Tuesday, February 4, 2025
Monday, February 3, 2025
FS Investments moving HQ out of Navy Yard to Schuylkill Yards
By Jeff Blumenthal – Senior Reporter, Philadelphia Business Journal
FS Investments plans to relocate from the Philadelphia Navy Yard to Brandywine Realty Trust’s new $300 million mixed-use tower at 3025 John F. Kennedy Boulevard in Schuylkill Yards.
In signing the 16-year lease, the alternative asset manager will increase its square footage by 46% from 80,000 to 117,000 — taking four floors in the 28-story tower situated just west of 30th Street Station.
FS plans to have all of its nearly 300 local employees move from 201 Rouse Blvd. into the new space by early January 2026. FS is the sole tenant at the Ensemble Real Estate Investments-owned Navy Yard building.
By choosing Brandywine’s (NYSE: BDN) mixed-use Schuylkill Yards project for its new home, FS will for the third time avail itself of Keystone Opportunity Zone tax credits.
CEO Michael Forman said had FS not been able to reach a deal with city and state officials in finding a building in a KOZ that had access to 30th Street station and other amenities, it would have likely relocated its headquarters to one of its other offices in New York or Connecticut. In the process the company would've relocated most of its employees while maintaining a smaller operation in the Philadelphia region.
In addition to being near 30th Street Station, Forman pointed to 3025 JFK being one of the few new Class A office spaces constructed in Philadelphia in recent years, and University City being a fast-growing area home to major employers such as University of Pennsylvania, Drexel University and Spark Therapeutics.
Keystone Opportunity Zones eliminate most state and local business taxes to incentivize for-profit businesses to relocate to specific underdeveloped and underutilized areas.
In 2021, the Pennsylvania Supreme Court ruled in favor of law firm Dechert to get a second helping of tax credits when it was considering moving to Schuylkill Yards from Cira Centre. Despite winning its lawsuit, Dechert is still operating at Cira on a short-term lease. The high court's ruling cleared up any ambiguity regarding the right for a business to reap the benefits of KOZ credits more than once.
When FS started in 2007, its offices were located in a KOZ at Cira Centre and then continued to receive credits when it relocated to the Navy Yard in 2015. Forman credited Gov. Josh Shapiro, Mayor Cherelle Parker and other state and city officials for their help in the new deal.
"I've been a big proponent for the need for tax reform in the city on multiple levels, and when you look at both the [Business Income & Receipts Tax] and the wage tax, Philadelphia is a very expensive place to do business," Forman said. "And when you look at all the factors that were important to us, location, tax efficiency, being close proximity of the train line, this met all of those."
FS has spent much of the past year weighing options for when its lease at the Navy Yard expires this year.
Forman, who lives in the city and is involved in various philanthropic, civic and political activities, told the Business Journal last year that leaving Philadelphia was not the preferable option. He said the firm’s management team ultimately had a responsibility to do what’s best for its employees, clients and shareholders, and Philadelphia’s business tax structure could be an impediment to keeping the firm's local workforce inside the city limits.
While many employers have been downsizing post-pandemic due to hybrid working, FS needs the extra space partly because it mandated last year that employees return to the office four days a week. The firm also said it is running out of space at the Navy Yard.
FS has nearly half of its 600 total employees situated at its Philadelphia headquarters. FS has been growing fast. Last year, the firm completed its acquisition of Darien, Connecticut-based Portfolio Advisors, a move which doubled its assets under management, brought it into the private equity space and added more than 100 employees. The firm today has $83 billion in assets.
"The business is just growing significantly," Forman said. "We've been lucky and successful, and we needed more space."
3025 JFK is part of the broader Schuylkill Yards project, Brandywine's $3.5 billion, 14-acre development in partnership with Drexel University that has been over a decade in the making.
The FS office lease comes as Brandywine continues its focus on beefing up the retail offerings at the University City master-planned site.
Forman noted that when it moved to Cira and the Navy Yard, FS was one of the first tenants to relocate to then-new commercial areas and in both cases it worked out.
"We think there will be lots of development, and we do think there will be more retail and food uses coming, so that was certainly part of our thinking," Forman said. "We got comfortable that there'd be lots of growth and evolution there, and that we were in the early innings of kind of the reimagining of Center City west of the Schuylkill."
FS employees will have access to the building's gym and Forman said the firm will be adding its own dining facilities.
Full story: http://tiny.cc/iyp8001
