(Image courtesy of SSH Real Estate)
Can the shabby stretch of Market Street from City Hall to Independence Mall become the city’s next tech corridor? A group of real estate developers thinks so.
They envision floor after floor of offices for the creative class — you know the drill: high ceilings, glass, open floor plans — flanked by residential apartments and retail on the ground floor. Digital billboards, too. (It calls to mind what the University City Science Center is trying to do in University City, minus the billboards.)
One of those office buildings is what used to be the Family Court building (34 S. 11th St.), an eight-story former warehouse that developers are overhauling to the tune of roughly $25 million. They want to attract coworking spaces, startups and other creative businesses. The building’s owners are tearing down the facade of the building and putting in floor-to-ceiling glass and new elevators. The ground floor will be home to a MOM’s Organic Market and a restaurant, and the other seven floors, amounting to 160,000 square feet, will be office space. They’ll have parking underground. They say there’s nothing else in the city like this.
NYC coworking giant WeWork, which has yet to announce a Philadelphia location, looked at the space, said SSH Real Estate’s Peter Soens, as did three or four other coworking and shared office space businesses.
The building — part of a wider $500 million project called East Market that will span a city block — is slated to open in the spring of 2016. It’s owned by SSH Real Estate, National Real Estate Advisors, JOSS Realty Partners and Young Capital LLC, which, through a 150-year “ground lease,” purchased the rights to the building about five years ago for an undisclosed price. The owners plan to have the building close to fully occupied by the time it opens, Soens said.
The owners are eyeing larger tech companies rather than early-stage startups. The smallest space they would lease is half of a floor (12,000 square feet), Soens said. That target market also shows in the types of leases they’re offering: traditional, longer-term ones instead of flexible, short-term leases. The minimum lease would be for five-to-seven years, he said. Of course, if a coworking space leased a floor of the building, it would offer that short-term office space for small startups.
Right across the street, Brickstone Realty is working on another development — not part of the East Market project — that will have 25,000 square feet of office space for tech and creative businesses. They’ll be targeting smaller businesses and leasing smaller spaces (about 6,000 square feet), Soens said, so their development is “complementary,” rather than competitive to the 11th Street office building.
The demand for this type of space exists, Soens said. Companies are outgrowing their offices just south of Market East and looking for options, he said, and companies from out of town are searching for places to open up shop in the city.
The East Market project is getting $14 million in grants from the city ($4 million) and state ($10 million), a spokesman said.
It’s one surefire sign of the local tech scene’s rise: the real estate industry is focusing more and more on attracting tech companies. Just a few years ago, Chuck Block’s 2401 Walnut Street was one of the only office spaces that embraced what Block called the West Coast office design that startups seem to gravitate toward. Goldman Properties’ Philadelphia Building was another. Now, The Bourse, just off Market on 5th Street, has jumped into the tech game.
Along with these two new office buildings on Market, there’s likely more to come. Three’s a trend.