Wednesday, August 14, 2019

Plymouth Meeting Ripe for More Apartments, but Development Sites Limited

One of the most popular strategies among Philadelphia apartment developers in recent years has been to deliver large, highly amenitized rental communities near centers of suburban office employment. This approach has been particularly successful in Philadelphia’s western suburbs, which are notorious for rush-hour traffic congestion along I-76.

By completing projects less than a 10-minute drive from existing office parks, developers have been able to offer apartment renters relief from bumper-to-bumper traffic. This benefit has been a key ingredient for success for projects such as MLP Ventures’ Royal Worthington, which is adjacent to Vanguard’s giant Malvern campus, and for the more than 1,600 market rate apartment units that have delivered within King of Prussia’s Village at Valley Forge master planned development since 2017.

But CoStar’s recent analysis of the ratio of occupied office space to existing apartment units in various Philadelphia suburbs suggests that Plymouth Meeting may be undersupplied in terms of apartment options relative to the size of its office stock.

Within a two-mile radius of Plymouth Meeting Mall, for every existing apartment unit there is more than 3,300 square feet of occupied office space.

That is more than three times the amount of occupied office space per apartment unit of surrounding suburban retail centers such as the Bala Cynwyd Shopping Center, Exton Square Mall and Neshaminy Mall. The figure suggests a large number of Plymouth Meeting office workers would jump at the chance to rent a high-end apartment and shorten their commutes.

When Parc at Plymouth Meeting delivered in 2015, the project was the township’s first market-rate apartment development to complete since the 1970s. The property reported over 95% occupancy last month and has raised one-bedroom asking rents by about 17% since it began preleasing five years ago.

But no other projects have completed or broken ground in Plymouth Meeting since Parc at Plymouth Meeting’s completion, as the lack of properly zoned, open land has limited developers’ options. Of the four land parcels over one acre currently listed for sale on CoStar, all are being advertised as having light industrial designations in place.

This lack of new development in an otherwise viable apartment submarket means landlords of existing properties should benefit from minimal competition over the next several quarters. Investors committed to bringing more high-end apartments to market in Plymouth Meeting may have to consider redeveloping some of the area’s older, underperforming office buildings, although few are currently being offered for sale.

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