Philadelphia Office Market
Greater Philadelphia’s office market entered 2026 with improving momentum across several key indicators. Sublease availability continued to decline, the development pipeline moved lower, and asking rents remained near recent highs, although overall vacancy and direct availability stayed elevated. After several years of significant occupancy losses, net absorption trends have become less volatile, and annual losses have moderated meaningfully from prior years. Leasing activity and tenant demand remain relatively stable, suggesting that market conditions are improving gradually, even if recovery remains uneven across submarkets and asset classes. New supply pressures are beginning to ease as the construction pipeline has contracted sharply from its 2023 peak to roughly 600,000 SF, or about 1.0% of inventory, by the first quarter of 2026. At the same time, rent performance continues to be led by Class A product, reinforcing the market’s ongoing flight-to-quality and the stronger positioning of premier assets.
Download Philadelphia Office Market Report 1Q26Philadelphia Industrial Market
Industrial leasing activity in Greater Philadelphia reached its highest level in two years, with the fourth quarter at 6.6 million SF, representing the strongest quarter. Class A industrial properties continue to capture a disproportionate share of local transaction volume. Class A properties captured 40.9% of leasing volume despite representing only one-third of inventory, driven by demand for higher clear heights, wider column spacing, and greater power capacity. Five major fourth-quarter transactions—led by DrinkPAK (1.4M SF), Cirro (750,000 SF), and Amazon (613,000 SF)—demonstrate strong underlying tenant demand. Southern New Jersey sublease availability (1.1 million SF) remains elevated but improving, with availability rate declining 30 basis points in the fourth quarter of 2025.
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.