By Paul Schwedelson and Jeff Blumenthal – Philadelphia Business Journal
Duane Morris has signed a long-term lease renewal at Duane Morris Plaza to downsize by 45,000 square feet, continuing the trend of law firms reducing large chunks of their office footprint.
The renewal drops Philadelphia-based Duane Morris’ space at the Center City office tower from 241,022 square feet to 195,757 square feet, a 19% reduction. The law firm will go from occupying seven and a half floors down to six.
Duane Morris already gave back 16,000 square feet, or 6% of its space, when it exercised a contractual option in 2022, meaning the firm is now taking a quarter less space from its original previous lease.
In addition to the renewal, Los Angeles-based building owner Oaktree Capital Management is refurbishing the lobby and implementing system upgrades.
The lease includes 183,000 square feet of office space and the 12,000-square-foot Morris’ Café. The building, at 30 S. 17th St. in the heart of Philadelphia’s office district, will retain Duane Morris Plaza as its name.
The law firm’s existing space is also planned to undergo a full renovation, which is scheduled to start in the fall and take 18 months to complete. Duane Morris’ previous lease was set to expire in March 2026.
Duane Morris is one of the largest law firms in the Philadelphia area, according to Business Journal research, with more than 240 local attorneys.
The lease renewal comes after Oaktree Capital Management’s $105.3 million commercial mortgage-backed securities (CMBS) loan for the building was transferred to special servicing in late January, according to servicer notes.
A month later, servicer notes reported the “lender is negotiating a loan extension that will enable the borrower to inject new equity and extend the Duane Morris lease.” The CMBS loan isn’t set to mature until November 2027. Wells Fargo Bank is the loan’s master servicer while Rialto Capital is the loan’s special servicer.
Reserves were used in February and March for the monthly interest payment, according to a CMBS report.
By retaining Duane Morris as its largest tenant, the 20-story, 617,476-square-foot building has a clearer future. The law firm had considered moving elsewhere in Philadelphia’s central business district, a move that would’ve hurt Oaktree Capital Management’s financial stability with the building.
Full story: http://tiny.cc/8upe001
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