Philadelphia Office Market
Large discrepancies in performance between the city’s trophy and non-trophy assets continued into the new year. At the end of the first quarter of 2024, trophy offices had a 16.8% vacancy rate, while standard Class A and Class B buildings had a 22.7% and 22.9% rate, respectively. The delivery of 3025 JFK Boulevard was Philadelphia’s latest addition to its trophy inventory. Its completion added over 170,000 square feet to available inventory. This, combined with its top-of-market asking rates, caused Greater Philadelphia’s overall asking rate to increase by $0.22/SF quarter-over-quarter to $31.85/SF. Leasing activity in Greater Philadelphia reached 1.4M square feet in the initial quarter of 2024. Since 2020, the average yearly leasing volume has been around 5.4M square feet. Although early, Greater Philadelphia is on pace to reach this annual average.
Download Philadelphia Office Market Report 1Q24Philadelphia Industrial Market
Absorption in Greater Philadelphia was 4.1M square feet in the fourth quarter of 2023, the highest quarterly total for the year and brought year-to-date absorption to 7.1M square feet. Over 1.9M square feet of the quarter’s 7.2M square feet of deliveries were leased at time of delivery, which boosted absorption totals. The market’s vacancy rate was 5.8% at the end of 2023, 70 and 190 basis points higher than the previous quarter and year, respectively. Much of the 19.8M square feet of deliveries throughout the year were unoccupied upon completion, leading to a surge in vacancy rates. The rapid addition of supply to a market previously supply–constrained has caused asking rate growth to moderate. Greater Philadelphia’s average asking rate was $11.68/SF at the end of the fourth quarter of 2023, virtually unchanged from the previous quarter.