Owner-occupants fill sales void in Philadelphia’s office sector

By Brenda Nguyen CoStar Analytics

As many traditional office property investors remain sidelined by ongoing uncertainty in the office sector, owner-occupants are emerging as one of the largest groups of active buyers in the Philadelphia office market.

Office users accounted for roughly 42% of office acquisition volume in 2026 year to date, nearly double their share of office purchases in 2025 and well above the historical average since 2016 of 9%. Their growing influence in the region's office investment reflects less a surge in building purchases by users than a sharp pullback among institutional investors, private equity firms, and REITs, groups that usually account for the lion's share of office building investment.

Overall office sales activity remains well below peak levels as many investors look toward alternative asset classes as the office sector continues to grapple with elevated vacancy, shifting workplace demand and financing challenges. Institutional buyers, for example, accounted for more than 23% of Philadelphia's office acquisition volume on average since 2016 but represented just 10.1% of volume in 2026. Private equity firms have been largely absent from the sector in recent years.

Owner-occupants, by contrast, continue to purchase office properties tied to their operational needs rather than investment returns. For many organizations, today's discounted pricing environment presents a rare opportunity to secure long-term occupancy while gaining greater control over real estate costs.

Building purchases by users can also have an outsized impact on market conditions. Unlike investors seeking rental income, owner-occupants often absorb office space that would otherwise remain available for lease, directly reducing vacancy when they move in.

A prime recent example is Burlington Stores’ pending $240 million acquisition of 3151 Market Street in University City. The Fortune 500 retailer is under contract to buy the 435,000-square-foot speculative office building, where roughly 400,000 square feet have remained vacant since the building completed construction last year.

Beyond a handful of corporate occupiers, recent owner-occupant acquisitions have largely included local institutions, particularly healthcare providers, government agencies and nonprofits. With stable space needs and longer investment horizons, these buyers are well-positioned to take advantage of pricing opportunities that many traditional investors continue to pass on.

While owner-occupants are unlikely to solve the broader challenges facing the office sector, they have emerged as a steady source of investment demand, slowly chipping away at Philadelphia’s office vacancy.

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