A surge of diverse investments is signaling the beginning of recovery in Philadelphia’s office market, writes Paul Schwedelson for the Philadelphia Business Journal.
Recent investments include the sale of 2000 Market Street to out-of-town investors, a loan extension and renovation plans for 1515 Market Street, and a new lease for the Center City headquarters of Stateside Vodka.
The central business district has maintained an overall vacancy rate of around 20 percent in recent years, yet demand remains strong for premier properties. Trophy office buildings had a vacancy rate of 11.1 percent in the third quarter, significantly lower than the 25.6 percent for Class A buildings and 21.1 percent for Class B properties.
The key now is to watch whether the strong leasing numbers from trophy properties will trickle down to Class A and Class B buildings.
“The trickle-down effect is positive for tenants, frankly,” said JLL Managing Director Alex Breitmayer. “Just having more options that are well-capitalized to relocate to, and capital infused into buildings that desperately need it.”
Overall, the demand for office space climbed 47.4 percent year-over-year in the third quarter.
Read more about Philadelphia’s office market and the various signs of its recovery in the Philadelphia Business Journal.
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