More than $500M in new development planned for Conshohocken

Conshohocken, Pa., is on the cusp of another wave of development with more than $500 million of construction projects in the pipeline or wending through the approval process that will continue to dramatically transform this tiny borough along the Schuylkill River.

The work consists of more than 1.27 million square feet of office development, the construction of a hotel and nearly 1,000 apartments as well as restaurants and other ancillary amenities demanded by its growing residential and office population.

Conshohocken and its sister across the river, West Conshohocken, Pa., have faced other rounds of robust commercial development over the years and these recently proposed projects have the potential to continue the revitalization of the former steel town and reshape its riverfront.

The community's first surge of development began in earnest in 1988 when Oliver Tyrone Pulver proposed what is known as the Tower Bridge complex, a collection office buildings on both sides of the river, and Acorn Development Corp. drew up plans to construct the Four Falls office building. A little more than decade later another rush of new and conversion projects were drawn up. One of the dominant players in 2000 was O'Neill Properties Group, which went into Conshohocken with bold plans to construct a mixed-use complex called Millennium that involved a series of office and apartment buildings along the banks of the river.

During the recession, development activity slowed to a trickle in the borough and elsewhere while lenders put a chill on funding new construction. Now that the economy has picked up steam, a third wave of development is in the works.

The projects, some of which are still going through the approval and land development process, include:

    A 330,000-square-foot office building proposed by Equus Capital Partners at 400 W. Elm St.

    A 300,000-square-foot office building, 200-room hotel and conversion of an old fire house into a brew pub called One Conshohocken on Fayette Street. That is being proposed by Keystone Property Group.

    A 260,000-square-foot office building called Seven Tower Bridge that will be developed by Oliver Tyrone Pulver.

    A 300,000-square-foot office building called Millennium Four that O'Neill Properties Group wants to construct.

    310 apartments at 51 Washington St. as well as 610 apartments at 401 Washington St.

    An 82,000-square-foot office building at 901 Washington St., which is just over the border in Whitemarsh, Pa., and is bring proposed by E. Kahn Development.

Each developer is jockeying to get ahead of the competition. Those proposing office space are working to pre-lease a majority of their buildings before putting a shovel into the ground. What is certain is all of the projects will not get built at the same time.

"The tenant market will decide which building will get built first," said Jeff Mack, an office broker with Newmark Grubb Knight Frank.

Why Conshohocken is receiving so much developer attention now is simple, according to commercial real estate experts.

"There are only a few sites that can accommodate a Class A build-to-suit and Conshohocken has five of them," Scott Gabrielsen, an office broker with Binswanger.

While availability of developable land certainly plays a major part in why Conshohocken has so many proposed projects, it happens to be in a borough that developers, office tenants and apartment renters find attractive for many reasons.

Conshohocken's location at the intersection of the Schuylkill Expressway and Blue Route as well as access to commuter rail make it ideal to funnel young Millennials living in Philadelphia. The community has a growing list of restaurants, retail shops, biking and walking trails, and other amenities that also appeal to workers.

"The market is speaking that there is significant interest in Conshohocken," Gabrielsen said.

There is demand for newly constructed or at the least, newly rehabilitated office space in the suburbs and brokers often point to the quick lease up of Crosspoint at Valley Forge on Swedesford Road in Wayne, Pa., as an example of how much tenants want state-of-the-art space. Crosspoint was a total gut job of an older building and attracted tenants such as Teleflex Corp. and others. There has been a dearth of new office construction in the suburbs.

Demand is even greater in markets closer into Center City where vacancy rates have crept down. For example, Conshohocken's 3.3-million-square-foot office market has a vacancy rate of 13 percent, Bala Cynwyd, Pa., has a vacancy of 13.5 percent in a 3.5-million-square-foot market and Radnor, Pa., is the tightest of them all at 4.7 percent on 2.8 million square feet. Class A space is even tighter in these prime locations.

"There are certain companies that don't want to be in the city and it could be because of tax reasons or employee commuting patterns but they want to be close to the city and your choice is Bala Cynwyd, Radnor and Conshohocken," said Glenn Blumenfeld, a broker with Tactix Real Estate Advisors who represents tenants. "Radnor has very little vacancy, Bala Cynwyd doesn't have the quality of assets that Radnor and Conshohocken have and they are generally older buildings with some exceptions. So, I think there is probably a need for quality office space close to Philadelphia."

A landlord would need to charge rents in the mid to high $30s per square foot to support new construction, which may not be as a big of a challenge as pre-leasing upwards of 65 percent of the building before breaking ground.

"You need a big tenant for that," Blumenfeld said. "You can't do it with a bunch of 20,000-square-foot tenants."

Source: Philadelphia Business Journal