by Natalie Kostelni
A Center City office tower that was one of the first local victims of the recession and downturn in commercial real estate is up for sale. One estimate has it trading for $120 million.
The last time 2000 Market St. sold was on New Year’s Eve 2009, while the economy was struggling and lenders continued to be tightfisted. Just a month earlier that November, RREEF, who had owned the 29-story, 665,000-square-foot office tower, voluntarily gave the building back to its lender, Prudential Life Insurance, in a deed in lieu of foreclosure.
CB Richard Ellis Investors, the pension advisory arm of CBRE Inc., stepped in. It bought the building for about $50 million, or $80 a square foot, a steep discount to the $77 million RREEF had paid for the building in 2003. It had a $49 million mortgage with Prudential.
Between the time RREEF bought the property — when the commercial real estate market was climbing to a peak — and the time it relinquished ownership, 2000 Market had lost nearly $30 million in value.
The deal highlighted a type of transaction that has played out with commercial real estate properties throughout the suburbs and Center City over the last few years and continues to do so as the market adjusts to conditions plaguing commercial real estate. Owners have routinely given up on buildings to lenders as property values dropped, or they tried to renegotiate loans as a way to retain a property.
Since buying the building, CB Richard Ellis Investors put $25 million into it; redoing the lobby, creating a large conference center in what had been a cafeteria and renovating common spaces.
It also stabilized the building with tenants. Arkema Inc. vacated more than 130,000 square feet but Marshall Dennehey, a law firm, relocated to the building from 1845 Walnut St., moving into Arkema’s space. Law firm Fox Rothschild also renewed its lease as well as the U.S. headquarters for the Board of Pension of the Presbyterian Church Pension Fund, which manages $8 billion in assets. With all of that leasing activity, 2000 Market went from 80 percent occupied at the time of sale to 96 percent occupied. The average lease term runs 11 years. CBRE is responsible for leasing the building.
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