Office attendance rises in some major US cities

 By Dani Romero CoStar News

Workers returned to offices at a higher rate in September than they did in the year-earlier month, though attendance varied widely across major U.S. metropolian areas.

Occupancy across 10 large regions in the U.S. tracked by Kastle Systems rose to 55.4% of pre-pandemic levels in the week ended Sept. 30, up from 52.9% in the month-earlier week ended Aug. 26.

Kastle measures office occupancy against a March 2020 baseline — before widespread pandemic office closings — tracking attendance using anonymized keycard-swipe data from thousands of buildings nationwide.

The September reading was higher than the 54.1% recorded during the same week a year earlier.

New York saw the largest monthly increase, climbing to 66% of its pre-pandemic level from 53.8% at the end of August and 54.3% during the comparable week a year earlier. In Washington, D.C., occupancy rose to 52.2% from 45.8% at the end of August and was unchanged from 52.3% the prior year.

Austin moved in the opposite direction, with occupancy falling to 67.9% at the end of September from 73.7% a month earlier. Philadelphia, meanwhile, remained the lowest of the 10 markets tracked by Kastle at 42%, up from 39.5% at the end of August but below 42.6% during the comparable week a year earlier. Chicago was little changed at 56.7%, compared with 56.9% a month earlier and 57.3% a year earlier.

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Spring EQ consolidates Philadelphia offices as companies upgrade space

By Katie Burke CoStar News

Several years after calling its employees back to the office, a mortgage lending firm tired of being spread across several buildings is consolidating its Philadelphia headquarters under one roof.

Spring EQ took over an entire floor in the Cira Center office tower overlooking the Schuylkill River. The move enables it to let go of two separate leased spaces and bring its more than 250 employees in the area together at a single address.

The company is preparing to move into just shy of 27,000 square feet at the Brandywine Realty-owned building. The space is smaller than it had collectively occupied prior to the decision, but company executives believe it will be far more efficient in the aftermath of transitioning back to in-person work.

And even though the size of the new office will be smaller, the price tag is far higher — a worthwhile investment given that the 2929 Arch St. space is expected to help with productivity by having all of its sales, operations and technology teams side by side, said Spring EQ Chief Executive Joe Steffa.

The company, founded about a decade ago and acquired by private equity giant Cerberus Capital Management last year, has previously operated across several offices in Radnor and Conshohocken, Pennsylvania, as well as an outpost at 300 Fellowship Road in Mount Laurel, New Jersey.

Office rents in the South Jersey suburb average less than $26 per square foot, according to CoStar data. By comparison, premium office options in Center City Philadelphia have climbed to about $52 a square foot.

Since the acquisition, Spring's workforce has ballooned to more than 500 employees, most of whom are expected to commute to a physical office at least three days a week. And with access to Cira Centre features such as a media room, fitness center and a variety of different workspace types, Steffa said the firm expects the new headquarters to help with recruiting and retention.

It's a move other companies nationwide are making as they aim to beef up their attendance policies and attract the best talent.

While some of those decisions have meant downsizing their square footage, many have come with a larger investment in the space, as tenants prove willing to pay higher rents for better-quality options.

The flight-to-quality shift has been a critical ingredient in the national office market's post-pandemic recovery, separating the properties at the highest end of the quality spectrum from the less desirable alternatives still struggling with large blocks of vacant space. With almost no new construction moving through the country's development pipeline, tenants are also accelerating their real estate decisions as the pool of attractive, available options quickly shrinks.

As a result of that building competition, rents among trophy office properties have increased sharply over the past year. Philadelphia has some catching up to do compared to other top markets such as New York or San Francisco, and while rent growth has been challenged in recent years, top-tier buildings have captured the bulk of recent leasing activity and pushed record rates.

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Lehigh Valley's logistics market falls further out of step with national trends

 By Brenda Nguyen CoStar Analytics

Pennsylvania's Lehigh Valley is emerging as a logistics outlier, with increasing availability and reduced tenant demand setting it apart from Philadelphia and national trends.

The logistics availability rate for the Lehigh Valley reached 18.5% in the third quarter of 2026, up more than 12 percentage points from roughly 6% in late 2022. The current rate is well above Philadelphia's 10.9% availability rate and the national average of 10.7%. Although availability remains elevated across many industrial markets following a historic development wave, the Lehigh Valley's supply-demand imbalance has widened faster than in most other U.S. markets.

The disconnect reflects a recent surge in speculative development, projects built without any preleasing, followed by a pullback in demand. Developers have added a substantial number of speculative warehouse projects based on expectations that pandemic-era gains in consumer spending, e-commerce and supply chain expansion would continue. Instead, logistics tenants have slowed expansion plans, consolidated operations or delayed leasing decisions, leaving an overhang of unfilled warehouse space.

Lehigh Valley logistics facilities larger than 200,000 square feet recorded roughly one million square feet of negative absorption over the past year, meaning tenants vacated more space than they occupied.

While the Lehigh Valley has struggled to fill recently delivered logistics facilities, Philadelphia's logistics availability has closely tracked the national average and trended lower in 2026.

By comparison, neighboring Scranton recorded approximately 2.4 million square feet of positive absorption in logistics facilities. The contrast suggests regional demand has not disappeared but has become more selective, with some occupiers likely favoring lower-cost markets.

The Lehigh Valley's long-term logistics advantages remain intact, including its 'one-day' geographical proximity to major consumer markets, robust multi-modal infrastructure and cost efficiencies relative to coastal hubs. However, the current glut of excess inventory and reduced demand are likely to keep the market trailing Philadelphia and national industrial trends over the coming year.

Even so, continued speculative development suggests logistics developers are positioning for stronger tenant demand to return in 2027 and 2028, rather than responding to current market conditions.

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