Philadelphia Office Market
Approximately 1.5 million square feet of leases were signed during the third quarter of 2025, falling short of the 5-year quarterly average of 1.9 million square feet. The Greater Philadelphia office market experienced negative net absorption of 95,983 square feet during the third quarter of 2025, bringing the region’s year-to-date absorption total to negative 626,605 square feet. Since the beginning of 2022, quarterly absorption has averaged negative 312,938 square feet, reflecting a moderation in negative absorption over the past few quarters. As of the third quarter of 2025, asking rents in Greater Philadelphia reached a record high of $32.06 per square foot, an increase of 2.8% over the past year. This peak has been fueled by strong demand for prime Class A and trophy office spaces in the CBD West Market. Even as leasing activity has slowed, asking rents have been sustained by steady demand for top-quality space. Currently, office construction remains limited in Greater Philadelphia, with Chubb Insurances Headquarters one of the more sizeable developments. The 478,800-square-foot office building is slated for delivery in the first half of 2026.
Download Philadelphia Office Market Report 3Q25Philadelphia 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.