The sudden and unexpected closure of a major Philadelphia art school could create a major upheaval in the city’s commercial real estate market with properties coming up for sale at once.
According to a Philadelphia Inquirer report, the University of the Arts will shut down on June 7 in the wake of continued declines in revenue and enrollment. The university was established nearly 150 years ago and totaled 1,149 students and roughly 700 staff and faculty when it announced last week that it will cease operations.
While the university played a prominent role in the city’s arts experience, it also owns one of the most prominent commercial property portfolios in Philadelphia – nine properties encompassing nearly 600,000 square feet of downtown real estate along South Broad Street and nearby the nearby Center City district. These include Dorrance Hamilton and Furness Halls on the university’s campus, which have an estimated combined value of $33 million, and the Philadelphia Art Alliance, with an estimated value of $4.7 million.
Over the past decade, the university tried to stave off its financial problems by selling properties, most notably the 2016 sale of the historic Merriam Theater for $10.6 million. The fate of the university’s property portfolio is unclear, with the school’s leadership offering no public statement on whether the buildings will be marketed for sale or put up for auction.
The prospect of having multiple properties coming to market at once has created concern for State Rep. Ben Waxman, whose district covers parts of Center City where the properties are located.
“The abrupt nature of the closure and how it’s being done means there isn’t any real planning happening in terms of the transition, it’s potentially all going to be sold at fire sale,” he said. “This has huge implications for all of downtown. These are prime pieces of real estate in Center City at the same time as we have a commercial real estate crisis looming.”
However, Prema Katari Gupta, president and CEO of the Center City District, an economic development agency, was confident that any property sale would not occur at severely discounted prices.
“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 said. “We need to focus on the students, faculty, and administrators, because the buildings are going to be fine.”
Photo: The University of the Arts’ Dorrance Hamilton Hall, courtesy ajay_suresh / Wikimedia Commons
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