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The 3rd quarter of 2017 shows that commercial office and retail leasing in King of Prussia remains strong despite an uptick in Class-A office vacancy. Some of the increase in Class-A vacancy can be attributed to a couple of large buildings being pulled offline in advance of major renovations and pending sales (255,000 SF combined).
Despite the increase in Class-A vacancy, reported lease rates continue to rise significantly from prior years with the average now at $28.73/SF.
Even better information to bolster the outlook is the dramatic drop in Class-B and C office space. When all three classes are combined, overall office vacancy rates have dropped 1.5 points to 15.0% from this time last year while the average lease rates increased to $25.29/SF. Class-B office appears to be in demand as the vacancy rate has dropped from 23.7% to 18.4% year-over-year. Class-C office also appears to be in demand as the vacancy rate dropped from 21.5% to 12.3% during the past year. The average lease rate for Class-B space increased to $21.68/SF while Class-C lease rates dipped to $15.08/SF.
In the industrial and flex space market, the vacancy rate for industrial properties decreased by more than 1 point to 2.4% from this time last year while the average lease rate increased to $6.71NNN. The vacancy rate for flex space increased to 3.8% with a drop in average lease rates to $8.94NNN. Based on the combined inventory of both flex and industrial, with over 350 properties, the vacancy rate remained the same at 3% from this time last year with a slight decrease in the average lease rate to $7.16NNN.
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King of Prussia Rail's Economic Impact
SEPTA releases Draft Environmental Impact Study
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The Federal Transit Administration (FTA) released SEPTA's Draft Environmental Impact Statement (DEIS) for the proposed King of Prussia Rail on October 13. The DEIS includes plans for the Locally Preferred Alternative (LPA) (the selected route for the extension) as well as a variety of economic impacts that were documented in an earlier report by the Economy League of Greater Philadelphia and Econsult Solutions.
Here are some impressive numbers from the Executive Summary, which can be found, along with the complete DEIS and KOP Rail Economic Impact Study, at the link below.
- $19.7 to $22.1 million PER YEAR in total tax revenue from construction spending
- $1.1 to $1.3 billion in local economic activity in the region during project operations
- Regional reduction in automobile emissions by 5,200 to 5,800 tons of carbon dioxide emissions; overall reduction in annual cost to mitigate for damage caused by emissions is valued at approximately $1.5 to $1.9 million
- Increased travel options, reduced reliance on autos, travel time savings and reduced transportation costs
- Improved access to employment opportunities and consumer goods and services
- Stable and potential increased property values
- 1,200 new employees PER YEAR in job growth across skill levels
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Inside King of Prussia's $1B Transformation
KOP Rail, new residential and KOP Town Center among most transformational projects in King of Prussia
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In the last few years, $1 billion has been invested into King of Prussia. Companies are increasingly selecting King of Prussia as their new headquarters, housing developers have over 2,500 multi-family residential units under construction, and national retailers continue to 'set up shop' in the Mall, at the Valley Forge Shopping Center, in the new Town Center and throughout other retail locations in KOP.
But by all accounts, King of Prussia is just getting started.
Transformative projects recently credited by Curbed Philadelphia as being particularly crucial in the conversion of this shopping haven into a suburban live-work-play hub include progress on King of Prussia Rail, the reimagining and renovation of 251 DeKalb, Canvas Valley Forge's 55+ community, and the 260,000 SF King of Prussia Town Center.
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Business in the Spotlight:
KOP Mall Gets New Wine Garden
Shoppers can now enjoy a rustic retreat thanks to Chaddsford Winery
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King of Prussia Mall continues to set the standard for exciting shopping destinations. This month the retail giant opened a rustic outdoor wine garden featuring seasonal and regular favorites by the glass or bottle from Chaddsford Winery, as well as craft beer from local breweries.
Nestled between Neiman Marcus and Macy's, the beautifully landscaped outdoor space features ample seating, yard games and a fire pit. Patrons may also take their libation into the mall as they peruse the stores.
By adding new activities and experiences that complement the retail environment, Simon Property Group, owner and operator of King of Prussia Mall, continues to attract shoppers and exciting stores. Even online retailers want a presence at this consumer haven. UNTUCKit is the latest online retailer to open a store in the mall; more proof that King of Prussia is contradicting the national downward trend of shopping centers.
There is good reason for the KOP Mall to consistently augment the shopping experience to draw consumers. CBRE Research noted in the third quarter retail report that retail sales exceeded $111 billion in the larger metropolitan study area for the first two quarters of 2017 and estimate 4.5% growth for holiday sales over last year. New and exciting offerings will help King of Prussia Mall grab a nice chunk of those sales.
160 North Gulph Road
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In the News
$820M deal: King of Prussia E-Commerce Company to be Acquired
Philadelphia Business Journal
A King of Prussia e-commerce and fulfillment company announced it's being acquired by a Belgian company as it mounts a growing challenge to industry giants like Amazon.
Read More...
CSL Behring Acquires Tucson Biotech for $91 million
philly.com
Biotherapeutics company CSL Behring in King of Prussia will buy Calimmune Inc. for at least $91 million to add an early-stage stem-cell gene therapy for sickle-cell disease to its product pipeline.
Read More...
CBRE Arranges Sale Of Bassett Furniture In King Of Prussia, Pennsylvania For $11.75 Million
citybizlist
CBRE announced that its Net Lease investment sales team has successfully arranged for the sale of Bassett Furniture.
Read More...
Joint Venture Acquires 40,000 SF Office Building in Metro Philadelphia for $8.2M
Rebusiness Online
A joint venture between Merion PHC Holdings LLC and Moreland Development LLC has acquired an office property located at 950 Pulaski Drive in King of Prussia.
Read More...
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Leasing Activity
640 FREEDOM BUSINESS CENTER DRIVE
23,358 SF
1000 CONTINENTAL DRIVE
20,949 SF
234 MALL BOULEVARD
10,057 SF
900 E 8TH AVENUE
5,423 SF
200 N WARNER ROAD
4,631 SF
150 S WARNER ROAD
3,836 SF
700 AMERICAN AVENUE
2,500 SF
1010 W 8TH AVENUE
2,123 SF
660 AMERICAN AVENUE
2,010 SF
120 S WARNER ROAD
1,989 SF
1006 W 9TH AVENUE
1,468 SF
INTERNATIONAL MINISTRIES
KING OF PRUSSIA BUSINESS CENTER
11,000 SF
GYM JAM
KING OF PRUSSIA BUSINESS CENTER
4,000 SF
FOUNDING FARMERS
KING OF PRUSSIA TOWN CENTER
14,046 SF
EAST MEETS WEST
KING OF PRUSSIA MALL
2,540 SF
FOOT LOCKER
KING OF PRUSSIA MALL
10,220 SF
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KING OF PRUSSIA MALL
3,254 SF
GHURKA
KING OF PRUSSIA MALL
4,541 SF
NYX
KING OF PRUSSIA MALL
1,200 SF
TADASHI SHOJI
KING OF PRUSSIA MALL
2,578 SF
ALL SAINTS
KING OF PRUSSIA MALL
2,959 SF
ALEX AND ANI
KING OF PRUSSIA MALL
904 SF
TOMMY JOHN
KING OF PRUSSIA MALL
1,614 SF
NATUZZI ITIALIA
KING OF PRUSSIA MALL
55,966 SF
JOHNNY WAS
KING OF PRUSSIA MALL
1,400 SF
CALVIN KLEIN
KING OF PRUSSIA MALL
2,635 SF
ZARA
KING OF PRUSSIA MALL
29,542 SF
KICKS USA
KING OF PRUSSIA MALL
7,000 SF
Not a complete listing.
Leases submitted to KOP-BID for Q3 2017, as of 10.23.17.
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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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© 2017 King of Prussia District. All Rights Reserved.
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