turnpike corridor re-investment project

Prepared by the Montgomery County Planning Commission, 2013

Turnpike Corridor Montgomery County’s unemployment rate is Reinvestment Project lower than the nation’s Project Goal Introduction 10.0% 9.0% Reinvigorate business parks With its many highways and employment 8.0% centers, Montgomery County has been an 7.0% between the Valley Forge and 6.0% economic powerhouse for decades. The county: 5.0% Willow Grove interchanges of 4.0% the Pennsylvania Turnpike  Has over half a million jobs; 3.0%

 Leads the state in high‐tech jobs; 2000 2001Montgomery 2002 2003 County 2004 2005Pennsylvania 2006 2007United 2008 States 2009 2010 2011 2012

 Leads the state in manufacturing jobs;

 Imports 86,000 more workers from Employment Centers neighboring counes than commute out;

and Hatfield Hatboro 29 Souderton Montgomeryville Horsham  Has a lower unemployment rate than the Huntingdon ¨¦§476 309 Willow Grove Valley naon or Pennsylvania. Lansdale Area 611 Harleysville Ambler 276 Area ¨¦§ Abington The Turnpike Corridor, with King of Prussia, 663 Ft. Jenkintown Washington 202 Swedeland, Norristown, Plymouth Meeng, Blue ut Glenside 73 Blue Bell Bell, Fort Washington, Willow Grove, Horsham, 73 Cheltenham and other nearby centers, is the backbone of the Plymouth county’s economy. Meeting Norristown ¯

100 ut422 Conshohocken Upper Providence Valley ¨¦§76 Forge Bala Cynwyd Royersford Pottstown 29 Oaks ¨¦§476 Bryn King of Prussia Mawr Ardmore Wynnewood 30,000 - 50,000 employees 20,000 - 30,000 employees " 10,000 - 20,000 employees # 5,000 - 10,000 employees = Turnpike Corridor Area

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Montgomery County’s job growth has slowed down Issues Despite these strengths, Montgomery County’s

economy does not seem as invincible as it once 40% did. Recently, the County: 35%  Has had lackluster job growth; and 30% 25%  Has seen tradionally strong industries, such 20% Montgomery County as manufacturing and informaon, adversely 15% Pennsylvania affected by structural changes in the naon’s 10% economy. Life sciences, tradionally strong 5% in the area, has also seen cutbacks. 0% Many of the business parks in the Turnpike ‐5% Corridor were developed decades ago, and these ‐10% places are now showing their age, with less Class 1970‐1980 1980‐1990 1990‐2000 2000‐2010 A office space, lower rents, and higher vacancy Source: County Business Patterns, which does not include the self-employed rates than other employment centers in the region, such as the Philadelphia Navy Yard and Great Valley. Many of the county’s business parks developed decades ago

BLS data does not include the self-employed

Fort Washington in 1965

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In addion, although the PA Turnpike has been Pennsylvania Turnpike through Montgomery County (6 interchanges in 20 miles) greatly improved over the past 20 years with extensive widenings and interchange expansions, the road was built as an inter‐city connector rather than a commuter road, and it is Montgomery County being used for both purposes. !

This original design limited the number of ! ! interchanges, with relavely long distances from !! one interchange to the next. Commuter highways, on the other hand, have much closer ! interchanges. To funcon properly as both an inter‐city and commuter highway, the PA Turnpike needs more interchanges in Montgomery County. I 95 from Delaware to Center City (17 interchanges in 20 miles)

Philadelphia !

Delaware County ! ! !!! ! ! ! ! ! ! ! ! ! !!

The Turnpike’s Interchanges are far apart

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Opportunities Turnpike Corridor Areas With its excellent connecons to the highway system; easy access to well‐educated workers; Horsham locaon in a prosperous, lower‐tax county with beauful neighborhoods, historic towns, and Horsham/ Willow Grove recreaonal opportunies, the Turnpike Corridor ¨¦§476 is in a strong posion to aract new Fort Washington development. ¨¦§276  Many properes are ready for redevelopment and improvement. The study area affects Plymouth Meeting/ Norristown/ Blue Bell ¯ 8800 acres of exisng office/industrial parks Plymouth and 1600 acres of proposed redevelopment ¨¦§76 at the Willow Grove Naval Air Staon for a King of Prussia Swedeland total of 10,400 acres ¨¦§476  The corridor includes 8 municipalies and 7 school districts, with many more nearby, with

all able to increase their tax revenue from = Turnpike Corridor Employment Center new development.

Many properties in the Turnpike Corridor can be redeveloped.

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Places in the county have reinvented themselves.

 Twenty years ago, Conshohocken was known as an old, distressed industrial town. Today, it is one of the premier office and apartment addresses in the region, with office rents much higher and vacancy rates much lower than other submarkets in the region.

 The Unisys Property in Whitpain Township is currently being redeveloped and reinvented as a Class A office park with excellent design and amenies.

In addion, many municipalies, both within the Turnpike Corridor and outside of it, have begun planning for changes in their employment centers. Conshohocken reinvented itself, becoming a premier office and apartment location.  King of Prussia has approved a Business Improvement District and is considering zoning changes.

 Lower Merion adopted new mixed use and more intensive zoning for the Bala Cynwyd office area on City Avenue.

 Lower Providence adopted new mixed use zoning for the Valley Forge Corporate Center.

 Upper Dublin is considering transfer of development rights zoning for Fort Washington that would get development out

of the floodplain. The Unisys complex in Whitpain Township is being reborn as Arborcrest.

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Opportunities There are also transportaon opportunies in the Turnpike Corridor.

 All‐Electronic Tolling (AET), which allows Purpose of Report exisng interchanges to be modernized and This report idenfies potenal new interchanges to be considered, may be PA Turnpike slip ramp locaons implemented for the whole Turnpike over the next decade. and possible municipal zoning and land use changes near the  The Turnpike is conducng a feasibility study for widening to 8 lanes between the Mid‐ Turnpike Corridor that, County and Bensalem interchanges. together, will help reinvigorate

 A Strategic Plan is underway to guide the the county’s older business Turnpike’s business decisions. parks.

 New state P3 Legislaon, Public Private Partnership, could be used to implement recommendaons.

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Market Trends

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General Trends The naon is slowly recovering from the Great campuses, office parks, business centers, and growing places? The answer is probably both— Recession. What direcon will new growth go? flex space could remain very popular for the in some areas, mixed use walkable business Will new offices and businesses connue to reasons they were created in the first place ‐ parks will be more popular, while in others, gravitate to suburban business parks or will they excellent highway access, a dhighly skille and tradional business parks will remain the norm. go elsewhere. Some forecasters think a large educated workforce, relavely low taxes, a With the Great Recession sll reverberang shi is already happening: strong and diverse county economy, and high‐ through the economy and globalizaon quality communies and residenal connuing, it’s always difficult to predict what The convenonal American suburban office neighborhoods. the economy will do. park is rapidly becoming an outdated model of development as both employers and When asked why he chose Collegeville, employees shi their expectaons of the Montgomery County for the relocaon of an 800 workplace from yesterday’s model of an person research facility, Andrew Liveris, the CEO office in a park to an office in a place. of Dow Chemical, responded, “Human capital. ‐ Urban Land Magazine, June, 2009 There is a lot of talent here ‐ we have the ability to grow it and put it all in one place. We wanted Once a symbol of suburban dominance, a Northeast Technology Center. It would be office parks from California to New Jersey are nonsensical to set up something in other parts.” being reimagined as lile cies. Hoping to ‐ The Philadelphia Inquirer, August 1, 2013 stave off suburban blight, local officials in more than a dozen communies have In a November, 2013 arcle tled The City or the Will suburban offices have higher vacancy rates? approved plans for developers to turn aging ‘Burbs? Most Go for the Green, the Philadelphia corporate parks into urban‐style complexes Journal analyzed the 100 privately held local with amenies including apartments, stores, companies with the largest percentage revenue movie theaters, bike paths, and office space. growth. Nong that 34 of these were in ‐ The Wall Street Journal, May 21, 2013 Montgomery County and only 20 in the city, the paper concluded that the suburbs remain a very Certainly, this conversion of old office parks into aracve place for growing companies. mixed use centers is occurring in different parts of the country, with some of the most cung So, which is right? Are tradional suburban edge new development following a mixed use office and business parks going the way of the horse and buggy? Or, will they remain viable, paern. On the other hand, corporate Or will they remain a growing part of the county’s economy?

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Mixed Use Areas Naonally, there is great interest in mixed use A number of companies have relocated or stayed downtown to provide beer access and a areas that provide a more vibrant and in older downtowns for this reason. Examples more diverse work environment. smulang environment for workers. Why? include:  United Airlines, Navteq Corporaon, and Much of this interest is driven by Generaons X  American Eagle Ouiers moved its Allscripts Healthcare Soluons moved from and Y and the start up entrepreneurs coming out headquarters from the Pisburgh suburbs to the Chicago suburbs back to the downtown. of these generaons. Southside Works, a new mixed use Sara Lee is considering a similar move. According to an Urban Land Instute arcle, development on an old steel plant.  Merck and Company will soon be leaving its these generaons want workplaces with: In discussing the move of their 900,000 square foot headquarters in a rural/  Opportunies for social exchange beyond headquarters, company president Susan suburban township in New Jersey for a the office; McGalla commented, We recognize that our locaon that, according to a company  Reasonable commung distance from home; associates are our most valuable resource announcement, is “adjacent to major and providing them with a creave and  Walkable desnaons with services that transportaon hubs and desirable urban producve environment is our top priority. meet daily needs; and centers.” The many posive amenies of our new ‐ Philadelphia Inquirer, July 14, 2013  Diverse experiences. facility, combined with the excing urban New, mixed use development seems to be less Approximately 77% of Generaon Y members environment offered at Pisburgh’s common here than in other parts of the have expressed interest in living in an urban Southside Works, will be key to arac ng country, perhaps because this area already has seng, and 30% said they would be willing to and retaining a talented workforce, which is many old mixed use towns. In addion, the pay a premium for walkability and proximity to absolutely essenal to our connued success. Philadelphia region is a slow growth area that employment, transit, and retail services. Mixed ‐ BusinessWire, October 21, 2005 has conservave development tendencies. use areas and developments offer many of these As part of this move, American Eagle amenies. Ouiers did receive significant state For companies that need to aract creave and economic development assistance. highly‐skilled members of Generaons X and Y,  Atlanta, BellSouth Corporaon consolidated these preferences are important. Companies its 10,000 employees into three sites near that are in urban downtowns or other mixed use mixed use transit staons. sengs with housing and retail may have a compeve advantage for recruing these  In Oklahoma, noodleStream.com relocated workers. from the outskirts of Oklahoma City to the The Conshohockens have become a mixed use center

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Industrial to Mixed Use ‐ The Office to Mixed Use ‐ University Town Center Instuonal to Mixed Use ‐ The Navy Yard Conshohockens The University Town Center, in Hyasville, MD, The Navy Yard, in Philadelphia, PA, is an inter‐ In the late 1980s, the riverfronts of is next to a metro staon and the University of esng conversion of an old military base into a Conshohocken and West Conshocken were full Maryland. From 1963 to 1971, it was developed modern mixed use center that includes ship of old industrial buildings. Since then, the area with three office buildings totaling 1,095,000 manufacturing, baking, offices, a couple of res‐ has been reinvented as a mixed use center with square feet. In the past ten years, it has been taurants, and a hotel. Significant residenal excellent transportaon access ‐ Routes 76 and reinvented as a walkable, mixed‐use center, development is also proposed. 476 intersect in West Conshohocken and the adding 1,100 apartments , 180,000 square feet Manayunk‐Norristown regional rail line has a of office, and thousands of garage parking spac‐ stop in Conshohocken. Since the mid‐1990s, the es. Addional offices, a retail main street, a Conshohockens have had: movie theater, a hotel, and more apartments  Over 2.5 million square feet of new offices, with hundreds of thousands more proposed; Mall to Mixed Use ‐ Vorhees Town Center  Two new hotels; and, The Voorhees Town Center in New Jersey is the  Over 1,000 new apartment units, with over Around the country, office complexes have remake of the old Echelon Mall. Part of the mall 1,000 more proposed to be built. started being converted into mixed uses. A few was kept while part was torn down for a new examples include: Although there is no new retail along the mixed use center that includes a 44,000 square riverfront, Conshohocken’s downtown has been foot office, over 300 apartment units, and over  The CT General Life Insurance in Bloomfield, reinvented as a restaurant desnaon. 100,000 square feet of new and proposed retail CT, a 1957 acre office park on 600 acres, was How did this great change happen? The space. The mixed use area features a boulevard converted in 2003 into a golf course, hotel/ Conshohockens benefited from excellent lined with restaurants and shops on the ground conference center, and 410 dwelling units; highway access, proximity to Philadelphia, and floor of new apartment buildings.  The Koger Center in Jacksonville, FL, proximity to higher‐income suburbs. Many originally 31 buildings built in 1957, was younger employees reverse commute to the redeveloped in 2006 as the mixed use Conshohockens from Philadelphia on the Midtown Centre; regional rail.  Offices at the former Texas Instruments The Conshohocken were not developed as a campus in Aleboro, MA, were retained, master planned community, but they have while upscale residenal units were added. evolved into a diverse, mixed use place.

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Office Uses county total.) tems design;

Office construction in the county has tapered off The PA Center for Workforce Information and  Ambulatory health care services, including significantly over the past decade, with less than Analysis publishes employment forecasts by in- doctor’s offices and home health care; 700,000 square feet being added per year. The dustry and occupation. The Center forecasts that last two years have been particularly low. Montgomery County will add 34,100 jobs be-  Administrative services, especially employ- tween 2010 and 2020, the most in the region and ment services, security, and service to build- The national situation in suburban communities a 7% increase. Looking at the industries of these ings; and is similar. During the peak years of suburban jobs, 21,640 might be expected to be in office office construction in 1989, 1990, 1999, 2000,  Financial investment services. buildings. If there are 3.32 employees per 1,000 and 2001, over 80 million square feet of office square feet of office, this correlates to 6.5 million Many companies want to consolidate operations space was built nationally in the suburbs. The square feet of new office space county wide. into one distinct geographic area, and this often last couple of years, 2011 and 2012, it has been This might not be as robust as past decades, but it leads them to suburban sites where there is land less than 8 million square feet per year. would still be a healthy amount, assuming the and room to grow. Recently, DOW Chemical Are these low county and national suburban of- forecasts are accurate. If the ratio of employees consolidated research in Oaks while ALMAC fice construction numbers the new norm or a per square foot changes because of technological pharmaceuticals built consolidated US headquar- temporary blip? changes in offices, say to 4 employees per 1,000 ters near Harleysville. Even Urban Outfitters’ square feet, or if more workers end up working move to the Navy Yard was a consolidation in Some indicators point towards a resurgence of from home, then significantly less new office space that gave them room to grow. office construction. Right now, the Delaware space would be needed countywide. Valley Regional Planning Commission projects On the other hand, there are some indicators that the county will add over 63,000 jobs by The Center estimates that the following industries pointing towards a continued decline in suburban 2040, and, if past trends continue, most of these typically found in offices will have the strongest office construction. As mentioned earlier, con- jobs would be in offices. The seven municipali- numeric growth: struction has been very low recently and many ties in this Turnpike Corridor are expected to younger employees favor mixed use, transit-  Professional and technical services, particu- add about 19,000 jobs, 30% of the jobs that will accessible areas. The image of office parks has larly scientific research and development, be added in the county. (These communities suffered in the popular imagination, such as seen management consulting, and computer sys- currently have 180,000 jobs, or 33% of the in the movie Office Space, which associates cor-

Office Construction in Montgomery County

YEAR 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 SQUARE 1,812,607 2,126,263 480,345 308,607 466,755 677,585 405,824 635,418 360,980 66,442 202,559 FEET

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porate parks with monotonous office jobs. Office Square Footage, Rents and Vacancy Rates

Another trend that might lead to less office con- AREA TOTAL SQUARE % CLASS A RENT PER VACANCY FOOTAGE OFFICE SQUARE FOOT* RATE* struction is more flexible office space, which can be seen in benching and hoteling, where employ- King of Prussia 6,393,060 sf 63% $24 15% ees share offices, cubicles and space. Many plac- Swedeland 3,344,577 sf 36% $24 15% es, like Drinker, Biddle and Reath law offices in Philadelphia have reduced common areas like Norristown/Plymouth 805,932 sf 7% $21 20% libraries and the size of offices while increasing Plymouth Meeting/Blue 6,170,511 sf 59% $24 21% common sitting and meeting areas where people Bell can collaborate. Their space will drop from Fort Washington 3,615,544 sf 47% $22 14% 209,000 square feet to 155,000. Horsham/Willow Grove 5,430,859 sf 39% $21 11% The president of the Philadelphia office of Glax- oSmithKline doesn’t even have an office; in- Horsham/NAB 1,378,833 sf 78% NA NA stead, she has a locker and uses common desks Suburban Philadelphia 124,548,207 sf 38% $22.65 13.7% and meeting rooms. Glaxo has announced that United States 10,305,867,784 sf 31% $21.36 11.8% most of its office facilities in Upper Merion will * Rent and Vacancy figures are estimates based on an analysis of specific properties within each study area using available data be consolidated at their Collegeville site as they from the CoStar Group between March, 2013 and September, 2013. “NA” is signified where not enough data was available to make shift to this benching and hoteling office model. a reasonable estimate.

These flexible office arrangements, popularized Office Rehabilitaon ‐ Sentry Park West Office Rehabilitaon ‐ Arborcrest by companies like Google and Apple, are becom- Sentry Park West is an excellent example of an Arborcrest, also in Blue Bell, is a good example ing more popular and could lead to less office old office development being significantly up‐ of the reinvenon of a corporate campus. This construction than might happen otherwise. graded. A decade ago, Sentry Park West con‐ 137 acre property was the Unisys campus. Alt‐ sisted of five Class C office buildings in Blue Bell hough Unisys is sll a tenant, as is Merck, the totaling 228,000 square feet. Rents were 30% over 700,000 square feet of offices were geng below market. old. The site has been redeveloped with mod‐ ern office space, a sustainable design in a park A developer bought the buildings and thorough‐ like seng, and an amenity center with a café, ly rehabilitated them, turning them into Class A fitness area, and common space for relaxing and space with higher rents and 40% higher occu‐ mingling. Another 700,000 square feet could be pancy. added in the future.

Sentry Park West has been reinvigorated.

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Industrial Uses Industrial construction, which includes factories, The county still has a good number of large indus- facturing and warehouse operations often need distribution centers, warehouses, flex space, and trial plants, such as Hatfield Meats; SPS Technol- new buildings with high ceilings, modern utili- similar uses, has been fairly low countywide ogies in Jenkintown, which makes specialty fas- ties, and specialized facilities to operate most over the past decade. Like offices, the past cou- teners; or Knoll Industries in Upper Hanover, efficiently. Older industrial buildings often end ple of years have been particularly low. which makes high end office furniture. There are up being used for secondary uses, like indoor many of these firms, from small to large, scattered recreation, contractor’s facilities, warehouse re- The major reason for this is the shift of manufac- around the county. And, pharmaceutical manu- tail sales, etc.. turing overseas, particularly China. Between facturing and its packaging remains the most sig- What is the future of the industrial sector for 2001 and 2011, the number of manufacturing nificant type of manufacturing in the county. jobs in the county declined 40%, from 72,509 in Montgomery County? Certainly, the county’s 2001 to 43,385 in 2011. This is still a lot of Wholesaling, warehousing, and storage are an experience over the past decade paints a pessi- jobs, the most for any county in the state. By important part of the industrial sector, accounting mistic picture. However, two recent trends, nat- 2020, the county is projected to lose another for approximately 24,000 jobs in the county in ural gas production increases and reshoring, may 2,000 manufacturing jobs. 2010. This is expected to remain relatively stable, reverse the trend. perhaps with a few hundred jobs lost by 2020. Over the past 50 years, manufacturing has shift- Declines in natural gas prices, driven by new ed in the county. Most of the heavy industrial A third type of industrial construction is flex supply such as Pennsylvania’s Marcellus Shale, facilities, the steel plants, tire factories, and space, which typically consists of one story small may encourage new manufacturing, particularly chemical plants, have closed, although some still scale space designed to be adapted to the users energy dependent manufacturing. Some of this, exist. Textiles left earlier than these. A few needs, whether offices, fabrication, or storage. or support industries for it, might locate in Mont- large manufacturing complexes, such as Lock- Flex spaces offer easy to use industrial space for gomery County. small companies. heed Martin in King of Prussia, which made Reshoring, where American manufacturers rockets, or Honeywell in Fort Washington, Because rents for industrial properties are rela- bring production back to the United States, is which made gauges, have changed into office tively low, typically around $5 per square foot, definitely happening. Companies like Ford, and research facilities. industrial land often comes under pressure to con- General Electric, Whirlpool, and Apple have vert to other uses. In addition, industrial manu- announced reshoring initiatives. Locally,

Industrial Construction in Montgomery County

Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Square Feet 398,762 525,465 432,124 420,415 558,801 255,281 543,185 250,054 248,199 22,698 34,296

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Industrial Square Footage, Rents and Vacancy Rates K’NEX industries in Hatfield has announced it is bringing some jobs back to the United States. AREA TOTAL SQUARE RENT PER VACANCY FOOTAGE SQUARE FOOT* RATE* Companies seem to be reshoring for a variety of reasons, including labor costs in China, transpor- King of Prussia 2,950,019 sf $7 4% tation costs, supply chain issues, lead times, Swedeland 5,336,499 sf $7 4% quality, and intellectual property protection. In addition, productivity in the United States has Norristown/Plymouth 2,683,768 sf $5 NA increased. One issue with reshoring is that many new industrial facilities are highly automated, Plymouth Meeting/Blue Bell 860,290 sf $10 17% which means fewer jobs are being created than Fort Washington 897,737 sf $5 23% there would have been in the past. Horsham/Willow Grove 2,288,026 sf $5 18% Because of the price of land, Montgomery Coun- Horsham/NAB 1,531,814 sf NA 8% ty is unlikely to get any large scale new industrial plants. However, the reshoring trend may lead to Suburban Philadelphia 220,399,154 $5.47 9.1% the expansion of existing manufacturers in the United States 20,795,432,076 $5.21 8.6% county; pharmaceutical related manufacturing * Rent and Vacancy figures are estimates based on an analysis of available data from the CoStar Group between March, 2013 and remains an important specialty of the county; and September, 2013. “NA” is signified where not enough data was available to make a reasonable estimate. many manufacturers may seek modern space that is more efficient and lower costs. Pharmaceucal Manufacturing ‐ Almac Flex Space ‐ Shoemaker Road

Recently, most large scale wholesaling and dis- Almac opened a new U.S. headquarters in Low‐ This flex space and light industrial development, tribution centers, with some of these focusing on er Salford in 2010 which included a 166,000 consisng of five buildings, was built on Hender‐ online retail distribution, have located in the square foot building for research, manufactur‐ son Road in Upper Merion between 1999 and Lehigh Valley or central Pennsylvania and it is ing, packaging, storing, and distribuon of clini‐ 2006. The buildings contain a variety of smaller unlikely these will locate in Montgomery Coun- cal trial pharmaceucals. scale industrial and commercial businesses, in‐ ty; however, smaller scale facilities that need to cluding a truck rental place, a bakery, an air con‐ be near the Philadelphia market may. dioning installaon firm, a printer, a label Flex space and light industrial space will most manufacturer, a torlla distributer, a satellite TV likely continue to be needed by small companies, installer, and a sports recreaon center. including new companies and those leaving older obsolete industrial space.

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Retail Uses Retail construction has been very strong over the National vacancy rates have been running a little In addition, many retailers want to be in more past decade, and the county now has 36 square over 6.5% while the Philadelphia suburbs are established suburban areas rather than greenfield feet of shopping center space per resident, while slightly lower. Within the turnpike corridor study sites on the edge of the region. All of these the national average is 23 square feet. Counting area, most of the submarkets are below the subur- trends mean, that although the retail market is all retail space, the county had about 38,800,000 ban vacancy rate. The highest vacancies in the fully saturated in the turnpike corridor, there will square feet in 2012, while the estimated demand county are in the western part of the county, par- be some demand for new space and old space of residents is only 19,600,000 square feet. ticularly the Route 422 corridor where so much may convert to other uses, at least partially. retail space has been added recently. Why is there such a disparity? There are two Changing Retail ‐ Plymouth MeeƟng Mall major factors. First, Montgomery County is a Overall, it appears the retail market in Montgom- The Plymouth Meeng Mall, first built in 1966, regional draw. The King of Prussia malls and ery County is saturated and growth will not come has gone through many transions. A few years Philadelphia Premium Outlets draw from the from unmet demand of residents. In addition, whole region, while the Montgomery, Chelten- shopping over the internet is increasing. Howev- ago, aer IKEA le, the mall was updated with ham, Willow Grove, and Plymouth Meeting er, this does not mean there won’t be new retail the largest Whole Foods store on the east coast malls all draw from outside of the county. development. Sometimes, new companies want to and a group of restaurants clustered around an enter the market, such as Wegmans or Bottom outdoor courtyard. More recently, the Mercy Secondly, many shopping centers are converting Dollar in the grocery business, and this means Health System opened a large healthcare center some space to other uses, even though this space they will want new sites. at the mall. is considered shopping center. For example, the Plymouth Meeting Mall recently converted Sometimes, companies have new formats that re- 23,000 square feet to a healthcare center; an old quire new buildings, such as drug stores adding Kmart in the Eagle Plaza shopping center has drive-throughs or convenience stores adding gas been turned into self-storage; and other shopping sales. At other times, whole new retail formats centers have seen old department or grocery emerge, like main-street lifestyle centers, such as store space converted to back offices and ambu- the Providence Town Center. In addition, certain latory care centers. retail, like auto sales, is growing quickly and needs new, modern space.

Retail Construction in Montgomery County

Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Square Feet 850,859 1,978,912 541,078 1,401,094 1,130,610 1,587,972 1,046,004 1,699,508 699,970 436,156 804,810

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Shopping Centers and Planning Regions ! ! Telford Lower Moreland Souderton Hatfield Twp. Montgomery ! Hatboro 29 ! East Greenville !! Horsham Pennsburg ! ! Marlborough Salford Hatfield! !!! Bryn Athyn ! Franconia Bor. Upper Hanover Red Hill ! HORSHAM-WILLOW !GROVE! Upper NORTH PENN 611 Moreland UPPER PERKIOMEN ! 309 ! ! ! 476 !! ! ! ! ! ! ! ¨¦§ ! Lansdale! ! ! !! VALLEY ! ! ! INDIAN VALLEY ! ! ! ! Green Lane ! ! ! ! Towamencin North Upper ! Abington ! !! ! Wales Lower ! !! 663 Gwynedd Dublin ! Upper Lower Upper ! ! Salford Salford Gwynedd AMBLER REGION ! Rockledge Ambler 276 ¨¦§ Jenkintown ! Upper ut202 Frederick ! Douglass Lower ! EASTERN MONTGOMERY! New Frederick Whitpain 73 COUNTY Cheltenham Hanover 73 !! ! ! ! ! ! CENTRAL PERKIOMEN VALLEY Worcester ! Schwenksville ! ! Springfield Skippack ! ! ! !!! ! ! ! CONSHOHOCKEN/ Perkiomen ! ! ! East Norriton PLYMOUTH 100 NORRISTOWN Philadelphia POTTSTOWN ! ! MEETING REGION ! REGION Collegeville !! ! ! Norristown Plymouth ! !! ! ! ! Whitemarsh ! ! Lower Upper Limerick Trappe ! West! ¯ Lower Providence Bridgeport Pottsgrove! ! 422 Norriton ! Pottsgrove ! ut SPRING-FORD Conshohocken ! ! ! ! ! ! West W ! ! Upper! ! ! Berks County Upper Conshohocken e ! Sch ! Merion ! s u ylki t ! l Providence ! ! l ! P Pottstown River Royersford o ! ! ! MAIN LINE/KING OF PRUSSIA t ! ! t 29 76 s ! Lower Merion g ¨¦§ ! ! Narberth r o ! v Chester County ! ! e ! ! !! ¨¦§476 ! ! Neighborhood ! Regional ! Big Box or Department Store ! Super-Regional Delaware County ! Community Planning Area

2012 RETAIL ESTIMATED 2010 ESTIMATED 2040 TURNPIKE CORRIDOR SQUARE RETAIL DEMAND RETAIL DEMAND REGIONS FOOTAGE OF RESIDENTS OF RESIDENTS COMMENTS Ambler Region 1,630,000 sf 1,750,000 sf 1,940,000 sf Residents go to Montgomery, Plymouth, and Abington for regional shopping Conshohocken/Plymouth Meeting 3,060,000 sf 1,100,000 sf 1,280,000 sf Region contains 1,020,000 square foot mall and large IKEA store. Eastern Montgomery County 6,090,000 sf 2,870,000 sf 3,030,000 sf Region contains two enclosed malls with 2,530,000 square feet. Horsham-Willow Grove 2,900,000 sf 1,680,000 sf 1,910,000 sf Residents go to Abington for regional shopping. Main Line/King of Prussia 6,820,000 sf 2,730,000 sf 2,960,000 sf Region has the King of Prussia malls with 2,800,000 square feet. Norristown Region 3,770,000 sf 2,170,000 sf 2,450,000 sf Residents go to Plymouth and King of Prussia for regional shopping. Montgomery County as a whole 38,790,000 sf 19,600,000 sf 22,200,000 sf

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Apartment Uses Apartment construction in the county has been Both nationally and regionally, there is a concern Conshohocken Apartments ‐ The Grande at relatively strong over the past decade, although that the apartment market is getting overheated, Riverview 2012 was a down year for new units. Over 500 that too many apartments will get developed at units are currently under construction in the the same time. In the short term, this is a risk, The 387 unit Grande at Riverview was built be‐ county, and an additional seven developments although it hasn’t happened yet, but in the long tween 2008 and 2013. It is built up to the street with at least 250 units each (three have over 500 term, there are fundamental demographic and with much of the parking under ground and is units proposed) are in various stages of the plan- development shifts that should keep demand for designed to appeal to young workers in Con‐ ning and design process. apartments high. shohocken. Relavely uniquely, this develop‐ ment is condominiums and has remained con‐ Right now, Montgomery County is following the These shifts include an aging population, more dos despite the down market that has led most national trend that has made, according to IRR, non-family households, deferred marriage and other projects under construcon to be rental the apartment sector the hottest property sector child-bearing, a preference of many younger in 2012, with almost all markets not only demon- adults for more urban-style living, more immi- apartments. Smaller condos of 800 square feet strating strong property fundamentals but also grants living in the county, less land available for sell for about $170,000 while larger ones of experiencing all-time low capitalization rates. single-family detached homes, and a slower 1,200 square feet sell for around $240,000. This These factors have combined to drive new devel- economy. can be compared to local rents of about $1,500 opment in many markets, making multifamily the per month for a one bedroom or $1,900 for a The county will need to add 38,000 more homes sole major property sector experiencing signifi- two bedroom. by 2040, and over a third of these are expected to cant expansion across the country. be apartments. The Turnpike Corridor is ex- At the time of the IRR report, the Philadelphia pected to have an even higher share of its new market area had a 3.7% vacancy rate, well below homes being apartments, mostly because the the national average of 5.16% and very attrac- amount of available land is limited. tive to national investors, which has helped drive the proposals for new apartment construction.

Apartment Construction in Montgomery County

Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Dwelling Units 57 473 956 648 743 1,142 562 407 688 428 76

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Forecasted New Housing Units

Lehigh County Bucks County

Telford Hatboro Lower Moreland Souderton Montgomery Upper Hatfield Twp. Horsham- 29 Salford Franconia East Willow Grove PerkiomenPennsburg Horsham Greenville Hatfield SFD 740 Bryn Athyn Valley Bor. North Penn Red Hill Upper SFD 940 SFD 1,080 SFA 990 Upper Marlborough 309 Moreland SFA 530 SFA 1,560 MF 1,250 Hanover Indian Valley MF 330 MFLansdale 1,800 Total 2,980 611 Lower Abington Green Lane SFD 1,890 Total 1,800 Total 4,440 Gwynedd SFA 1,210 476 Upper Upper ¨¦§ Towamencin North Eastern MF 750 Wales Dublin 663 Salford Upper Ambler Mont. Co. Total 3,850 Rockledge Gwynedd Area SFD 280 Douglass Ambler 276 New Lower SFD 660 ¨¦§ JenkintownSFA 490 Hanover Upper Salford Frederick SFA 720 MF 600 Central MF 920 Total 1,370 Lower 73 Perkiomen Total 1,370 Cheltenham 73 Frederick Worcester Valley Whitemarsh SchwenksvilleSFD 1,620 202 Whitpain Pottstown ut Springfield Skippack Area SFA 680 Conshohocken SFD 2,790 MF 510 Norristown East Plymouth Total 2,810 Norriton 100 SFA 1,400 Limerick Area Meeting Philadelphia MF 1,280 Perkiomen SFD 1,100 Plymouth SFD 450 Total 5,470 SFA 1,360 SFA 450 Spring-Ford Trappe Norristown MF 1,600 MF 1,040 SFD 1,580 Collegeville Total 4,060 Upper Bridgeport Total 1,940 Lower ut422 SFA 1,430 Lower West Pottsgrove Pottsgrove Conshohocken 76 MF 1,760 Upper Providence Norriton ¨¦§ W Providence West Berks County Berks e Sch Total 4,770 Main Line / Conshohocken s u Pottstown ylki t l l P R ive Royersford King of Prussia o r Upper Lower Merion t SFD 170 t 29 s Merion g Narberth r SFA 580

o v Chester County e MF 1,460 476 Total 2,210 ¨¦§

Delaware County Additional Units Forecasted for Year 2040 Household Composition as a Percentage of All TOTAL SFD SFA MF 2040 HOUSEHOLD TYPE UNITS UNITS UNITS UNITS HOUSEHOLD TYPE 1980 2010 PROJECTED ADDED ADDED ADDED ADDED Family Households w/ Family Households w/ 37.5 32.3% % 32.2% 11,800 8,500 2,300 1,000 Children Under 18 Children Under 18 Other Family Households 38.8 35.6 % 33.8 % % Other Family Households 7,800 3,000 3,100 1,700 Householder Living Alone 20.4 26.3 % 27.3 % % Householder Living Alone 13,300 1,300 4,500 7,500 Other Nonfamily Households 3.2 5.8 % 6.7 % % Other Nonfamily Households 5,100 500 1,500 3,100 Total 38,000 13,300 11,400 13,300 Sources: U.S. Census Bureau, Montgomery County Planning Commission Source: Montgomery County Planning Commission

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