Penn to begin $35 million redevelopment of campus McDonald's, creating shared-use office building

Penn will close the McDonald’s located on 40th and Walnut streets by January to redevelop the property into a 50,000-square-foot office and retail building. 

The University entered an agreement to purchase the store in December 2021, after years of Penn real estate leadership expressing interest in the property. In place of the restaurant, which has been a community and campus staple for over 50 years, Penn will construct a mixed-use, six-story office building. Executive Director of Real Estate Ed Datz told The Daily Pennsylvanian that McDonald’s will be relocated into the new building. 

“We’re committed to seeing McDonald’s return, and they’re equally excited to let that happen, both the operator and corporate McDonald’s to be able to renew their retail presence there,” Datz said.

Datz said that the new building is estimated to cost between $35 million and $40 million, pending approval from the Board of Trustees. Construction is expected to begin by late December or early January 2023 — “immediately after” the standing McDonald’s closes — and is planned to be completed in fall 2024. 

The relocated McDonald’s will be on the new development’s first floor and take up 7,500 square feet, which is larger than the restaurant’s current structural footprint. The adjacent structure at 125 S 40th St. that is home to Terrakawa Rawen, Dunkin', Yiro Yiro, and Zesto Pizza and Grill will not be impacted, Datz said.  

The building will be developed by Mosaic Development Partners, a minority- and women-owned real estate firm that describes itself as intending to “revitalize neighborhoods and marginalized communities.” Datz said that the main reason the University sought to buy the current McDonald’s was because of its age and location on a “strategic corner” of University City.

“If you think about it, with [Gutmann College House] and the retail complex across the street and Acme, we do think that the 40th Street corridor is a very important corridor for University students and the community,” Datz said. “It’s really where all things intersect, so yes, we’d like to continue to see that continue to improve and enhance.”

While specific tenants are not finalized, the new building is expected to focus on student services. Datz said that Facilities & Real Estates Services is working with the Division of the Vice Provost for University Life, which is “projected” to be a tenant. He said that final tenancy decisions will be made after the building design goes through one more review process to complete the footprint of each floor.

The McDonald's located at 3935 Walnut St. has sparked controversy among administrators and community members over the years, with some Penn community members saying that the building's presence attracts crime. In a 2011 interview with the DP, former Vice President for Public Safety and Penn Police Department Superintendent Maureen Rush said the McDonald's presence is a "safety concern" due its ability to generate "unruly crowds."

On Feb. 23 — one month after a grease fire erupted in its rear kitchen — the city issued the McDonald's four violations of hood ventilation and cleaning codes. In March, multiple gunshots were fired outside of the building. A window of the McDonald’s was shattered in the encounter, and several shell casings were found on the street. 

The McDonald's opened around the fall of 1970 and was last sold in 1992 for $570,000. The Philadelphia Office of Property Assessment most recently assessed the property's 2023 market value to be $915,900. 

Some comments on a 2011 article published in West Philly Local also criticized Penn officials for characterizing the McDonald's as a "scourge" on campus and condemned the University's redevelopment of West Philadelphia neighborhoods as gentrification, reflecting broader concerns about the ongoing rise in market values in University City and its impact on the area's affordability. 

Other community members have said they believe concerns about McDonald's are connected to anti-Black racism. In a 2011 interview with the DP, West Philadelphia resident Larry Falcon said safety concerns are a "veil" for racism targeting young Black West Philadelphia residents.

In the past, Penn officials have expressed interest in purchasing and redeveloping the McDonald's building. In 2011, then-Director of Real Estate Paul Sehnert told the DP that he wanted to transform the building into a residential space with restaurants and retail.

The McDonald's had previously planned to relocate in 2001 to 43rd and Market streets, but construction was canceled following petitions by Falcon and the activist group he founded, Neighbors Against McPenntrification, who were concerned about how construction disturbed their neighborhoods.

“We’re very excited about this project,” Datz said. “We’re hopeful that everybody appreciates the renewal of the McDonald’s and a building that contributes to the overall environment there.”