Monday, November 13, 2017

Philadelphia's office market slides while the suburbs take off

Natalie Kostelni Reporter Philadelphia Business Journal
The office markets in Philadelphia’s Central Business District (CBD) and the suburbs are a tale of contrasts, according to various third-quarter research reports.

The suburban market had its strongest quarter in terms of demand for office space than it has had in the last 12 years and the vacancy rate nearly dropped to its lowest point last seen in the first quarter of 2008, according to CBRE Inc. data. That’s when the vacancy rate stood at 14.9 percent. It is now at 15.1 percent.

Activity was so robust in the suburban office sphere that there was 935,538 square feet of absorption, or space occupied by tenants and taken off the market. The submarkets that saw the most leasing activity were Fort Washington, King of Prussia, Conshohocken, and the Malvern-Exton area, according to JLL.

That was not the case in Philadelphia where there were signs that the CBD is on the wane. The CBD logged its highest vacancy since the third quarter of 2014, climbing to 13.7 percent as tenants such as PNC Bank, Wells Fargo and Verizon gave back space and tenants haven’t backfilled the spaces that have been thrown back on the market, according to Newmark Knight Frank research. Savills Studley’s research showed the vacancy rate nudging up for the third consecutive quarter and now is 15.0 percent compared with 13.8 percent.

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