Philadelphia Office Market
Greater Philadelphia’s office market ended 2025 with positive momentum in select indicators. The leasing landscape is more favorable, with sublease availabilities having stabilized and asking rents recording three consecutive quarters of gains. Following five years of significant occupancy losses, totaling 7.1 million SF from 2020 to 2024, net absorption was only slightly negative in 2025 throughout the Greater Philadelphia office market. The improvement of net absorption trends bodes well for the region’s recovery over the next several quarters. The delivery of 3201 Cuthbert Street, an office and laboratory building in University City, kept vacancies elevated in Philadelphia’s CBD market. A lack of new construction and moderately negative net absorption kept suburban vacancies flat over the quarter.
Download Philadelphia Office Market Report 4Q25Philadelphia Industrial Market
Industrial construction deliveries saw a marked decline in 2024, but picked back up in 2025, with nearly one million square feet of deliveries through the first three quarters. With little preleasing activity, the 33 buildings that have delivered over the course of this year have a combined vacancy rate of 96.9%, thus pushing the overall market’s vacancy rate to 8.0%, an increase of 230 basis points over the past year. Quarterly net absorption registered negative one million square feet, largely driven by a tenant bankruptcy resulting in 1.3 million square feet of space becoming vacant. This brings the market’s year-to-date absorption total to 445,654 square feet after strong positive absorption posted during the second quarter. The Greater Philadelphia construction pipeline totaled 6.9 million square feet at the end of the third quarter, down nearly 10 million square feet from the prior year—a reduction of 58.5%. Major projects that broke ground this quarter include 600 Irick, a 310,000-square-foot warehouse in Burlington County and One Collins Drive, a 274,400-square-foot distribution facility in Salem County. After annual declines in 2024, asking rents have increased 4.1% over the past twelve months to average $11.43 per square foot as of the third quarter. The growth in asking rents has been driven primarily by Class A warehouse availabilities. As of the end of the third quarter, there is approximately 22 million square feet of Class A warehouse space available at an average asking rate of $13.05 per square foot.
Philadelphia Multifamily Market
Greater Philadelphia’s multifamily occupancy rate was 96.7% as of the second quarter of 2025. The elevated occupancy rate is driven by robust employment growth coupled with a constrained housing market, where high interest rates continue to deter single-family home purchases. Philadelphia stands out among major U.S. cities for its sustained affordability, particularly when evaluating the relationship between average income and cost of living. In the current year, Philadelphia reports an average annual salary of $81,333 alongside a cost-of-living index of 102.8, which translates to annual living expenses of approximately $30,889. This combination yields a purchasing power of $79,130—an impressive $4,949 above the national average. In contrast, cities such as New York have a much higher cost-of-living index at 169.6 with annual expenses surpassing $50,900, making Philadelphia a notably more budget-friendly place to live. With a favorable salary-to-cost-of-living ratio of 2.63, Philadelphia residents enjoy a comfortable lifestyle without the financial strain often experienced in other major metropolitan areas.