HPC Inc., a California-based, healthcare-oriented real estate investment trust, has paid $161 million, or $228 a square foot, to previous owner Digital Realty Trust, a San Francisco-based data-center owner, for 833 Chestnut St., its 705,00 sf, 14-story data center and office property in a converted Gimbels warehouse.
"The deal is expected to generate net operating income of about $9.3 million, representing a cap rate (ratio of annual rent/purchase price) of 5.8%" for seller Digital Realty, the company said in a statement.
The price compares to the average $283/sf for Class A office space in Philadelphia last year, according to Real Capital data posted here. But Bill Luff, boss at Colliers International's Phliadelphia office, says the only recent transaction he recalls that far exceeded that price was for the Comcast headquarters -- new construction.
As with some other Philadelphia office buildings designed for tech users, including the University City Science Center in West Philadelphia, the primary tenant at 833 Chestnut hasn't been data center clients, but Jefferson University Hospitals, according to Digital.
UPDATE: Statement from Michael Darragh, Digital Realty VP of Acquisitions: "833 Chestnut has been great project for us. We acquired the asset in 2005, and viewed it as an opportunity to expand the existing data center tenancy within the building, while maintaining the established medical office client base.
"Over time it became apparent there was strong demand for additional medical office space in Philadelphia. Given 833's proximity to the Thomas Jefferson campus, this building was ideally suited for those requirements.