The effect of return-to-office policies on vacancies in Philadelphia

The effect of return-to-office policies on vacancies in Philadelphia October 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.

Avison Young creates real economic, social and environmental value as a global real estate advisor, powered by people. As a private company, our clients collaborate with an empowered partner who is invested in their success. Our integrated talent realizes the full potential of real estate by using global intelligence platforms that provide clients with insights and advantage. Together, we can create healthy, productive workplaces for employees, cities that are centers for prosperity for their citizens, and built spaces and places that create a net benefit to the economy, the environment and the community.

Avison Young is a 2021 winner of the Canada's Best Managed Companies Platinum Club designation, having retained its Best Managed designation for 10 consecutive years.

For moreinformation:

  • Download 2022 Third Quarter Office Market Report here.

Media Contact:

  • Nathan Reyna, Media Relations & Content Specialist, Northeast: +1.917.877.1697

Business Development

  • David Fahey, Principal & Managing Director, Philadelphia: +1.610.276.1081