KOP Development Boom

Source, Philadelphia Business Journal, Natalie Kostelni

In April, Purolite Corp. held a virtual groundbreaking on a new $14 million, 74,000-square-foot building in King of Prussia and has plans to invest another $25 million to fit it out and install the equipment it needs to operate the manufacturing facility.

Not far away from the Purolite plant site at 3700 Horizon Blvd., Steelyard Sports is proposing an expansion off Swedeland Road that would add six new athletic fields and complement its current indoor-outdoor sports complex.

At the other end of the township, at the Village at Valley Forge, Children’s Hospital of Philadelphia is nearing completion of a $298 million hospital, Toll Brothers Inc. is moving forward with another stacked townhouse community, and Realen Properties plans to build a $20 million, 40,000-square-foot medical office building off Guthrie Road next to Anthology, a new senior housing complex.

In all, about $1.3 billion of projects are currently underway and contributing to the more than $4 billion in development that has transformed Upper Merion — particularly King of Prussia — over the last decade, solidified it as the center of Philadelphia’s western suburbs, and positioned it to rival the city for employers and residents.

ALL ROADS LEAD TO KOP
About $1.3 billion of projects are currently underway, hitting all corners of Upper Merion. Click on the map below to see details.

The third-largest jobs center in the region outside of Center City and University City, Upper Merion had 61,890 jobs in 2017, up 17% from 52,844 in 2010, according to King of Prussia District data.

Though it’s too soon to know how the jobs number will fare post-pandemic, Upper Merion is riding a resurgence the suburbs are experiencing as people desire less dense environments, more open space and more living space. Township officials are also confident that its highly rated schools, mix of housing stock and other desirable attributes will enable it to withstand any rough patches that might present themselves.

The Realen project will be built on one of the two last remaining development sites at the 123-acre Village at Valley Forge, which has been integral to King of Prussia’s evolving status. “It was an absolute game changer,” said Eric Goldstein, executive director of King of Prussia District. “It gave King of Prussia something it never had before and that was a true mixed-use community and a downtown.”

The ongoing build-out of the Village at Valley Forge and development elsewhere in the township has brought its own set of challenges for Upper Merion and even prompted some anti-development sentiment as more projects come to fruition and raise concerns that too much open space is getting gobbled up by development.

“We know we have to take a hard look at managing that growth and the pressure that it has on infrastructure,” said Bill Jenaway, an Upper Merion supervisor who has been on the board for 12 years. “It’s a unique and critical struggle we have and a great challenge to have as an elected official. It’s more palatable than having the opposite problem but striking that balance for the future is the most challenging situation we have right now. We could see it coming.”

Though the King of Prussia Mall continues to dominate the retail landscape, the projects that have been constructed have steadily diversified the township’s economy. A concerted effort was made a decade ago to expand the types of businesses locating in Upper Merion.

“You look at where the economy was 10 years ago and it was so heavily focused on retail and office,” said Greg Waks, who has also served as an Upper Merion supervisor for the last 12 years. “We have gone from essentially a two-wheel-drive economy to a four-wheel-drive economy. There’s just an enormous amount of demand to be in King of Prussia. There’s a saying that all roads lead to King of Prussia. If you think about it, there’s a lot of truth to that.”

Life sciences continues to be a growing area with the development of Discovery Labs, where WuXi Biologics moved into 33,000 square feet, and the relocation of Purolite’s headquarters last year from Bala Cynwyd.

Health care and tech jobs have also increased. The Village at Valley Forge attracted a new outpatient facility for Main Line Health as well as CHOP’s new hospital and specialty care center. While Lockheed Martin has had a decades-long presence in King of Prussia, tech firms like Qlik, FinPay and Radial Corp. have also located in the township.

Upper Merion, not unlike other suburban communities, is seeing an influx of warehouse-distribution centers. Township officials last year approved the development of a 331,428-square-foot warehouse-distribution center at 900 River Road.

As part of its diversification efforts, the township has also deliberately focused on entertainment and sports businesses. “We would love a minor league baseball team but we know that will never happen,” Jenaway said.

What it has though is a Topgolf that will get underway this year and the expansion of two sports venues to capture a portion of the growing travel and youth leagues. With sports tournaments come hotel stays, restaurant visits and shopping trips at the mall. Upper Merion also has a casino, and most of Valley Forge National Historical Park sits within its boundaries.

The development of the Village at Valley Forge also led to Swedeford Road becoming one of the most desirable office markets in the region, attracting investors and companies that wanted to be near what was an expansive amenity for tenants.

“When I think back to 2011, when I first got to King of Prussia, I would say King of Prussia had lost its way in terms of staying at the forefront of people’s attention in particular as a place for a corporate location,” Goldstein said. “In the 1990s and early 2000s, there was a lot of competition that came up in the suburbs and gave King of Prussia a run for its money. It was compounded by the Great Recession and struggling. It didn’t have a vision for how to move forward, but the diversity of industries and jobs helped save Upper Merion over the last 10 years and it’s going to continue and that’s very healthy.”

The growth has meant transportation increasingly becoming a focus for the township. It has engaged SEPTA, PennDOT, and the Greater Valley Forge Transportation Management Association to gather input on traffic movement and figure out ways to ease congestion.

The King of Prussia Rail is still in progress and reached milestones last year including an environmental impact assessment and an updated route. A study from 2015 estimated the rail line could add $540 million to $946 million to the assessed value of existing real estate in that section of Upper Merion over two decades and encourage developers to construct upwards of 8 million square feet of new space valued at $840 million.

In spite of that potential impact, and benefits such as improving the link between Upper Merion and Philadelphia, there are those who harbor reservations about the rail line and it hasn’t always been an easy sell.

“The idea of mass transit, light rail, we’re not opposed to that,” Jenaway said. “It’s not the route that we would have suggested and it clearly missed some opportunities. It doesn’t go the village.”

Jenaway also contends it doesn’t address where the traffic is really coming from, citing Route 202, the Pennsylvania Turnpike and Route 422.

One unknown for the township is how Simon Property Group might redevelop the King of Prussia Mall, a crown jewel in the real estate investment trust’s portfolio and the largest mall in the United States based on the amount of retail square footage. The mall owner has tried to work with Upper Merion on plans to incorporate more uses such as hotel, office and apartments but after years of discussions, little progress has been made.

Back at Horizon Drive, at the eastern end of the township, work continues on Purolite’s new manufacturing facility with construction expected to be completed by year end. The company signed a 15-year lease with two five-year extension options and will add 50 new jobs in King of Prussia when the building is up and running.

“Our expansion in Southeastern Pennsylvania, I feel, will be one our greatest achievements,” said Don Brodie, Purolite’s owner and founder, at the virtual groundbreaking.