Friday, August 19, 2011

Liberty Property buys prime downtown site

by Natalie Kostelni

"Liberty Property Trust bought a development site at 18th and Arch streets in Center City where a giant skyscraper called American Commerce Center was once proposed.

The Malvern real estate investment trust disclosed few details about the transaction other than confirming through a spokeswoman that an entity affiliated with Liberty acquired the 1.5-acre property and that funds used to buy the parcel were provided by a third party, whom it declined to name. The seller was the Multi-Employer Property Trust (MEPT), a union pension fund based in Seattle that was involved in the original partnership that initially bought the site four years ago.

The property, now operating as a surface parking lot, sold for a reported $40 million, or a staggering roughly $612 a square-foot for a downtown parcel. It last traded in the fall of 2007 for $30.5 million, or $490 a square foot, but that was before it was rezoned to accommodate a high-density commercial project.

With Liberty now controlling the site, speculation has begun to swirl about what the developer might do with it.

The company constructed Comcast Center for the cable and media giant just a stone’s throw away at 1701 John F. Kennedy Blvd., and some surmise Liberty may be planning an expansion office tower for Comcast Corp. or perhaps a combination of tenants currently swarming the market, such as the law firms Cozen O’Connor and Morgan Lewis among others. More titillating is the prospect of having a new company move into Center City that would take a chunk of new office space, but those types of deals are few and far between.

What’s promising is that a well-known, experienced local developer with deep pockets now owns the ground and has the ability to make something happen on it.

In 2008, a local developer under the name Walnut Street Associates (which included MEPT), and later in a partnership going under the name Hill International Real Estate Partners, proposed an $800 million, 2.2 million-square-foot skyscraper that would have stood as not only as the city’s tallest but the tallest in the United States. The 63-story building called the American Commerce Center would have stood 1,510 feet high, surpassing Comcast Center, which at 1,000 feet tall is the city’s tallest, and the Empire State Building.

The bold proposal would have had 1.3 million square feet of office space, a 300-room, high-end hotel and 315,000 square feet of retail space above and below street level. An underground garage would have 383 parking spaces. Though the city approved the zoning and plans for the ambitious tower, it never happened for a range of reasons including a lack of an anchor tenant to kick it off during the recession. The plan, however, showed the potential of what could be constructed on the site and at what scale.

Walnut Street Associates bought the property, one of the last remaining prime development sites in the Central Business District, from Verizon Communications Inc.

Other undeveloped downtown parcels that have sold include:

• Brandywine Realty Trust bought 1919 Market St., which is 33,746 square feet, at an auction for $9.3 million, or $275 a square foot;

• 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;

• 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 St. totaling 22,400 square feet sold at an auction for $12 million, or $535 a square foot."

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