By Katie Burke CoStar News
As one of Philadelphia's fastest-growing companies and with a recent in-person mandate in effect, FS Investments' search for a new headquarters came down to two requirements: bigger and better than its current digs.
After an extended search across Pennsylvania and Connecticut, the alternative asset manager ultimately decided to keep its corporate hub in Philadelphia with a long-term deal for space at one of the city's newest developments. FS Investments this week signed a 117,000-square-foot lease — one of the largest to be signed in the market over the past half decade — to relocate to Schuylkill Yards, a $3.5 billion mixed-use project spearheaded by Brandywine Realty Trust.
The 16-year agreement at 3025 John F. Kennedy Blvd. will ultimately result in a nearly 50% increase to FS Investments existing real estate footprint in the city. The firm has leased the entirety of the roughly 80,000-square-foot building at 201 Rouse Blvd. in the city's Navy Yard area since early 2015, according to CoStar data.
"The business is just growing significantly," FS Investments CEO Michael Forman said in a statement. "We've been lucky and successful, and we needed more space."
By this time next year, FS Investments will have moved all of its nearly 300-person regional workforce to its new Schuylkill Yards headquarters, where it will occupy four levels of the 28-story building. The company will join law firm Goodwin Procter, which took over about 30,000 square feet in the tower last August, and will occupy more than half of the mixed-use property's office space.
Known as the West Tower, the building is split between more than 200,000 square feet of office; 326 luxury apartment units; and roughly 9,000 square feet of ground-floor retail. Tenants have access to a variety of communal meeting spaces, regionally curated artwork and a 29,000-square-foot amenity space on the ninth floor that includes a fitness club with group classes, game room, fireside lounge, coworking and conference rooms, and an outdoor pool with a sundeck.
"FS Investment's lease adds to the stabilization that has been building across Philadelphia's office market over the past year," said Brenda Nguyen, CoStar's associate director of market analytics. "The company's commitment to the city underscores Philadelphia's ability to support business growth beyond its traditional education and medical sectors."
FS Investments decision to not only expand its office real estate presence, but also significantly upgrade it is indicative of a broader trend rippling across the United States in which tenants are prioritizing space in the newest and nicest properties.
While the average lease size among recent office deals in the country has shrunk by about 20% compared to pre-pandemic levels, properties at the highest end of the quality spectrum have benefitted from a growing surge in demand as companies — many of which are ramping up their in-person requirements — prove willing to pay top dollar for office space in well located, highly amenitized properties.
Rents at Brandywine's West Tower, for example, command about $51.60 per square foot, according to CoStar data, almost double the Philadelphia market average of less than $28 a square foot.
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