Saturday, February 2, 2013

Brandywine Realty Trust plans to redevelop 1900 Market St.

Brandywine Realty Trust says it will redevelop 1900 Market St., which houses Nasdaq's Philadelphia Stock Exchange operations and investment and law offices, "as a Class A office building." Work will start next year and be done by 2015, the company said.

Separately, Brandywine, of Radnor, has asked Campus Crest Communities, a Georgia company known mostly for building student housing at suburban and small-town colleges in the South and West, to put up student housing on a site approved for a 36-story high-rise at 2930 Chestnut St. in University City, according to two real estate industry sources familiar with the deal.

The property adjoins the University of Pennsylvania campus. Brandywine had earlier hoped to lure office tenants to the block with help from state and city tax breaks. Brandywine spokeswoman Marge Boccuti declined to comment on the project.

Brandywine paid $34.8 million to buy the 457,000-square-foot 1900 Market building in 2011. Last summer, its lead tenant, law firm Cozen O'Connor, announced plans to vacate 200,000 square feet. But given the sale price of $76 per square foot, "the building's existing tenant base, current below-market leases, and purchase price will provide an attractive yield," Brandywine said in a statement.

Philadelphia's office real estate market, as measured by square footage, rents, and employment, has been flat for 20 years, as the impact of expanding tenants such as Comcast has been erased by cutbacks such as GlaxoSmithKline's move next week from its complex near 16th and Vine Streets to a smaller space at the Navy Yard.

Cozen's plan to move to One Liberty Place fed speculation that 1900 Market, with an open atrium at its center, could be turned into high-end apartments and expanded, echoing developer Ron Caplan's plans for the vacant AAA Mid-Atlantic building nearby or the Brandywine-Independence Blue Cross plan for apartments and retail in the vacant lot at 1919 Market.

But Brandywine and other landlords also have said that the city's most modern office towers, including the Mellon and the former Verizon towers nearby, are successfully attracting high-end tenants, and that there may be more demand for high-end offices as companies like FMC Corp., the Philadelphia chemical conglomerate, seek to consolidate into newer space.

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