News Summary
The Wanamaker Building in Center City, Philadelphia, is set to be converted from office space to residential apartments by developer TF Cornerstone amid foreclosure proceedings. With significant portions of the building currently vacant and a looming sheriff’s sale, the transformation represents a strategic response to the increasing demand for housing in urban areas. Challenges exist due to the building’s large floor plates, requiring careful modifications to comply with housing codes. City officials and residents will monitor the situation closely as this development unfolds.
Philadelphia – The historic Wanamaker Building in Center City is set to undergo a significant transformation as New York-based developer TF Cornerstone moves forward with plans to convert the office space into residential apartments. This development comes at a critical time, with the foreclosure sale of the property scheduled for June 3 via sheriff’s sale.
Currently, the Wanamaker Building, which spans 1.4 million square feet at 1300 Market Street, consists of a 435,000-square-foot retail section housing a Macy’s store and a 954,363-square-foot office portion that is currently 79% vacant. The building’s financial distress is evident, with an unpaid mortgage balance of $112 million contributing to ongoing foreclosure proceedings. The property was placed under receivership in September 2023, and a series of judicial proceedings are set to unfold, including a settlement conference on January 6 and a pre-trial conference on February 3. Should no agreement be reached, a trial is scheduled for March 3.
TF Cornerstone’s interest in the Wanamaker Building marks the company’s first undertaking of an office-to-residential conversion in Philadelphia. Earlier this year, the developer acquired the majority of the debt on the office section of the building, positioning them to advance their plans for redevelopment. The conversion effort is part of a broader strategy by TF Cornerstone and its partner, Dune Real Estate Partners, through their joint venture known as Alta Residential, aimed at addressing increasing housing demand across major cities, including New York, Washington D.C., and Boston.
TF Cornerstone brings considerable experience to the project, having successfully completed 15 office-to-residential transformation projects to date. However, the Wanamaker Building presents unique challenges for this type of conversion. Its large floor plates, measuring over 100,000 square feet each, significantly exceed the size ideal for residential developments. Developers will likely need to leave portions of the interior space vacant or demolish parts of the structure to meet housing code requirements regarding window placement, impacting the overall layout.
The Wanamaker Building has seen declining occupancy rates in recent years. Rubenstein Partners, the current owner, is actively exploring alternatives for the building’s office component but faces challenges due to the building’s financial and physical conditions. Efforts to convert underused office spaces into residential units are increasingly seen as vital as many substantial office buildings around Philadelphia, including the former GlaxoSmithKline offices and the defunct Centre Square building, have also entered receivership.
In 2019, TF Cornerstone made a strategic investment by purchasing the 435,000 square feet of retail space at the base of the Wanamaker Building for $40 million. This prior acquisition may provide a stabilizing anchor as the company seeks to breathe new life into the upper office levels through their residential conversion plans. With the June sheriff’s sale fast approaching, the future of the Wanamaker Building may hinge on how these foreclosure proceedings culminate after nearly a decade of declining usage and rising vacancy rates.
As the developments unfold, city officials, real estate analysts, and local residents will be closely monitoring the situation. The potential conversion of the Wanamaker Building into residential apartments speaks to a growing trend of redefining urban spaces and meeting the housing demands of Philadelphia’s population amidst a landscape of shifting commercial real estate dynamics.
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Additional Resources
- AL DÍA News: Wanamaker Building Housing Transformation
- Wikipedia: Wanamaker Building
- Axios: Market Wanamaker Makeover
- Google Search: Wanamaker Building foreclosure
- Bisnow: New York Firm and Wanamaker Debt Acquisition
- Encyclopedia Britannica: Wanamaker Building
- Bisnow: Wanamaker Building Foreclosure News
- Google News: Wanamaker Building Philadelphia
- Bisnow: Wanamaker Building Tenant Loss and Debt Issues
