By Barbra Murray
The 1.8 million-square-foot Centre Square, a prominent office complex in Philadelphia’s central business district, has come under new ownership in the largest office transaction in the city’s history based on square footage. Acting on behalf of Equity Commonwealth, capital solutions and investment sales provider CBRE Capital Markets orchestrated the sale of the seminal two-tower property to Nightingale Properties LLC for $328 million.
Seller Equity Commonwealth had acquired Centre Square in 2002 for $183.5 million.“The sale is a testament to the acceptance of Philadelphia as a prime office investment market by institutional capital from around the world,” Robert Fahey, an executive vice president with CBRE Capital Markets’ Institutional Properties team, told Commercial Property Executive.
Centre Square sprouted up at 1500 Market St. in 1974, adding the 36-story East Tower and the 43-story West Tower to the city’s skyline, and later bringing what has become a renowned 45-foot-tall Clothespin art sculpture to its front plaza. Today, the Class A office complex is 91.2 percent leased to a host of tenants, including Radian Insurance, which committed to 150,000 square feet in 2015; and The University of Pennsylvania Health System, which expanded its lease by 29,500 square feet in 2016 for a total occupancy of 264,000 square feet at the property.
Well located, well tenanted, and well known: “The asset was pursued by a broad variety of domestic and offshore capital sources,” Fahey noted. “Notwithstanding the fact that it is 2-3 times larger than the average Philadelphia CBD office trade, it was an attractive investment due to its roster of tenants and average lease term of over eight years.”
SOMETHING OLD, SOMETHING NEW
CBRE has a past with Centre Square, and the firm’s involvement will continue. Nightingale named CBRE the exclusive leasing agent for the property, where the firm has spearheaded leasing for 15 years.
There will, however, be some changes at Centre Square, as the new owner will submit the property to a comprehensive renovation program.