Teardown Candidates After the Zoning Amendments

Inside the developer’s mind

Picture a developer with a sharp pencil, hunting for opportunities in the 4a and 5b zones after the amendments pass.

The teardown premium under the new zoning is what a developer can pay for the land plus the old building (its residual land value) minus what the building is already worth as an income stream (its existing-use value). When that gap is positive, demolition pays. When it is negative, the old building is worth more standing. A positive gap is bad news for renters.

What the old building is worth standing. Take the building type that fills these blocks: a three-unit building on a modest lot. It throws off roughly $44,000 in net operating income, which at a 6% cap rate values it around $740,000. Two recent sales in these districts confirm it: 204 Grayling, three units, sold for $737,500 in June 2026, and 106 Hampden, three units, for $918,000 in January 2026. Call the hurdle $800,000. That is what a developer has to clear before touching it. A larger six-unit building sits higher, around $1.3m, and is correspondingly harder to justify tearing down, but six-unit buildings are the exception here. Of the 35 small buildings in these districts, one has six units; 26 have two or three.

When redevelopment can pay. The new by-right building must cover that hurdle plus demolition, construction, and a developer’s profit. A lot of 6,000 to 7,500 square feet, the typical size under one of these three-unit buildings, supports roughly 10 to 14 new units. Running it with the CRE Development 101 rent figures, a $500,000-per-unit condo sale price against the borough’s $595,000 median home, and national mid-rise construction costs of $250,000 to $325,000 per unit, here is the teardown premium (new residual land value minus the roughly $800,000 existing value) for a three-unit teardown:

Three conclusions come out of this.

First, against a three-unit hurdle, even a new rental building is worthwhile once the lot yields about a dozen units, which most do. Replacing three units with twelve rentals clears the standing value by roughly $48,000, and the margin grows as the unit count rises. Rental replacement is not the marginal case it looks like against a six-unit building; for the stock that dominates here, it works.

Second, for-sale condos are worthwhile at nearly every yield and by a wide margin. In a borough with a $595,000 median home, a developer captures more value per unit by selling than by renting, and the premium runs from half a million dollars upward. For-sale condos are the strongest demolition channel.

Third, the buildings most exposed are the lowest-value ones. Low in-place income means low existing-use value, which is the easiest hurdle for the teardown premium to clear. The oldest, lowest-rent buildings are, by that very fact, the most vulnerable to teardown. A well-kept building charging market rents is comparatively safe because its standing income value is high.

There’s also a clean link to parking. Construction cost per unit is the most sensitive input, and structured parking is the biggest single line item. A lower parking mandate lowers per-unit cost, which raises the teardown premium. A 0.7-space rule wouldn’t just relocate cars onto the street; it would make demolition worthwhile on more lots.

The 4a and 5b districts

The 4a and 5b districts contain 170 parcels¹ (104 in 4a, 66 in 5b), broken down by what’s on them today²:

The stock in the middle rows: about 35 small two-to-six-unit buildings holding roughly 110 dwelling units. These cluster on the blocks right next to the station: Elmwood, Iona, Grayling, Dudley, Hampden, Essex, and Windsor. Owner mailing addresses in the assessment records suggest about two-thirds are absentee-owned, a good proxy for rental; most of the rest are duplexes where the owner lives in one unit and likely rents the other. So about 95 to 110 of these units are tenant-occupied. They are Narberth’s older, lower-rent housing, and they are the parcels where the teardown premium can turn positive.

The reason they’re exposed shows up in the lot sizes. A typical two-to-three-unit building here sits on 5,000 to 8,000 square feet. Under by-right multifamily rules, those lots could carry roughly 10 to 25 units, three to eight times what stands there now. That multiplier is exactly the condition the model above needs for demolition to be worth it. Applying the teardown threshold from the model (a new development has to yield enough absolute units, and enough gain over the existing building, to clear the standing income value), the exposed count comes out as a range depending on how much the new rules let a developer build:

• Conservative yield assumptions: 15 of the 35 small buildings are candidates, putting about 51 existing units at risk.
• Development-favorable assumptions: all 35 are candidates, the full 110 units.

Widen the screen to every developable parcel, adding single-family lots big enough to support by-right multifamily and underused Montgomery Avenue commercial, and the exposed set runs from 72 to 134 of the 170 parcels.

These yield estimates assume apartments are permitted by-right on these small lots. As we read the proposed amendments, apartments go by-right only on lots above some undefined minimum area, a threshold not yet in any ordinance text. If that threshold is larger than the 4,000-to-7,000-square-foot lots that most of this small stock sits on, then the by-right path on those parcels is stacked townhouses or row-homes rather than apartments, which lowers the yield. It still exceeds the existing two or three units, so the teardown incentive survives in weaker form, but the figures would come down. Pinning down the minimum lot size and any density cap in the ordinance text is the one thing that would move these counts, and it is a question for Council.

Recent sales in the source data:

• 204 Grayling, 3 units, June 2026, $737,500 ($246k/unit)
• 106 Hampden, 3 units, Jan 2026, $918,000 ($306k/unit)
• 114 N Essex, 4 units, June 2025, $730,000 ($182k/unit)
• 111 Dudley, 5 units, Sept 2022, $1,000,000 ($200k/unit)
• 111 Iona, 4 units, Jan 2022, $775,000 ($194k/unit)

The market in these blocks is turning over: several of the small buildings changed hands in 2024, 2025, and 2026. The prices confirm the hurdle. The three-unit buildings above sold for $737,500 and $918,000, and the model’s $800,000 hurdle for a three-unit teardown sits squarely between them. These buildings are worth real money standing, which is why demolition pays only where the by-right density gain is large. On lots yielding a dozen units or more, which most of these are, the gain is large enough.

Existing renters will bear the cost. The new development is likely to skew toward for-sale condos, not just apartments.

Thanks for reading.

Our Narberth, Inc. is a Pennsylvania nonprofit civic organization engaged in research, public education, and community advocacy on land use and zoning in Narberth Borough. Nothing here is legal or financial advice. We welcome challenge to any figure or source in this piece.