GlobeSt.com UPDATE: Comcast Center Funding and Rates Reach New Highs

David Binswanger, president and CEO of locally based Binswanger/CBB, represented Comcast in its lease negotiations for 534,000 sf, or approximately 44% of the building, on a 15.5-year term and it will also serve as Comcast's project manager for interior tenant improvements. Binswanger tells GlobeSt.com the building's name change from One Pennsylvania Plaza to Comcast Center was "absolutely a part of the negotiations, although I think Liberty was always willing to grant naming rights."

He declined to disclose the rental rate, except to say, "it is certainly higher than current rates in existing buildings. However, Comcast is getting a truly world-class corporate headquarters far above the initial design." He would not confirm estimates GlobeSt.com obtained from area brokers on condition of anonymity, who put the rate at more than $40 per sf, which far exceeds the $25-per-sf rate at top trophy towers. Some expressed doubts about what tenants will ink leases for the building's remaining space, but owner concedes, "some of Comcast's suppliers may pony up for smaller chunks in order to be near it."

By failing to vote on a bill granting special tax-free zoning to the site at 17th and JFK Boulevard, the state legislature killed that incentive. The project does receive the City's long-standing 10-year tax abatement on new construction. Gov. Ed Rendell provided $30 million in state infrastructure funds, and sweetened the pie with another almost $14.8 million.

"The largest incentive to three other major Downtown tenants--Towers Perrin, Sunoco and Cigna combined--totaled just $9 million," Dave Campoli, HRPT's managing agent here, tells GlobeSt.com. Campoli heads Center City Owner's Association, a group formed to combat granting tax breaks originally intended for blighted areas, to this project. Although Centre Square, the building Comcast is exiting, is an HRPT property, he refutes charges of 'sour grapes,' saying, "I knew long ago Comcast was leaving."

CCOA was successful in defeating Keystone Opportunity Improvement Zone status for Comcast Center, he says, "but it's like winning the trophy and having it stolen. It's shocking that the governor would circumvent the will of the legislature and spend $43 million in taxpayer dollars on a project for a tenant with 44% occupancy, especially with a Downtown vacancy approaching 20%. It's like building a stadium when you don't have a team.

"We're glad Comcast is staying in Philadelphia, and we always thought Comcast should be incentivized," Campoli adds. "But this is out of all proportion, especially when Septa [the area transit system], schools, roads, all kinds of things are in dire need of funding, and neither the city nor the state can foot the bill."

Of the controversy, Binswanger says, "It's hard to argue against the more than $400 million in private money that is being spent on this, the largest class A office project in the Commonwealth's history. It would not surprise me if, before the building is completed, Comcast winds up taking significant additional space," he adds, conceding, "that may not happen." Of the vacancy rate, he says, "I think activity is starting to pick up, and, with all that's going on in the city, I think we'll see reasonable absorption begin to take place."