City Avenue in Lower Merion set to triple its apartment count, transforming the office and retail hub

City Avenue is trying to change.

At first glance, a drive along the border between Philadelphia and Lower Merion Township reveals a multilane roadway that is choked with traffic at rush hours, its flanks lined by strip malls, fast-casual restaurants, and shopping plazas. Along its eastern stretch, late 20th-century office towers hold court over a sea of surface parking lots.

It doesn’t look like a great spot for a walkable new residential neighborhood.

“When City Avenue was really developed in the 1950s, it was auto-oriented and celebrating access to the car and the freedom that you have in the suburbs to have a vehicle,” said Jillian Dierks, Lower Merion’s senior planner. “Now we’re looking at promoting the principles of new urbanism and encouraging a more mixed-use environment.”

Lower Merion laid the groundwork for this change in 2010, when the township adapted its zoning code to encourage more density in key areas. That’s part of the reason for the boom in residential development on the Montgomery County side of the line in recent years. Since 2019, at least 848 units have been built, and an additional 1,674 new units have been approved for construction in that part of Lower Merion.

The prospective building boom on the north side of City Avenue is partly due to the space available in the surface parking lots wreathing the office buildings and shopping malls that dominate the Lower Merion section of the strip.

Now policymakers are trying to pull this auto-oriented corridor into the 21st century.

“We are close to transit, whether it’s the highway, the buses, or the trains, so we’re a prime location for infill. When you drove around, you saw all the parking lots,” said Bryan Fenstermaker, president and CEO of City Ave District, the nonprofit business development agency that straddles Lower Merion and Philadelphia. “People are looking for walkability and connectivity.”

Given the current development environment with high interest rates and construction costs, many of the projects remain in the planning phase. The exception, unveiled earlier this year, are Federal Realty Investment Trust’s plans to expand its residential offerings with 217 units at the site of a former Lord & Taylor’s department store at 121 E. City Ave.

Other property owners with big development plans include Keystone Development + Investment with 272 units at One Belmont and Hanover Properties with 425 units at 111 Presidential Blvd. Tishman Speyer planned 757 units around its Bala Plaza office properties but last year sold them to the FLD Group Inc. and the Adjmi family. The new owners have said they plan to continue with a residential redevelopment.

There are no clear timelines for any but Federal Realty’s project, where fencing has gone up around the site.

“The only thing that would hamper any of this is what’s going on with the interest rates and market conditions,” Fenstermaker said. “Anytime the Fed keeps hinting at interest rate [cuts], why wouldn’t you stall a bit?”

City Avenue is already home to some residential buildings, largely on the Philadelphia side of the border. Before 2008, the Lower Merion part of the area had a total of 1,040 multifamily units, in contrast with the 1,015 in Presidential City, a single huge apartment complex on the Philadelphia side of the line.

But the corridor is best known for its commercial uses. In accordance with mid-20th-century planning norms, retail, office, and residential buildings were largely kept at a distance from each other.

On the eastern end of the avenue, office complexes like Bala Plaza Park and One Belmont house big companies like the Susquehanna International Group and Philadelphia Insurance, along with myriad big law firms and high-end medical offices.

As the commercial properties grew older, policymakers saw an opportunity to create more of a mixed-use setting, bringing life to sections of the area that had previously been dead after 5 p.m.

“A lot of the office development happened in the 1950s and ‘60s, so we were seeing some stagnation and decreasing property values for the commercial properties,” Dierks said. “There was interest in spurring reinvestment into City Ave district. Combining office and residential makes a lot of sense.”

Retail is still thriving along City Avenue, but these properties are also slated to see residential development. Federal Realty spent $8 million on facade improvements for its shopping center. The huge Sak’s Fifth Avenue there enjoys strong sales, according to the City Ave District, and has resisted offers to move to King of Prussia.

Still, when Lord & Taylor went bankrupt and shuttered its physical retail across the country, Federal Realty did not focus exclusively on retail offerings to replace it. Instead, they decided that residential over smaller-scale retail — they are hoping for a cafe and perhaps boutique fitness — was better for the future of City Avenue.

“We had to make a choice about how to best repurpose the development block, and it’s not an easy task in this retail world to backfill a 120,000-square-foot department store,” said Mark Brennan, vice president of regional development at Maryland-based Federal Realty. “Residential was the highest and best use, coupled with ground-floor retail.”

When Federal Realty previously built 87 apartments in the Delwyn at Bala Cynwyd (behind its mall at 59 E. City Ave.), skeptics said no one would want to live in the auto-oriented shopping strip. But the building quickly filled up.

Instead of marketing to the stereotypical suburban consumer — a family with multiple children — City Avenue housing appears to be courting the consumer base that developers in Center City attract.

“You’re seeing young professionals before they have children, retirees, singles, childless couples,” said Christopher Leswing, director of building and planning for Lower Merion Township. “We find after four to six months they’re 90-95% occupied.”

So-called family-size apartments of three bedrooms or more are a rarity, despite Lower Merion’s reputation for excellent public schools. The township has been working with the school district to measure the effects of multifamily development along City Avenue but so far have found little impact.

“It’s probably one of the conversations that comes up most at community meetings, at least for multifamily projects, is how many kids are they going to put into the schools,” Fenstermaker said. “But we’re not seeing an influx. These buildings are not bringing kids into the schools.”

The burst of new proposed development is coupled with an expansion of new trails, bike lanes, and pedestrian safety measures, the kind of amenities that have become the norm closer to Center City.

St. Joseph’s University is in the midst of a $300 million building boom of its own — including large new dorms on City Avenue — and is building a pedestrian underpass to cater to students. City Ave District is spending millions of dollars to improve pedestrian bicycle access and safety along the corridor.

Despite these improvements and the area’s two SEPTA Regional Rail stops, most people travel by auto, and the density of traffic, with its attendant exhaust, and a dearth of street trees makes walking along City Avenue unpleasant.

Local policymakers insist that change is underway and that as residences are added, there will be a greater impetus to make the area more livable. In their vision, it will appeal to those who want to live in the suburbs but be close — conceptually and actually — to the city.

“We’re trying to make it much more pedestrian-oriented,” Leswing said. “It’s a greener environment than many of those other [suburban commercial hubs], and it’s not quite as auto-oriented.”