NY Owner to Net Lease 600,000 SF of Downtown Philly Office Space

PHILADELPHIA-The New York-based owner of three Downtown buildings is looking for net lease deals on 600,000 sf of prime office space. The investment firm’s new broker says the buildings are currently leased far below market rates and most of the space will roll over within a few years.

Central business district properties the Architects Building, Lafayette Building and Lewis Tower are all owned by the same undisclosed New York-based investment firm, according to Ruth Barone, a senior vice president at Carlton Advisory Services, the real estate advisory firm charged with net leasing the properties. Barone is marketing the properties along with Carlton chairman Howard Michaels Michael Butz, also a senior vice president at the firm.

According to Michaels, the properties’ current tenants are holding leases “30% below market, and 50% to 70% of the leases in all of the buildings will roll over in three to four years,” making a net-lease deal an attractive investment for a long-term investor willing to ride out the current economic mudslide.

Barone tells GlobeSt.com that the buildings are not only leased at “five to six bucks below market, in the $10 to $13 range,” but that their quality and location are especially marketable.

“The properties are great,” Barone says. “They have tremendous upside, with potential as office and as residential space. And Philadelphia has undergone quite a renaissance.” She says any investor with a knowledge of Philadelphia’s real estate history will take notice.

The Architects Building is a 26-story, 185,000-sf art deco tower “right in center city,” Barone says. The Lafayette Building, “just across from Independence Hall and the Liberty Bell,” is an 11-story, 180,000-sf Federal-style structure and the Lewis Tower is another art deco property, 35 stories high and 185,000 sf, also in the city center.

Barone says the owner is looking for “a complete net lease. The tenant will have full control of the property. If they want to take over the top floors, that’s fine. If they want to make it into a hotel, that’s fine. All they have to do is pay the rent on a monthly basis to the owner.”