Tuesday, October 5, 2010

Fate of 1441 Chestnut decided tomorrow

"The auction for 1441 Chestnut St. is set for tomorrow and will likely reflect current sentiment in the commercial real estate market as well as even set a new pricing for these types of parcels.

The real estate investment market, with a dearth of deals, has investors scouring for insight on where things are trading. Three years ago was the last time prime undeveloped Center City lots sold with frequency. That was when the real estate market was peaking and sale prices reflected it. Here are some transactions from 2007:

• The Philadelphia Parking Authority sold to Castleway Properties a 36,267-square-foot parcel at 1907-1915 Walnut St. for $36.7 million, or $1,011 per square foot;

• The 62,173-square-foot parcel the Bell Atlantic Properties sold for the proposed American Commerce Center at 18th and Arch streets for $30.5 million, or $490 a square foot; and

• Insurance Co. of North America sold a 22,145-square-foot lot at 100-118 N. 19th St. to Philadelphia Management Inc. for $8.4 million, or $379 a square foot.

The land at 1441 Chestnut is 22,400 square feet — about a half acre — and has received zoning approval to accommodate an 848,000-square-foot tower. It has an existing surface parking lot producing an annual net operating income of $650,000. It’s a block from City Hall in the heart of the Central Business District so it’s likely to garner some decent interest.

Mariner Commercial Properties bought the property nearly 10 years ago for roughly $11 million. Mariner Commercial, which was operated by Tim Mahoney, and Brook Lenfest’s Brooks Capital Group were in a partnership to build a Waldorf Astoria on the site. The market for the hotel, which would have also had a portion of its units as condominiums, turned and the project was killed.

The parcel also got tangled up in litigation over its ownership.

This is an absolute auction, meaning the parcel will be sold regardless of price. Interested parties who plan to make bids on the land were required to submit a $250,000 cashier’s check. I’ll let you know tomorrow who and how many show up at the auction and who makes the winning bid and for how much. Hopefully they will let us in on what they plan to do with it."

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