CRE Market Weekly Market Wrap - Philadelphia

by Steve Lubetkin, Globest.com
Suburban office markets that provide an urban-like live-work-play environment are well positioned to capture strong demand from office users. Among the most common attributes of so-called “urban-suburban” submarkets are the presence of abundant retail, office and housing options, as well as employment opportunities, based on a survey in the 25 largest suburban markets. Established urban-suburban submarkets have the added advantage of amenities like entertainment and recreational offerings, restaurants and grocery stores and public transportation access. According to the report, established Philadelphia submarkets include Bala Cynwyd, Conshohocken and the Main Line.

Emerging submarkets in Philadelphia, identified in the report as King of Prussia/Valley Forge, Plymouth Meeting and Exton/West Chester, are more likely to be in transition, with development, construction or renovation – including ongoing or planned public transit projects – shaping dynamics. Notably, emerging submarkets are more likely than established submarkets to have mixed-use projects in the works. Mixed-use projects often serve as a catalyst for additional development in a particular area, spurring interest in the surrounding neighborhood.

The amount of new office construction underway in urban-suburban submarkets is slightly elevated relative to their share of inventory. Emerging submarkets account for 22 percent of total square footage under construction in the top 25 suburban markets (compared to their 20 percent share of total inventory) and established submarkets account for 30 percent (compared to 26 percent of total inventory). Yet in certain metros, these shares are much higher, with urban-suburban submarkets accounting for 100 percent of the suburban office space under construction in Sacramento, Minneapolis/St. Paul, Kansas City and Austin.

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