1515 Market Street is a twenty-story, class “A,” office building consisting of approximately 510,000 square feet. The property is located at one of the premier sites in the Market Street West submarket of the Central Business District of Philadelphia, PA. The building had five tenants, totaling 79,736 square feet, with leases expiring during the first twelve month hold period, in addition to 20,323 square feet of existing vacancy and was in need of cosmetic and life-safety improvements as part of a comprehensive re-branding. SREA persuaded foreign institutional ownership to sell the property in order for 1515’s owner to consolidate investments in its core markets. A caveat to the agreement to sell to SREA was the requirement that SREA identify and control a trophy office building in Washington, DC for the institutional owner to acquire. SREA successfully facilitated the DC property acquisition on behalf of the institutional owner and acquired 1515 Market Street in the first quarter of 2007.
- Investment opportunity began with the off-market negotiation of a competitive price structure.
- Successfully acquired the asset by aligning with appropriate co-investors and lenders based on their investment parameters.
- Introduced building to brokerage community with a new marketing campaign that promoted broker-friendly transactions focusing on leasing existing vacancies and near term expirations.
- Implemented a proactive tenant retention program to ensure long term value.
- Executed significant and strategic capital improvement master plan for Building entrances, lobby interior, restrooms and common areas.
How SREA Added Value
Following the global financial crisis, SREA restructured the institutional debt and equity in the Property. SREA and its institutional equity partner capitalized on improving market dynamics and sold 1515 Market Street in the 4th Quarter of 2014. Highlights of the assignment included:
- Rental rates were increased by approximately $2.00/sf from previous owner’s rates, while simultaneously converting the Building from full service to a “plus electric” lease structure.
- Executed Lease Agreements/Amendments totaling 30,545 square feet of new tenants and expansions and 14,050 square feet of renewals during the first five months of ownership.
- Increased occupancy to 91.4% within the first five months.
- Achieved rental rates higher than the property’s competitive set of buildings.
- Created an enduring, new image for the building through renovations to the lobby entrance, lobby interior, common corridors and restrooms.