The U.S. General Services Administration has signed a roughly 97,000-square-foot lease for Department of Health and Human Services operations at the former Strawbridge & Clothier department store building at 801 Market St.
The federal agency will occupy the eighth and part of the ninth floors of the early 1930s building on a 10-year lease valued at about $23 million, according to Jim Mullarkey of Newmark Grubb Knight Frank, who helped broker the deal.
The HHS divisions, which are moving from the Public Ledger building near Independence Mall, will occupy the Strawbridge's building space beginning June 2018, Mullarkey said Friday.
The lease marks a return to the space for the federal government. The GSA had previously rented the floors for its mid-Atlantic operations. Those divisions have since relocated to the Dow Chemical Building at 6th and Market Streets.
The Strawbridge's building's eighth and ninth floors previously accommodated an auditorium used by the department store for fashion shows and other exhibitions, Mullarkey said. The space is set to be fully renovated for HHS, he said.
The lease brings the occupancy of the 13-story building's top seven floors to 60 percent, according to Mullarkey. Those floors are under the control of debt servicer LNR Partners LLC.
The lower floors are separately owned by Pennsylvania Real Estate Investment Trust. Office tenants of those lower floors include Philadelphia Media Network, owner of The Inquirer, the Philadelphia Daily News and Philly.com.
The building's ground-floor retail space, meanwhile, is included in PREIT's plans to transform the adjacent Gallery at Market East shopping mall into a center for discount versions of designer-label stores called Fashion Outlets of Philadelphia.