Monday, May 13, 2019

Need for modern workspaces driving suburban office boom

Natalie Kostelni Reporter Philadelphia Business Journal
Multiple new office projects, totaling nearly 1 million square feet, are in various stages of planning in Philadelphia's suburbs as developers seize on a lack of available space and rising rents that can financially support new construction.

This points to a potential wave of new development later this year and into next year.

At least one developer, Equus Capital Partners Ltd., is trying to get ahead of the competition by building on speculation, or without any tenants lined up. The company is finalizing approvals on a 145,000-square-foot building at 675 E. Swedesford Rd., in Wayne. “We plan to start construction in September,” said Steve Spaeder of Equus.

It's considering another spec project. “We’re taking a serious look at 400 Barr Harbor [Drive] in Conshohocken,” Spaeder said. That proposed 218,000-square-foot building is going through the approval process and Equus will “take a hard look” at breaking ground on it next spring, Spaeder said. 

Other projects in the works but not on spec include: Seven Tower Bridge, a 250,000-square-foot building in Conshohocken that may have Hamilton Lane as an anchor; Metroplex Two, a 280,000-square-foot structure in Plymouth Meeting; and 650 Park Ave., a 100,000-square-foot building in King of Prussia.

Two projects are underway that have substantial pre-leasing. Keystone Property Group broke ground on Sora West, a 429,000-square-foot complex in Conshohocken, and Brandywine Realty Trust is developing 145 King of Prussia Rd., a 150,000-square-foot structure in Radnor as part of Penn Health's new campus.

It's not often a combination of factors conspire to support new office construction. However, higher rents, low vacancies, a lack of large blocks of space — particularly for trophy space — and tenants desiring fresh, new space are driving developers to queue up these projects.
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