HFF Shopping Paoli Office Property for MF Redevelopment

PAOLI, PA—Holliday Fenoglio Fowler is shopping an unusual multifamily opportunity – a 7.45-acre office park adjacent to the Paoli train station, which already has the development rights for up to 135 units of multifamily housing. It's the largest such parcel available on the Main Line with the potential for highly amenitized luxury apartment development, Mark Thomson, HFF senior managing director in Philadelphia, tells GlobeSt.com exclusively.

“There are a lot of moving parts to this deal,” says Thomson. “It's a very rare apartment development site. There's really only one other site along the entire Main Line where you can potentially build apartments, and that's in Wynnewood. That's under contract with a group right now that's paying about $100,000 per unit for the buildable dirt.”

The property is currently a four-building office complex, with functionally obsolete office buildings that need to be demolished, says Thomson. PennDOT and Amtrak are planning to take about an acre of the site under eminent domain for a planned relocation of the Valley Road bridge over the railroad. That will not occur until Federal funding is allocated, and could take several years.

The land is zoned “Town Center,” and based on that zoning, the land's owner is entitled to build up to 135 multifamily units, Thomson says. While there is no approved plan for multifamily housing, once a developer seeks Paoli's approval, it is possible that the town could be persuaded to allow more unit.

“It makes a lot of sense on paper as a 135-unit deal, so anything else you get is just the cherry on top,” he says. The primary target for multifamily units is actually the “empty nesters,” Thomson says.

“There's really no class A apartments on the Main Line,” he says. “They really don't have a renting option, the nicest properties that you can rent in are older, seven- or eight-foot ceilings, they might have beautiful finishes, but they are older.”

Thomson says empty-nesters unloading million-dollar plus homes on the Main Line will find a downtown apartment option in Paoli very attractive. “It's right in the middle of everything.”

HFF is marketing the property to potential developers and investors, and interest from developers and equity sources has been high, Thomson says.

“Pretty much every builder who has been active in the Philly market is digging into this deal, and a lot of national builders who have been looking to get into the Philly market, are also looking at this deal,” he says. “The pricing we are shooting for is $9 million, which is just over $65,000 per buildable unit, which I think is right for this site. There are a couple of sites trading in King of Prussia for $45,000 per unit, but King of Prussia is not the Main Line, and it's not transit-oriented.”

Thomson says HFF will be seeking bids in July, and expects the transaction to close by the end of the year.