The three emptiest office buildings in Philadelphia
These buildings near the heart of Center City — the Wanamaker Building, the Centre Square complex, and One South Broad — have some of the highest vacancy rates in Philadelphia.
Two of downtown’s biggest offices, Centre Square and the Wanamaker Building, are leading the city in vacancy.
They are both right next to City Hall, at the heart of Philadelphia, where their high vacancy rate — 47% for Centre Square and 65% for Wanamaker — is all the more obvious. Another neighboring poor performer is One South Broad, with an occupancy rate of just under 42%.
These are outliers, for now. The vacancy rate for the entire region is 20.5%, while for the city itself it is 19.1%, according to commercial real estate services firm Jones Lang LaSalle (JLL).
Industry experts say that in the near term, there are no easy answers. Both the apartment and life science markets appear to be glutted, as pandemic-era projects come online. Demolition would be extraordinarily expensive and disruptive, not to mention undesirable for iconic historic structures.
In the short term, stakeholders say that bringing municipal workers back to Center City offices more regularly could make a difference in the daytime activation of space around City Hall.
As policymakers and business interests mull this conundrum, here is a guide to some of the most distressed buildings in Philadelphia, how they got that way, and what can be done with them.
- What does it mean if a building is in receivership? The complicated loans that back large buildings include a contingency in case of default. A special servicer is called in to try to find a compromise between owners and lenders and ensure the problems don’t get any worse. If they can’t reach a deal and the loan goes into default, the building goes into receivership. When that happens, the building is now functionally in the hands of the lenders.
- Who oversees a building in receivership? Lenders do not generally want to own and operate office or apartment buildings, so the receiver’s job is to prepare the property for sale. Receivers have the authority to sign leases and make deals on behalf of the investors.
Centre Square
Centre Square, just west of City Hall, is the largest office complex in Center City.
Opened in the 1970s with a plaza adorned with the Clothespin statue by Claes Oldenburg, the buildings have been massively overhauled once a decade since they opened.
In mid-2017, New York-based Nightingale Properties and Kuwait-based Wafra Capital Partners bought Centre Square and then got a $388 million loan to refinance the property in December 2019.
- 15th and Market Streets
- 32-story East Tower and 40-story West Tower
- 1,760,091 total square feet
- Opened in 1973
JLL estimates that Centre Square had about 6,300 workers in the two towers. But since 2020, occupancy has plummeted. Big tenants such as mortgage insurer Radian (173,738 square feet) have left and are subleasing their space, and the complex’s largest tenant, the University of Pennsylvania Health System (297,380 square feet) has largely pulled workers out, too, although its lease is active until 2025.
“That’s 1,000 people our stats would say are there, but they’re not,” said Tom Weitzel, managing director with JLL in Philadelphia. “It looks bad, but it’s actually worse.”
The value of the building has dropped 14.8% since October 2019 to $401,200,000 in October 2022, according to real-estate tracker CoStar Group. Unable to pay a loan due in December 2022, the lenders filed for foreclosure and the property went into receivership last May.
Wanamaker Building
The Wanamaker Building is the third largest downtown office building. It also houses the 435,000-square-foot Macy’s department store and underground parking
In 2017, Philadelphia-based Rubenstein Partners bought a controlling stake in the building and invested millions in renovations. Tenants Children’s Hospital of Philadelphia (CHOP) and Penn Medicine expanded their footprint, and occupancy rose well above 90%.
- 100 Penn Square East
- 15 stories
- 1,401,000 square feet
- Opened in 1911
Then the pandemic struck.
“They just got caught up in a timing conundrum where the market was not flush with tenants moving in and some tenants that have been there for a while were reconsidering their space needs,” Weitzel said.
Today, only about a third of the office space is occupied. CHOP (252,631 square feet), the federal government (239,049 square feet), and Digitas Inc. (108,619 square feet) are all gone, and there are few new entrants looking for such large spaces.
The value of the building has plummeted by 72%, from $185.7 million in 2018 to $52.4 million in December 2023 according to CoStar.
Last year it became clear that Wanamaker would not be able to refinance its loan as it reached maturity in June 2023, so the lender filed for foreclosure, and a receiver was placed in control of the property in early September.
One South Broad
Located just to the south of City Hall and featuring McCormick & Schmick’s and the newly opened Insomnia Cookies headquarters as retail tenants, One South Broad Street is not challenged in quite the same way as its larger counterparts.
The Art Deco building was purchased in 2014 by New York-based Aion Partners. At the time, the building was 88% occupied.
But since 2020, that’s fallen by 30%, according to CoStar. Commercial mortgage-backed securities (CMBS) documents show the next major lease expiration isn’t until Huntsworth Health’s term closes in mid-2026.
- 1 S. Broad St.
- 28 stories
- 473,188 square feet
- Opened in 1932
