By Katie Burke CoStar News
JPMorgan is preparing to fine-tune its Philadelphia office property through a deal that would consolidate its current patchwork under a more concentrated roof.
The New York financial heavyweight is in the final stages of negotiations to sublease some of Aramark's Center City headquarters space at 2400 Market St., according to people with knowledge of the talks. If realized, JPMorgan would fill about 63,000 square feet on the fifth floor of the property, enabling the bank to cut some of its ancillary office space across Philadelphia's urban core.
JPMorgan and its affiliates currently occupy space across several Center City buildings, including 1735 Market St., where its lease expires next year, as well as at the One Liberty Place tower and 1880 John F. Kennedy Blvd.
It isn't clear how or when the company's pending agreement for Aramark's space will impact the bank's existing footprint in the region, and JPMorgan representatives did not immediately respond to CoStar News' requests for comment. The amount of space the bank is weighing in the 2400 Market St. building is roughly equivalent to what it currently leases across its other Philadelphia offices.
The Philadelphia plans fit into a broader office rejiggering for the nation's largest bank as it doubles down on its commitment to physical space to accommodate a strict in-person policy for all employees. Over the past couple of years, it has signed several large renewal deals, expanded regional offices and spent heavily to acquire more property.
That ongoing investment has so far resulted in new and renewal agreements in Boston, Seattle, San Francisco, Dallas, New Jersey and Southern California, according to CoStar data. It also unveiled its new midtown Manhattan headquarters, a $4 billion supertall office development that now serves as JPMorgan's global headquarters.
In the aftermath of a deal to anchor the new South Station Tower in downtown Boston — another move that makes it possible for the bank to consolidate its regional presence in a single space — Chris McKenna, the company's managing director for global real estate, said JPMorgan would be looking to concentrate its footprint in other markets such as Miami, Atlanta, Philadelphia and some along the West Coast.
Willing takers
With those plans nearing fruition in Philadelphia, the pending JPMorgan deal is expected to provide a healthy boost to the city's recovering office market.
Similar to other markets nationwide, Philadelphia has benefited from stable employment growth, heightened office attendance mandates, a slowdown in large move-outs and downsizings, and a shrinking share of sublease space in recent years.
While demand remains at just a fraction of its pre-pandemic levels, the region's nearly 11% vacancy rate is well below the national average, according to CoStar data, and tenants such as JPMorgan Chase are increasingly willing to invest in their physical spaces. That has meant a gradual but steady uptick in deal momentum as companies lock down the type of spaces they want while it's still available.
That should bode well for Aramark as it pursues some real estate fine-tuning of its own.
The facilities and food services giant signed its original lease for the 2400 Market St. building about a decade ago, taking on just shy of 278,500 square feet for its corporate offices. Yet Aramark's space across the fifth through ninth floors of the 592,000-square-foot property proved excessive in the years following the pandemic's 2020 outbreak, prompting it to begin hunting for some subtenants.
“When the building was originally designed for Aramark, additional space was incorporated to support future flexibility," the company said in a statement to CoStar News. "As we continue to evolve our workplace strategy, we have determined that our teams can be fully supported within the building’s top four floors.”
The company confirmed that it would soon vacate its space on the fifth floor and relocate employees to its remaining floors in the property.
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