Three consecutive quarters of positive net absorption on the order of one million square feet pushed regional office vacancy to 17.1%, its lowest level since 2010 as reported in Newmark Grubb Knight Frank’s newly released Q3 Philadelphia office market research report. The resurgence of the regional market has been driven by the suburban office markets, in southern New Jersey, Wilmington, Delaware and Pennsylvania. The Philadelphia CBD office market thus far has lagged the suburban recovery. The Class A sector continues its bull run and is on pace to absorb more than it has in any year since 2007.
“2012 has been a breath of fresh air. After three tough years, there are clear signs that the office market is turning the corner,” said Bob Clements, executive vice president, managing director of the Philadelphia region for Newmark Grubb Knight Frank.
Key statistics for the Philadelphia office market during the third quarter of 2012 are as follows:
• The Philadelphia CBD has the region’s lowest vacancy rate at 14.5%.
• A construction pipeline of just 396,000 square feet equates to just .3% of the existing inventory.
• Overall asking rents remain flat with a Class A rents resting at $27.48.Twenty-one of the region’s 27 office submarkets had year-to-date positive absorption as of the third quarter.
“Regional economic and labor market fundamentals are showing signs of improvement and, broadly speaking, the pace of the recovery continues to be dependent on healthy corporate profits and increases in employee headcounts,” added Mr. Clements. “Our Philadelphia research team has generally tracked the national economic and labor market trends and should be a good barometer as we head into 2013.”
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A part of BGC Partners, Inc. (NASDAQ:BGCP), Newmark Grubb Knight Frank is one of the largest commercial real estate service firms in the U.S. It brings together the strategic consultative approach to creating value for clients and leading position in the New York market that are hallmarks of Newmark; the complementary strengths of Grubb & Ellis in leasing and management, investment sales, valuation and capital markets services; and BGC’s financial strength, proprietary technology, expertise in global capital markets and deep relationships with many of the world’s leading financial institutions.
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