Philadelphia 4Q Vacancy Reports

4Q Philadelphia Office vacancy decreases to 12.4% and Industrial vacancy decrease to 12.4%. Full reports can be viewed at: http://tinyurl.com/yh8adc9

The quarter over quarter decreases were small. 4th quarter office vacancy was 12.4% where in 3Q it was 12.5%. This is helps prove the new saying of “flat is the new growth.” Although the vacancy decreases are small they are encouraging. Many tenants are taking advantage of the softer market and trading up into a better class of building. Class A office space recorded a net absorption of positive 409,646 square feet in the 4th quarter where it was a negative (1,612,551) square feet absorption rate in the 3rd quarter. These are signs we are moving in the right direction. The Philadelphia office market tends not to overbuild. The vacant space gets absorbed faster and therefore our market bounces back quickly from downturns. Class B and C office building also saw positive absorption of vacancy but not as large as the Class A office buildings.

The vacancy rate for Philadelphia 4th quarter flex/industrial markets decreased to 10.8%. This is down from 11% as compared to the 3rd quarter. 10.8% vacancy rate is what we had in the 2nd quarter 2009. Again, this is incremental absorption but the signs are encouraging. This translates into 3,903,123 square feet being absorbed in the 4th quarter. Average rents for Industrial space dropped from $4.76 per square foot in the 3rd quarter to $4.63 in the 4th quarter. These are quoted as triple net numbers. Average rental rate for Flex space also decreased from $9.66 per square foot in the 3rd quarter to $9.38 per square foot in the 4th quarter. These numbers are also quoted as triple net.
If you have further questions or inquiries about the Philadelphia area real estate market please feel free to contact me at (610) 616-4604 or jodonnell@OmegaRE.com