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Commercial real estate in King of Prussia finished 2017 on a solid note. With an 8-point decrease in vacancy rates since Q4 2012, Class A office space remains strong at 11.5% with average leasing rates at $27.64 PSF.
Vacancy rates for Class B and C office space also dropped over the same 5-year period from 25.8% to 22.3% and 21.8% to 11.3%, respectively. When all three classes are combined, overall office vacancy rates have dropped almost 7 points to 14.8% while the average lease rates increased to $24.64 PSF. The average lease rate for Class B space grew to $23.30 PSF while Class C lease rates stayed the same at $15.08 PSF from Q3 2017. Class A, B and C absorption has filled 425,000 SF of office space, which at the industrial average of 250 SF/employee, means approximately 1,700 new employees have been added since 2012.
King of Prussia's commercial market improvements are more impressive when comparing to the metropolitan area. Our vacancy rate is one point lower than the Downtown Philadelphia Market and more than four points lower than the Suburban Philadelphia Market as reported by CBRE's Q4 2017 Marketview Report.
The demand for industrial and flex space also improved over the same five-year period. The vacancy rate for industrial properties decreased by more than 4 points to 1% from this time five years ago but the average lease rate also dropped to $6.42/nnn. The vacancy rate for flex space decreased by more than 2 points to 3.8% with an increase of $.40 PSF in the average lease rate to $7.73/nnn. Based on the combined inventory of both flex and industrial, with 216 properties the vacancy rate dropped 3.2 points over the five year period to 2.3%.
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King of Prussia Mall Ahead of the Curve
King of Prussia Mall is considering residential and/or office space to fill recent vacancy
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Following the closure of JC Penney at the King of Prussia Mall this past year, Simon Property Group is considering new opportunities for the vacant space. Mixed-use development, that could include residential and office space, is on the horizon for JC Penney's 17-acres site and parking lot.The redevelopment effort would be a transformation that Chief Executive Officer David Simon has likened to a suburban version of Hudson Yards, the massive complex of offices, shops and residences on Manhattan's western edge.
"I don't think people appreciate how dynamic these properties are and how they evolve over a long period of time," Rick Sokolov, Simon's president and chief operating officer, said in an interview at King of Prussia. "We're very excited about the opportunities to implement and add mixed-use components to King of Prussia."
The new direction has the potential to raise the property's value from $2 billion to upwards of $3 billion dollars.
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Business in the Spotlight:
King of Prussia District is excited to welcome a new headquarters to KOP
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The American College of Financial Services is moving its headquarters to King of Prussia in 2019, following the purchase of 630 Allendale Road in Q4 2017. The addition of this prominent educational institution to Upper Merion Township is testament to the variety and quality of resources that benefit the business and residential communities. Access to a skilled workforce, excellent business relationships and transportation amenities are just some of King of Prussia's assets that foster a collaborative environment for students and faculty.
The American College was founded in 1927 and is currently located in Bryn Mawr.
Having outgrown the existing facility, a larger building was needed to continue the advancement of The American College and its educational programs. The 156,000 SF building at 630 Allendale Road will provide ample space for future development and will accommodate
the staff of over 200, in addition to the student body. The American College's President and CEO Robert Johnson stated in the public announcement that "this move represents a renewed investment in the mission of the institution, which is to raise the level of professionalism in financial services by promoting education, ethical practices and the pursuit of new knowledge for the benefit of society."
The American College of Financial Services is the nation's largest non-profit educational institution devoted to financial services and offers six different degrees and designations students can pursue. The College has educated one in five financial advisors in the country and the larger space will help advance the evolution of this academic and professional field and enhance the dynamic King of Prussia community.
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In the News
Main Line Health Eyes King of Prussia Expansion
Philadelphia Business Journal
Main Line Health is in the early stages of planning to expand its suburban presence with the construction of a major new building at the Village at Valley Forge.
Read More...
Boyd Gaming of Las Vegas to Acquire Valley Forge Casino Resort
The Philadelphia Inquirer
Boyd Gaming Corp. has agreed to acquire the Valley Forge Casino Resort in King of Prussia for $280.5 million, the Las Vegas-based gaming company said in a release on Wednesday.
Read More...
King of Prussia Mall to Add Apartments, Office to Retail Property
Philadelphia Business Journal
Simon Property Group is looking to transform the vacant J.C. Penney property at the King of Prussia Mall into a mixed-use project that would involve apartments, a hotel and "outdoor work-play space."
Read More...
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Commercial Sales & Leasing Activity
SALES
PRUSSIA HOTELS LLC
GPX REAL ESTATE PARTNERS
$5.42M | 48,920 SF
JSF HENDERSON ROAD LLC
$1.5M | 3.49 ACRES
AMERICAN COLLEGE OF
FINANCIAL SERVICES
$17.5M | 150,000 SF
LEASING
250 KING MANOR DRIVE
100,000 SF
211 S GULPH ROAD
62,000 SF
305 E CHURCH ROAD
49,100 SF
2200 RENAISSANCE BOULEVARD
10,610 SF
660 AMERICAN AVENUE
10,000 SF
555 S HENDERSON ROAD
8,500 SF
1150 FIRST AVENUE
8,144 SF
1150 FIRST AVENUE
7,076 SF
900 E 8TH AVENUE
5,423 SF
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1006 W 9TH AVENUE
5,390 SF
310-314 S HENDERSON RD
4,793 SF
901 E 8TH AVENUE
4,522 SF
KING OF PRUSSIA TOWN CENTER
MIDICI THE NEOPOLITAN PIZZA CO.
KING OF PRUSSIA TOWN CENTER
KING OF PRUSSIA TOWN CENTER
NATUZZI ITALIA
KING OF PRUSSIA MALL
5,966 SF
PIZATA
KING OF PRUSSIA MALL
1,831 SF
BUENO ONDA
KING OF PRUSSIA MALL
1,153 SF
ALEX AND ANI
KING OF PRUSSIA MALL
904 SF
Not a complete listing.
Retail leases submitted to KOP-BID for Q4 2017, as of 1.9.18.
All other sales and leasing info from CoStar.
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King of Prussia District (KOP-BID) is a 501(c)(3) not-for-profit, special
services organization. KOP-BID engages public and private partners to
collaboratively improve the economic environment in King of Prussia
by making it more vibrant, attractive and prosperous.
Learn more at visitKOP.com
DISCLAIMER: All information obtained using CoStar Analytics and field checked for accuracy by KOP-BID. Vacancy rates are calculated using existing, non-owner occupied commercial buildings in Upper Merion Township only, over 10,000 SF, Class A, B, and C plus retail, industrial and flex.
KOP-BID uses "Direct % Vacant Available" in its vacancy rate reporting.
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234 Mall Boulevard, Suite 150, King of Prussia PA 19406
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© 2018 King of Prussia District. All Rights Reserved.
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