Philadelphia Office Market
During the third quarter, there was a negative net absorption of 252,526 square feet, with the city accounting for most of the decrease in demand, registering a negative 304,452 square feet of absorption. The properties that experienced the most negative net absorption in the CBD market were 1760 Market Street, who had negative 21,598 SF of absorption this quarter due to several smaller tenants vacating including Ageras and Anderson Kill PC, and 1650 Arch Street, who has negative 12,790 SF of absorption due to Tridiuum vacating the 20th floor of the building. The office pipeline remained unchanged in the second quarter with no new office deliveries. Three projects still under construction are: the new Chubb Insurance headquarters in West Market,155 King of Prussia Road in Radnor, and 203 Squire Drive in Newtown Square. The Chubb Insurance headquarters is expected to deliver in early 2026, and 155 King of Prussia road and 203 Squire Drive are expected to deliver in the fourth quarter of 2024. Approximately 1.4M square feet of leases were signed during the third quarter of 2024. Greater Philadelphia’s office market performed well in the first half of the year, outpacing leasing expectations. However, a lack of signed leases in the third quarter has put us behind last year’s numbers year-to-date of 4.4m SF.
Download Philadelphia Office Market Report 3Q24Philadelphia Industrial Market
Industrial construction deliveries have declined significantly, with 4.6M square feet delivered through 2024. The 1.2M square feet of new supply delivered during the third quarter is less than half of the quarterly average of 3.5 MSF over the past eight quarters. This is well-timed as demand for new bulk facilities has also slowed. The market has absorbed 6 MSF year-to-date. Available sublease space declined in the third quarter to 2.7 million square feet. With 1.4 million square feet of sublet availability, Southern New Jersey constitutes 52% of the market’s sublease availabilities despite comprising only 3.5% of the region’s inventory. The lease-up of Class A space in Burlington County, coupled with moderating demand, has put downward pressure on asking rates in the Greater Philadelphia market. Rents have declined by 3.9% over the past 12 months after growing steadily since 2017. The decline in rental rates was primarily due to class C properties, which saw a 9.7% decrease in rents over the past 12 months.