The BNY Mellon Center in Philadelphia's Center City will soon need a rebrand now that its namesake tenant is planning to exit the last of its remaining space in the building as part of a relocation that will slash its regional office footprint by about two-thirds.
BNY, the oldest bank in the United States, is preparing to relocate its downtown office from the 54-story tower at 1735 Market St. sometime next year, a spokesperson for the financial services giant confirmed. The New York-based financial institution will be vacating its roughly 47,000-square-foot space in the tower and moving several blocks away to the One Logan Square building, where it has opted to lease just 15,000 square feet.
The downshift coincides with the bank's 2026 lease expiration in the BNY Mellon Center high-rise, the spokesperson said, but the decision to retain a stake in the city "underscores our long-term commitment to Philadelphia, our locally based clients and maintaining a vibrant office presence in the city."
The more than 1.3 million-square-foot Market Street tower has been named after BNY since it was developed in the 1990s. The bank, which once occupied as much as 180,000 square feet there, has steadily reduced its physical presence in recent years as it implemented widespread tweaks and changes to its office portfolio across the country.
Just last month BNY renewed its roughly 200,000-square-foot lease at One Boston Place tower in downtown Boston.
The institution, formerly known as Bank of New York Mellon, has occupied the largest share of the 825,000-square-foot tower for more than 15 years, according to CoStar data, and fills 10 of the property's 41 levels.
Other space
The Boston recommitment followed shortly behind a sublease arrangement BNY recently finalized for about 192,000 square feet in Manhattan's iconic One World Trade Center. The deal with Vogue parent Conde Nast, the sublessor, was signed to accommodate the financial heavyweight's shifting real estate needs as it works through a top-to-bottom makeover of its headquarters nearby at 240 Greenwich St.
The bank's downsizing move echoes those made by other major office tenants across the country in which they have leveraged upcoming lease expirations to reevaluate how much space they need and where.
While the large-scale move outs that plagued the U.S. office market in the earlier days of the pandemic appear to have wound down, many companies have been waiting until the end of their lease terms in order to reduce space, relocate to other parts of a market or dump the space altogether.
The national office vacancy rate has remained stubbornly stuck at a record high of more than 14% for the past couple of years, according to CoStar data. While office tenants collectively signed 12 million square feet of deals in the quarter ended Sept. 30 — the most since 2019 — Philadelphia has lagged behind the national inflection point and is still struggling to backfill a spike in available space.
Companies in Philadelphia over the past year have surrendered about 1.3 million square feet more than they've occupied, according to CoStar data, adding to the more than 9 million square feet office tenants have vacated over the past half decade.
Despite the net loss in office occupancy, Philadelphia — and even its central business district area — is still ahead of other major cities across the country.
At 19%, the office availability rate within Philadelphia's Center City downtown core is far lower than those reported in other major office markets, such as Chicago, Boston and Washington, D.C. And the Philadelphia region as a whole has maintained a track record for having the third-lowest availability rate among the 15 largest U.S. office markets, trailing only New York City and Minneapolis.