A former Center City office building that's being converted into a luxury apartment tower will welcome its first tenants at the beginning of May, becoming Philly's first such project to start leasing since the COVID-19 pandemic.
The 18-story building at 1701 Market St., once the offices of law firm Morgan Lewis & Bockius, was sold to developer Alterra Property Group for $26.2 million in October 2023. The sale price was more than 40% below the city's assessed value of $48 million for the building earlier that year, a sign of the troubled office market since the rise of remote work during the pandemic.
In cities across the United States, developers are increasingly looking for opportunities to convert office buildings into apartments when they possess the right characteristics. Nationally, such projects surged from 12,101 units planned at office buildings in 2021 to more than 55,000 units in the pipeline by the start of last year.
"We've been doing conversions for a long time, irrespective of it kind of trending right now and being in vogue given the distress in some of the office sector," Mark Cartella, Alterra Property Group's senior vice president of development and construction, said Wednesday during a tour of the Center City building that was constructed in 1956.
Once fully converted, the property will have 299 one- and two-bedroom units on the building's sixth through 18th floors. One-bedroom rents start at $2,350 and two-bedroom rents start at $3,900. The building is about 70% one-bedroom units and 30% two-bedroom units.
Michael Tanenbaum/PhillyVoice
The living room of a two-bedroom apartment is shown above on the sixth floor of 1701 Market St., a former office building converted into an apartment tower that will have 299 rental units.
Michael Tanenbaum/PhillyVoice
The photo above shows the kitchen in a two-bedroom unit.
Michael Tanenbaum/PhillyVoice
The second bedroom in a two-bedroom unit.
Michael Tanenbaum/PhillyVoice
The bathroom in a two-bedroom unit.
Above the first floor lobby are three stories of parking with 190 spaces, an existing feature of the office building. The rooftop will have a heated, 24/7 saltwater pool, a dog run and outdoor lounge spaces for residents to work. And in the building's underground concourse — which offers direct access to SEPTA's Suburban Station — there will be a full pickle ball court, half a basketball court, a golf simulator and a club room with darts, billiards and a private dining area.
"In terms of the units and amenities, we think we can go head-to-head with any multifamily building constructed in the city over the last few years," Cartella said.
The building is currently 12% leased, and the move-in ready units are mostly on the sixth floor. The entire building is expected to be finished by mid-June.
Michael Tanenbaum/PhillyVoice
The living room of a one-bedroom apartment is shown above on the sixth floor of 1701 Market St.
Michael Tanenbaum/PhillyVoice
The bedroom in a one-bedroom unit.
Michael Tanenbaum/PhillyVoice
The kitchen in a one-bedroom unit.
Michael Tanenbaum/PhillyVoice
A closet area is shown in a one-bedroom unit.
Office-to-residential conversions can be costly and technically challenging projects depending on the dimensions of a building. Alterra was drawn to 1701 Market St. because of its rectangular shape, which is more amenable to creating apartment layouts with plenty of natural light compared to square-shaped buildings. In years past, most of Philly's office-to-residential conversions have been at older buildings that were constructed before the advent of HVAC systems encouraged modern designs with centralized utilities. Converting newer buildings is more difficult because their floor plates makes it harder to connect utilities to perimeter apartments.
Michael Tanenbaum/PhillyVoice
The larger two-bedroom units at 1701 Market St. are roughly 1,150 square feet and the larger one-bedroom units are about 650 square feet. All of the two-bedroom units have two bathrooms.
Michael Tanenbaum/PhillyVoice
In a unit under construction at 1701 Market St., a window offers a direct view of City Hall.
Alterra's past conversions in Philly include former offices at 1616 Walnut St. and 1515 Chestnut. St., a former parking garage at 414 S. 16th St., and an old grain silo that was turned into 24 lofts at 407. N. 20th St.
Cartella said 1701 Market St. is a rare example of a remaining office building that was ideally suited for a full conversion in Philadelphia. Over the past few decades, Center City's zoning encouraged such projects at aging offices as newer Class A buildings took over the Philly skyline. Future conversions are likely to skew toward mixed-use projects.
"All the low-hanging fruit has already been picked," Cartella said. "I think you'll see a few more conversions, but some buildings will always be office buildings for a variety of constraints."
