Posted Jan 28, 2016, 4:13 AM
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Join Date: Oct 2011
Location: Philadelphia
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Office Sector News
From Center City District
Four Reports Show Strong Leasing in Downtown
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Though each report counts a slightly different inventory, four major year-end summaries have highlighted the improving downtown Philadelphia office market with its shrinking vacancy rates and rising rental rates. Newmark Grubb Knight Frank's (NGKF) Philadelphia 4Q15 Office Market notes the overall vacancy rate in the central business district (CBD) fell from 11.5% to 10.9%, with average rent of $27.52, while the suburban vacancy rate hit 16.3%, with an average rent of $25.49. NGKF also noted more than a half million square feet of leasing from companies new to the Philadelphia CBD.
Strong leasing activity during 2015 has lowered availability across the CBD, including University City and the Navy Yard, with the exception of Market East, where Dow’s announced departure from 100 South Independence Mall West returned a large block of office space to the market, according to JLL’s Chart of the Week for January 11. Market East’s vacancy rate rose from 12.7% to 13.9%, while Market West’s fell dramatically from 15.7% to 11.7%. The Navy Yard’s availability moved slightly from 3.2% down to 3.0% and University City’s from 3.9% to 2.3%.
In its Philadelphia Office MarketView Q4 2015, CBRE counts 43,235,869 square feet (SF) of office space in the downtown, compared to 60,524,564 SF in the Philadelphia suburbs. Downtown’s vacancy rate was calculated at 10.5%, with an average asking rent of $27.88, while the suburbs’ rate was 18.8%, with rent averaging $25.48. Downtown’s year-to-date net absorption was 537,262 SF, compared to 305,854 SF in the suburbs.
For the year, the CBD accounted for nearly half of the region’s occupancy gains, continuing the trend noted by all reports of Center City outperforming nearly all suburban markets.
SSH Real Estate counts the CBD vacancy rate as 9.79%, with average rents at $27.80, a 3.3% increase over the previous year, in its 2015 Greater Philadelphia Year-End Office Market Report and Outlook. SSH expects rental rates to increase and vacancy rates to decrease during 2016. SSH also notes that the amount of trophy office space under construction has remained relatively constant at approximately 2,000,000 square feet in Center City, with theFMC Tower and the Comcast Innovation and Technology Center making up the majority of the office space in the pipeline.
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Retail News
CBRE Report: Center City Rents Show Second-Highest Growth
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With an 88% increase in prime retail rents since the first quarter of 2008, Philadelphia is second only to Miami (141%) in rent growth through the fourth quarter of 2014, as rates averaged $225 per square foot (SF), according to CBRE’s Philadelphia Retail Marketview Q4 2015.
Population growth in Greater Center City over the past three decades has helped create and sustain enough amenities, public space improvements (e.g., Dilworth Park), and a level of safety that the urban core has become a first choice in the region for potential residents, the report noted.
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http://www.centercityphila.org/pressroom/ccnews012616.php
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