Friday, June 24, 2011

Real Estate: Sluggish, but positive signs are emerging

"The commercial real estate markets in Center City and the suburbs are beginning to show some signs of improvement though empty pockets of space are still dragging down the office scene. In Center City, the office market has a total vacancy rate of 19.2 percent, though for the first time in three years it experienced two consecutive quarters of positive absorption and a small decline in vacancy. While those are positive signs, large blocks of Class A space and GlaxoSmithKline eventually vacating 800,000 square feet in Center City for a move to the Navy Yard is dampening a sustained rebound in the office sphere.

In the suburbs, vacancy rates tightened up a tad, ending a two-quarter run of downsizing and negative absorption. The vacancy rate, now at 18.2 percent, is anticipated to fall below 18 percent this year and return to a level not seen in two years. In spite of the steep vacancy rate, large blocks of contiguous space are scarce, especially in the King of Prussia, Conshohocken and Radnor submarkets.

On the investment side of the commercial real estate market, apartment and industrial properties are receiving the most attention though multifamily appears to be seeing the most deal activity since funding from Fannie Mae and Freddie Mac are helping to finance deals."

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