Despite Slight Uptick in Vacancy, Confidence in the Greater Philadelphia Office Market Continues in the New Year

Philadelphia, PA (April 18, 2016) — Newmark Grubb Knight Frank (NGKF) released its first quarter 2016 office reports for the greater Philadelphia region this week. While the metro area witnessed variations in demand performance this quarter, the reports indicate that strong fundamentals in the local office market and economy point to another year of positive growth in 2016.

Philadelphia’s Central Business District (CBD) and suburban submarkets witnessed an increase in overall vacancy by 10 basis points quarter-over-quarter, to 14.3 percent. The suburban submarkets tallied a fourth consecutive quarter of six-digit positive absorption, which lessened the impact of downsizing by tenants such as Cigna and Wells Fargo in the CBD. Overall rents in the downtown submarkets increased $0.60/SF this quarter to $28.07, largely in response to the surge in demand growth charted in 2015. Pricing will likely continue to grow over the next quarters, especially with the construction completion of the FMC Tower/Cira Centre South set for later this year. Nearly 60 percent pre-leased, the tower will command rents of over $50.00/SF for elite office space. Wayne Fisher, NGKF executive managing director, noted, “Over half of all new tenancy in Center City Philadelphia last year occurred in West Market’s Class A sector alone, which has led to a justified average rental rate above $30.00/SF for Class A space in that submarket for the second quarter in a row.”

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