King of Prussia / Wayne Summary
King of Prussia / Wayne continues to be one of Philadelphia’s most sought after metro suburban submarkets. This submarket encompasses a vast array of tenants ranging from financial institutions and healthcare firms and pharmaceutical manufacturers.
Due to the lack of construction in this area in recent years, vacancy rates have remained low causing lease rates to rise significantly from prior years. But this has not stopped powerhouse tenants in the ever growing fields of healthcare and technology from moving into King of Prussia. And larger financial and insurance companies are relocating to the area to provide shorter commutes and better work / life communities for their employees. Net absorption for this submarket over the next 5-10 years will quickly rise.[1]
The area agencies are committed to improving the infrastructure for long term growth and expanding demand. In the last few years, $1 billion has been invested into King of Prussia.2 The expansion of the Norristown High Speed Line, multi-family residential units under construction, the King of Prussia Mall expansion and the Town Center development are just a few improvements that are being made and have been invested in the King of Prussia market.
Many developments within the boundaries of King of Prussia have been given the green light to shift toward a mixed-use set up. Office parks with a live/work/play environment are much more enticing to companies who value their employees.
The King Of Prussia District reports that “There has been a 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.” Further to this point, Class-B office appears to be in demand as the vacancy rate has dropped from 23.7% to 18.4% year-over-year. Moreover, the district reports that “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”.[2]
In the industrial and flex space market, vacancy rates have decreased by more than 1 point to 2.4% from this time last year while the average lease rate increased to $6.71NNN. Flex space vacancy increased to 3.8% with a drop in average lease rates to $8.94NNN. KOPBD reports that “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.” 2
Sales in this submarket are solid investments, most with good occupancy and long term tenants.
[1] CoStar King of Prussia Marketing Analysis Dated October 18, 2017 [2] King of Prussia District Commercial Properties Q3 2017 Summary
