Friday, November 18, 2011

Five Tower Bridge building for sale 2nd time in 3 years

by Natalie Kostelni
"Five Tower Bridge, one of the premier office buildings in the suburbs, is up for sale just three years after it was bought by a California company.

KBS Realty Advisors of Newport Beach, Calif., bought the eight-story, 222,058-square-foot building at 300 Barr Harbor Drive in West Conshohocken for $73 million, or around $327 a square foot, in October 2008. It’s expected to trade for roughly the same amount this time around. (The highest office trade on a per-square-foot basis was in 2005 when BPG Properties sold 300 Four Falls, a 290,000-square-foot office building in West Conshohocken, for a staggering $100 million, or $340 a square foot.)

Five Tower was constructed by Oliver Tyrone Pulver in 2001 as part of the company’s Tower Bridge office complex that has developed over the years in West Conshohocken and Conshohocken. As with the other Tower Bridge buildings, it was designed by Skidmore Ownings & Merrill. It has a parking garage that can accommodate 700 vehicles. KBS declined comment.

The building is fully occupied and many of the tenants are in the space for the long term. Keystone Foods leases 50,000 square feet through 2019, Oracle America Inc. is in 49,000 square feet until 2020 and Hirtle Callaghan & Co. occupies nearly 30,000 square feet through 2021, according to a person familiar with the building.

Those characteristics, being in a strong submarket, fully leased with a cadre of top tier tenants, is the type of building that appeals to nervous commercial real estate investors. The investment market for office properties is struggling through a glut of distressed buildings working their way through special servicing, foreclosure and other issues. That had made sale velocity all but stagnate except for top-of-the-market buildings.

Few office buildings are on the market or have traded. In Center City, 1700 Market St., a 32-story, 841,000-square-foot office tower, sold for $143 million. In Evesham, N.J., Brandywine Realty Trust sold a portfolio comprised of 10 Lake Center and three buildings in the Greentree Corporate Center totaling 243,000 square feet for $22.8 million. Grubb & Ellis arranged that sale.

The office investment market remains challenging.

“In general, assets in the suburbs have been tough assets to sell over the last few years but Radnor and Conshohocken have been the most well-received investors. If you’re going to sell, you want to sell in Radnor or Conshohocken.”

Those two submarkets see rent growth and low vacancies.

The Central Business District is a different story. Many buyers don’t even consider Philadelphia these days.

“It’s not a growth city,” he said, noting that rent growth is limited."

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