The recently completed King of Prussia Town Center shopping plaza has been acquired by a Los Angeles-based real estate fund, at what may be a record price for a recent Philadelphia-area retail property transaction.
CBRE Global Investors said in a release Wednesday that a fund under its sponsorship purchased the 263,000-square-foot shopping center at 155 Village Dr. in King of Prussia.
The fund paid $183 million for the property, according to a person familiar with the transaction who was not authorized to discuss it publicly.
That would be the highest sale price for a Philadelphia-area mall or shopping center in the last five years, according to data compiled by the CoStar Group, a real estate tracker.
The hefty price tag is an indicator of growing investor enthusiasm for so-called lifestyle centers, retail developments that lean heavily on tenants such as restaurants and health clubs that encourage longer visits, said Lauren Gilchrist, Philadelphia research director at commercial real estate services firm JLL.
"This kind of retail concept is focused on an experience whereby the consumer has a reason to stick around," she said. "And spending more time means spending more money."
King of Prussia Town Center is 87 percent leased, according to CBRE, with tenants including LA Fitness, Nordstrom Rack and REI and restaurants such as Honeygrow and Fogo De Chao. The first of those began opening in August.
An adjacent Wegman's supermarket is already owned by the CBRE-backed fund, according to the news release.
The shopping center, developed by Chevy Chase, Md.-based JBG Cos., forms the retail portion of the Village at Valley Forge, a 122-acre master-planned development that, upon completion, will feature nearly 3,000 residential units and 1 million square feet of commercial space.
JBG built the center on land acquired from Realen Corp. of Berwyn, developer of the Village at Valley Forge. A new 135,000-square-foot Children's Hospital of Philadelphia outpatient facility opened as part of the development in 2015.
Jeff Felder, who oversaw the Town Center acquisition as a senior director with CBRE Global Investors, said the surrounding development's future residents and workers would form a ready customer base for the center's shops, adding to the heavy traffic they already receive from the affluent communities located near the property.
Felder said shoppers are drawn to the walkable combination of shopping-center stalwarts like Nordstrom Rack and REI by unique-to-this-market eateries such as City Works and Paladar Latin Kitchen & Rum Bar.
That mix differentiates the property from the massive King of Prussia mall nearby, he said.
"I view this center as complementary, not competitive to the mall," Felder said. "This location is one of the premier retail submarkets in the country."