Law firm Morgan, Lewis & Bockius LLP is moving from Center City’s core business district near City Hall to a new custom-built $200 million home near the banks of the Schuylkill, a hopeful sign in a city that has seen little ground-up office construction despite demand for commercial space.
Morgan Lewis has signed a lease to become the sole occupant of what’s being called 2222 Market, a 19-story, 305,000-square-foot tower to be built for the law firm at 23rd and Market Streets, developer Parkway Corp. said Monday.
The project will be Center City’s first non-Comcast Corp.-related commercial office building in more than 20 years, as developers struggle to build in a city where rents make it hard to justify the cost of new construction.
Parkway aims to begin construction this summer to allow Morgan Lewis to take occupancy in 2023.
“I hope it’s a turning point,” Parkway president Robert Zuritsky said.
Office buildings have continued to rise in University City and the Navy Yard, largely aided by Keystone Opportunity Zone tax benefits that help subsidize development at specific sites, but development has been more sluggish in Center City itself.
Citywide, only two office properties are under construction, both of them single-tenant buildings at the Navy Yard, according to a survey published last week by a team at real estate services firm JLL, led by its Philadelphia research director Lauren Gilchrist.
Center City, meanwhile, has seen just a handful of new buildings since the skyscraper construction boom of the late 1980s and early 1990s, outside of Comcast Corp.’s big headquarters and tech towers.
But developers are increasingly rolling out proposals for new Center City office buildings in hopes that tenants will bite.
With an average office vacancy rate of 9.9%, which is below national levels, demand for new office space should be high in the city, the JLL researchers said.
But “one market fundamental that continues to plague Philadelphia developers is [relatively low] average asking rents,” they said.
Sarah E. Bouchard, Morgan Lewis’ managing partner for the Philadelphia office, said her firm would be paying higher rent at the new bespoke building than at its existing home at 1701 Market St.
But she said the expense would be justified by features of the new headquarters that can help attract and retain talented employees, such as the outdoor space on the building’s many terraces and its landscaped roof.
“We wanted to really build a space that would make sure people felt healthy and engaged when they’re at work,” she said.
The long-blighted block included the site of what had been Center City’s last porn theater, the Forum Theatre, which closed in 2012.
Bouchard said her firm was drawn to the area’s up-and-coming vibe when it was contemplating a move from its current home.
“Where we will be, at 2222 Market, is really developing,” she said. “It’s going to be exciting.”