Philly Conversion Still Likely as TF Cornerstone Forecloses

Ownership appears to be of little consequence to the fate of the famed Wanamaker building in Philadelphia’s Center City.

The office portion of the property at 1300 Market Street is likely headed for a residential conversion, a source familiar with the matter told the Philadelphia Business Journal. The 114-year-old building has been the subject of some drama and an ongoing foreclosure.

Rubenstein Partners started weighing a conversion of the property’s office portion a year ago. At the time, the building was struggling with vacancy and operating losses; it went into receivership in September 2023.

But New York-based TF Cornerstone has since entered the picture. Tom Elghanayan’s firm purchased a majority of the debt backing the office portion earlier this year. TFC then moved quickly to foreclose on Rubenstein; a settlement conference is set for the start of next year.

Even if Rubenstein exits the scene, TFC’s interest in pursuing a conversion doesn’t appear to be going anywhere. The firm announced last week a $1 billion joint venture with Dune Real Estate Partners to advance office-to-resi conversions across the country.

TFC has completed 15 commercial-to-residential conversions spanning 5 million square feet. While its venture didn’t list Philadelphia among the initial target cities, it is expected to be part of a group that includes New York, Boston and Los Angeles.

There have been 73 commercial-to-resi conversions completed so far in 2024, according to CBRE Group. Another 309 projects are in the pipeline — a majority of them specifically office-to-residential — accounting for 38,000 units.

Converting the 954,000-square-foot, 79 percent vacant office on Market Street won’t be easy. The floorplates are considered significantly larger than the ideal size for conversion.

Rubenstein has owned the property since purchasing it for $200 million in 2017. It sold the retail portion of the site — occupied by a Macy’s department store — to TFC for $40 million in 2019.

— Holden Walter-Warner