School Shutdown Could Free Up Center City Real Estate

The abrupt closure of Philadelphia’s University of the Arts is creating endless problems for students and faculty, but it’s bittersweet for real estate players as prime properties may become available as a result.

Since the 1890s, the university has amassed nearly 600,000 square feet in Philadelphia’s downtown, the Philadelphia Inquirer reported. A city tax assessment from two years ago estimated the combined market value of the university’s nine properties at $162 million.

Notable holdings include Dorrance Hamilton and Furness Halls at 320 South Broad Street, combined for an estimated value of $33 million. The two buildings are considered historic in a city defined by such things.

Other notable buildings include Terra Hall — home to performing and visual arts, as well as a dining room — dormitory space, a 238-seat dance and performance hall, a student center and more.

State Rep. Ben Waxman said its real estate is “potentially all going to be sold at fire sale” due to the sudden nature of the situation, saying it would have “huge implications for all of downtown.”

The university has sold off real estate assets before, though. In 2014, it sold an accessory building to developer Carl Dranoff, who used it in a condo project, for $6.4 million. Last year, developer MM Partners purchased a residence hall for $10.7 million.

Center City District president Prema Katari Gupta says she expects a lot of interest from developers.

“It’s a great portfolio at the heart of the city, amid transit access, walkability, and all of the stuff that makes downtown real estate really strong.” Gupta told the publication.

The timeline for any real estate divestment is murky, though, as the school’s president has resigned and as the university is exploring a merger with Temple University.

— Holden Walter-Warner