Developer Buys Philadelphia Office Tower At 74% Discount To Assessed Value
PMC Property Group will acquire the Three Parkway office tower from MRP Realty for $30M, an amount that represents just 26% of the building’s last assessed value.
The city last assessed the 561K SF building's value at just less than $115M, according to the Philadelphia Business Journal. Washington, D.C.-based MRP Realty paid $95M when it purchased the property from Dallas-based Tier Real Estate Investment Trust in 2017. At that time, the building was 14% vacant.
But when Philadelphia-based PMC closed the deal last week, the 20-story building between 16th and 17th streets along the Benjamin Franklin Parkway was more than 60% vacant, the PBJ reported.
PMC plans to convert half of the building into residential space, with 175 units on its lower 10 floors. The occupied office space will remain as is, PMC Vice President Kate Groshong told the PBJ.
About 174K SF is slated to be converted to residential. The space was occupied by Drexel University College of Nursing and Health Professions until 2022. The college moved to the then-new uCity Square building at 36th and Filbert streets in University City that year.
The Three Parkway acquisition marks the third discount sale of a major commercial building in Philadelphia this summer. The Bourse building and 400 Market St. sold to a joint venture of Lubert-Adler Real Estate Funds and Keystone Development and Investment last month for 64% and 27% of assessed value, respectively.
It is also among at least five buildings that developers plan to convert to multifamily, hospitality or mixed-use. The number of large blocks undergoing conversion in Philadelphia's central business district caused vacancy to tick down from 20.2% in Q1 to 19.7% this past quarter.
PMC also developed the Riverwalk apartment towers and is underway on a two-story, 287-unit apartment tower at 2301 John F. Kennedy Blvd. near Three Parkway.
