In a move that promises to remake the face of University City, Penn announced Friday that it has closed on the deal to purchase the postal lands east of campus.
The sale caps off years of negotiations and marks a key point in a 25 to 30 year process of bridging the gap between Center City and Penn's campus.
The so-called postal lands will fill in what is now 24 acres of desolate industrial space with a vibrant mix of green space, retail, residences and office space.
When completed, the plan aims to remake the western bank of the Schuylkill River and make University City a world-class destination within Philadelphia.
It will represent the University's most significant construction project since moving to West Philadelphia more than 130 years ago.
The University simultaneously announced that it will develop a 14-acre parcel of the postal lands in conjunction with Brandywine Realty Trust to bring in new housing and retail opportunities for students, staff and area residents.
That area, which stretches from Market to Walnut streets, will feature a 40- to 50-story office tower and a 25- to 30-story residential tower in a development known as Cira Centre South.
The current Cira Centre - also developed by Brandywine - is located adjacent to 30th Street Station.
The two towers, which Brandywine will construct on land leased from Penn for 90 years, will cost the development company about $400 million and will be completed by 2012.
The University has agreed to lease 100,000 square feet out of the office tower's 400,000 to 500,000 square feet.
The complex will bring 4,000 construction jobs to the area. According to preliminary studies, its construction is expected to provide more than $2 billion in economic growth.
When completed, it will have an ongoing economic impact of $900 million a year.
The deal with Brandywine is just one part of the University's development plans for the area, which Penn has eyed for many years.
The rest of the postal lands south of Walnut Street will be developed directly by the University as part of its Penn Connects plan for campus expansion, developed with Sasaki Associates, the lead architectural firm involved in the project.
Construction on this parcel will begin in earnest after an event feting major donors to the University's capital campaign, which will help finance the project.
That event will be held on Oct. 20 during Homecoming.
The campus expansion plan calls for the area between Franklin Field and the Palestra to be turned into park and recreational space that will connect to athletic fields on the postal lands.
The University is in the process of finding a design consultant to lead this part of the project, Penn Executive Vice President Craig Carnaroli said.
The first major phase of the construction will also involve leveling the area's parking lots in preparation for converting the space into recreational and athletic fields.
Besides Cira Centre South, Brandywine also bought the historic post office, located at 30th and Market streets. It will hold 5,000 Internal Revenue Service workers who will relocate from an office in Northeast Philadelphia.
The renovation of the post office - which will involve gutting much of the interior and restoring its historic facade - and construction of a nearby 2,400-space parking garage will cost Brandywine around $365 million and is scheduled for completion in 2010.
Penn sold the rights to buy the post office to Brandywine for $28 million as a way of closing the deal.
The transaction was completed in late July but only became public recently, in part because negotiations between the various government and private entities involved in the land deal were complex.
"There was always a chance it could fall apart," Carnaroli said.
The postal service relocated most of its operations in the purchased area to a newly constructed facility in Southwest Philadelphia last year, and a retail post office will be constructed on the 3000 block of Chestnut Street for local residents and businesses.
The towers will replace the current post office annex, demolition of which is expected to start in about month, according to Brandywine president Gerald Sweeney.
According to Carnaroli, Brandywine will apply for a variance - a prerequisite for construction - at a meeting with the city Planning Commission on Sept. 20.
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