Investor pumps $24M into Lower Merion apartments: Update

(Update: Adds apartment data in paragraph 5.) Marcus & Millichap Capital Corp., New York, says it's arranged $23.5 million from local investors for Philadelphia-based Cross Properties to go ahead with its planned $30 million purchase and conversion of the four-story red-brick 120,000 sq ft former Eastern Baptist Theological Seminary (Palmer Seminary) dorm complex into 132 apartments and 13,500 sq ft of offices for doctors.

The seminary is just one of several apartment projects in the works or proposed for Lower Merion Township. Others include Merloc Partners' plan to build 250 apartments near the Wynnewood Septa train station; Carl Dranoff's Ardmore Place (121 units); Nolen Properties' Righters Mill Road project (284 units); and two big Schuylkill River ex-industrial sites, the former Connelly Container Corp. and Pencoyd Iron Works, which are being reviewed by builders interested in following up old proposals of King of Prussia developer Brian O'Neill to build hundreds more units on each. Also, residential development is the leading contender for the planned sale of surplus acreage and empty buildings at St. Charles Seminary at City and Lancaster Aves. across from the ex-Baptist site. Office-to-apartment conversions are also a possibility: Mack-Cali Realty last month agreed to sell 150 Monument Blvd. to local redeveloper Bill Glazer's Keystone Property Group as part of a multi-building $201 million deal.

Who's going to live in these new apartments? The Baptist site "is right across Lancaster Ave. from Lankenau Hospital, which has 4,000 employees," notes Steven Rock, the Marcus & Millichap SVP who closed the Baptist deal. "We expect medical technicians, students at St. Joseph's University," and Philadelphia residents who are having kids and looking to suburbanize to Lower Merion schools.

Lower Merion provides a well-funded alternative to the chronically fiscally challenged Philadelphia public schools and the waitlisted charter schools that have sprung up to replace them.

But LM planning board member Brian O'Leary tells me few apartment dwellers actually have school-aged children, according to a Montgomery County study. (UPDATE: About 18 of every 100 people living in existing county apartments are under age 18; only 6 of 100 in "new" apartments are school or preschool age, according to the county's data. Read the study here. Corrected from an earlier version that assumed a higher student population.) 

Developer Cross Properties is the partnership of David Blumenfeld (brother of Broad Street-focused developer Eric Blumenfeld) and Kevin Michals (who, like David B., formerly worked for Philadelphia developer David Grasso.)

Beyond the Cross project, will Lower Merion still have room for hundreds, even thousands, of new units?

Helen Aster, president of HarrisonRichards Inc. and a veteran apartment manager in Philadelphia and the Main Line, says that in Lower Merion (as in nearby Manayunk and some other outlying Philadelphia neighborhoods) she sees a "a lot of apartments being built on speculation by investors and developers who are no longer build office buildings and strip centers due to the way the Internet has changed corporate life and retail sales."

Aster notes For Rent signs along Montgomery Ave. and free rent offers by managers eager to fill vacancies. "And that's before all the new units will be built," she told me. Investors have called her from New York eager to fund apartment deals, but she suspects they're more interested in the low prices (compared to New York) than in market demand studies. 

I ask if this is all a prelude to another big move of residents out of West Philly and Center City and onto the rental Main Line. "It happened in the 1960s," Aster told me. Real estate trends being what they are, the eventual result was a glut of apartments, many of which went condo in the 1970s: "There's a cycle." Cross is getting in early.