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The effect of return-to-office policies on vacancies in PhiladelphiaOctober 12, 2022
Avison Young releases its Q3 2022 Philadelphia Office Market Report
Philadelphia, PA –Avison Young today released its Third Quarter 2022 Office Market Report for Philadelphia. According to the report, total vacancies have reached a five-year record high of 13.6%, caused by sublease vacancy increase by 10 basis points and direct vacancies increased 80 points from the second quarter. Some of these vacancies are caused by major anchor tenants moving into new office developments, leaving behind the space they currently occupy. However, more companies are implementing return-to-office policies, which could positively affect the vacancy rates as more people stream back to the workplace.
“The dynamic shifts in workplace attendance and expectations have certainly challenged our office market here in Philadelphia,” said David Fahey, Principal and Managing Director of the firm’s Philadelphia office. “With the potential of a softening labor market, we may see companies requiring workers to spend more time in the office.”
The Report also indicates that as target cap rates have aligned with interest rate increases, there is downward pressure on demand for office space acquisitions as investors question the value of potential new assets. “As more people return to the office, the value challenges we’re seeing in properties may ease the downward pressure, but still be dependent on the rising cost of capital,” said Fahey.
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- Download 2022 Third Quarter Office Market Report here.
- Nathan Reyna, Media Relations & Content Specialist, Northeast: +1.917.877.1697
- David Fahey, Principal & Managing Director, Philadelphia: +1.610.276.1081