PhillyDeals: Unused corporate spaces ripe for buying

Philadelphia is full of forlorn former corporate buildings and a few healthy, expansive institutions looking for space, like Drexel University.

Sometimes they meet and match. Drexel's nursing school is happy in the high-rise ex-headquarters of the former Pennwalt Corp. and the departed Reliance Insurance Co. at Three Parkway.

But supply and demand in this town don't always meet at those happy points where a deal works.

Someday, Drexel would like to consolidate its legacy medical campuses, which surround Hahnemann University Hospital on North Broad Street and the former Woman's Medical College of Pennsylvania, five miles away in East Falls, to a single modern complex, presumably close to Hahnemann if it continues to serve as Drexel's teaching hospital.

"Despite this interest, the college has no plans in the foreseeable future to make such a move," says spokeswoman Lori Doyle. "There is no move in the works." Any move "is many years away."

That doesn't stop developers from dreaming.

A Drexel real estate delegation visited the former Inquirer tower at 400 N. Broad St., two blocks from Hahnemann, way back in 2006.

Developer Bart Blatstein, who owns the former Inquirer Building and its garages and lots across 15th Street, says Drexel Med would be a welcome user for that property, especially as the state denied his bid for a casino license there.

The ex-GlaxoSmithKline campus along 16th below Vine Street is also vacant. Drexel has lately checked that out, too, the Philadelphia Business Journal reports.

I wondered: Could Drexel do a civic good deed by taking over the underused School District of Philadelphia headquarters at 440 N. Broad St., old home of TV Guide?

The school system put 1,551 administrators to work at 440 when it opened there in 2005. But after years of cuts, only 590 are still there, says schools spokeswoman Raven Hill.

Why not sell? Because the district still has to pay off what it owes on the property, Hill told me.

The state-sponsored School Reform Commission that oversees city schools, headed then by investor James Nevels, bought the building from a Goldman Sachs affiliate in 2003 for $45 million. The school system spent $90 million more renovating it as offices in 2005, the Inquirer reported.

The district still owes $110.7 million for the underused site, Hill told me. It will have to cover that debt, plus moving expenses, before it can afford to move, she said.

I ran that number by Blatstein. He laughed. He asked me to repeat it. He laughed again.

The School District needs more than four times what Blatstein spent buying the buildings adjoining 440: He paid $23 million for the ex-Inquirer complex at 400 N. Broad, and $21 million for the former state office building at 1400 Spring Garden, where he made apartments. Both deals closed in 2011.

Looks like it will be a long time before the district's debt on its headquarters matches the market value, for Drexel, or anyone else.