Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Dechert, an institution in Philadelphia’s Center City for more than a century, could be moving its offices to the 30th Street Station area to decrease its tax burden when its lease expires at the Bell Atlantic Tower in 2005. Barton Winokur, Dechert’s chairman, said the firm was exploring all of its options, but he made it clear that he feels Philadelphia creates an “unfair tax climate” for professional service companies. “We have not only a law office but our firmwide administration based in Philadelphia,” Winokur said. “And given the tax situation, that doesn’t make much sense anymore. We are looking at a number of alternatives because [being in Center City] is very expensive for our lawyers. And one of those options is moving to 30th Street and taking advantage of the Keystone Opportunity [Expansion] Zone [which abates many state and city taxes]. “It seems to me that the tax system in this city is set up to favor manufacturers and not professional service firms. We have offices in New York, Washington and San Francisco, and none of them have tax burdens like this. I don’t know what we’ll do for certain. But one thing’s for sure — our costs will go down in 2005.” Blue Bell, Pa.-based development company Brandywine Realty Trust is orchestrating the 30th Street project, which calls for a 32-story office building to be constructed on what is now an Amtrak-owned parking lot just north of the train station. The first floor will be filled with retail space, while the rest will include office space. Architect Cesar Pelli, who designed the world’s tallest buildings, the Petronas Towers in Malaysia, will head up the project — which will include 802,279 square feet of space available for rent. Brandywine Realty is shopping for an anchor tenant before commencing construction, which they hope to do sometime next year. The fact that it is located in a Keystone Opportunity Expansion Zone means that tenants would be able to either abate or receive credits for several state and city taxes for a 10-year period. While Dechert or any other prospective tenant would not be able to escape the city wage tax, it would be able to abate the city’s sales and use, business privilege, net profits, real property, and use and occupancy taxes. On the state level, tenants would receive relief from state personal income, capital stock, foreign franchise, sales and use, insurance premium, bank shares and mutual risk institution taxes. In return, the tenant must generate revenue and jobs for the area. Brandywine Realty general counsel Brad Molotsky said the 30th Street location would benefit a large business such as a law firm for many reasons. Employees who live in the northern and western suburbs can still take SEPTA to work, lawyers would have enhanced access to the airport for flights and Amtrak for trips to New York, Washington and Harrisburg, Pa., and the Center City courthouses would only be a five-minute cab ride away. In addition, Molotsky said the University of Pennsylvania and Drexel University have spent money on improving the infrastructure in the surrounding area. Klehr, Harrison, Harvey, Branzburg & Ellers real estate partner Carl Primavera said that Dechert could save as much as $50,000 per partner annually by making the move. And because Dechert’s focus is on national and international practices, the proximity to the airport is probably more important than proximity to the local courthouses. In its present location, Dechert has to take cabs to the federal courthouse at 6th and Market streets, but Primavera said that its lawyers don’t venture to City Hall very often. “If Dechert litigators are in City Hall, they’re on a tour,” Primavera said. “They are an international law firm, so it’s not as important as it would be to other firms. The greatest distance involved in the move is mental perception. It’s much less daunting than in reality. When Fox [Rothschild O'Brien & Frankel] moved to 20th and Market, people said that we’d never hear or see them again. But that’s worked out fine. Dechert could draw businesses out there.” Dechert litigation department chairman Robert Heim said with the emergence of commerce court, the firm is spending more time in City Hall. But he said that the inconvenience of being at 30th Street would be neutralized by access to Amtrak train service and the airport. “I don’t think being at 30th Street would present any major problems for the litigators,” Heim said. “But I like the building we are in. I like the restaurants. I like being across the street from the Four Seasons. So there are trade-offs.” Karen Daly, executive managing director at Insignia ESG real estate company, said that the benefits of moving to 30th Street could be anywhere from nothing to $30 per square foot, depending on the company’s revenue and the job growth it brings to the area. Dechert would also have to spend money on improving the property. Winokur, though, said the firm is covering all of its bases. He even broached the idea of having lawyers and administrators in two different locations to save money. Daly said that such a decision would reduce costs but increase overhead. There is always the possibility that Dechert could re-sign with the Bell Atlantic Tower, owned by important client Verizon. Winokur said the firm is talking to Verizon but would need the space to be retrofitted to meet the technological needs of practicing law in today’s world. Dechert moved in to the space 15 years ago. The rent would also have to be reduced significantly, Winokur said. One location that can be crossed off Dechert’s wish list is Willard Rouse’s new proposed high-rise office building at 17th and JFK, which is waiting to sign an anchor tenant before construction begins. When asked about the possibility, Winokur uttered only two words: “too expensive.” And that is the battle-cry from prospective tenants across the city as they shop around with Center City landlords. Though it also considered the 30th Street site, Duane Morris just decided to leave One Liberty Place, which, like the Bell Atlantic Tower, is considered an AA building, in favor of the lower-priced United Engineers Building across the street. Post & Schell also decided to put efficiency and cost ahead of glitz and prestige by moving into 4 Penn Center. Daly said Dechert is in the catbird’s seat because not only is it the only large Philadelphia law firm with a lease expiring in the next couple of years, the market is also swinging its way. Daly said a lot of major tenants will have their leases expire between 2004 and 2006, so landlords need to lock up space and are more willing to do it at a lower rate. “They might be penalized because of a lower rent, but the security of having the space filled is more important to them,” Daly said. I think 2004 to 2006 are going to be termed the perfect storm. It seems like every major building could have holes to fill.” One Liberty Place will have 200,000 square feet when Duane Morris vacates that building by 2005, Two Liberty Place will have 1.2 million square feet, and Center Square will have 700,000 square feet available, Daly said. “I assume we are an attractive tenant,” Winokur said of his firm, which has between 250 and 300 lawyers in Philadelphia. “But any decision we make will be based on what’s best for our lawyers and staff.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.