Tenant Consolidations Negatively Impact Greater Philadelphia’s Market

Philadelphia, PA (April 5, 2017) — Newmark Grubb Knight Frank (NGKF) released its first quarter 2017 office reports for the greater Philadelphia region. The reports detail increased vacancy from tenant consolidations in the Philadelphia suburbs and Philadelphia Central Business District (CBD). As a result, quarterly absorption was negative for greater Philadelphia at 464,424 square feet. Rent growth moderated or decreased slightly in suburban markets but asking rents for Class A space in the CBD continued on an upward trajectory.

The CBD closed the first quarter of the year with 358,347 square feet in negative absorption. Four of the five tracked submarkets within the CBD reported an uptick in vacancy from year-end 2016. “Despite the initial negative impact to the CBD,” notes Craig Scheuerle, NGKF executive managing director, “the return of large blocks of non-trophy, Class A space will not weigh heavily on rents in premium buildings as tenants remain hungry for quality space in prime locations.” The University City submarket had 226,000 square feet returned to the market by the Children’s Hospital of Philadelphia (CHOP) as it prepares to occupy a new facility by the South Street Bridge. In the West Market submarket, PNC Bank renewed and downsized by 135,000 square feet at 1600 Market Street.

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