Monday, April 25, 2011

555 City Ave. locks in tenants

by Natalie Kostleni
"BALA CYNWYD — The Philadelphia office of Beasley Broadcast Group Inc., which owns 92.5XTU country radio station and Wired 96.5, is among a handful of tenants who have renewed leases at 555 City Ave., securing the property’s occupancy for the long term.

Beasley moved to the building in 1990 and extended its lease on 15,000 square feet for another 15 years. The decision came after the company considered other options in the office submarket.

“The location is ideal from an operational standpoint as well as for our sales department,” said Natalie Conner, vice president and market manager at Beasley Broadcast Philadelphia. “But when it’s all said and done, this is home for lots of reasons. We have a longstanding relationship with these people, and they made it very clear they wanted to keep us here.”

Other tenants also renewed. New York Life signed for 22,000 square feet, Group Dynamics stayed on for 9,600 square feet, MetroNetwork extended its lease on 7,000 square feet, and Kerby Jewelers will stay in its lease until 2015 on 350 square feet with plans to renew after that.

Alan Castle, who owns Kerby Jewelers, moved into what is commonly referred to as simply “555” 21 years ago.

“I based it on traffic and an upscale neighborhood,” Castle said. “I needed people with disposable income and even in a down time, everyone who comes to my store is working. The building has proved very successful for me. They will carry me out of here.”

Castle is so keen on 555 that he made up T-shirts made with “Kerby Jewelers, 555 Building, Bala Cynwyd” emblazoned on them.

“In Europe or the Jersey Shore, people will stop me when I’m wearing the shirt and tell me they know the building,” Castle said. “It’s a landmark.”

The building’s distinctive blue rooftop 555 sign can be seen from the Schuylkill Expressway and afar. Though not a towering skyscraper, it’s prominent. It helped spur additional office development in Bala Cynwyd and establish it as one of the region’s most desirable office submarkets.

The Rubin family, which has been entrenched in Philadelphia real estate for decades, bought seven acres on which 555 is located in 1963 for $100,000 an acre. At the time, Bala Cynwyd was considered a distant suburban outpost though it was just across the street from Philadelphia. A Marriott stood where 401 City Ave. now sits and the Rubins thought maybe another hotel would be a good fit for the land.

The hotel would be called La Ronde. It would be a round structure with a revolving restaurant at the top that would compete with the Kona Kai restaurant at the Marriott that always seemed busy and a place to celebrate special occasions. La Ronde was never constructed.

At the time, a young Ron Rubin was working with John A. Robbins, who was constructing strip centers throughout the region. Rubin, now chairman and CEO of Pennsylvania Real Estate Investment Trust, a Philadelphia real estate company, handled leasing the small shopping centers Robbins built. Robbins ended up serving as a mentor for Rubin.

While the hotel concept never materialized, an idea to construct an office building came about. Bala Cynwyd had some offices at the time but they were all mostly occupied by companies such as Gulf Oil, Esso, Liberty Mutual and General Refractories Co. as headquarters or for local offices.

The Robbins and Rubins teamed up to construct the building. Robbins, who also ran a construction company, designed it as an 11-story, 128,000-square-foot structure. He borrowed the money to move forward with the project and had the idea to call the building 555 City Avenue, according to Rubin. It sounded good enough and the name stuck.

The building would cost $4 million to construct and was built on speculation with no tenants lined up to occupy the space. It opened in 1964 with a restaurant called the Red Coach Grill that was owned by Howard Johnson’s. Its first tenant was Sherwin Williams, which took a floor for a district office at $3 a square foot, less than the asking rate.

“Four dollars was what we were renting space for,” Rubin said. “We were getting killed.”

The strategy to lease up the building was simple and is still relied upon today by Bala Cynwyd landlords.

“We were trying to pull tenants out of Philadelphia because of the tax situation and we had a hell of a time,” Rubin recalled. “We struggled.”

With the lure of lower taxes and free parking, which a tenant couldn’t get downtown, 555 finally leased up with a bevy of small tenants. It took two years.

Among the companies that moved in were New York Life, John Hancock and First Pennsylvania, which also built a branch in the building. First Pennsylvania was the financial institution that lent the developers the money to fund the construction of 555. When the Red Coach eventually moved out, Charley’s Place replaced it and now Houlihan’s fills the 9,350-square-foot restaurant space. The building’s occupancy rate has steadily remained around 95 percent throughout the years and rents now stand at $31.50 a square foot.

One other facet of the building that also has remained steady for the past 47 years is the 50-50 partnership formed between the Robbins-Sablosky families and the Rubins to own 555.

“It’s a great building and a great partnership,” said Chris Robbins, whose grandfather was John Robbins and who now runs the Robbins Cos."

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