"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 of Tide 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. 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."
"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. 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."
Center City Philadelphia office buildings have been selling for far below prior prices and assessed values, drawing residential developers and out-of-market investors. The 29-story, 665,000-square-foot tower at 2000 Market St. sold in August for $45.5 million after a 2018 sale of $107.7 million; buyers plan to keep it as an office. The 1801 Market St. building sold for $30 million and will be partially converted to residential. Multiple large buildings face financial distress. City tax assessment data show a roughly 28% inflation-adjusted decline in large office building value since 2019, and many properties have flat or falling valuations.
#philadelphia-office-market #distressed-commercial-real-estate #office-to-residential-conversion #tax-assessments
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