WSFS Financial Corp. renews Office Lease in Philadelphia

By Katie Burke CoStar News

The parent company of WSFS Bank signed a deal to keep its headquarters at a Philadelphia office tower in a welcome boost for the property since it had its valuation cut by more than 35% and was last year sent to receivership.

Wilmington, Delaware-based WSFS Financial Corp. earlier this month signed the long-term extension agreement for its 96,800-square-foot hub at 1818 Market St. where it is the tower's namesake and largest occupant.

The nearly 1 million-square-foot tower is one of many scattered across Philadelphia's urban core that have faced increasing financial distress over the past several years as a product of significant occupancy losses, a bleak leasing climate and declining valuations that have complicated refinancing efforts.

Landlord Shorenstein Properties acquired the Center City property more than a decade ago for $184.75 million, much of which was financed through a $174 million loan issued through Bank of America. The San Francisco-based real estate firm then pumped nearly $95 million into renovations, tenant improvements and leasing expenses, efforts that helped boost the tower's appraisal value beyond $282 million and helped Shorenstein secure a roughly $223 million refinancing package issued by Barclays Capital Real Estate in early 2021.

Fast forward a couple of years, however, and Shorenstein — similar to other landlords across the United States — faced a troublesome combination of fewer tenants and smaller spatial requirements that sent vacancy rates soaring to unprecedented highs.

The 1818 Market tower was more than 80% occupied in 2021, according to CMBS reports, a figure that fell in the following years before settling at less than 70% by March 2025. The refinancing loan was underwritten on the assumption that the property would generate about $16 million of annual net cash flow, but the declining occupancy rate meant the WSFS-anchored building only pulled in about $12.7 million in 2024.

By last summer, Shorenstein owed $239.5 million on the commercial mortgage-backed securities loan backed by the tower, according to Philadelphia court documents. The loan is still performing but remains held with a special servicer.

Center City presence

While financial turbulence has pushed some tenants across the U.S. to look for more stable alternatives, WSFS' decision to double down on its existing space points to companies' increasing willingness to commit to their physical real estate.

The WSFS Financial subsidiary, one of the nation's oldest banks, inherited the 1818 Market St. space in early 2019 as part of its acquisition of Beneficial Bancorp, the Philadelphia-based financial holding company for which the tower was previously named.

Yet WSFS has quickly settled in, growing its regional workforce to more than 250 employees and, in 2024, signing on for additional space on the ground floor to house a banking office and a publicly accessible lounge space to host meetings and events.

The bank's renewal "underscores our unwavering commitment to Philadelphia, a city that has been integral to our growth and success as an organization." WSFS CEO Rodger Levenson said in a statement, adding that Philadelphia is more than "just a key market for WSFS."

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Bimbo Bakery to Move HQ from Horsham, PA to Texas

 By Candace Carlisle CoStar News

The U.S. subsidiary behind Mrs Baird’s and Sara Lee bread has decided to move its headquarters to Texas from Horsham, Pennsylvania.

Bimbo Bakeries USA has leased space within an office building in Irving, Texas, a city about 13 miles northwest of downtown Dallas. The move puts Bimbo USA closing to its parent company's Mexico City headquarters and is expected to strengthen collaboration and enable "faster, more integrated decision-making across operations," according to a statement.

Bimbo USA's parent company is Grupo Bimbo, the world's largest baking company with operations in 39 countries. Grupo Bimbo entered the U.S. market in 1998 when it bought Mrs Baird's Bakery, which was founded in Fort Worth, Texas, by Ninnie Baird in 1908.

“Texas was our first home and played a defining role in our early history," said Greg Koehrsen, president of Bimbo USA, in the statement. "We’ve built a strong presence here over the years, and this region remains central to who we are today."

The relocation of Bimbo USA's headquarters to Texas after 17 years of being based in the Philadelphia area "positions us to operate more efficiently as we continue to invest in our brands and our communities," Koehrsen added.

The company's other bakery brands include Arnold, Ball Park, Entenmann's, Little Bites, Oroweat, Thomas and Stroehmann. Bimbo USA has more than 20,000 workers in the United States as well as 50 manufacturing locations.

Bimbo USA's senior leadership team and other employees are already working at the new Dallas-area office, the company said, with recruiting underway to fill additional roles. According to CoStar data, the company moved into about 7,000 square feet in the building in December.

A spokesperson for the company confirmed to CoStar News that employees have relocated to Dallas over the "last few months" with the new office expected to be "completed in June." In all, the spokesperson said about 100 workers will be based at the Dallas headquarters.

Still, Bimbo USA said it remains committed to the greater Philadelphia area and will keep its sales center and regional operations in Conshohocken, Pennsylvania.

Dallas is "a significant market" for Bimbo USA with multiple bakeries, sales centers and distribution centers in North Texas, according to the statement.

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State PA's office consolidation adds pressure on Local landlords

By Brenda Nguyen CoStar Analytics

Pennsylvania’s Space Optimization and Utilization Project, or SOUP, introduced in early 2025, is reshaping the Commonwealth’s office footprint in ways that carry implications for private‑sector office demand, particularly in Philadelphia and Harrisburg.

The multi‑year initiative represents the state’s first comprehensive review of its real estate portfolio. The cost-saving initiative is designed to reduce reliance on leased office space by consolidating agencies into modernized, state‑owned facilities through an implementation period extending to 2033.

The Keystone State began the lease-consolidation process in 2024 with 324 leases totaling 6.7 million square feet. The state has already shed 270,000 square feet of office space. At full execution, the Commonwealth expects to exit roughly 2 million square feet of leased office space across the state, achieving a 30% reduction, expected to generate nearly $180 million in cumulative lease savings through 2033, including approximately $14 million in Greater Philadelphia and roughly $166 million across 15 counties in Central Pennsylvania.

While these cost savings are fiscally meaningful for the state, they translate into an additional hit on office demand, particularly in markets where government occupancy has historically provided stable, long‑term demand.

Philadelphia is absorbing this shift amid challenging office conditions. In April, office availability across Center City hovered near 18%, while suburban office vacancy had settled around 16%, reflecting several years of negative absorption as tenants worked to right-size their office footprints.

Against this backdrop, the phased exit of state agencies from leased space introduces incremental availability into a market already contending with excess supply, particularly among Class B and C assets that have historically relied on public‑sector tenancy.

While trophy and top‑tier Class A buildings have demonstrated relative resilience amid a continued flight‑to‑quality, office properties favored by government tenants face greater concession pressure and longer timelines to secure replacement tenants, if any at all.

The implications of SOUP are even more acute in Harrisburg, where the state government has long played a stabilizing role in office demand. Office vacancy in the region remains comparatively low—generally in the high‑single‑digit range—but this stability is partially tied to the state’s outsized occupancy of office space in the region.

Pennsylvania’s move toward denser layouts, shared workspaces and hoteling occupancy patterns mirrors broader private‑sector trends, reinforcing the reality that fewer square feet per employee will be required going forward.

For Philadelphia and Harrisburg office landlords alike, the state’s consolidation strategy adds more pressure to already bifurcated office markets as the Commonwealth of Pennsylvania steadily contracts its leased office space through 2033.

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Ace American Insurance Co. renews large office lease on New Jersey waterfront

 By Linda Moss CoStar News

An anchor tenant at a Hudson River waterfront office tower owned by Manulife US Real Estate Investment Trust has extended the lease for its 117,280 square feet of space.

Philadelphia-based Ace American Insurance Co. signed a 65-month lease extension for 10 Exchange Place in Jersey City, New Jersey, according to landlord Manulife, a Singapore-listed real estate investment trust.

The deal will move back Ace's lease expiration from December 2029 to May 2035, Manulife said Thursday. The tenant will retain its entire 117,280 square feet of space at the same rental rate, the REIT said. Ace has been a major tenant at the 740,354-square-foot office high-rise, known as Exchange, since Manulife acquired the property in 2017. It paid $315.1 million for the building, according to CoStar data.

Global insurer Ace contributed 5.4% of Manulife's total gross rental income as of Dec. 31 last year and is the landlord's fourth-largest tenant. E-commerce giant Amazon has also recently renewed its lease for office space at Exchange, according to Manulife.

“We remain focused on prioritizing high-quality tenants and executing accretive leasing strategies that strengthen portfolio fundamentals over the long term,” John Casasante, Manulife's CEO and chief investment officer, said in a statement.

The Hudson waterfront continues to attract major financial services and multinational tenants due to its proximity to Manhattan and lower rents. While the pace of leasing activity in the Hudson waterfront office market has moderated in the first quarter, asking rents have remained resilient year-on-year as total office inventory continues to hold steady

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Fusion Gyms takes former H&M space at Shops at 69th Street

 By Vivian Peregrino CoStar Research

Fusion Gyms, a popular, no-contract fitness chain with five locations across Philadelphia and Bucks County, has signed a lease to open a sixth location at 2 S. 69th St. in Upper Darby, Pennsylvania, where it will occupy just under 26,000 square feet across the ground, second, and third floors of The McClatchy Building.

The distinctive Art Deco structure is part of the Shops at 69th Street, an outdoor retail destination near the 69th Street transit hub owned by New York-based Ashkenazy Acquisition Corp. The shopping center spans multiple blocks and is home to a mix of national and local retailers. Fusion Gyms will be occupying space formerly occupied by fast-fashion clothing chain H&M.

Fusion Theaters, a related business owned by the same owner of Fusion Gyms, also leased space in the Shops at 69th Street for its debut location. The new movie theatre and arcade games concept leased a 41,000-square-foot space next to Five Below in the open-air shopping mall.

The new theater space will be located near the former Tower Theater concert venue, which remains available and slated for redevelopment.

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