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. Download Philadelphia Office Market Report 1Q25
Philadelphia Industrial Market
Industrial construction deliveries have declined significantly, with approximately 6.4M square feet delivered through 2024. The fourth quarter saw the delivery of 883,995 square feet of new supply, significantly below the quarterly average of 3.3 million square feet over the past eight quarters. This reduction aligns well with the current slowdown in demand for new bulk facilities. Year-to-date, the market has absorbed a total of 6.1 million square feet. Between the third and fourth quarters, available sublease space expanded to 3.2 million square feet. Southern New Jersey alone accounts for 1.4 million square feet of this total, representing 44.3% of the market’s sublease availability, even though it comprises just 39.6% of the region’s overall available inventory. By the end of 2024, the annual average asking rent had declined by 2.1%, a shift following five years of unprecedented rent growth. During this period of rapid rent increases, over 59 million square feet of industrial space was delivered, representing approximately 11% of the market’s total inventory. This substantial influx of supply within a short timeframe contributed to the moderation of rents in 2024, as the supply effectively met the robust demand seen in recent years.