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PHILADELPHIA-Cigna Corp. decided to keep its headquarters in Center City and committed to 440,000 sf over 16 floors in Two Liberty Place. The announcement follows stiff competition, especially from Camden, NJ, which once offered Cigna an incentive package valued at approximately $100 million, according to published reports.

Cigna currently occupies approximately 633,000 sf in Two Liberty Place at 1601 Chestnut St. and between 50,000 sf and 60,000 sf at neighboring One Liberty Place. It will consolidate all 1,500 employees under the new lease, which commences in first-quarter 2006. Cigna spokesman Michael Frandsen tells GlobeSt.com, “we require less space because of more efficient space planning.”

Terms of the lease are confidential, but Frandsen says, “the agreement is for 10 years with an option to extend for five years.” William Elder, SVP in the New York office of San Francisco-based Shorenstein Co., which owns the building, confirms the 10-year term and tells GlobeSt.com, “the agreement contains some renewal opportunities.” Elder represented Shorenstein in the negotiations.

A team consisting of Sid Smith and Bud Hirsh of the local office of Wayne, PA-based GVA Smith Mack, and Alex Jinishian and Robert Freedman of the New York office of GVA Williams, represented Cigna. Both Hirsh and Jinishian declined to comment on any aspect of the deal.

A local real estate executive tells GlobeSt.com, on condition of anonymity, that, under the new lease, Cigna will pay less per sf than it is now paying. Asked whether the rental rate on the new lease is lower than under the current lease, Elder declined to comment. Regarding the incentive package provided to keep Cigna in place, Elder says, “I can’t comment because I don’t know the details. But this was a huge, huge team effort.”

Both Frandsen and Elder acknowledge that Cigna received generous incentives but declined to elaborate on the contents of the package. The roster of entities thanked by Cigna in its announcement to stay put encompasses likely participants. The list includes Gov. Ed Rendell and the governor’s Action Team; Mayor John Street; Peter Longstreth, president of Philadelphia Industrial Development Corp.; Rep. John Perzel and Sen. Vincent Fumo of the state legislature, and Mark Schweiker, CEO of the Greater Philadelphia Chamber of Commerce, and the chamber’s Greater Philadelphia division.

“After carefully considering the financial incentives offered to Cigna for remaining in our present location and factoring in the cost of employee turnover and potential disruption, we’ve concluded that staying at Two Liberty Place is in the best interest of our customers, employers and shareholders,” H. Edward Hanway, Cigna’s chairman and CEO, says in a statement.

According to Elder, the 1.2-million-sf, 57-story building is 100% occupied until first-quarter 2006 when Cigna’s new lease goes into effect and Ace Ltd.’s master lease expires. Ace acquired portions of Cigna during Cigna’s tenure in the building and it occupies approximately half of the building. Ace will relocate to 463 Walnut St., a building it recently acquired. Under current conditions, when Ace exits and Cigna consolidates, Elder says, 60% of the building will be vacant.

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