After checking around - and unlike rivals Cozen O'Connor, which is moving down the street, or Drinker Biddle, which is cutting space -- law firm Pepper Hamilton LLP has chosen to renew its lease for 268,000 sq ft at Radnor-based Brandywine Realty Trust's Two Logan Square office tower in Center City. The lease had been scheduled to expire in 2015.
Real estate sources say the firm had been asking in the high $30s/sq ft and Pepper had agreed to pay at least $35, which Brandywine and Pepper declined to confirm. Two Logan ranks with neighboring Center City high rises and a handful of buildings in suburban Radnor and Conshohocken as the region's highest-rent commercial real estate, though rents here are still less than half what premium New York properties command.
“We are delighted to retain Pepper Hamilton as a key tenant" -- and one of Brandywine's three largest tenants, said Brandywine chief executive Gerard H. Sweeney in a statement. His firm bought the building in 2010 and now controls five of the 10 biggest office buildings in Center City. "We believe the Center City office market continues to improve -- particularly in the Class A category," including the Logan towers, Sweeney told me later in an interview. "We are seing increased rents with longer-term leases containing annual rate increases."
"Rents have moved [higher], in the upper tier of the market, because supply is limited," agreed Robert Fahey of office broker CBRE, which was not involved in the transaction. "Brandywine has done a great job of creating pricing power" among high-end Philadelphia buildings by taking over "the majority of the upper-tier office assets in the central business district," Fahey added. "They deliver a great product and control many of the best assets. That has benefitted the entire market" by setting higher rents for the most desirable locations.
Pepper managing partner Thomas J. Cole Jr. said Two Logan, close to the Four Seasons Hotel, the Benjamin Franklin Parkway museum district, Septa and Amtrak stations, and other popular locations, "has worked well for our clients, attorneys and employees."
Pepper Hamilton's reps on the deal included Greg O’Brien, Elizabeth Cooper, Pete Talman, and David Healy of Jones Lang LaSalle. Brandywine's leasing director Steve Rush and leasing rep Matt Croce negotiated for the landlord.