2000 Market for Sale

Rubenstein may look to acquire Centre Square.

By Natalie Kostelni, Staff Writer

One of Center City's largest landlords, The Rubenstein Co., has decided to do something it seldom does -- sell one of its downtown properties. In this case, it has put 2000 Market St. up for sale.

"We would consider a sale or be interested in a sale at this time," said Mark Rubenstein, president of the private Philadelphia real estate investment company his father founded. "It's a very solid, good, stabilized building. It seems like a time for us to re-deploy those proceeds into something else."

What Rubenstein might go after next is not known, but speculation in the real estate community is that the company may use the proceeds from the sale and take a serious look at Centre Square, a 1.8-million-square-foot building at the epicenter of the office market at 15th and Market streets.

Buying Centre Square, commonly called the Clothespin Building because Claes Oldenburg's giant sculpture rises up in front of it, would restore Rubenstein as the No. 1 landlord downtown after having dropped to No. 2 when Thomas Partners took over 11 Penn Center this year.

However, Centre Square would be a risky investment for any landlord. Roughly 70 percent of its leases are set to expire over the next four years, creating what is considered an unstable rent roll. On the other hand, that situation may permit a buyer to pick up the property at a discount.

Rubenstein bought 2000 Market, a 628,000-square-foot building on the far edge of the Central Business District, in 1997 for a $52.7 million, or about $84 a square foot, from Metropolitan Life Insurance Co.

It is nearly fully occupied, with several long-term leases and an average lease term of about eight years. Its three major tenants are Atofina Chemicals Inc., which takes up close to 263,000 square feet; the Fox Rothschild O'Brien & Frankel law firm, which occupies about 106,000 square feet; and the Board of Pensions, which leases about 77,000 square feet. Those tenants have anywhere between five, 10 or more years remaining on their leases, Rubenstein said.

The building, constructed in 1973, underwent major renovations in 1996 and 1997, after Rubenstein bought it. Rubenstein's real estate investment trust put in several million dollars in rehabbing the lobby, ventilation and elevator systems as well as creating a parking lot behind it.

Despite the upgrades and strong tenant roster, some local real estate observers say the building sits too far on the edge of the Central Business District, making it remote from the action.

Rubenstein counters that criticism by citing numerous companies, including his own, that have made that end of town their address. "It's very accessible," he said, adding that it has some of the best, non-obstructed views of the skyline in town. "It's not Liberty Place but it is a very good fundamental building."

That the company is looking to sell is unusual, but Rubenstein cautioned against reading too much into the decision.

"We have not thought about looking at any others (to sell)," he said.

Eastdil Realty was hired by Rubenstein to gauge buyer interest. "That will enable us to determine how to proceed with the building," Rubenstein said, adding that if the interest isn't there, the company may not sell it.

Some in the real estate community think the property will fetch an estimated $100 a square foot. Others nudge that figure to above $120, while others think that's expecting too much considering that the newer Aramark Tower sold this year for $129 a square foot.

Rubenstein, a big landlord in the Main Line, either owns or holds an interest in four other major office buildings in Center City. It has a significant limited-partnership interest in One Commerce Square, owns outright One and Two Logan Square and is the majority partner in 10 Penn Center.

A couple of years ago it sold a stake in 10 Penn Center to a German investor. Earlier this year, Brandywine Realty Trust acquired its 360,000-square-foot Plymouth Executive Campus.