Brandywine Pays $52M for Two W. Elm Street Properties

"We now have an ownership interest in 1.1 million sf of class A office space in Conshohocken, which gives us nearly 50% of the class A office market (here)," says Gerard H. Sweeney, president and CEO of the Plymouth Meeting-based REIT, in a statement. Calling Conshohocken "one of the more desirable submarkets in suburban Philadelphia," he says this acquisition "is a continuation of Brandywine's overall investment strategy of acquiring class A office buildings in our existing core markets."

"The Conshohocken market is definitely seeing increased activity," George S. Hasenecz, VP of investment services, tells GlobeSt.com. He says One W. Elm is now 100% leased, "and we believe 101 will be leased up in short order." Leasing will be handled in house. The REIT's total portfolio encompasses interests in 299 office and industrial properties aggregating 24.2 million sf, and Hasenecz says overall leasing is currently about 91%.

Brandywine funded the W. Elm purchases with proceeds from its unsecured credit facility. The properties are free and clear of debt. Together the buildings have an aggregate of 283,510 sf. Keating is the seller of One W. Elm, a property of approximately 97,736 sf, while 101 W. Elm St., which aggregates 185,774 sf, changed hands since its construction and the seller is Keystone Mercy Health Care.

At midyear, the office vacancy rate here was 22.9%, according to data from the Philadelphia office of Cushman & Wakefield, while CB Richard Ellis data put it at 20.65%. CBRE reports the average asking rental rate for class A office space at $29.19 per sf, while C&W says the average is $27.43 per sf. In GlobeSt.com's last reported lease transaction at 101 W. Elm St., which was for a December 2004 move-in, the offering rental rate was $26 per sf, plus electric, which Hasenecz says, "sounds about right."