Growth Starts to Level Out in the Philadelphia Metro

Philadelphia, PA (January 24, 2017) — Newmark Grubb Knight Frank (NGKF) released its fourth quarter 2016 office reports for the greater Philadelphia region. The reports detail tightened vacancy in the suburban markets and a vacancy uptick in the Philadelphia Central Business District (CBD). Rent growth surged in the CBD and was moderate across the suburban markets. Tenants were drawn to premium space, but activity in Class B product increased with certain tenants looking for more unique spaces in older buildings. The overall greater Philadelphia region closed 2016 with 1.3 million square feet in new occupancy gains.

Philadelphia’s CBD posted 229,989 square feet in positive absorption for 2016, though occupancy gains were 600,000 square feet less when compared against 2015’s total. The delivery of the FMC Tower and downsizing by tenants such as CIGNA and Wells Fargo, pushed the vacancy rate up 60 basis points, year-over-year, to 11.5 percent. During the quarter, Five Below announced that it would move its headquarters from 60,000 square feet at 1818 Market Street to 195,000 square feet at 701 Market Street, which includes a retail component as well. Wayne Fisher, NGKF executive managing director, noted, “The CBD will continue to experience slow, but positive growth as we move into 2017. Rent increases will deaccelerate with the exception of trophy-quality product which has less available inventory. New inventory coming on line in late 2017 and into 2018 will put upward pressure on vacancy.”

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