No Haircut Here: King Of Prussia Office Sells At A Premium
A fully leased office complex near the King of Prussia Mall sold for 7% more than it did a decade ago, bucking the trend of falling trade prices for similar properties across the region.
Chicago-based Mesirow Sale-Leaseback Capital spent just under $68M to buy three buildings totaling 250K SF from M&H Properties, the Philadelphia Business Journal reported.
The Wynnewood-based seller spent $63.5M to buy the property at 1170-1190 Devon Park Drive from Liberty Property Trust in 2015, according to Montgomery County property records. That is a difference of 7%.
The new sale price for the complex, which is occupied entirely by insurance firm USLI, comes out to $270 per SF, up from $253 per SF 10 years ago.
Most office sales over the past two years have been at notable discounts.
In the Philly suburbs, that includes the sale of Radnor Court in Wayne for $36M in January, down from a $43.7M transaction in 2014, and the $65.5M sale of Plymouth Meeting Executive Campus in October, which was previously expected to fetch $100M, the PBJ reported.
In Philadelphia proper, CSB Holdings and Tide Realty Capital’s acquisition of 2000 Market St. for $45.5M was a 58% drop from the nearly $108M the building sold for in 2018.
PMC Property Group also bought Ten Penn Center for $30M, which is just 40% of what the property sold for in 2006.
Centre Square at 1500 Market St., the city’s largest office property, is now up for sale as a conversion play. It is expected to fetch $100M, less than a third of the $328M the building sold for in 2017.
The full tenancy at the Devon Park Drive property is a standout in a market struggling with rising vacancy. The King of Prussia/Valley Forge submarket was 24.7% vacant last quarter, up from 23.5% in Q1, according to CBRE.
The Q2 rate there also outpaced the 21% the brokerage calculated for Philly’s Pennsylvania collar counties and is well above the 18.4% and 14.1% seen in Center City and South Jersey, respectively.
