Philadelphia Office Market
Approximately 1.4M square feet of leases were signed during the first quarter of 2025, falling short of the 1.7M square feet 5-year first quarter average.
During the fourth quarter, the Greater Philadelphia market experienced positive net absorption of 112,075 SF for the first time since the third quarter of 2022. The suburban submarkets were the main contributors to the positive absorption seen in the market, with a combined 304,974 SF of positive absorption, while the city of Philadelphia accumulated -189,452 SF of absorption. Blue Bell/Plymouth meeting and Exton/Malvern were the submarkets that absorbed the most space this quarter, with a total of 109,809 SF and 98,191 SF, respectively.
The office pipeline had no new deliveries this quarter. The new Chubb Insurance Headquarters at 2000 Arch Street remains the only building in the office construction pipeline. There are three life sciences buildings in the construction pipeline as well: 2300 Market Street, 3151 Market Street and 3201 Cuthbert Street. Next quarter, 2300 Market Street, 3151 Market Street and 3201 Cuthbert Street are all expected to deliver while the Chubb Insurance Headquarters is scheduled to deliver in early 2026. All four of the buildings under construction are in the CBD.
Philadelphia Industrial Market
Industrial construction deliveries have declined significantly, with 13.9M square feet at the end of the first quarter of 2025, a 997,000 square foot decrease from the previous year. Over the last 8 quarters, there has been an average of just under 16.8M square feet of quarterly deliveries. This reduction aligns well with the current slowdown in demand for new bulk facilities. Between the fourth quarter of 2024 and first quarter of 2025, available sublease space expanded to 3.5M square feet. Southern New Jersey contributes 1.7M square feet to the total market, which represents approximately half of the available sublease space. This is notable given that Southern New Jersey constitutes only 45.6% of the region’s total available inventory. From the fourth quarter of 2024 to the first quarter of 2025, the annual average asking rent increased by 3.3%. This figure is just $0.13 shy of the all-time high recorded in the first quarter of 2023. Over the past eight quarters, asking rates have demonstrated robust growth, with an average increase of 1.5% each quarter.