NY investor buys Center City tower for $144M, $170/sq ft

Commercial real estate brokers Jones Lang LaSalle says it sold the 1700 Market Street office tower in Center City, for Chicago-based owner Pearlmark Real Estate Partners (ex-Transwestern Investment), to Brooklyn-based property investor David Werner and his partners, for $143.5 million, or $170 a square foot.

That's a little less than the $178 /sq ft landlord Brandywine Property Trust paid last summer for the Commerce Plaza complex two blocks west and across the street. That reflects the difference in rents: 1700 offices rent at around $25-26 a sq ft while Commerce asking rents are a few dollars higher. 

The building is around 85 percent occupied; lead tenants include Deloitte and Independence Blue Cross. The contract, negotiated in May, "closed on schedule despite a tumultuous capital market in August and September," said Tom Beneville, international director for Jones Lang, who led the team that closed the deal.

Mortgage-backed commercial-property bond financing stalled this summer as investors demanded better collateral, forcing borrowers to turn to higher-priced bank financing, said a financial source familiar with the deal.

Beneville called the sale a significant deal for Philadelphia: "It's a big building, there was a lot of competition from institutional U.S. and offshore investors, it's out of town New York capital, and it's a major institutional lender."

Bidders included Israeli and South American investors, according to a person familiar with the talks.

Jones Lang's Dustin Stolly and Meridian Capital managing director Ronnie Levine also arranged for Werner to borrow $123 million in senior mortgage and mezzanine financing through UBS. The Jones Lang sales team included svp Jerry Kranzel, vp Mike Carpenter.

Werner's office said he would have no comment on his plans for the property, which also includes a 5-story, 761-car garage. He and his partners also own the Widener and former PNB Bank towers south of City Hall, home to Wells Fargo offices and other tenants.