Q2 2019 Summary
We are happy to present the full Q2 2019 commercial real estate report. Due to discrepancies with the numbers between the beginning of the year and previous quarters, we skipped reporting the vacancy rates for the first quarter. Now that we have fixed the glitch in our reporting process, we can once again report on, what we believe to be, more accurate vacancy rates as reported by CoStar.

The King of Prussia commercial market remains strong through all classes of commercial office and industrial/flex space. The vacancy rate for the combined office classes have dropped significantly, while the average lease rate PSF continues to rise. Class A vacancy at the end of Q2 is 11.7%. The average lease rate has risen significantly to $31.83.

The Class B vacancy rate dropped over 10 points since Q2 2014 to 15.0% in 2019, while the average lease rate has increased to $24.04. The biggest drop in vacancy rate to date in 2019 remains in Class C from 21.0% in Q2 2014 to 1.7% in the last quarter. The average lease rate has leveled out at $17.12 PSF. The combined classes of office space have dropped over 6 points to 12.2%, while the average lease rate PSF has climbed to $27.36 PSF.

As discussed in our spotlight segment on Discovery Labs (below), the addition of lab space available in an incubator setting at the former GSK site on Swedeland Road has increased the inventory for flex space. The addition of nearly 450,000 SF to the market has increased the vacancy rate to 18.4%. The vacancy rate for Industrial has reached an all-time low of 0.2%, the lowest recorded rate since the collection of KOP industrial properties were added to the CoStar database in 1997. The average lease rate for Industrial space at $7.81/NNN is the highest it has been since Q2 2002.

Thanks as always for your support and interest in King of Prussia.

Eric T. Goldstein
Executive Director
King of Prussia District
The Discovery Labs
The former GSK research facility on Swedeland Road is undergoing a renovation into a large co-working campus featuring turnkey, pharma-quality, chemistry and biology lab space to include a world-class vivarium, a place where animals and plants are kept under semi-natural conditions for observation.
The Discovery Labs is an innovation incubator that will provide a workspace platform for new healthcare, life sciences, and technology-enabled companies on a 1.6M SF campus. 
The key to a campus-sized innovation incubator is collaboration, and The Discovery Labs has a design in mind to facilitate the company interactions. Small lab and office spaces, ranging from a bench to dedicated 1,000-20,000 SF work areas, are available for short term leasing to R&D start-ups, while even larger areas are open for established companies that want to co-work and foster innovation in one of the dozen buildings at the site. 
MLP Ventures, the privately-owned venture capital and real estate group that created The Discovery Labs, describes the leasing activity as "robust" in a press release issued last month. Companies currently located at The Discovery Labs include a number of life science industry cornerstones like CHOP, Thomas Jefferson University, GSK, Tosoh Biosciences, Crown Castle and MedRisk. The defining tenant-base that will spur collaboration is IQ Connect, the 100,000 SF life science incubator for start-ups, developed in a partnership between The Discovery Labs and the Pennsylvania Biotechnology Center. This venture will bring together researchers, entrepreneurs and product development startups, along with human resources, venture capital, investment banking and other business services, to pursue discovery and development that will help transform the region into a life sciences hub.
709 Swedeland Road
King of Prussia, PA
Commercial RE Transactions

Henderson Road Investors LLC
243 S. Henderson Rd.

VFPP Building Owner LLC
1018 W. Ninth Ave.

5127 Lancaster Avenue LLC
155 Boro Line Rd.

Page & Hudson LLC
169 Boro Line Rd.

Associated Management LLC
580 Shoemaker Rd.


3500 Horizon Dr.
65,579 SF

640 Freedom Business Center Dr.
23,358 SF

780 Fifth Ave.
10,363 SF

826 W DeKalb Pk.
10,000 SF

170 N Henderson Rd.
9,522 SF

555 Croton Rd.
8,437 SF

234 Mall Blvd.
7,055 SF

780 Fifth Ave.
6,974 SF

610 Freedom Business Center Dr.
6,757 SF

1012 W Ninth Ave.
5,896 SF

900 E Eighth Ave.
5,626 SF

1013 W Ninth Ave.
4,842 SF

1000 Continental Dr.
4,183 SF

445 W DeKalb Pk.
4,000 SF

1012 W Ninth Ave
3,291 SF

216 Mall Blvd.
2,538 SF

2011 Renaissance Blvd.
2,518 SF

700 S Henderson Rd.
2,292 SF

900 E Eighth Ave.
2,182 SF

234 Mall Blvd.
2,107 SF

610 Freedom Business Center Dr.
1,971 SF

1,977 SF

4,424 SF

Kung Fu Tea
127 SF

5,331 SF

APM Monaco
402 SF

Popeyes Louisianna Kitchen
620 SF

Warby Parker
1,840 SF

2,447 SF

Buffalo Wild Wings
6,000 SF

Modani Furtniture
6,987 SF

* Commercial Office
* Retail

Not a complete listing.
Retail leases submitted to King of Prussia District for Q1 2019, as of 7/16/19. All other sales and leasing info from CoStar.
King of Prussia District is a 501(c)(3) not-for-profit, special services organization.
King of Prussia District engages public and private partners to collaboratively
improve the economic environment in King of Prussia by making it more vibrant,
attractive and prosperous.

DISCLAIMER: All information obtained using CoStar Analytics and field checked for accuracy by King of Prussia District. Vacancy rates are calculated using existing, non-owner occupied commercial buildings in Upper Merion Township only, over 10,000 SF, Class A, B, and C plus retail, industrial and flex. King of Prussia District uses "Direct % Vacant Available" in its vacancy reporting. All industrial and flex statistics are NNN.
234 Mall Boulevard, Suite 150, King of Prussia, PA 19406
484.681.9452 |
© 2019 King of Prussia District. All rights reserved.