Independence Blue Cross headquarters tower to be sold for near-record valuation by Atlanta-based owner

The owner of Independence Blue Cross’ Market Street headquarters tower has reached an agreement to sell the building for a price that would be among the highest paid per square foot for a non-medical office building in Center City.

Piedmont Office Realty Trust, a real estate trust based in Atlanta, entered into a binding contract on March 31 to sell the 801,000-square-foot office tower at 1901 Market St. for $360 million, or about $450 a square foot, it said in a financial disclosure last week.

The deal was expected to close in the summer, Brent Smith, Piedmont’s president and chief executive, said in a conference call with analysts Thursday.

Smith did not disclose the buyer. A message for Piedmont was not immediately returned.

Robert Fahey, who had marketed the property as an executive vice president with commercial real estate firm CBRE, confirmed the sale agreement, but declined to identify the buyer.

Independence itself had at one point been under contract to buy the property, according to a person familiar with the potential deal but not authorized to discuss it publicly. It could not be immediately confirmed whether the insurer remained the property’s buyer.

“Independence has a long-term lease for the building and any sale will not affect how we do business every day and serve our valued members,” Independence spokesperson Donna Farrell said. “We are not able to discuss any other details at this time."

The building’s sale price of $450 a square foot would be among the highest paid for a Center City office building, more than the $350 a foot paid last year for the BNY Mellon Center at 1735 Market St.

It is less than the $463 a foot paid by Comcast Corp. when it bought out the majority owner of its headquarters tower in 2014. The valuation is also less than the $648 a foot that the University of Pennsylvania Health System paid last year for the 800 Walnut St. medical tower it had until then occupied as a tenant.

Independence Blue Cross has leased the 1901 Market St. tower since it was built as the health insurer’s headquarters in the late 1980s. Piedmont acquired the property in 2003.

The insurer and its subsidiary businesses also occupy about half of the 457,000-square-foot property across the street at 1900 Market St., formerly known as the Stock Exchange building.

The company posted $16.3 billion of total revenue in 2018, according to its most recently filed annual report. Its surplus was $2.9 billion.

Asked during last week’s conference call whether economic issues surrounding the coronavirus pandemic could endanger the 1901 Market St. tower’s sale, Smith said that the deal had been struck at a time when the impact of the virus was apparent and that the buyer has funds available for the purchase.

“They’re all cash-on-hand to complete the transaction,” he said. “So we feel very confident that they are going to perform.”