Source, Philadelphia Business Journal, Natalie Kostelni
Not a shabby showing for the 275-unit building that fronts North Gulph Road in King of Prussia, Pa. The Ave is within walking distance of the restaurants at the mixed-use community and a short drive to the King of Prussia Mall and Valley Forge Park. If the early lease up of so many units is any indicator of the demand for this niche property type, no wonder other developers are dipping into the extended-stay, or serviced-apartment, business pioneered by Korman decades ago.
At the Laurel at 1911 Walnut St., a new $300 million luxury residential building on Rittenhouse Square in Center City, Southern Land Co. is setting aside a portion of its units as extended stay. The exact number hasn’t been set, but the company is going to see what the market demand is and gauge how many based on that. At this point, the Laurel has 54 condominiums starting at around $2.5 million and 241 apartments.
Roost, another extended stay provider, has committed to take five levels and 60 units at 1199 Ludlow, an apartment building at the East Market project in Philadelphia. These units will be extended stay and fully furnished. The 20-story apartment building will have a total of 240 apartments and this will be Roost’s third Center City location. Korman’s AKA, which is its extended stay brand in urban areas, opened in University City at the FMC Tower at Cira Centre South last year and is also seen in its Rittenhouse Square property, which has had a presence for years. Other players are in the game including Oakwood Hotel and Apartments.
In its 2016 to 2017 report for the Global Serviced Apartments Industry on the extended stay market, The Apartment Service showed that the number of these type of units has doubled in recent years. In 2008, there were 401,997 of these extended stay apartments at 6,722 locations and that number has grown by 10.5 percent to 826,759 apartments. As a result of the increase in the number of units, 42 percent of companies that concentrate on this segment of the multifamily sector contend that competition has become the “greatest challenge” to their business and can potentially lead to a softening in the market, according to the report.
Urbanization is one of the biggest drivers of growth in serviced apartments, according to the industry report. While that may be the case, there are other factors influencing Ave’s expansion, said Lea Anne Welsh, COO of Korman Communities and president of the Ave brand.
Business travel is one of the leading reasons people stay at Ave, which is the brand for Korman’s suburban properties. The industry report said that 88 percent of companies use these types of apartments during business-related travel.
People who are experiencing a lifestyle change – going through a divorce; having a house built or repaired from unexpected damage from a snow storm – also account for a growing segment of renters, Welsh said. Increasingly, those looking to downsize and live in a different way are also contributing to Ave’s growth. For example, people like the daily breakfast with Starbucks coffee, maid and laundry service, events and ability to live in an environment that is akin to staying on a long-term basis at a luxury resort or hotel.
“We really run extended-stay hotels with longer stays,” Welsh said.
To underscore that point, there’s also an around-the-clock team that helps renters with concierge services such as arranging for valet dry cleaning and events. The complex is staffed with a full-time “lifestyle coordinator” that also helps coordinate events for the community as well as individuals.
The new King of Prussia Ave has furnished and unfurnished units ranging from 572 square feet to 1,400 square feet. It also has 50,000 square feet of amenity space including business spaces, pool, fire pit lounges, a fully-equipped kitchen with grills and outdoor dining areas and a movie theater with surround sound. The project is one of several apartment developments at the Village at Valley Forge.