Philadelphia's Office Vacancy Decreases to 8.7%

The Philadelphia Office market ended the first quarter 2017 with a vacancy rate of 8.7%.

The vacancy rate was down over the previous quarter, with net absorption totaling positive 173,096 square feet in the first quarter. That compares to positive 1,080,044 square feet in the fourth quarter 2016. Vacant sublease space increased in the quarter, ending the quarter at 1,112,547 square feet.

The Class-A office market recorded net absorption of negative 588,125 square feet in the first quarter 2017, while net absorption for Philadelphia's central business district was negative 4,710 square feet.

Tenants moving into large blocks of space in 2017 include: Ashfield Healthcare moving into 82,000 square feet at 1100 Virginia Dr; WeWork moving into 55,238 square feet at 1900 Market Street; and Holy Redeemer Health System moving into 36,000 square feet at 201 Veterans Way.

Rental rates ended the first quarter at $22.68, an increase over the previous quarter.

A total of six buildings delivered to the market in the quarter totaling 214,556 square feet, with 4,398,979 square feet still under construction at the end of the quarter.

This trend is compared to the U.S. National Office vacancy rate, which stayed at 9.7%, relatively unchanged from the previous quarter, with net absorption positive 10.78 million square feet in the first quarter. Average rental rates increased to $24.44, and 339 office buildings delivered this quarter totaling more than 21.29 million square feet, with 154.4 million square feet still under construction.
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