OFFICE MARKET Suburban Philadelphia - 2019 SPRING REPORT - Colliers International
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2019 SPRING REPORT Suburban Philadelphia OFFICE MARKET
Comprised of Revenue Managing
17,000+
professionals
$3.3B (US$)
2B
(square feet)
Established in Lease/sale transactions Transaction value
68
countries
69,000 $127B (US$)
All statistics are for 2017, are in U.S. dollars and include affiliates.
Colliers International Suburban Philadelphia Division:
COLLIERS INTERNATIONAL
161 Washington
161 Washington Street, Suite 1090
Conshohocken, PA 19428
+1 610 684 1850
The foregoing information was furnished to us by sources which we deem to be reliable, but no warranty or representation is made as to the
accuracy thereof. Subject to correction of errors, omissions, change of price, prior sale or withdrawal from market without notice.
TOTAL INVENTORY: 58,951,570 sf
BALA CYNWYD
2,974,026 sf
CONSHOHOCKEN
3,452,370 sf "
!
#
476
KING OF PRUSSIA/WAYNE
12,021,040 sf
(
/
422
MAIN LINE/RADNOR
3,065,483 sf (
/1
(
/
202 309
DELAWARE COUNTY
23
5,410,236 sf "
!
#276
611
MALVERN/EXTON/WEST CHESTER
9,728,291 sf
"
!
#76 LOWER/CENTRAL BUCKS
(
/
322
(
/
30
"
!
#95 5,790,383 sf
252 HORSHAM
3
5,457,376 sf
"
!
#
76
FORT WASHINGTON/ROUTE 309
"
!
# 3,769,851 sf
(
/1 476
PLYMOUTH MEETING/BLUE BELL
(
/
202
(
/ 322
7,294,548 sf
"
!
#95
VACANCY RATES
CONSHOHOCKEN Q1 18
5.8% Q1 19
MALVERN/EXTON/WEST CHESTER Esri, HERE, DeLorme, MapmyInd
9.1%
BALA CYNWYD
9.5%
DELAWARE COUNTY
9.0%
MAIN LINE/RADNOR
8.1%
KING OF PRUSSIA/WAYNE
12.4%
FORT WASHINGTON/ROUTE 309
15.8%
PLYMOUTH MEETING/BLUE BELL
17.1%
HORSHAM
18.1%
LOWER/CENTRAL BUCKS
21.9%
SUBURBAN PHILADELPHIA OVERVIEW
Summary Investment Sales
The Philadelphia suburban market had a choppy second half of Suburban Pennsylvania office sales volume in 2018 surged 31% over the
2018 and first quarter of 2019. The tug-of-war for tenants has 2017 mark. Sales totaled $1.37 billion in the submarket. Forty-one
resulted in constant gains and losses between submarkets like percent of the dollar volume was completed in the very big fourth
Malvern-Exton-West Chester and King of Prussia/Wayne as quarter. Activity carried over into the 1st quarter of 2019. Reflecting
well as Horsham and Fort Washington. Most of the largest lease better quality property sales, the average price per square foot jumped by
transactions at the end of 2018 were renewals or build-to-suits $20 in 2018. The average was boosted by four sales in the fourth quarter
at prices over $300 per square foot.
and did not impact occupancy. The largest leases during the
first quarter mainly involved tenants moving and shrinking their Liberty Property Trust continued its announced conversion to an industri-
occupancy. al REIT with the disposition of 23 office buildings in multiple portfolios.
Liberty sold almost $370 million dollars of Suburban Pennsylvania office
The major build-to-suits announced in 2018 for Amerisource- properties in 2018. National and local private investors continued their
Bergen and Amerihealth Caritas are under construction. The acquisition dominance. REITS, advisors, and users combined totaled 21%
the first ground-up speculative project of the decade at of total acquisitions.
CrossPoint II was gearing up.
Weighted average Class A cap rates fell to new lows, reversing the
Asking rents continued to increase for both Class A and B 2015-2017 trend of rising caps. Again, the higher quality properties sold
space. Some submarkets such as Conshohocken had significant in 2018 created the drop. Also, the prospect of higher market rents
spikes as new owners have pushed up rents. encouraged buyers to bid up the price of suburban office buildings.
Vacancy Rate Vacancy Rate Vacancy Rate
13.1% 11.3% 14.6%
TOTAL MARKET
CLASS A
CLASS B
Inventory Inventory Inventory
58,963,604 sf 25,604,380 sf 33,359,224 sf
Absorption Q1 19 Absorption Q1 19 Absorption Q1 19
-118,464 -134,426 27,996
Asking Rents (Average/SF +electric)
$24.55 $28.17 $22.47
TOTAL MARKET CLASS A CLASS B
Year-Over-Year
Rental Rate Trend
CLASS A CLASS B
PG. 4 | SUBURBAN OFFICE MARKET | 2019 SPRING REPORT
BALA CYNWYD
News & Notable Transactions
> AXA Advisors is relocating from 40 Monument Road to One Belmont
Avenue. The financial advisory firm is expected to take two full floors
at close to 40,000 square feet, but will be vacating over 51,000 square
feet.
> Following the final approval of the planned apartment and retail
redevelopment of 9 President Boulevard, the sale from Brandwyine
Realty Trust to Westrum Development was finalized. The existing,
vacant office building will be demolished for the new development
> Lower Merion Township is considering an ordinance to slow down
the residential growth along the City Avenue District Regional Center
Area. The goal is to limit multi-family construction, but encourage
additional commercial development. A similar ammendment is
proposed for the Rock Hill Road District that requires any new building
to have ground floor commercial/nonresidential uses.
1 Belmont Avenue, Bala Cynwyd
> Renovations have been completed at 15 Kings Grant Drive. The
57,000-square-foot building was rehabbed to accomodate Cardone
Industries.
Inventory
Total Market Class A Class B
2,974,026 sf 1,059,573 sf 1,914,453 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$30.65 $31.50- $25.00-
$33.50 $27.50
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
20%
18% Overall
16% 9.5%
14%
15 Kings Grant Drive, Bala Cynwyd 12%
10% Class A
8% 11.0%
6%
4%
Class B
2%
0% 8.6%
401 City Avenue, Bala Cynwyd 13 14 15 16 17 18 19 Q1
SUBURBAN OFFICE MARKET | 2018 FALL-WINTER REPORT
CONSHOHOCKEN
News & Notable Transactions
> American Real Estate Partners, the new owners of Eight Tower > MLP Ventures is in the planning and approval process for a
Bridge, will be updating the exterior and amenities withing 270-unit apartment complex at 601 Washington Street. The
the building. They will also be rebranding the tallest suburban property is currently an industrial site with older structures.
Philadelphia office building as 161 Washington.
> Construction is underway at Fayette Street and 1st Avenue to make
way for the new Sora West project. AmerisourceBergen will be
leasing the entire 12-story, 427,000-square-foot office building. A
hotel, parking garage, a restaurant in the renovated firehouse and
public space will also be part of the complex.
> Morgan Properties purchased the office portion of the Millennium
complex. The three-building complex sold for $52.0 milllion or $264
per square foot. AmerisourceBergen will be vacating the entirety of
the 70,000 square foot Millenium III once SORA West is complete.
> Alliance HSP acquired the Spring Mill Corporate Center for $81.0
million or $131 per square foot. Alliance plans to continue in-progress
renovations to the complex. 161 Washington, Conshohocken
Inventory
Total Market Class A Class B
3,452,370 sf 2,205,294 sf 1,247,076 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$35.87 $36.00- $27.00-
$42.50 $32.00
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
20%
18% Overall
16% 5.8%
14%
SORA West, Conshohocken 12%
10% Class A
8% 8.1%
6%
4%
2% Class B
0% 1.7%
227 Washington Street, Conshohocken 13 14 15 16 17 18 19 Q1
PG. 6 | SUBURBAN OFFICE MARKET | 2019 SPRING REPORT
DELAWARE COUNTY
News & Notable Transactions
> A court settlement was reached to allow the proposed > Anchor Health pruchased Crozer Keystone’s Office and Surgery
redevelopment of the Drexeline Shopping Center to move forward. Center at 2010-2050 West Chester Pike in Havertown for $17.0
Development plans are being finalized for the rehab of the 17.5- million. The two-building, 68,737-square-foot medical office
acre site into the Drexeline Town Center, a mixed-use complex complex was sold by DWS (formerly RREEF).
with current tenants ShopRite and Crozer-Keystone Medical
Center along with a new 140-unit apartment building, office
building and self-storage units.
> 50 at Granite Run, the apartment component of BET Investment’s
redevlopment of the Granite Run Mall, is nearing completion.
> AmeriHealth Caritas will be expanding significantly in Delaware
County. The managed-care provider signed a 378,000-square-foot
build-to-suit with Equus at Ellis Preserve, and has renewed and
expanded at Airport Business Center in Essington, where Keystone
Property Group will renovate the complex for Amerihealth staring
in 2021.
> Pilot Freight leased 60,000 square feet at 2 Braxton Way in Glen
Mills. The logistics company’s current headquarters is in Lima, AmeriHealth Caritas HQ, Ellis Preserve, Newtown Square
Delaware County.
Inventory
Total Market Class A Class B
5,410,236 sf 2,834,535 sf 2,575,701 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$24.96 $25.50- $22.50-
$27.50 $23.50
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
20%
18% Overall
16% 9.0%
14%
200 Stevens Drive, Lester 12%
10% Class A
8% 5.4%
6%
4%
2% Class B
0% 13.0%
2 Braxton Way, Glen Mills 13 14 15 16 17 18 19 Q1
SUBURBAN OFFICE MARKET | 2018 FALL-WINTER REPORT
FORT WASHINGTON/ROUTE 309
News & Notaable Transactions
> BET is under construction on the Promenade at Upper Dublin. > Gwynedd Mercy University purchased 154 acres and a
Expected to be completed in mid-2020, the project will include 155,000 square foot building on Sumneytown Pike in
128,000 square feet of retail space anchored by a grocery store, as Spring House from Merck to expand its campus footprint to
well as a 402-unit apartment building. 314 acres in total. GMU paid $12,165,750 or approximately
$78.50/SF.
> Thomas Jefferson University announced that it will be opening
The Jefferson Institute for Bioprocessing at the Spring House
Innovation Park in 2019. The 25,000-square-foot facility will be the
first education and training center for biologics processing in North
America.
> Toll Brothers will be leasing 167,300 square feet at 1100 Virginia
Drive, moving from Horsham. However, Ocwen has announced
that it will be shutting its loan-servicing operation at the Virginia
Drive building starting in the second quarter.
> Internet Archive, a digital library company, purchased the former
Allergan/ Vitae building at 502 W. Office Center Drive. The
California-based non-profit paid $82.45 per square foot for the 1201 Sumneytown Pike
47,000-square-foot building.
Inventory
Total Market Class A Class B
3,769,851 sf 1,057,548 sf 2,712,393 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$22.81 $25.75- $21.50-
$26.50 $23.50
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
30%
Overall
25%
15.8%
20%
1100 Virginia Drive, Ft. Washington
15% Class A
10%
16.6%
5%
Class B
0% 15.4%
Spring House Inovation Park
13 14 15 16 17 18 19 Q1
PG. 8 | SUBURBAN OFFICE MARKET | 2019 SPRING REPORT
HORSHAM
News & Notable Transactions
> BET Investments demolished the long-vacant, 102,000-square-
foot office building at 200 Witmer Road in order to commence the
construction of a four-story, 322,280 square foot apartment complex.
> Toll Brothers will be leaving the 203,000-square-foot building at
250 Gibraltar Road and moving to Fort Washington. This building
was taken back by its lender at sheriff sale in early 2018.
> As it relocates operations to New Jersey, TEVA will be closing the
office at 425 Privet Road in the fourth quarter. TEVA has leased
the 120,290-square-foot building for almost fifteen years.
> BET Investments sold Fairway Plaza in Huntingdon Valley to
Golden Sense. The 71,807-square-foot building sold for $4,825,000.
> The 209-acre Limekiln Golf Club was sold to a joint venture
between Matrix Companies and Envision Land Use. The developers
are seeking approvals for a 496-unit active adult community.
250 Gibraltar Road
Inventory
Total Market Class A Class B
5,457,376 sf 1,749,169 sf 3,708,207 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$20.83 $25.50- $20.00-
$26.50 $24.75
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
30%
Overall
25% 18.1%
20%
425 Privet Road, Horsham
15% Class A
6.5%
10%
5%
Class B
0% 23.6%
2600 Philmont Avenue, Huntingdon Valley 13 14 15 16 17 18 19 Q1
SUBURBAN OFFICE MARKET | 2018 FALL-WINTER REPORT
KING OF PRUSSIA/WAYNE
News & Notable Transactions
> Children’s Hospital of Philadelphia has announced plans to > Renovations have been completed in the medical building
construct a major expansion of its Main Campus in King of Prussia, located at 170 Henderson Road, and a national dialysis
which will be anchored by a 250,000 square-foot inpatient hospital. tenant has leased the entire first floor.
> Equus Capital Partners has commenced site work at CrossPoint II,
a 240,000-square-foot spec building at 675 E. Swedesford Road.
The new project is one of the only buildings in the region to feature
mass timber construction.
> Admiral Capital Group acquired Valley Forge Park Place from
Keystone Property Group for $27.65 million. The two buildings
totaling 160,044 square feet, will be Admiral’s first suburban
Philadelphia assets.
> Keystone also sold 1000 Madison Avenue to Hudson Equities
Management for $17.5 million or $170.08 per square foot.
> Quench USA leased 47,000 square feet at 630 Allendale Road 675 E. Swedesford Road, Wayne
for its new headquarters, expanding from a flex building on Fifth
Avenue in King of Prussia.
Inventory
Total Market Class A Class B
12,021,040 sf 4,830,732 sf 7,190,308 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$26.77 $32.50- $23.50-
$37.00 $27.50
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
30%
Overall
25% 12.4%
20%
1018 W. 9th Avenue, King of Prussia
Class A
15%
11.5%
10%
5%
Class B
0% 12.9%
1000 Madison Avenue, Norristown 13 14 15 16 17 18 19 Q1
PG. 10 | SUBURBAN OFFICE MARKET | 2019 SPRING REPORTLOWER/CENTRAL BUCKS COUNTY
News & Notable Transactions
> Stage one of the “missing link” interchange between Interstate
95 and the Pennsylvania Turnpike (I-276) was completed in late
2018. The $500 million project to revamp the 4.4 mile stretch of
I-295 between the Yardley-Newtown exit and replacement of the
Scudders Falls Bridge is under construction with a scheduled 2021
completion date.
> The 44,000-square-foot 650 Louis Drive building in Warminster
sold to Sant Properties, along with the flex building at 1 Ivybrook
Drive. Sant then flipped the building to The Leser Group for $4.75
million.
> An affiliate of The Leser Group also purchased 1 Allied Drive in
Neshaminy Interplex for $154 per square foot. The 40,500-square-foot
building is occupied by NCB.
650 Louis Drive, Warminster
> Ohio-based Viking Partners acquired the Bucks Town Corporate
Campus in Langhorne for $10.5 million or $74.22 per square foot. The
five-building office and flex complex was sold by the lender, U.S. Bank.
Inventory
Total Market Class A Class B
5,790,383 sf 3,053,656 sf 2,736,727 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$20.89 $25.50- $20.50-
$30.50 $24.00
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
30%
Overall
25% 21.9%
20%
1 Allied Drive, Trevose
Class A
18.4%
15%
10%
5% Class B
0%
25.9%
800 Town Center Drive, Langhorne
13 14 15 16 17 18 19 Q1
SUBURBAN OFFICE MARKET | 2018 FALL-WINTER REPORTMALVERN/EXTON/WEST CHESTER
News & Notable Transactions
> As part of its transition of operations to Northern New Jersey, Teva
USA will be vacating close to 250,000 square feet in Quarry Ridge and
Westbrook Corporate Center.
> Ricoh leased 45,000 square feet at 300 Eagleview Boulevard in Exton.
The company is vacating 106,855 square feet in Great Valley Corporate
Center.
> J&J spinoff Lifescan, leased 36,156 square feet at 20 Valley Stream
Parkway in Great Valley. The company will be relocating operations from
Chesterbrook Corporate Center
> Liberty Property Trust sold three Vanguard-leased buildings in Great
Valley Corporate Center totaling 569,000 square feet to Arch Street
Capital advisors for $173.1 million. Liberty also sold a four-building office
and flex portfolio on Chesterfield Pakway to Exeter Property Group for
$44.8 million or $142 per square foot.
> A syndicated investment group from Northern New Jersey acquired the 300 Eagleview Boulevard, Exton
91,190-square-foot Malvern Executive Center for $15.5 million.
Inventory
Total Market Class A Class B
9,728,291 sf 4,110,372 sf 5,617,919 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$24.22 $26.50- $21.50-
$29.50 $23.50
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
30% Overall
25%
9.1%
20%
1001 N. Cedar Hollow Road, Malvern
Class A
15%
12.0%
10%
5%
Class B
0%
13 14 15 16 17 18 19 Q1
7.1%
41 Moores Road, Westbrook CC, Malvern
PG. 12 | SUBURBAN OFFICE MARKET | 2019 SPRING REPORTPLYMOUTH MEETING/BLUE BELL
News & Notable Transactions
> 980 Jolly Road (980 at Blue Bell) is currently undergoing a
modernization headed by Kairos Real Estate Partners via a $4-$6
million renovation project. The connected buildings, formerly
occupied by Aetna, are receiving new facades, building systems,
fitness and conference centers. Brightview Landscaping leased the
top two floors.
> The office and industrial buildings at 850 Jolly Road have been
demolished, and construction is underway on a 87,000-square-foot,
270-unit corporate rental complex. Developer Korman Communities
purchased the 11.6 acre property in 2017.
> TG Realty purchased a four-building complex at 160-190 W.
Germantown Pike from Franklin Realty Development. The medical/
professional buildings sold for $12.8 million or $173.15 per square foot.
> CRF Bracket leased 105,638 square feet at 785 Arbor Way in Blue
Bell. The company will be consolidating from Chesterbrook and 980 Jolly Road, Blue Bell
Northbrook Corporate Centers in Wayne and Trevose, respectively.
Inventory
Total Market Class A Class B
7,294,548 sf 2,592,986 sf 4,701,562 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$25.42 $26.00- $18.50-
$36.00 $24.00
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
30%
Overall
25% 17.1%
20%
785 Arbor Way, Blue Bell
15% Class A
11.8%
10%
5%
Class B
0% 20.1%
190 W. Germantown Pike 13 14 15 16 17 18 19 Q1
SUBURBAN OFFICE MARKET | 2018 FALL-WINTER REPORTMAIN LINE/RADNOR
News & Notable Transactions
> Construction is underway on Penn Medicine’s new complex on
King of Prussia Road. The 250,000-square-foot outpatient facility
will be part of a larger development with a medical office building,
hotel and 2 parking garages.
> Brandywine Realty Trust will be renovating Radnor Financial
Center. The $14 million upgrade will include new common areas, a
redesigned lobby, new new cafe and conference rooms.
> Brandywine Realty Trust recently renovated 426 West Lancaster
Avenue in Devon. The 56,000-square-foot building received a
new glass atrium, updated lobby, restrooms, and elevators, and a
enhanced outdoor space.
> Dranoff Property’s One Ardmore Place is nearing completion.
The 110-unit luxury apartment complex is the first of multiple
apartment and mixed-use developments in the pipeline for Ardmore. 150 Radnor Chester Road (Radnor Financial Center)
Inventory
Total Market Class A Class B
3,065,483 sf 2,110,605 sf 954,878 sf
Average Asking Rent Range (+electric) Year-Over-Year Rental Rate Trend
$33.08 $34.00- $25.00-
$42.00 $29.00
TOTAL
MARKET CLASS A CLASS B CLASS A CLASS B
Historical Vacancy Rate
20%
Overall
18%
16% 8.1%
14%
426 West Lancaster Avenue, Devon 12%
10% Class A
8% 7.4%
6%
4%
2% Class B
0% 9.6%
Penn Medicine Development Rendering, Radnor 13 14 15 16 17 18 19 Q1
PG. 14 | SUBURBAN OFFICE MARKET | 2019 SPRING REPORTContact Us
John Susanin Ina Sargen Kyle Hilbert
Senior Vice President - Office Leasing Senior Vice President - Office Leasing Vice President - Office Leasing
john.susanin@colliers.com ina.sargen@colliers.com kyle.hilbert@colliers.com
+1 610 684 1860 +1 610 557 0182 +1 610 615 1836
COLLIERS INTERNATIONAL
161 Washington
161 Washington Street, Suite 1090
Conshohocken, PA 19428
+1 610 684 1850
The foregoing information was furnished to us by sources which we deem to be reliable, but no warranty
or representation is made as to the accuracy thereof. Subject to correction of errors, omissions, change of
price, prior sale or withdrawal from market without notice.You can also read
