Many of Philadelphia's office buildings are plummeting in value - and it's costing the city millions

"Several Center City office buildings have sold in recent months for well under half their previous prices and assessed values, attracting residential developers and out-of-market investors. The 29-story, 665,000-square-foot tower at 2000 Market St. last sold in 2018 for $107.7 million. In August, it went for $45.5 million to Maryland-based Tide Realty Capital and New York's CSB Holdings, which plan to retain it as an office building."

"The 1801 Market St. building with 27 stories and more than 675,000 square feet sold lastmonth for $30 million to PMC Property Group, which will keep part of the space as offices and convert part to residential. The property last sold in 2006 for $75 million, or $144 million in today's dollars. Analysts and office brokers say similar sales are likely in the near future."

"City tax assessment data show that the overall value of Philadelphia's large office buildings in 2019 was about $9.8 billion, slightly higher than today. But adjusted for inflation, that's a 28% decline in the last six years. Of 197 office properties worth $5 million or more that were analyzed, the majority saw flat or declining values, while 10% saw their valuations drop by 25% or more."

Several large Center City office buildings recently changed hands for well under prior sale prices and assessed values, drawing interest from residential developers and outside investors. Notable transactions include 2000 Market St., which sold in August for $45.5 million after a 2018 sale of $107.7 million, and 1801 Market St., which sold last month for $30 million with partial planned conversion to residential. Multiple major buildings show financial distress. City tax assessment data indicate 2019 values near $9.8 billion, but inflation-adjusted values declined about 28% over six years, with many properties flat or down.

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