Thursday, July 7, 2011

Chester County’s Office Market Saw Small Improvement

"Chester County’s main commercial office market saw a small improvement in the first half of the year.

The Malvern/Exton/West Chester submarket moved into the positive arena for the first time in 2½ years, reporting a positive net absorption rate of 53,150 square feet in the second quarter, bringing the year-to-date rate to a positive 4,580 square feet, the report found.

Positive net absorption occurs when more space is leased than is left vacant.

Class A office space in the Chester County market made up the lion’s share of positive net absorption, at 58,275 square feet.

Rental rates in the market continue to zig-zag from the second quarter of 2010 when rates were reported at $20.25 and then went down to $19.78 in the first quarter of 2011. They were back up to $20.33 in the second quarter of 2011.
 The vacancy rate for office space in the Chester County market is at 22.7 percent now, down from 23.3 percent last year at the same time.

“It’s not the 11 percent you would see in a healthy market but the good news is that for the first time in some time there’s positive absorption."

“We are clearly moving from negative or neutral absorption into positive absorption. We’re seeing a much improved environment on the demand side.”

One of the more promising signs for the commercial real estate market is that “bankers are looking for deals.”

The Greater Philadelphia region’s midyear 2011 commercial office market reported a year-to-date positive absorption of 657,000 square feet, indicating the trend of a gradually improving market still rings true.

“The most significant comparison is when we look at the state of the market a year ago when year-to-date net absorption was a negative 780,850 square feet; this gives us a better snapshot of the improvement the Greater Philadelphia market is experiencing,” the company said in a statement. “This upward absorption trend is spread fairly evenly among the major submarkets with the first quarter contributing 60 percent of the positive 2011 leasing activity and second quarter contributing 40 percent.”

Particularly strong was the King of Prussia submarket, which accounted for 84 percent of the positive absorption in the suburbs."

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