Vacancy Remains at High Levels in the Philadelphia Central Business District

Philadelphia, PA (October 4, 2017) — Newmark Knight Frank (NKF) has released its third quarter 2017 office reports for the greater Philadelphia region. The reports detail how downsizing by tenants within the Philadelphia Central Business District (CBD), and fewer regional companies relocating to the CBD this year, kept vacancy at high levels. Market fundamentals weakened in both the Southern New Jersey and Delaware office markets, but Suburban Philadelphia continues to record gains in occupancy.

The CBD recorded its highest level of vacancy since the third quarter of 2014, closing the third quarter of 2017 at 13.7 percent. Tenants such as PNC, Wells Fargo and Verizon continued to downsize in the CBD. Downtown has been slow to absorb these large blocks of vacant space. Wayne Fisher, NKF executive managing director relates, “The number of tenants relocating from the suburbs to downtown has dwindled. Also, a decline in leasing activity by co-working firms and Comcast have failed to move space off of the market so far this year.” Year-over-year, Class A vacancy increased 250 basis points to 13.1 percent; over the same time period, the average direct rental rate for Class A space declined by $0.31 per square foot to $32.78 per square foot.

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