Office-space seesaw effect

When Nutrisystem Inc. relocates its headquarters, call center, and about 350 employees to the Fort Washington Office Park next year, the move will be Upper Dublin Township's gain and Horsham's loss.

But if recent trends hold, there's a good chance that the 130,000 square feet the weight-management company sheds in Horsham will fill up, compliments of - Upper Dublin.

An oddly symbiotic relationship has developed between the office markets in these neighboring Montgomery County municipalities, which together have more than 8 million square feet of commercial space.

As the pattern has gone for at least the last 10 years, Upper Dublin's Fort Washington office complex gains a tenant, often from one of Horsham's office parks. What soon follows is a win for Horsham: A defector from Upper Dublin moves in.

The corresponding ups and downs of each market's vacancy rates is what Matt Devine, a commercial broker at Grubb & Ellis Co., calls "the seesaw effect."

"We sure keep moving companies busy, don't we?" quipped Horsham Township Manager Michael McGee.

Indeed. Among the recent back-and-forths:

In December 2007, GMAC moved employees from six Horsham office buildings (plus a Cherry Hill location) to a 450,000-square-foot corporate center at the Fort Washington Office Park. The property, the former Expo Center, underwent an $82 million renovation by Liberty Property Trust to accommodate the mortgage company's growing workforce of 1,800.

Moving into the 200,000 square feet GMAC left behind in Horsham were two companies that pulled up stakes in the Fort Washington park: United Healthcare Group and Hartford Insurance Co.

About the same time, a Kellogg Co. sales office headed to Horsham from Fort Washington.

Nutrisystem won't talk about its intended change of venue. But people familiar with the move said that by August the company will occupy 123,000 square feet on Office Center Drive in the Fort Washington complex that housed Hartford Insurance.

The moving vans don't have far to travel. Fort Washington is just one exit (less than five miles) west of Horsham on the Pennsylvania Turnpike.

Turnpike access makes both office markets appealing, said Jim Mazzarrelli, senior vice president and regional director at Liberty Property, which owns 2.7 million square feet of commercial space in Horsham and 1 million in Fort Washington.

"The advent of this improved infrastructure brought these two markets almost into one," Mazzarrelli said, citing more than $20 million in interchange improvements since 2000 that has made getting into each town's office parks speedier.

Horsham's turnpike exit is the Willow Grove Interchange.

Motorists have two turnpike options to get to the Fort Washington Office Park. One is the Fort Washington Interchange at Route 309. The other is a limited-access, automated interchange at Virginia Drive that allows eastbound turnpike traffic to enter at the heart of the office park. (Exiting the office park, a motorist can go only west on the turnpike.)

Such easy access to the region's major east-west highway and proximity to each other renders the two locations "interchangeable," said Adam Shute, senior director at Newmark Knight Frank Smith Mack, a global real estate services firm.

Why all the moves, then?

"Space functionality and economics," Shute said.

The asking rate for top-quality office rentals in the two markets - where the vacancy rates are a little more than 20 percent - is about even at $25 a square foot.

Taxes aren't drastically different either. Upper Dublin's property-tax rate is slightly higher than Horsham's - the owner of a property worth $200,000 would pay about $300 more there annually.

For GMAC, the move to Fort Washington was all about more room. Spokeswoman Jeannine Bruin said that when the mortgage company decided to bring its local employees under one roof, a facility that could accommodate them couldn't be found in Horsham.

Shute, from Newmark, is the leasing agent for the complex on Office Center Drive in Fort Washington where Nutrisystem, which also wants to consolidate, is headed.

The now-Horsham-based United Healthcare and Hartford had been tenants of Office Center Drive more than 20 years, he said, but needed a complete retrofit.

Those companies could get the desired upgrades simply by moving into some of the offices GMAC vacated in Horsham. It beat staying in Fort Washington and working during a remodel, he said, especially since there would be no commuting upheaval.

And now that Nutrisystem is moving in, it all works out for the Fort Washington Office Park.

Still, Upper Dublin officials acknowledge they have work to do to keep competitive. Since it was built on marshland in the 1950s, flooding has plagued the office park, causing one death and tens of millions of dollars in property damage.

Upper Dublin is seeking grants of about $30 million for water-management improvements recommended by Temple University. "We could be a whole lot better than we are now," said Township Manager Paul Leonard.

And Horsham's future plans?

"Our first goal is to pipe all of our water to Fort Washington," McGee said - quickly adding: "That's a joke!"