PhillyDeals: Whale building on Market Street changes hands

These whales on the building at 2400 Market St. can be seen from the Schuylkill Expressway.
These whales on the building at 2400 Market St. can be seen from the Schuylkill Expressway. (ED HILLE / Staff Photographer)
Posted: April 12, 2014

Dean Adler of Lubert-Adler Partners says he and Ron Caplan of PMC Property Group have agreed to pay $42 million to New York-based Loeb Partners for the Marketplace Design Center at 2400 Market St., the building with the whales painted on the side visible from the Schuylkill Expressway.

"It's right in the middle of the Market Street Corridor, Rittenhouse Square, and University City," Adler told me Thursday.

He says the partners hope to keep the Design Center businesses in place, in a consolidated area, along with the telecom server farms that use part of the building; add "creative office space" for tech companies in some of the vacant areas; and top the building with a "mid-rise" apartment tower, as Caplan and Adler have done at the former AAA MidAtlantic building three blocks away at 2040 Market St.

"It's a former car factory, and the roof is 80 feet up, where you get magnificent views of the river," Adler added. "You can take the first floor and have an exciting coffee shop, and perhaps a grocer, there."

Giant, or Trader Joe's? "Yeah. And people who live here can walk to work. We have a parking garage behind the building. We can build on the roof. So we didn't have to pay for parking or for land. Our costs right there are 35 percent less" than new construction.

Didn't Loeb take that into account in setting the price?

"They've wanted to sell," Adler concluded.

Sale on Chestnut Street

Gene Muchnick, who used to run his family's music electronics store at 1725 Chestnut St. near Rittenhouse Square, has sold the property for $2.2 million to Midwood Management, the New York-based firm headed by Steven Schwartz and John Usdan.

Midwood has become a major owner of commercial properties in the neighborhood, says Laurence Steinberg, senior vice president of broker CBRE|Fameco, who represented the seller.

["It's] the last vacant building on this 1700 block," Steinberg told me. "But with the new strength of retail on this block, that may change."

"Leasing interest is very strong, and I expect rents on that block to continue to show substantial growth with the soon-to-open American Eagle Outfitters, Nordstrom Rack," Steinberg said.

Budding out

The American way has been for companies to pay workers' health care as part of their compensation - even into retirement. But what happens when people last longer than their employers?

Budd Co. is gone, but more than 5,000 retirees who made those bright stainless-steel SEPTA railcars and other heavy vehicles at its former Red Lion Road, Hunting Park, and Midwestern plants still rely on the pensions and health insurance the company promised in exchange for their labor.

The pensions are funded and insured. But Budd's successor, the German conglomerate ThyssenKrupp NAInc., has only $400 million to cover $1 billion in liabilities to finance retiree medical costs, according to ThyssenKrupp's spokesman Steve Blow. The company is asking the U.S. bankruptcy court in Chicago to approve changes that could reduce health-insurance coverage or make survivors pay more for medical services.

Gordon Carlson, who spent 20 years on the line at Budd as a United Auto Workers employee and 13 more in management, said retirees are waiting to learn what's going to happen to prescription, eye-care, and dental plans.

Mike Klimo, a retired member of UAW Local 813, said he's hoping to see workers well-represented on the creditors committee - and he's waiting for word from union officials on how the organization plans to help.

Sun split

Now that the SunGard Data Systems/Sungard AS split is official, when will KKR, Silver Lake, and the other big private-equity firms that paid $11.4 billion for the Wayne software conglomerate back in the late 2000s finally get paid?

SunGard CEO Russell Fradin gave a hint back in a February conference call with investors.

"I have just been incredibly pleased of how supportive the board and the [private equity] sponsors have been," Fradin said. "If it takes another year or two, great. If it takes another three or four, they're willing to do that."



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