Conshohocken, Pa., an Old Steel Town, Now an Office Hub

CONSHOHOCKEN, Pa. — The view from the 15th floor of the Eight Tower Bridge office building here looks over two interstate highways, a commuter rail line, an old warehouse and a riverside stand of woods.

It is a snapshot of the attractions for developers in this former steel town on the banks of the Schuylkill about 15 miles northwest of central Philadelphia. The area has been gradually adding commercial buildings since the late 1980s, but is now the site of a surge in plans for new office space.

Four buildings totaling 1.25 million square feet are proposed, in what would be the first big additions to the town’s commercial real estate since the recession.

They are 400 West Elm, a 340,000-square-foot, 10-story structure on a wooded site; Seven Tower Bridge, covering 260,000 square feet on 10 floors; Millennium Four, a 300,000-square-foot project; and One Conshohocken, covering 350,000 square feet. The first three would be built on riverside sites.

The recent increase in development plans reflects the geographical advantages of Conshohocken, which is near the intersection of Interstates 76 and 476, its accessibility to central Philadelphia by commuter rail and the availability of its land, in contrast to some nearby western suburbs where land for development is scarce.

A rendering of Seven Tower Bridge, a 260,000-square-foot office building planned for the intersection of Interstate 76 and 476 in Conshohocken, Pa. Credit Skidmore Owings & Merrill, Chicago, IL.

With its location at the intersection of interstates, Conshohocken could become the region’s new “Main and Main,” said Jeffrey E. Mack, executive managing director at Newmark Grubb Knight Frank, an international real estate firm that provides brokerage and other services.

He argued that the town was poised to take the title from an area at Route 1 and City Line Avenues on Philadelphia’s western outskirts, which has been heavily built. That location, in Lower Merion Township, “ran out of land,” he said.

The prospect of a big addition in local office space also reflects a desire by companies to attract educated employees in their mid-20s to mid-30s who are expected to seek jobs in industries such as technology, finance or health care but who do not want a traditional suburban lifestyle.

“Those folks want to live in new urban-type environments where the amenities and the urban setting and the transit orientation are also important,” said Steve Spaeder, senior vice president for development at Equus Capital Partners, developer of the 400 West Elm project. “Conshohocken has all of those elements.”

Equus and other developers are betting that employees in the planned buildings will be turning their backs on tract homes on quarter-acre lots and opting instead for apartments or town homes in places where they can ride mass transit, bicycle or walk to work.

That is why all the planned developments are within a few minutes’ walk of two train stations, where the Southeastern Pennsylvania Transportation Authority drops riders about 35 minutes after leaving central Philadelphia.

“Transit-oriented real estate has become more desirable recently than ever,” said Esther Pulver, vice president of marketing for the Oliver Tyrone Pulver Corporation, the developer of the Seven Tower Bridge project.

The transit stops are adjacent to a bike path connecting the town with central Philadelphia, a feature that developers hope will offer an additional incentive to employees who live in the city but work in the suburbs.

In an effort to meet the millennial generation’s desire for an urban lifestyle, Conshohocken’s boosters draw attention to the town’s 42 restaurants. And they argue its well-financed public schools will prove a powerful draw compared with the notoriously underfinanced public schools in Philadelphia when couples have children — even if the targeted demographic group is currently reluctant to give up urban living.

In an appeal to a collaborative work style that is increasingly favored by employers of younger workers, some of the projects will be built on relatively large footprints, allowing wider, more open floors than would be possible on smaller sites. If all the new space is built, it could accommodate up to 5,000 new workers, Mr. Mack said, in a town of 7,800 residents.

To its west, Conshohocken benefits from its proximity to wealthy residential enclaves such as Villanova and Gladwyne, which can be expected to attract executives of companies occupying the new space.

For employers, rents in the new buildings will be in the mid-$30-per-square-foot range, a level that is comparable to that in central Philadelphia but that is significantly lower than city rates when taxes there are taken into account, said Mr. Mack, who represents tenants and brokers land sales in the Conshohocken area. He estimated that Philadelphia taxes add $10-15 per square foot to commercial rents there.

He predicted that the West Elm and Seven Tower Bridge projects would be the first to be built because they had been designed, and were likely to be ready for occupancy in 2016.

The town’s commercial vacancy rate edged up in the second quarter to a three-year high of 14.8 percent because of a “modest loss of occupancy,” according to a report from Newmark Grubb Knight Frank.

But the vacancy rate is expected to drop below 10 percent by mid-2015 in response to anticipated leases totaling 475,000 square feet, the company said.

“If leases are signed with these companies in the short term, all of the losses incurred during the last two quarters will be erased, and overall occupancy will grow to its highest levels since 2008,” the company said in a report.

Source: NYTimes.com