Thursday, June 7, 2018

Comeback Underway In Bala Cynwyd Office Market

Development, Renovation Activity Across Various Property Types Helped Push Bala Cynwyd’s Office Occupancy Rates to New Heights
Bala Cynwyd’s office market may not be exhibiting a red-hot leasing environment or 5 percent rent growth, but the area’s occupancy rate, currently 92 percent, has been gradually tightening since 2010 and is now near its highest levels in 15 years.

Coming out of the Great Recession, Bala Cynwyd struggled to compete for office tenants with nearby suburbs like Conshohocken or Radnor, both of which offer prospective lessees a larger stock of newer or more recently renovated office properties.

However, a gradual progression of development and renovation projects has helped Bala Cynwyd reassert its competitive edge.

The 2007 opening of a 120,000 Target across City Line Ave. from Bala Cynwyd added an additional anchor for retail traffic to the area. The new Target had helped support a range of popular restaurants along the periphery of the relatively new shopping center, including California Pizza Kitchen, Naf Naf Grill and Starbucks.

Since then, more than 750,000 square feet of office space has been renovated along the portion of City Line Ave., stretching from Interstate 76 to the Bala Regional Rail Station at Conshohocken Road. Lower Merion Township also approved new zoning ordinances to promote dense, mixed-use and transit-friendly development, and Post Brothers renovated and up-scaled roughly 1,000 apartment units at Presidential City.

Office owners in the area are beginning to see the benefits of these upgrades.

Existing financial tenants such as Investedge and Allied Mortgage both chose to stay in Bala Cynywd and expand their office space within the submarket during 2017. In the first quarter of 2018, auto parts remanufacturer Cardone Industries also decided to relocate its front office operations from Northeast Philadelphia to lease all of 15 Kings Grant Dr., a vacant, 57,000-square-foot Bala Cynwyd property where Keystone Property Group is underway on a full-scale renovation.

While its properties offer tenants ample parking ratios in line with other Philadelphia suburbs, Bala Cynwyd’s proximity to educated workers, particularly those living in and around Center City, is unparalleled among the metro’s suburban submarkets. The largest office property in Bala Cynwyd has about 190,000 residents with a bachelor’s degree or higher living within a five mile radius; more than double the tally that lives within a five mile radius of competing areas like Radnor, Conshohocken and King of Prussia.

If local owners continue to modernize Bala Cynwyd’s existing office stock, the narrative of underperformance that dogged Bala Cynwyd in the years following the Great Recession could very well be turned upside down.

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