Mike Pestronk, partner in Post Bros., the apartment redevelopers, says his firm paid "more" for 260 S. Broad St. than the $22 million paid for the 330,000 sq ft office tower when it last sold, in 2001.
(Pestronk won't say how much more until the deed is recorded. The old price works out to about a third less than the $28 million for 280,000 sq ft that Leonidas Addimando's 806 Capital and its partners reportedly paid for 1616 Walnut St. this past Spring, for a mostly-occupied building, with parking, for an office-to-apartments-to-maybe-condos-someday conversion project.)
Will the site, dubbed the Atlantic Building, be the next in a growing list of Center City ex-office tower turned into apartments? That's the idea: "We are in the apartment business," Pestronk confirmed. There is no timetable, he added.
Whn not keep the building as offices? "We did try to buy it" in the mid-2000s, Pete Soens, partner at SSH Real Estate, which has bought other aging South Broad-area office towers, told me. "But once they lost Klehr Harrison" and other key tenants at 260 "and the occupancy declined below 50%, it was essentially off the market, it wasn't going to happen as offices." Soens cheered the sale: "It helps the office market when (a deal) lowers the supply of offices. It's a good sign that rents could pick up" for remaining space.
"It's a good location. It signifies more investment and confidence and the likelihood of more shops, more housing, and the avenue as more of a destination," developer Carl Dranoff told me. Dranoff built the neighboring 163-condo Symphony House and nearby 146-apartment 777 [S. Broad], and plans the 85-apartment-plus-stores South Star Lofts development at Broad and South. "You just have to be patient and deal with" existing tenants and historical preservation issues, he added.
260 includes the Center City outlet of the Ruth's Chris high-end steakhouse chain, along with the site last occupied by TV impresario Ted Turner's former steakhouse chain, and Neil Stein's former Avenue B (corrected - thanks Mike), which aimed at the theater crowd from the nearby Kimmel Center.
Pestronk says his firm has been negotiating since last summer with the Wall Street lenders and servicers who had foreclosed on the tower; the property had been used to guarantee mortgage-backed securities, which means a series of people had to be satisfied before the deal went through. The previous sale 11 years ago was to Michigan-based Atlantic Investors LLC, by GE Capital.
Post Bros. is no stranger to hard negotiations; its use of some nonunion crews in its Goldtex and Rittenhouse (Germantown) projects has made the Pestronks objects of picketing and protest by city building trade unions who accuse the brothers of "destroying industry standards" by not funding workers' health and retirement plans. The Pestronks say they pay their crews market wages or better.