$430M Office Tower Coming to Philadelphia

Rendering of office building at 2000 Arch St. Image courtesy of Chubb

Insurance company Chubb, in partnership with Parkway Corp., has announced plans to develop a 438,000-square-foot office building in Philadelphia. Work is expected to commence in February 2023 and the project is slated for completion in early 2026.

According to the PhillyVoice, the office tower will cost $430 million to build, in which The Redevelopment Assistance Capital Program, provided by the Commonwealth and facilitated by the Philadelphia Industrial Development Corp., is contributing $10 million in construction costs. The same source mentioned that another $3 million are coming from additional state funds. Parkway Corp. is developing the 18-story tower, designed to achieve LEED Platinum certification, and Chubb will be the anchor tenant.

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The project will rise at 2000 Arch St., in downtown Philadelphia, less than 1 mile from City Hall, 1.2 miles from the University of Pennsylvania and within walking distance of the Franklin Institute. Future tenants will have access to nearby Logan Square Park and several dining options in the surrounding area. The Amtrak Philadelphia Station is located in the vicinity, only half a mile from the upcoming office building.

Tom Wolf, Governor of Pennsylvania, mentioned in prepared remarks the state’s investment in the project and what will be Chubb’s largest office in North America, leading to the creation of more than 1,250 jobs. Chubb’s involvement in Philadelphia is expected to create a workforce focused on roles in digital technology, finance, underwriting and claims. The project will also involve supporting jobs from local unions.

Demand for Class A office space

A third-quarter Cushman & Wakefield office report shows that, in the Central Business District, demand for Class A office space translated into roughly three-fourths of all leasing activity, with rates up 0.5 percent since the beginning of 2022 and 1.3 percent year-over-year.

Philadelphia had roughly 2.5 million square feet of office space under construction as of October, representing 1.4 percent of total stock, while the national supply pipeline accounted for 2.1 percent, according to a recent CommercialEdge office report.

Other major projects in Philly

Since the beginning of the year, several projects have received funding and broke ground in Philadelphia, particularly in the life science market. In August, Keystone landed a $265 million loan to expand the life science conversion of the Beaux Arts building, the former publishing headquarters of The Curtis in Philadelphia. Earlier in October, a Children’s Hospital joint venture broke ground on a 350,000-square-foot facility, slated for completion in 2025.

Another joint venture, this time including National Real Estate Advisors, JOSS Realty Partners, SSH and Young Capital, secured $260 million for the development of a mixed-use project in the central Market East neighborhood of Philadelphia. Upon completion, investment in the project is expected to exceed $1 billion.