The fiasco around the closure of Hahnemann Hospital will take years to unwind. As we and others have detailed before, Harrison Street Real Estate Capital and Paladin Healthcare partnered to purchase the hospital from Tenet in 2018 and they didn’t even make it two years before closing the hospital down. When the sale was first announced, we predicted that something to this effect would occur, speculating that the deal was more about owning (and eventually selling) roughly six acres around North Broad Street than it was about buying and successfully operating a hospital.
It makes sense, given the complexity of the deal and the fact that bankruptcy is involved, that the turnover of the real estate have moved at a rather slow pace. At this time, the owners and creditors are in a full on court fight, per the Inquirer, and this will likely shake out over the course of several years. We don’t understand the intricacies of the different ownership entities and who is entitled to sell what and when, but at least a few of the buildings in the portfolio are seemingly not subject to restriction in terms of being sold. One example is the building at 1501 Race St., known for decades as the Bellet Building and known previously as the Schaff Building.
Earlier this year, the Inquirer reported that an affiliate of Brandywine Realty Trust had purchased the property for $9.7M. The building has been used as office space for Hahnemann and Drexel’s med school since the mid-1960s, and was originally constructed in 1923 by the Sunday School Board of the Reformed Church to serve as a “hub for Christian organizations from all denominations,” per a story about the building’s history on Hidden City. Interestingly, this building was originally constructed as an addition to a seven story building which once sat at the corner of 15th & Race, but that building was demolished in 1990 when 15th Street was widened to expand the I-676 offramp. You can still see a tiny bit of the demolished building on the eastern face of the building.
Last week, the City issued a zoning permit that indicates that the building will soon enter into a new stage in its life. Soon, all those offices will be converted into apartments, with a total of 170 in the plans. The first floor will remain in use as office space of some kind, though there will surely be some common space and perhaps some amenities on the first floor as well. Amazingly, it appears that this building is not on the Historic Register, which means that the developers will be free to punch new windows in the walls, reopen old window openings, and alter the facade as they see fit. We don’t imagine they will do much to change the facade, however, as the building looks pretty great as it is and we can’t see how any benefit of altering the facade would exceed the cost.
As a location for housing, this corner has some plusses and minuses. On the one hand, it’s right in the middle of downtown, with City Hall just a couple blocks to the south and Logan Square Park three blocks to the west. On the other hand, proximity to City Hall and a shuttered hospital isn’t a great selling point, nor is being adjacent to 15th Street, which essentially serves (as planned) as an extended highway offramp over here. Views of I-676 to the north ain’t great either.
That being said, the residential conversion of the former One Franklin Plaza at 16th & Race into the Franklin Town Residences seemed to work out pretty well, so we imagine that another residential project nearby will make sense as well. In fact, we would wager that this won’t be the last residential conversion for a building formerly associated with Hahnemann. But as we said, it will likely take a good while and some staggering legal fees before most of that real estate changes hands.