Tuesday, January 24, 2017

Q4 2016 King of Prussia Commercial Property Summary

By Eric Goldstein

In Q4 2016, vacancy rates in King of Prussia continued to drop for Class A commercial office space to 6.8% and nearly a full percentage point for all commercial office categories to a low of 12.1% for the year. This represents a 5% reduction in vacancy from Q4 2015.

Leasing activity for 2016 totaled 858,145 SF; well above the 5-year average of 574,596 SF per year.

This dramatic increase in demand represents more than companies just wanting a presence in King of Prussia.

We believe that the choice by HTH Worldwide, The Judge Group and Vertex, Inc. to make KOP home to their corporate headquarters is a testament to the long-term growth and redevelopment expectations in the area.

There was an interesting shift from Class B commercial office space, which experienced a slight increase in vacancy rates at the end of the year, while absorbtion in Class C space surged cutting the inventory vacancy by half since 2015 to just 8% vacancy.

Industrial/Flex space remains in high demand with a further drop in the overall vacancy rates and rising lease rates hitting historic highs.

Lease rates for all categories stayed close with the previous quarter, with Class A Office at $28.40/SF, Class B Office at $21.12/SF, Class C Office at $19.39/SF, Industrial at $8.94/nnn and Flex at $6.65/nnn.

We believe 2017 will extend the positive trend in King of Prussia for leasing demand in commercial office, industrial, flex and retail properties.
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