Monday, December 29, 2014

$1B in real estate transactions for Center City in 2014

by Natalie Kostelni, Staff writer for the Philadelphia Business Journal

he Center City investment market shrugged off any remnants from the recession and pulled out a year in which $1 billion worth of commercial real estate traded.

Twenty-four transactions were logged in the Central Business District compared with 16 totaling $700 million in 2013 and eight in 2012 totaling $96 million. The data excludes a $505 million transaction in which Comcast Corp. bought a majority stake in Comcast Center.

Property owners have decided to seize on the interest in commercial real estate and deals are getting done.
"We're seeing more velocity this year than I've ever seen."

Large institutional investors who historically shied away from Philadelphia are bidding on buildings that come up for sale and have managed to execute transactions.

Another factor in play is where the investment money is originating. Domestic institutions have been unable to compete with the onslaught of international capital flooding primary gateway cities, such as New York and Washington D.C. This has meant they have turned their investment attention to cities such as Philadelphia.

"Philadelphia shines in that second-tier, non-gateway market."
While office properties in the Central Business District are in high demand, all property types are getting investor attention.
Retail space has become a hot commodity and has recorded some of the biggest deals on a per square foot basis. For example, the 19,963-square-foot space at 1801 Walnut St. where Anthropologie occupies space, sold for $1,528 a square foot, and 1705 Walnut St., which totals 6,138 square feet, traded for $815 a square foot.

Some of the top office sales include: 1835 Market St. at $100 million; 1515 Market St. at $85 million; Curtis Center at $125 million; and 3535 Market St. at $140 million. Examples of some multifamily trades include the Sansom at $42 million, Edgewater at $113 million and the Avenue of the Arts at $33 million.
The suburban office market was not as robust as Center City.
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