INDUSTRY WRAPUPS
From the January 11, 2002 print edition

Real Estate
Rehab breathes new life into engineers building
Natalie Kostelni

The new owners of the United Engineers Building at 30 S. 17th St. in Center City are hoping interior and exterior renovation will help fill 346,000 square feet of vacant office space, which accounts for more than half of the building.

Aside from getting an overhaul that will cost a few million dollars, the property is also getting a new name. Oaktree Capital Management LLC of Los Angeles is changing the name of the building to United Plaza.

The name change comes as the 659,335-square-foot, 20-story building sheds its old image as the home of a large engineering firm that has also undergone several name changes.

The building recently lost its lead tenant, Washington Group International Inc., which occupied roughly 300,000 square feet. The engineering and construction company had initially indicated it would downsize. Washington Group instead decided to relocate its offices out of Philadelphia. The building had been constructed in 1976 for its anchor tenant, United Engineers. Years later, Raytheon Engineers & Constructors International Inc. acquired United Engineers. Raytheon was bought by Washington Group in July 2000 in a transaction that ended in dispute.

The current saga of the United Engineers Building began in the late 1990s, when the company, then Raytheon Engineers, was considering moving 1,000 jobs out of Philadelphia. The defense contractor ultimately stayed put but not for long.

Jobs were steadily cut at the company and sublease space was put on the market. The company said late last year that it would relocate its Center City office, where it employs about 350 people, to Princeton and other areas.

It was no secret that Washington Group would eventually sublease some space and that the lease would expire in about five years. However, the engineering firm wasn't expected to up and leave before then. Its recent departure left PricewaterhouseCoopers as the building's lead tenant with about 90,000 square feet. Washington Group filed last May for bankruptcy protection, temporarily complicating matters with the lease. However, through bankruptcy proceedings, the lease was vacated and now controlled by Oaktree Capital.

Oaktree bought the building in May 2000 for $51.7 million, or about $86 a square foot.

Washington Group was paying rents in the high teens, below market rate. With the renovations, the new owners are seeking about $24 a square foot, bringing it up to par with some of its closest competition, such as Four Penn Center, Three Parkway and 1818 Market St. It is expected that the "new" United Plaza will go toe to toe with those three buildings in attracting tenants.

The renovations are considered to be the first since the building was constructed 26 years ago. Local architectural firm Cope Linder was retained for the job.

As part of the remake, the lobby will be redesigned and expanded to extend for a city block. Among other renovations, the outside plaza areas will be redone with landscaping as well as the addition of granite and marble flooring, which will also be incorporated into the lobby areas.

Work to the exterior of the building is expected soon. Interior alterations will be completed by May.

NAI Geis Realty Group Inc. is marketing the building.

Natalie Kostelni can be reached at nkostelni@bizjournals.com or 215-238-5139.