Center City office building back up for sale
801 Market St. in Center City Philadelphia was built in 1931.
A historic building on Market Street in Center City is up for sale. Again.
The property for sale at 801 Market St. includes 11 stories of office space, or 703,466 square feet. The portion of the building for sale consists of floors three to 13.
The building was built in 1931, renovated in 2002 and recently housed the Philadelphia Inquirer. It’s listed on the National Register of Historic Places.
A partnership between New York firms Cohen Equities and Taconic Capital Advisors owns the 11 floors of office space in the building.
The building, adjacent to the Fashion District Philadelphia, was put up for sale in August 2021 before being taken off the market. Cohen Equities Asset Manager Teddy Chattah said the companies are now picking up where they left off.
"We're real estate investors. We buy and sell properties all the time. It's the nature of our business," Chattah said when asked why Cohen is again marketing the property.
Cohen Equities and Taconic Capital Advisors bought floors seven through 13 for $30.5 million in November 2016. A year later, the partnership secured $96 million in financing and bought floors three through six from PREIT.
At the time of the purchases, the building was around 50% to 60% leased. The owners spent $30 million renovating the building, Chattah said.
The property is currently 86% leased with several government entities as tenants, including the Commonwealth of Pennsylvania, U.S. Department of Health and Human Resources, U.S.
Department of Housing and Urban Development and the U.S. Equal Employment Opportunity Commission. The weighted average lease term is 7.4 years, according to marketing material for the property.
When the property went up for sale in 2021, Cohen and Taconic Capital hoped to sell the property for around $170 million, Chattah said. But during the Covid-19 pandemic, he said it wasn't an opportune time. There were interested parties and offers that were considered, but ultimately no deal was made, Chattah said.
In June 2022, an entity affiliated with Philadelphia-based Alterra Property Group sold a first-floor commercial site housing a Giant Heirloom grocery store to Realty Income Trust of San Diego (NYSE: O) for $21.6 million. Another portion of the first two floors, home to a Shoppers World department store, is not involved in the sale and is under different ownership.
The Giant Heirloom Market at 801 Market St. is a separate commercial condominium than the office portion.
Chattah is unsure how much the property could command this time around, but if it doesn't garner the price that the sellers feel it's worth, he said it's "OK' if it doesn't sell. He said "it's not a fire sale." Between the renovations made to the building and the increased occupancy, Chattah believes it's now a worthwhile investment for a buyer and an opportunity to sell.
"The building wasn't in the best of shape" when Cohen and Taconic Capital bought it, Chattah said. "I'd like to think we're leaving it better than we found it."
A subway station directly below the building accesses the Market-Frankford Line, Broad-Ridge Spur and PATCO to South Jersey. The building offers underground access to Jefferson Station.
The Inquirer is now located at 100 S. Independence Mall West at 6th and Market streets. The East Market submarket has faced challenges as retail stores along the south side of the street have closed and their storefronts boarded up. In January, Marshall’s closed on Market Street between 10th and 11th streets. Across the street, the 76ers are proposing to build a new arena at a site currently home to a portion of the Fashion District.
Office space in the Market Street East submarket had an 11.3% vacancy rate in the first quarter of this year, 11th most out of 37 submarkets in the region, according to CoStar’s quarterly report.
The property is being listed by Cushman & Wakefield’s Charles McGrath and Brett Grifo.