After 4 years of aborted deals, the Nelson building in Society Hill finally sells

April 15, 2021 [Philadelphia, PA] – The Nelson building, once eyed for a new high-rise condominium tower, has finally sold after four years of falling in and out of agreement with multiple prospective buyers.

Vert Properties Inc., a South Jersey real estate firm, paid $4.8 million for the 30,000-square-foot building in the Society Hill neighborhood of Philadelphia. The brick structure sits at 222-230 Walnut St. between 3rd and Dock streets and adjacent to the Ritz Five movie theater.

Efforts to get the Nelson building sold turned into a bit of a saga with a series of unrelated stumbling blocks preventing a deal from happening until now. It was under agreement a total of five times with others taking a serious look at buying it.

“One might say what was wrong, but the fact that we kept receiving interest in my mind says what was right, which is a testament to the unique quality of the asset and its irreplaceable location,” said Steve Perna of PernaFrederick Commercial Real Estate, which arranged the transaction and had the listing since early 2017.

The building was first put under agreement in April 2017. That’s when Tom Scannapieco, a local developer, was nearing completion of the construction of 500 Walnut and was on the hunt for a site for his next luxury condominium tower. Particular about where he builds what are ultra, high-end developments, Scannapieco found that the location of the Nelson building checked all of the boxes – until it didn’t.

From the time Scannapieco put the Nelson building under contract until November 2018, a few events transpired to complicate a transaction. Nelson, an architectural firm that housed its operations in the building, relocated to 100 Independence Mall West and moved out of the Walnut Street building. Then, Cohen Media Group bought Landmark Theatres, acquiring 252 screens in 27 cities including the Ritz Five that Scannapieco wanted as part of his development plans.

The hope was that the Ritz Five could be excluded from the Cohen transaction and bought separately by Scannapieco. “We were pushing for that and they said no and kept it in,” Perna said.

Scannapieco couldn’t make it work without the Ritz Five and decided to terminate the agreement. “I credit Tom,” Perna said. “He gave it all he had.”

By June 2019, Astoban Realty Group put the building under contract and considered developing a mid-rise residential building on the property. Ultimately, the Philadelphia real estate company turned its attention to acquiring the Freeman’s Auction House building at 1810 Chestnut St. in Rittenhouse Square where it’s developing a residential tower.

In August 2019, Studio Incamminati art school put the Nelson building under agreement with a plan to relocate from the Wolf building. Fundraising efforts to purchase the property fell short and the agreement terminated in January 2020. Studio Incamminati ended up moving to Bok.

In February 2020, the Chinese Education Academy of Philadelphia, a Montessori school, made a run at buying it. “They moved quickly, did their appraisal, due diligence and were 10 days away from making a second deposit in March, but then the dreaded Covid-19 hit,” Perna said. “After a few frantic days, they decided to terminate. This was most painful since it was so close.”

The sale was on schedule to close in April.

The pandemic paused efforts to sell the building. “I was feeling very frustrated for John and Gen Nelson,” Perna said about the sellers. “When we started this process, the Nelson design firm was still in there. They moved and it started to get complicated because then you have to take care of a vacant building.”

After some downtime and getting a call here and there about it, efforts to sell the building ramped up last July. In January, Vert signed an agreement to buy it. It was the deal that finally happened. The transaction closed March 21.

“There were numerous discussions and letters of interest interspersed during this entire time and we got close with a handful of them but for one reason or another, which is part and parcel of this business, didn’t come to terms,” Perna said.

Vert was drawn to the building because of its location, proximity to hotels, restaurants and other retailers. It also found the interior appealing with its high ceilings and expansive windows that provide for an abundance of natural light.

Vert operates two co-working concepts: Incutate in Sewell, New Jersey, and the Trade Lofts, which caters to trade-type businesses in Glassboro, New Jersey. Vert plans to explore putting its Incutate coworking facility in the Nelson as well as lease it out to tenants. PernaFrederick is overseeing those efforts.

“We understand this property has great development potential but we plan to lease the space through the Incutate concept for the foreseeable future,” Frank Lauletta, president of Vert, said in a statement. “However, due to the nature of the operation, we can change course rather quickly if we were afforded an opportunity we felt like we couldn’t pass up.”