The $185 million sale last year of the Bala Plaza office complex wasn't only a big deal for the Philadelphia office market, it registered nationally, as well. The transaction was the fifth-largest multitenant office sale in the entire country during 2023.
Seller Tishman Speyer retained CBRE and Beacon Commercial Real Estate to exclusively shop the Bala Plaza complex to potential buyers. The complex includes four office buildings and a free-standing Saks Fifth Avenue store, which sits above two levels of underground parking in Bala Cynwyd. The big sale was successfully executed during a troubled time for office properties in the wake of the pandemic and hybrid work, and that's why a panel of local industry professionals selected Bala Plaza as the winner of the 2024 CoStar Impact Award for the sale/acquisition of the year for Philadelphia.
The buyer was an investment group that included FLD Group, the Adjmi family, A & H Acquisitions and MS Management. The property they acquired currently has 1.1 million square feet of office and retail space, located on a 61-acre campus. The two largest tenants, Tokio Marine and Philadelphia Insurance, recently signed long-term lease renewals through 2035.
The new ownership plans to follow through with the already-approved redevelopment plans for Bala Plaza, which include 2.1 million square feet of new development that encompasses multiple retail sites, a 168-room hotel, about 650,000 square feet of office space and 750 residential units.
About the Project: The sale of Bala Plaza, a traditional corporate campus, included One Bala Plaza, Two Bala Plaza and Three Bala Plaza. Its new landlords said they will oversee the iconic Main Line property and move forward on the master plan that Tishman had gotten approved by local officials. The master plan and rezoning aims to reinvigorate Bala Cynwyd and transform it from an auto-centric cluster of office buildings into an integrated mixed-use environment that's both walkable and alive in the evenings and on weekends.
The key to the success of the sale is the redevelopment plan as Bala Plaza is the largest single commercial land assemblage in Bala Cynwyd. The change in Bala Plaza's ownership wasn't just about achieving a record price, but putting the redevelopment in the hands of investors who are committed to following through on the plans.
What the Judges Said: The Bala Plaza redevelopment by the new owners "will bring more housing density to the area which is much needed," according to Mike McNelis, head of growth at Philly Living Management Group. "The community around Bala Plaza has been somewhat fragmented and to some extent showed little synergy over the past years," Kenneth Penn, president of Benchmark Construction Group, said. "With repositioning of the commercial space, new residential housing and an improved shopping district it has quietly become a new community."
They Made It Happen: Gene McHale, president, Beacon Commercial Real Estate; Douglas Radio, executive vice president, CBRE; Jerome Kranzel, senior vice president, CBRE; Robert Fahey, executive vice president, CBRE; Bruer Kershner, senior vice president, capital markets, CBRE.
CoStar Senior Market Manager Shae Yeager and Market Manager Douglas Scott-Meagher contributed to this report.