Dec. 25–A new University City office building that was initially proposed 19 months ago moved a big step closer to reality yesterday, with three tenants signing the first leases.
Together, they would occupy almost half of the 28-story tower that Brandywine Realty Trust wants to build just north of Amtrak’s 30th Street Station.
The leases signed by two Philadelphia law firms and a suburban investment-management firm will trigger a ground-breaking in the next few months, with anticipation that the building would be completed by early 2005, according to Brandywine, which is based in Plymouth Meeting.
The site of the office tower, called the Cira Centre, is in an area designated as a Keystone Opportunity Zone, which means its tenants could qualify for major state and local tax breaks
“It really finishes 2003 for us on an up note,” city Commerce Director James A. Cuorato said yesterday. “It’s our understanding from Brandywine that now that there’s some certainty and the building will go forward, they are very close to signing additional tenants that are from outside Philadelphia, which is what we have been hoping for.”
The three tenants that signed leases are:
Dechert L.L.P., an international law firm now in the Bell Atlantic Tower at 1717 Arch St., where it leases 225,000 square feet of space. At the Cira Centre, it would occupy 245,000 square feet.
Woodcock Washburn L.L.P., an intellectual-property law firm that now leases 80,000 square feet in One Liberty Place at 1650 Market St. It signed a new lease for 109,000 square feet.
Attalus Capital, a Bala Cynwyd hedge fund and private equity firm. It was not immediately clear how much space the firm occupies now, but it signed a lease in the Cira Centre for 20,000 square feet.
Designed by Cesar Pelli, Cira Centre would consist of 690,000 square feet of office space and 37,000 square feet of conference, retail and other space. Brandywine officials have planned the tower as their signature project in the Philadelphia area, where they own or manage dozens of office and industrial properties.
If completed, Cira would be the first new office building in Philadelphia since 2000, when an 8-story building at 16th and Vine Streets for GlaxoSmithKline P.L.C. opened.
Shares of Brandywine, a publicly held real estate investment trust, closed yesterday at $27.25, up 5 cents. Announcement of the Cira lease signings came after the stock market closed yesterday.
“Cira is an outstanding addition to the city’s skyline, and will serve as an attraction point to bring companies into the city,” Mayor Street said in a statement. He also noted that the new building would help form “an economic bridge to our West Philadelphia neighborhoods.”
Various proposals for the Amtrak site have been presented for almost 20 years.
If built, Cira Centre would increase competition among Center City office towers to retain tenants. Fifteen major companies have leases that expire in or about 2005 and 2006. Those companies occupy a total of 4.22 million square feet of space.
Cira is one of two big office towers that have been proposed for Philadelphia in the last few years. The other, One Pennsylvania Plaza, is planned for the north side of John F. Kennedy Boulevard between 17th and 18th streets. Liberty Property Trust, of Malvern, has been trying to sign prospective tenants for that 57-story, 1.25-million-square-foot office tower, which was designed by New York architect Robert A.M. Stern. It has not announced any tenants for the building.
City officials have previously said they hope both buildings break ground in 2004. But owners of existing office buildings are concerned about the two proposed towers’ effect on the health of the office leasing market.
The Center City office vacancy rate is 12.5 percent, far below the region’s overall rate of 18 percent, according to Grubb & Ellis Co., a real estate firm based in Northbrook, Ill.
Brandywine’s and Liberty’s planned projects have caught the attention of Wall Street analysts as they try to weigh the potential impact of these new office buildings on the future earnings of the REITs. In mid-December, Moody’s Investment Service noted that it would “closely monitor” Brandywine’s progress in developing Cira and how the REIT finances it.
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(c) 2003, The Philadelphia Inquirer. Distributed by Knight Ridder/Tribune Business News.
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