March 4, 2021Philadelphia Business Journal
American Real Estate Partners has completed $15 million in renovations to 1600 Market St., a 39-story Center City office tower, and joins some other landlords who forged ahead with expansive capital improvement projects during the pandemic.
The renovations were planned before the onset of the coronavirus and undertaken with the goal to better position their buildings to compete for tenants in the market. In the case of 1600 Market, the 825,968-square-foot office building was and continues to suffer from significant vacancies. It's currently 80% occupied.
While luring tenants to fill empty space remains at the forefront of those efforts, the ongoing pandemic enabled the landlords to incorporate some upgrades not in their original plans. An item that is at the top of tenant’s requirements these days is improved air quality in buildings. That was an issue seldom discussed prior to the pandemic but now top of mind.
For example, AREP installed higher levels of filtration to enhance air quality, put in technology for destination dispatch elevators and made as many items as possible frictionless and touchless. Elevators now have ultraviolet light and ions to keep air clean. AREP of Northern Virginia also sought to meet standards of indoor health and wellness set by UL verified Healthy Building Program and achieved that at 1600 Market and its entire 10 million square foot portfolio.
Nahla Capital, which completed $12 million in interior and exterior renovations to 2000 Market St., installed ultra-violet duct cleaning technology to improve air quality. At Spring Mill Corporate Center, Alliance HSP upgraded its ventilation systems as part of a recently completed $10 million capital program.
“It’s important,” said Doug Fleit, CEO of AREP. “If you think about it, everyone processes this pandemic a little differently than everyone else. Our job was not only to make a building a little safer but build a certain level of confidence when they come into the building.”
The more noticeable renovations sought to totally recast the building that was last renovated in 1996. The tower has also long been associated with its biggest tenant, PNC Bank, which has reduced its footprint to 230,000 square feet from 350,000 square feet.
“Our goal was to redefine the building and have nothing short of a redefinition,” Fleit said. “We met and exceeded our expectations. You have this iconic building that hadn’t been renovated in a long time and you could see the wear and tear. People passed by it without noticing it. From the outside and inside we wanted to change the context of it.”
Much of the work used art, lighting and visual devices to enhance its appearance and identity. On the street level, new glass and an expansive illuminated sculpture of the number “1600” was installed adjacent to the building’s entrance.
Once inside, the lobby pops with white marble and a cascading chandelier that had more than 2000 color-shifting lights. A sculpture titled “Willy,” depicts a yellow fox holding a red balloon in a nod to the building originally serving as the site of the historic Fox Theater. The sculpture was commissioned by AREP and fabricated by the atelier of the late Seward Johnson.
More that 8,000 square feet of amenity space was built out on the second floor and pop art is used to pay homage to some famous Philadelphians including Betsy Ross, Kobe Bryant, William Penn, Ben Franklin, Questlove and Pink.
AREP acquired the building in for $160 million in February 2018.
“When we bought the building PNC was downsizing and that was our opportunity,’ Fleit said. “The reason we were able to do all of the things we did was because we wanted to take this tired, old building and turn it into a cutting-edge workplace. What we are seeing is more people coming back to the building and that will build over the next three or four months. That is what we are expecting and that is what we are prepared for.”