete for premium high-rise availabilities in Market Street West.
1600 Market Street offers investors a rare opportunity to acquire a Class A tower building in downtown Philadelphia. For more information on this commercial property, please contact Doug Rodio, Brett Segal, Jose Cruz, Graham Stephens, Andrew Weir or Ben Appel. For information on financing opportunities, please contact Ryan Ade. To view HFF’s current real estate investment listings, please click here to be directed to HFF’s property search page.