Philadelphia Office Market
Net absorption registered negative 201,944 square feet during the second quarter, with most of the negative demand in the suburban markets, which registered negative 147,380 square feet of absorption compared to negative 54,565 square feet in the City of Philadelphia. The office pipeline remained unchanged in the second quarter with no new office deliveries. Two projects remain under construction: the new Chubb Insurance headquarters in West Market and the Mass Timber Building at Ellis Preserve in Newtown Square. Approximately 1.2M square feet of leases were signed during the second quarter of 2024. Due to a solid first quarter, leasing in the first half of 2024 has outpaced last year’s first-half totals.
Download Philadelphia Office Market Report 2Q24Philadelphia Industrial Market
Industrial construction deliveries have declined significantly, with 3.4M square feet delivered through the first half of 2024. The 1.8M square feet of new supply delivered during the second quarter is less than half of the quarterly average of 3.9MSF over the past eight quarters. This is well-timed as demand has also slowed. The market has absorbed 2.3 MSF year-to-date. After six consecutive quarters of increasing sublease volume, available sublease space declined in the second quarter to 2.9 million square feet. With 1.4 million square feet of availability, Southern New Jersey constitutes 48% of the market’s sublease availabilities despite comprising only 28% of the region’s inventory. The lease-up of Class A space in Burlington County, coupled with moderating demand, has put downward pressure on asking rates in the Greater Philadelphia market. Rents have declined by 1.0% over the past 12 months after growing steadily since 2017.
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