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."

""We are considered to be somewhat contrarian investors," said Aaron Loeb, president ofTide Realty Capital. "Office certainly has significant challenges, but we believe very strongly in the asset class, especially in stronger gateway cities like Philadelphia." The 1801 Market St. building with 27 stories and more than 675,000 square feet sold last month for $30 million to PMC Property Group, which will keep part of the space as offices and convert part to residential."

"Multiple large buildings are in various stages of financial distress, including Centre Square at 1500 Market (1.8 million square feet), 1818 Market (almost 1 million square feet), 1515 Market (more than 502,000 square feet), and One South Broad (475,000 square feet). An Inquirer analysis of city tax assessment data found that the overall value of Philadelphia's large office buildings in 2019 was about $9.8 billion, slightly higher than today."

Several Center City office buildings recently sold for well under half their previous prices and assessed values, drawing residential developers and out-of-market investors. A 29-story tower at 2000 Market St. dropped from a 2018 price of $107.7 million to $45.5 million in August, with buyers planning to retain office use. The 1801 Market St. property sold for $30 million and will be partly converted to residential. Multiple large buildings are in financial distress. A city tax-assessment review shows 2019 values around $9.8 billion and an inflation-adjusted 28% decline over six years.

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