Five Center City office buildings that changed hands in the last two months have sold for a combined total of $151 million less than their assessed value, writes Paul Schwedelson for the Philadelphia Business Journal.

Each of the buildings sold at a steep discount, bringing into focus the current value of lower-quality office buildings with high rates of vacancy. The five buildings ranged from being virtually empty to 70 percent occupied. Three will be converted to new uses.

The sales shed light on Philadelphia’s fast-changing office market. After several years with reduced sales, difficult circumstances are forcing owners to sell their properties at discounted prices. The main drivers for this are high interest rates that have made refinancing challenging and low occupancy that leaves owners with less leasing revenue to pay off loans.

The difference between the assessed values of office buildings and their sale prices is an indication that future years could bring a significant drop in office buildings’ assessments. This would hurt the budget of the City of Philadelphia, which is expected to bring in $1.1 billion in fiscal year 2024 from property taxes and realty transfer tax.

Read more about Center City office buildings in the Philadelphia Business Journal.

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