Upper half of West Market Street office building will be converted into 273 apartments

Ten floors of the 27-story Ten Penn Center at 1801 Market St. will be converted from office space to 273 apartments, according to a zoning permit issued Tuesday.

The building was purchased by PMC Property Group last summer for $30 million, less than half the price it was the last time it changed hands in 2006. At that time, it sold for $75 million, or roughly $144 million in today’s dollars, according to the Bureau of Labor Standards’ inflation calculator.

The recent transaction is part of a trend of deeply discounted office building sales since the COVID-19 pandemic and the rise of hybrid work.

PMC is one of Philadelphia’s largest apartment developers and has distinguished itself in the post-pandemic push to convert underused office space into apartments. PMC previously converted half of the 20-story Three Parkway building at 1601 Cherry St. In that case, the lower levels were turned into 143 apartments.

According to Ten Penn Center’s sales listing last summer, 65% of the offices in the building were occupied with much of the vacancy being concentrated in the upper levels. The building is effectively divided in half by the 16th floor, which is largely mechanical.

The downtown residential market has remained robust during the societal and economic turmoil over the last six years, with 3,500 new apartments opening between Pine and Vine Streets and the rivers since 2023 alone, according to Center City District.

“The apartment market remains really healthy, across across the entire city, but in Center City specifically,” said Clint Randall, vice president of economic development at Center City District.

Despite fears of an apartment glut, especially along the Delaware River and in Northern Liberties, demand for multifamily living has remained resilient in much of Philadelphia. (Occupancy rates in Center City are at 92%.)

The pipeline of office-to-residential conversions has been relatively robust as well, despite the fact that so many of Philadelphia’s older industrial and commercial buildings had already been turned to multifamily use pre-pandemic.

673 apartments have been created in former office space in Center City since the COVID-19 pandemic, according to the Center City District.

“There was an assumption that it would take longer to to eat up all of the supply, but it’s not taking as long as anybody thought,” Randall said. “Because of that, you’re able to move forward and get financing for new deals because you can prove that when there are good products available, it leases.”

PMC Property Group did not respond to a request for comment.