Beneficial Bank to re-dip into office space search

by Natalie Kostelni
Major office tenant Beneficial Bank may be on the move.
The bank is in the early stages of relaunching an evaluation of its options. This comes roughly two years after the bank went through an arduous exercise about whether to remain in Penn Mutual Towers or relocate out of the building at 510-530 Walnut St. in the Independence Square office submarket in Philadelphia.
A departure from Penn Mutual would be another blow for the property, which is in receivership.
Beneficial first launched that search in 2007 with a goal of finding new and larger office space between 125,000 and 135,000 square feet in order to consolidate some other offices under one roof.
At the time, its lease was scheduled to expire in the spring of 2011 and it had plenty of time to evaluate its options.
Though it toured space and considered various buildings, after the lengthy exercise of looking around, it ended up signing in 2010 an extension that pushed its lease to expire March 2014. It occupies about 90,000 square feet at Penn Mutual, where it first signed a lease in 2000 and moved to in 2001.
The short-term lease bought Beneficial time for the real estate and financial markets to continue to recover.
What it didn’t do is give it many more options depending on where it looks. If it decides to stay in the Independence Square submarket, Beneficial has a bevy of empty offices that could easily accommodate 100,000 square feet or more.
If it wants to upgrade to trophy space in the Central Business District along West Market Street, it will be limited.
If Beneficial left the submarket, it would also mean another hit for it. The entire Independence Square office submarket is struggling. After enjoying years of having one of the lowest vacancy rates in Philadelphia, it now has the second highest at 16.2 percent. Of its 4.5 million square feet, more than 750,000 square feet of direct space is empty.
The reason for the increase in vacancy is multifold. Wells Fargo is trying to lease nearly 100,000 square feet of office space at its operations center on Market Street. In this market, that’s almost like emptying out an entire building.

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