Philadelphia office market reports
The Philadelphia MSA office market has a lot to be optimistic about heading into the next quarter, with over 3.1M SF of new space being developed across multiple submarkets and investors becoming more bullish on property valuations. Despite negative absorption and an uptick in availability, landlords remain optimistic in the Philadelphia MSA with rents returning to pre-pandemic levels. Fundamentals have also been kept in order through office conversions, influenced by a strong multi-family and industrial market.
Across the MSA there are 253M SF of existing office space and 3.1M SF currently under construction with 12 properties scheduled to deliver in the next 12 months.
Delays in return-to-office efforts, in conjunction with firms consolidating office space has led to a second consecutive quarter of negative absorption.
Direct asking rent
Asking rents are returning to pre-pandemic levels as investors remaining confident in the market. Upward pressure is being placed on Class A rents through an emerging flight-to- quality trend while Class B rents, which saw the larges decrease during the pandemic, are starting to rebound.
While direct availability has remained in check the Philadelphia MSA office market continues to experience an increase in sublease space due to companies scaling back on in person operations and future expansions.
Vacancy currently sits at 12.1% with 1.3% of total vacant space available through sublease options.
Investment sales activity declined this quarter with both sales volume and deal frequency decreasing compared Q4 2021.
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Get in-depth office market reports and insights from commercial real estate experts in the Greater Philadelphia area. Avison Young advisors look at Philadelphia commercial real estate activities and the latest Philadelphia statistics to provide you expert market research on Philadelphia's office properties.
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