PHILADELPHIA — Liberty Property Trust (NYSE:LRY) and Synterra Partners, in partnership with GlaxoSmithKline (GSK), the Philadelphia Industrial Development Corporation and the City of Philadelphia, broke ground yesterday on Five Crescent Drive, the newest building in the Navy Yard Corporate Center.
The 205,000 square-foot, four-story facility is a corporate office building for GSK, which signed a 15.5-year lease for the building in February. The property will house much of the administrative function for the company’s North American pharmaceutical group. Expected to be complete in 2012, the tenant will fully occupy by April 1, 2013.
As an important anchor of the Navy Yard Corporate Center, Five Crescent represents a more than $81 million investment from Liberty. As with each of the properties within the office development, this project will be LEED certified, striving to achieve the LEED Platinum designation. In addition, specifically requested by GSK, the office space itself will be a collaborative workspace, outside the traditional concept of a typical workplace.
“In many ways this project will break new ground in terms of the way interior spaces have been designed,” says John Gattuso, regional director and senior vice president for Liberty Property Trust. “It’s a very different building from much of what we’ve done before, and what GSK has done in the U.S. There are no fixed partitioned offices in an effort to design space for how people really work, rather than how we think we work. It’s a change in culture, and it will be interesting to see what impact this type of design will have on technology companies going forward.”
When asked about the state of office development and how this project fits into the current environment, where little new construction is coming online, Gattuso responded that Liberty is quite busy. The company is currently underway on three new office buildings in Philadelphia, with a fourth high-rise ready to go.
“The state of office construction is really one of those things you can’t generalize. You can do a broad brush, and you can understand why people say that the market isn’t seeing a lot of growth, but from our perspective we need to dig deeper to listen to what clients need,” says Gattuso. “Companies are working in ways they didn’t in the past, and they have needs for new facilities for growth reasons. It’s all driven by demand, and all these projects we’re working on follow traditional fundamentals. We are able to execute them at returns that make sense for us to do. We think it’s going to be a busy year.”
Nationally, he says, the office market is accelerating, but specifically Philadelphia has been performing well for the past year. Five Crescent is reflective of dynamics in the market.
With the completion of this project, the Navy Yard Corporate Center will be approaching its 1 millionth square foot of office space. This is the fourth building to be constructed there, and Liberty has been developer for the center since 2003. The company created a master plan in conjunction with the Philadelphia Industrial Development Corporation, and Five Crescent is further execution of that plan, which will continue over the next 10 years with expected full build-out at 2.5 million square feet.
— Dan Marcec