The large-scale American architecture of the late 19th and early 20th centuries is something to behold, and the elegant and time-honored vibe of those structures is often highly desirable in the commercial and residential markets. Of course, creating a lucrative strategy for such a property can be a complex matter that requires in-depth legal probing in order to avoid possible pitfalls.
For example, consider the recent sale of the Avenue of the Arts building in Philadelphia. The Center City structure was built as an office building in 1898. After being purchased by a Philadelphia-based partnership in 2000, investors put $18 million into the structure to convert it for residential use.
Four years later, a New York corporation bought the building for $45 million, and the Art Institute of Philadelphia currently uses the Avenue of the Arts as a residential hall. In September, the institute’s lease will expire.
The price paid by the most recent buyers — Principal Real Estate Investors and MRP Residential — reflects the uncertainty surrounding the property in recent years. The new buyers paid $33 million for 209,095 square feet, spanning from floor four to floor 17. The bottom three floors were not part of the acquisition and will remain commercial.
The new buyers have announced plans of investing an undisclosed amount to develop high-end residential units. The upgrades will reportedly include, among other things, a theater room, a roof deck, an interior courtyard and a fitness center.
The head of MRP Residential has also expressed interest in converting other old office buildings in the Philadelphia area. With any such plans, developers would be wise to cover their legal bases to ensure a smooth acquisition.
Source: Philadelphia Business Journal, “Ave. of Arts building sells for $33M, plans call for luxury apartments,” Natalie Kostelni, Feb. 24, 2014