State office building in Philadelphia sold

January 16, 2008 11:52:01 AM PST
A state office building has been sold for $25.2 million and will be converted into residences, forcing the relocation of about 900 employees, officials announced Wednesday.

Tower Investments Inc. has bought the nearly 50-year-old, 19-story building at the corner of Broad and Spring Garden streets in Philadelphia, Gov. Ed Rendell said.

The 2-acre site, which contains surface and underground parking spaces, will be developed into a complex of residences and retail stores. The building has 250,000 square feet of usable space.

The move will save the state $30 million over 20 years, based on projected costs to maintain and repair the building and to lease replacement space, Rendell said.

"The building is beginning to show its age, and we are at a point where it would require the Commonwealth to make a substantial capital investment to keep it running efficiently," he said in a statement.

A state office building in Pittsburgh will be sold for similar reasons, said Ed Myslewicz, spokesman for the Department of General Services, which handled the Philadelphia sale.

The Pittsburgh building has 16 stories and was built in the 1950s. Its 800 employees, who work in 20 departments, will be relocated to nearby leased offices once the building is sold. The state hasn't started advertising for bids yet, Myslewicz said.

Five bidders were interested in the Philadelphia building, he added.

The sale is slated to close late this year or in early 2009, around the same time employees will be relocated. The building's disposition was cleared by the General Assembly last year.

About 900 state workers will be relocated to leased offices downtown. They include employees of the departments of Conservation and Natural Resources; Education; Insurance; Labor and Industry; and Public Welfare.

The state will lease 212,000 square feet of office space about a mile from the old building for at least 20 years, and 49,000 square feet at another nearby site for 10 years, with two five-year options to renew.

Along with the savings, the sale will "serve as a catalyst for continued economic development for the region," Rendell said.

The building is in an area undergoing a revitalization, said Bart Blatstein, president of Tower Investments in Philadelphia.

"We want to be part of the resurgence of the North Broad (Street) corridor," he said. Broad Street "is a very important artery in the city. At one time, it was the main commercial and residential street in the city and it's coming back."

The acquisition will complement a $130 million project Tower developed about a mile north of the state building at Temple University, Blatstein said. That development contains theaters, retail stores, restaurants and student housing.


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