Philadelphia office building lands loan to upgrade to attract tenants

 By Jonathan Lehrfeld CoStar News

One of the Philadelphia region's largest credit unions closed the biggest loan in its history, marking an expansion of its commercial lending abilities and helping an office tower owner upgrade the building as occupiers seek higher-quality workspaces.

Citadel Credit Union closed a $50 million commercial real estate loan for the 29-story building at 2000 Market St. in Philadelphia, the company said Wednesday.

The record-setting transaction for the not-for-profit institution demonstrates its ability to go beyond traditional consumer banking and community partnerships to source, originate and lead larger, more complex commercial real estate deals, it said. Closing the deal "demonstrated that we can close complex opportunities at greater scale," Michael Desimone, chief lending officer at Citadel Credit Union, said in a statement.

The funding will enable the building's new ownership group to continue tenant improvements to increase the property's occupancy rate. The 2000 Market St. tower is about 70% leased, CoStar data shows.

A joint venture between New York-based CSB Holdings and Baltimore-based Tide Realty Capital purchased the roughly 665,000-square-foot Center Center tower about a year ago for $45.5 million. Law firm Marshall Dennehey anchors the building, with other tenants including the Board of Pensions of the Presbyterian Church and CMI Media Group, according to CoStar data.

"Since acquiring 2000 Market Street, the ownership group has upgraded the building’s gym, added a pickleball court, and created modern shared and hoteling spaces throughout the property," a Citadel spokesperson told CoStar News via email.

Office tenants nationwide have sought higher-quality space. Some law firms in Washington, D.C., are willing to wait years to move into big-box trophy office space in the city.

The credit union's financing includes a future-funding component that enables the 2000 Market ownership group to build customized spaces for long-term anchor tenants, the spokesperson said. The scope of those improvements is set to be tailored to each tenant’s specifications.

In addition to its work on the Market Street office building, Citadel Credit Union is expanding its physical presence in Philadelphia proper. Last month, it signed a lease for its third city branch. That location, at 133 W. Hunting Park Ave., is slated to open next year.

Its first branch in Philadelphia opened in the Overbrook Park neighborhood earlier this year, and a second location is slated to open in the Cedar Park neighborhood in the coming months.

For the record

Chris Hansen led the transaction for Citadel, working with the ownership group and the lender’s agent, Rhyze Solutions. Two50 Capital Group, led by Adrian Edery and Sara Frankel, served as the commercial financing broker.

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Discount clothing retailer Burlington to move headquarters to Philadelphia

 By Jonathan Lehrfeld CoStar News

Burlington Stores plans to relocate its headquarters from its namesake city in New Jersey to a building it acquired in Philadelphia in one of the market's biggest recent economic development wins.

The national off-price retailer agreed to purchase 3151 Market St. in West Philadelphia's Schuylkill Yards development, a few minutes' walk from the city's main train station, to serve as its new corporate office.

Burlington will pay Philly-based real estate investment trust Brandywine Realty Trust $240 million for the new 13-story, 441,000-square-foot building, according to a Securities and Exchange Commission filing Thursday. The deal, subject to customary adjustments, is expected to close at the end of this month.

"Burlington will take a phased approach to moving teams to the new space beginning no earlier than the end of 2028 or early 2029," a Burlington spokesperson said in a statement to CoStar News.

Burlington operates 1,300 stores in 47 states as of last month, including 43 shops around Philadelphia. 

Overall, Burlington is set to invest $370 million into its relocation. The move is expected to create at least 2,000 new jobs over the next five years, according to Pennsylvania economic development officials.

The deal signifies "the largest headquarters relocation to the city in years," Gov. Josh Shapiro said in a statement.

One New Jersey business group said Burlington's planned move is a blow to the Garden State.

"While corporations make these decisions for a myriad of reasons, we cannot and should not ignore the impact our state’s tax policies and anti-business policies have on our overall competitiveness," said Michele Siekerka, president and CEO of the New Jersey Business & Industry Association, in a statement. "Nor should we diminish the loss of executive presence in our state, the number of new jobs that New Jersey will not have, and the amount of property tax lost."

Burlington to convert Jersey offices to industrial

The retail chain has called Burlington, New Jersey, home since 1972. But it said it's outgrown its headquarters there.

"Burlington is rezoning its current HQ buildings in New Jersey to warehouse space and plans to dedicate some of the space to farmland," the Burlington spokesperson said. "In addition, the company will continue to operate warehouse and distribution centers in the towns of Burlington, Florence, Edgewater Park and Logan Township in New Jersey."

Once known as Burlington Coat Factory, the company rebranded about a decade ago. It expects to open nearly 150 net new stores in fiscal year 2026, a spokesperson said.

“We are one of the fastest growing retailers in America, and as we evaluated different options for our new corporate home, we were strongly attracted to the energy, talent, and infrastructure that Philadelphia has to offer," Burlington Stores CEO Michael O’Sullivan said in a statement.

The Market Street building was completed in the fourth quarter of 2024. Brandywine closed on $87.3 million in clean energy financing for the project earlier this year, marking the largest transaction of its kind in Pennsylvania.

The 3151 Market St. building is currently 4% leased and is subject to a $57.3 million mortgage that will be repaid at closing, according to the SEC filing. It's home to a Fine Wine & Good Spirits on the ground floor.

Brandywine anticipates net proceeds totaling about $168 million from the sale of the building, it said.

The state of Pennsylvania plans to invest $30 million in the project. The city of Philadelphia is supporting this investment with incentives, including a $7 million forgivable loan and a job creation tax credit award.

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Chobani plans record investment in Allentown, PA

By Jonathan Lehrfeld CoStar News

Yogurt maker Chobani is launching its next growth chapter via a pair of transactions with food and beverage giant Keurig Dr Pepper that could set up a record investment in Pennsylvania.

Chobani will pay $800 million to buy back an equity stake in its own company and another $125 million to take over the lease, equipment and operations of a manufacturing and warehouse campus in Allentown, it said Tuesday.

Chobani, a company that has seen revenue growth of 20% annually over the past three years, said it plans to invest about $1.2 billion over the next five years in the 1.5 million-square-foot property, creating more than 900 jobs.

"This $1.2 billion investment from Chobani is the largest private sector investment in the history of Pennsylvania's agriculture industry and will strengthen our dairy industry, support our farmers, and reinforce our position as a national leader in agriculture and food manufacturing," Gov. Josh Shapiro said in a statement.

That facility, about 60 miles northwest of Philadelphia, first opened for production in 2021. It's owned by global investment group Kohlberg Kravis Roberts & Co., CoStar data shows. KKR declined CoStar News' request for comment.

Chobani plans for it to have up to 10 production lines to scale new products. At full capacity, the Allentown facility is expected to source more than 3 billion pounds of Pennsylvania milk annually.

The deals are expected to close in the third quarter of this year, subject to customary closing conditions. Production under Chobani — known for its Greek yogurt — is expected to begin at the facility next year.

Keurig Dr Pepper, or KDP, and Chobani still intend to work with one another in a partnership that originated via a 2023 deal over coffee company La Colombe. KDP said it intends to use the net proceeds from the transactions to reduce debt as it positions its two future businesses, Beverage Co. and Global Coffee Co., for long-term success.

Meanwhile, Chobani said it is investing separately in a new dairy processing facility in Rome, New York; expanding its manufacturing operation in Twin Falls, Idaho; improving its original site in New Berlin, New York; and expanding its facility in Norton Shores, Michigan.

For the record

The commonwealth of Pennsylvania is set to provide $50 million in loans and grants to support infrastructure and site improvements for the project. Chobani may also be eligible for state tax credits.

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JPMorgan Chase to consolidate Philadelphia office hub with downtown deal

 By Katie Burke CoStar News

JPMorgan is preparing to fine-tune its Philadelphia office property through a deal that would consolidate its current patchwork under a more concentrated roof.

The New York financial heavyweight is in the final stages of negotiations to sublease some of Aramark's Center City headquarters space at 2400 Market St., according to people with knowledge of the talks. If realized, JPMorgan would fill about 63,000 square feet on the fifth floor of the property, enabling the bank to cut some of its ancillary office space across Philadelphia's urban core.

JPMorgan and its affiliates currently occupy space across several Center City buildings, including 1735 Market St., where its lease expires next year, as well as at the One Liberty Place tower and 1880 John F. Kennedy Blvd.

It isn't clear how or when the company's pending agreement for Aramark's space will impact the bank's existing footprint in the region, and JPMorgan representatives did not immediately respond to CoStar News' requests for comment. The amount of space the bank is weighing in the 2400 Market St. building is roughly equivalent to what it currently leases across its other Philadelphia offices.

The Philadelphia plans fit into a broader office rejiggering for the nation's largest bank as it doubles down on its commitment to physical space to accommodate a strict in-person policy for all employees. Over the past couple of years, it has signed several large renewal deals, expanded regional offices and spent heavily to acquire more property.

That ongoing investment has so far resulted in new and renewal agreements in Boston, Seattle, San Francisco, Dallas, New Jersey and Southern California, according to CoStar data. It also unveiled its new midtown Manhattan headquarters, a $4 billion supertall office development that now serves as JPMorgan's global headquarters.

In the aftermath of a deal to anchor the new South Station Tower in downtown Boston — another move that makes it possible for the bank to consolidate its regional presence in a single space — Chris McKenna, the company's managing director for global real estate, said JPMorgan would be looking to concentrate its footprint in other markets such as Miami, Atlanta, Philadelphia and some along the West Coast.

Willing takers

With those plans nearing fruition in Philadelphia, the pending JPMorgan deal is expected to provide a healthy boost to the city's recovering office market.

Similar to other markets nationwide, Philadelphia has benefited from stable employment growth, heightened office attendance mandates, a slowdown in large move-outs and downsizings, and a shrinking share of sublease space in recent years.

While demand remains at just a fraction of its pre-pandemic levels, the region's nearly 11% vacancy rate is well below the national average, according to CoStar data, and tenants such as JPMorgan Chase are increasingly willing to invest in their physical spaces. That has meant a gradual but steady uptick in deal momentum as companies lock down the type of spaces they want while it's still available.

That should bode well for Aramark as it pursues some real estate fine-tuning of its own.

The facilities and food services giant signed its original lease for the 2400 Market St. building about a decade ago, taking on just shy of 278,500 square feet for its corporate offices. Yet Aramark's space across the fifth through ninth floors of the 592,000-square-foot property proved excessive in the years following the pandemic's 2020 outbreak, prompting it to begin hunting for some subtenants.

“When the building was originally designed for Aramark, additional space was incorporated to support future flexibility," the company said in a statement to CoStar News. "As we continue to evolve our workplace strategy, we have determined that our teams can be fully supported within the building’s top four floors.”

The company confirmed that it would soon vacate its space on the fifth floor and relocate employees to its remaining floors in the property.

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Sales of Philadelphia multifamily properties lose momentum in 2026

By Brenda Nguyen CoStar Analytics

After rebounding strongly in 2024, sales of Philadelphia-area multifamily properties have increasingly lost momentum over the past two years. Apartment transactions totaled roughly $982 million through July, trailing the $1.15 billion recorded during the same period in 2025 and the even higher $1.8 billion completed in 2024.

Multifamily sales across the Philadelphia region have yet to surpass 2022 levels in the years since, and this year appears unlikely to change that.

Investors are responding not only to current interest rate levels but also to the changing outlook on where rates may move next. After beginning 2026 by pricing in multiple Fed rate cuts, investor expectations have become more cautious amid concerns about the budget deficit and persistent inflationary pressures, prompting speculation about a possible rate hike.

The investment slowdown is unfolding unevenly across property types.

Multifamily often moves earlier than other commercial real estate sectors, serving as a signal of what may be ahead. Apartment leases typically reset annually, so rents and values respond more quickly to economic shifts than office, industrial or retail assets do. This dynamic can draw investors into apartments earlier during a recovery, but it can also prompt them to pull back sooner when conditions change.

Sales of Philadelphia retail centers also declined from last year’s pace and are on track to finish with one of the lowest cumulative totals in recent years. Office sales remain structurally challenged and continue to trend lower, a pattern that has persisted for the past three years.

Industrial property investment posted its strongest first half in at least five years, though sales momentum slowed heading into summer.

With several months remaining in 2026, it remains unclear whether sales activity will stabilize or decline further. Either way, Philadelphia’s investment market is moving toward a more selective environment in which buyers are more cautious, pricing is under greater scrutiny, and fewer deals are closing.

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