Wanamake-it housing? Rubenstein eyes historic office conversion in Philly

As a century-old building empties out, ownership is considering transforming at least part of the Philadelphia office property into residential space.

Rubenstein Partners is weighing a conversion to apartments of four upper floors of the Wanamaker building at 1300 Market Street, the Philadelphia Business Journal reported. Plans for a conversion, which would span floors 9 through 12, are being drawn up by Tantillo Architecture.

David Rubenstein’s building is 112 years old and has seen better days. Rubenstein purchased the 1.4-million-square-foot property for $200 million in 2017, but it went into receivership in September. Rubenstein has been eyeing alternatives for the ample office space.

At the end of October, the building was only 35 percent occupied, according to a receiver report filed with the Court of Common Pleas in Philadelphia. Three years ago, occupancy was at 96 percent. The property’s operating loss was $10.6 million in the first 10 months of this year.

A conversion to life sciences space was considered in 2020 following the departure of the Children’s Hospital of Philadelphia, which was using 300,000 square feet. Those plans don’t seem to have gained much traction, though.

Other attempts to fill some of the empty space have fallen short. The University of Pennsylvania Health System was considering taking 75,000 square feet at the Wanamaker this year and the parent company of GoPuff was eyeing 100,000 square feet in 2021, but neither deal was consummated.

Rubenstein has a $112 million balance on its mortgage, according to September court documents, and recently replaced the property manager. Investors in the trust that owns the debt on the property are seeking to foreclose.

In 2019, Rubenstein sold 435,000 square feet occupied by a Macy’s department store to TF Cornerstone for $40 million. The vast majority of the building’s remaining 954,000 square feet is office space.

— Holden Walter-Warner