American Actual Property Companions has closed a $162.5 million refinancing deal for 1600 Market St., an iconic 39-story tower in Philadelphia’s Middle Metropolis. Natixis Company & Funding Banking offered the five-year, floating-rate mortgage. JLL’s Senior Managing Director Ryan Ade and Managing Companion Cary Abod of Abod Capital helped negotiate the transaction.
American Actual Property Companions acquired the high-rise in 2018. The corporate paid $160 million to Equity Commonwealth for the 825,968-square-foot asset. On the time it modified palms, the property was 82 p.c leased. American Actual Property Companions has leased greater than 100,000 sq. toes within the tower since buying it.
Often known as the PNC Constructing, the tower has served because the financial institution’s regional headquarters since 1996. PNC is at present taking on 233,411 sq. toes of workplace area on the deal with. In 2019, the financial institution dropped almost 120,000 sq. toes of area after a lease renegotiation. The present settlement is ready to run out in 2031, in accordance with CommercialEdge information. The tenant roster additionally contains regulation companies, engineering consultants and actual property businesses.
Final yr, the 1982-built property underwent $15 million price of renovations. The proprietor initially deliberate to reposition the tower via beauty upgrades however, with the onset of the pandemic, plans shifted to incorporate updates to the air circulation and purification methods in addition to the introduction of contactless know-how. The renovations introduced 1600 Market St. Wired Rating Gold certification and UL Industries Verified Wholesome Constructing Mark.
The property features a health heart, shared convention heart, recreation space and ground-floor restaurant and affords quick access to Middle Metropolis’s eating and leisure venues. The tower can also be one block from fifteenth Avenue Subway Station and the Metropolis Corridor.
Life sciences brings workplace stability
As of December, Philadelphia had 14.3 p.c of its workplace stock accessible for lease. The determine is 120 foundation factors under the nationwide emptiness charge, the most recent CommercialEdge report exhibits. The workplace market is essentially supported by the metro’s increasing life sciences sector, which has been largely unaffected by the pandemic.
In March of final yr, a partnership between Ensemble Actual Property Investments and Mosaic Growth Companions was chosen by PIDC to develop two new life science buildings within Navy Yard, a $2.5 billion masterplan growth in Philadelphia. At full buildout, the event will embody greater than 1 million sq. toes of life sciences area.
Average optimism concerning the market’s restoration is fueled by subsequent yr’s wave of lease expirations, which ought to final till 2025, a fourth-quarter JLL report highlighted. Regardless of the lingering uncertainty, capital continues to be flowing in direction of conventional workplace buildings.
Final yr, a flurry of refinancing offers closed for properties in Philadelphia’s CBD. In August, Landmark acquired $80 million to refinance 123 S. Broad St., a 705,500-square-foot workplace constructing within the Midtown Village district. PCCP offered the word which included $4.1 million capital for capital enhancements.