Lubert-Adler Says It Has Office Tenants In Hand As Residential Leasing Starts At Former Power Plant
Lubert-Adler Real Estate Funds is nearly finished with most of its redevelopment of the hulking 500K SF former power plant at 1325 North Beach St. on the Delaware River in Fishtown, with an ambitious mix of uses.
The local investment and development firm launched leasing for the 128 traditional apartments at The Battery early this month, with the first move-ins scheduled for July, Lubert-Adler Vice Chairman Leonard Klehr told Bisnow, which toured the building June 13.
The apartments make up the third through eighth floors of the building's largest section, the north and south Boiler Houses. On its first two floors are 120K SF of office space, split between about 100K SF of traditional office and 20K SF of creative office known as The Hub. Avison Young is running the office leasing effort.
Lubert-Adler has already signed multiple office leases and turned over the spaces for tenant fit-out, with move-in expected around year's end, Klehr said. Though he declined to identify the tenants or what sort of space they leased, the Hub is intended for smaller tenants and won't have much, if any, tenant-specific fit-out.
Such leasing momentum could be surprising in a vacuum for a building over 2 miles from Philadelphia City Hall, to say nothing of how Philly's office market has slumped since the pandemic, like most U.S. cities.
“The office market today is very troubled, and there’s a lot of uncertainty because employers don’t know whether their employees are going to show up at the office this year and next year," Klehr said. "There’s a cloud over the office market, there’s no doubt about that.”
But the Battery's new historic restoration may qualify it to be a winner of the ongoing flight to quality. Its location within a Keystone Opportunity Zone and the state tax break that comes with it provide a functional discount for tenants compared to new office space in Center City or University City — an advantage that helped drive the Philadelphia Navy Yard to outperform Philly's overall market, Klehr said.
Lubert-Adler has tapped Sentral to manage the overall building and the lease-up of the apartments, the most prized of which will be a two-bedroom corner unit on the top floor with a wraparound balcony and private usage of one of the former Philadelphia Electric Co. generating plant's smokestacks. The asking rent: $10K per month.
Local catering and events company Cescaphe, whose owner, Joe Volpe, previously co-owned the power plant with Bart Blatstein, rented the first two floors of the street-side portion known as the Switch House. The first weddings have already been scheduled for August or September, Klehr said.
Cescaphe will also manage the 45 flexible-stay, furnished apartments in the three floors above the event space, giving it the ability to house event guests and create bridal suites for weddings, Klehr said.
Usage of Turbine Hall, a yawning space with only one mezzanine floor, giving it the feel of a grand train hall like 30th Street Station, has yet to be finalized. The building's historic protections preclude converting it to traditional uses like office or apartments.
Between the Boiler Houses and the Delaware River sits a pier and a coal house, both of which are also historically protected and undergoing restoration. The small outbuilding has five floors and no elevators, complicating any conversion effort that would need to be compliant with the Americans with Disabilities Act, but the pier has garnered interest from restaurateurs drawn to the waterfront, Klehr said.
No public plans to integrate the historic, Louis Kahn-designed concert barge now owned by Lubert-Adler CEO Dean Adler have been announced to date.
By the time the apartments fully come online by late fall, Lubert-Adler also expects to finish its extension of the Delaware River Trail from its current northern terminus at Penn Treaty Park. The trail would run between the building and the pier, one of several ways in which Lubert-Adler designed the Battery to bring the public closer to the imposing structure that has neighbored Fishtown since its construction in 1920.
"We extended Palmer Street from Beach Street to the river, we extended the [Delaware] River Trail, and we expect to open up what was behind a fence. We’re pretty pleased we’re able to do that, the overall effort to open this property up to the public,” Klehr said. “If you think for a second, this entire 11-acre plot was behind a fence for 100 years."
