Here’s what is (probably) coming next for the Wanamaker building

The future of the Wanamaker building will be decided from New York City.

The iconic Philadelphia building will most likely — after negotiations are complete — fully belong to TF Cornerstone (TFC), a real estate company with deep roots in Manhattan.

The company has owned the 435,000-square-foot portion of the building that contains Macy’s since 2019 and purchased the debt for the struggling 954,363-square-foot office portion of the structure last year. It is currently in negotiations to purchase the whole building with Philadelphia-based Rubenstein Partners and has been consulting with city officials about the plans.

“When Macy’s closes in the spring, TFC plans to begin the transformation of the 114-year-old landmark from retail and predominantly vacant office space into a mixed-use anchor for Center City, with new entertainment and fitness outlets, shopping, office, and loft apartments all under one roof,” the company said in an unsigned statement.

While it is far too early for TF Cornerstone to share specific plans, the company has described a rough outline with city officials that could include three or four floors of offices above the building’s retail space.

The rest of the upper floors would be converted to apartment uses, while the space now occupied by Macy’s would be divided to allow multiple smaller format stores. The company has discussed the idea of having the iconic Wanamaker Grand Court Organ, the largest functioning instrument of its kind in the world, play not just on holidays but at a certain time every day.

“It’s very capital intensive and very complicated to break that space up, but that ultimately is what’s going to be done,” said Douglas J. Green, principal of MSC, a retail broker. “There’s really no demand for a single tenant to take every last square foot that Macy’s occupied.”

At a news conference in City Hall Thursday evening, commerce director Alba Martinez said that she had spoken with Jake Elghanayan, one of TF Cornerstone’s principals, and that he assured her that they would respect the historic legacy of the building.

“The Wanamaker building is one of Philadelphia’s crown jewels, an architectural and cultural landmark that holds enormous potential for the future,” Martinez said. “We envision a mix of possible uses, retail, dining, residential, cultural attractions and more.”

TF Cornerstone has undertaken multiple conversions of historic buildings in New York into apartment buildings and noted that in its history the company has “created over 4,300 apartment units by converting buildings from other uses in New York City.”

Last year, the company announced a $1 billion collaboration with Dune Real Estate Partners aimed at converting struggling office structures into residential uses in Washington, D.C., Boston, Philadelphia, and Los Angeles. Their plans for the Wanamaker Building are an early entry in that effort.

“By focusing on the adaptive reuse of historic structures, TFC contributes to urban revitalization and sustainable development,” the company said in a statement.

TF Cornerstone dates to 2008, and the breakup of one of New York City’s big family real estate businesses.

After the family patriarch moved to New York from Iran in the 1940s, his three sons Henry, Tom, and Fred Elghanayan built on the family real estate holdings on Second and Third Avenues in Manhattan. They bought historic structures and developed new buildings across the island as the Rockrose Development Corp.

Then in 2008, Henry Elghanayan informed his brothers that he wanted to divvy up the family’s $3 billion holdings. He held on to the original business, Rockrose, and Tom and Fred formed a new real estate empire with their chunk of the empire: TF Cornerstone.

“Cornerstone to us sounded like the business that we’re in: solid, we build buildings,” K. Tom Elghanayan told the New York Times in 2009. “The TF is Tom and Fred. Actually, my name is Kamran and so we were going to call it KF Cornerstone, but then that would be KFC, which is Kentucky Fried Chicken.”

TF Cornerstone has retained the brothers’ power and reputation in New York since the breakup. The company was a key partner in the bid to bring Amazon to Long Island City before the deal was killed by political and labor backlash. TF Cornerstone built 1,400 apartments near the land instead.

The company emphasizes its long history, dating to the Rockrose days, of working with and retrofitting historically protected buildings.

In a statement, TF Cornerstone noted their Carnegie Hall Tower includes expansion space for the famed concert hall in its base, the former FBI headquarters on East 69th Street that is now a 313-unit building, and a former federal archives building that has become 479 residential lofts. The heavily regulated Gallup Building that the company owns in Washington, D.C., has been renovated for retail and office use.

The Wanamaker building is TF Cornerstone’s first project in Philadelphia.

TF Cornerstone bought the part of the Wanamaker building that contains Macy’s in 2019 for $40 million, and Jake Elghanayan (Tom’s son) issued a statement at the time particularly praising the Grand Court.

An opportunity to obtain the rest of the building followed the calamitous events of 2020. In the aftermath of the COVID-19 pandemic, the rest of the Wanamaker building, owned by Rubenstein Partners, could not retain old office tenants or attract new ones. As vacancy climbed — it stood at almost 77% last March — that part of the building’s appraised value fell from $185.7 million in January 2018 to $52.4 million in November 2023, according to CoStar Group.

TF Cornerstone bought the debt for the struggling office portion of the building last autumn.

“Cornerstone bought the CMBS debt on the office portion so it could legally control the Wanamaker’s fate,” said Brenda Nguyen, associate director of market analytics for CoStar. “This positions the NYC-based developer to take possession through a forced foreclosure” as a lender would.

Although TF Cornerstone doesn’t officially have title of the building yet, in all likelihood it soon will.

Councilmember Mark Squilla said the company reached out to him in November. Both the Council member and members of Mayor Cherelle L. Parker’s administration expressed enthusiasm about TF Cornerstone’s plans and their outreach to local officials.

“They wanted to know what was important to the city,” Squilla said. “They wanted to reassure [us] that they have the city’s best interests at heart.”

The Wanamaker building already enjoys the most flexible zoning in Philadelphia’s code, so it will not need legislative or regulatory relief to add apartments to the building.

A 10-year property tax abatement is also available to those who renovate buildings, even though a similar incentive for new construction was sharply curtailed in 2019. Squilla said the company has not asked for further incentives, but he is happy to look at ways to help.

In a statement Thursday, the company said it would begin renovating the building in the spring after Macy’s closes.

“While the closure of the venerable Macy’s department store is significant, it presents a unique opportunity to reimagine the Wanamaker building in a way that respects its historic integrity,” the company said in a statement. “When Macy’s closes in the spring, TFC plans to begin the transformation of the 114-year-old landmark from retail and predominantly vacant office space into a mixed-use anchor for Center City.”

Editor’s note: This article has been updated to correct the square footage and most recent vacancy rate of the Wanamaker building’s office portion.

Staff writer Sean Collins Walsh contributed to this article.