Last August, J. Grasso Properties paid $94 million for the Curtis Center, a historic office building in the heart of Philadelphia. Three months later, it couldn't resist picking up an adjacent landmark, the Public Ledger Building, for $43 million. Now the hometown real estate investment group is embarking on a $5 million renovation of the properties and rebranding them into a two-building complex called Curtis Square.
The acquisitions give Grasso close to 1.4 million sq. ft. of office space in a 5.3 million sq. ft. submarket along the Delaware River in the city's CBD. “We control 20% of the marketplace,” says Joe Grasso. “We weren't seeking another acquisition, but they're very complementary assets. So when the Public Ledger Building opportunity came up, we felt it was prudent to take advantage of the situation.”
The 12-story structures dominate the west side of Independence Mall. Designed in a Georgian-Revival style by Philadelphia architect Horace Trumbauer, the buildings were built to house the publishing empire of Cyrus Curtis, whose titles included Ladies' Home Journal and The Saturday Evening Post. The 885,800 sq. ft. Curtis Center came first, constructed between 1909 and 1921. The 12-story, 471,300 sq. ft. Public Ledger Building followed in 1928. Curtis acquired the Public Ledger, Philadelphia's first penny journal, and the first to use the Pony Express, in 1913.
Grasso tapped Bill Luff, executive vice president at Jones Lang LaSalle, to lease both landmark properties. Asking rental rates are $24 per sq. ft. at Curtis Center and $23 per sq. ft. at Public Ledger. “Over the last year, Independence Mall has been one of the best-performing submarkets in Philadelphia,” Luff says. “It's continuing to tighten and improve.” The broker is pursuing smaller, professional services-type tenants at the Ledger, where the vacancy is about 9%. He's going elephant hunting for a large corporate user at the Curtis Center, which has a 115,000 sq. ft. chunk available. Tenants have access to amenities in both buildings, such as the Public Ledger's Downtown Club and the Curtis Center's 12-story, glass-enclosed atrium park.
The Curtis Center was originally designed to accommodate Curtis Publishing's printing operations. A massive $80 million renovation in the mid-1980s transformed most of the property from warehouse to traditional office space. A spectacular Tiffany glass mosaic, Dream Garden, handcrafted in 1916, attracts tourists to its lobby.
Both buildings are in good shape, says Garrett Miller, Grasso's partner in the firm. Upgrades to be completed by the end of 2007 include new mechanical systems, which should help to control expenses, and added amenities, such as a fitness center and conference rooms. New sidewalks, period lighting and other exterior improvements will help visually link the two properties. They're already connected physically through an underground tunnel, although the tunnel is used mostly by maintenance and security personnel.
Grasso says downtown Philadelphia is experiencing a renaissance, and he aims to be a big part of it. “We have an opportunity to help revitalize underutilized and under-appreciated gems. We see ourselves as the driving force behind a lot of changes in this historic neighborhood.”