Contact Us

Philadelphia vs. Boston: A Super Bowl CRE Scouting Report

In commercial real estate, Boston and Philadelphia mirror their football teams, which will be facing off in the 2018 Super Bowl: the established exemplar and the scrappy underdog. But just like on the gridiron, both cities have strengths and weaknesses that add subtleties to the story. Bisnow presents a sector-by-sector breakdown of the two cities.


200 Clarendon St., previously known as the John Hancock Tower, is Boston's tallest building.

Boston: Greater Boston’s nearly 210M SF of office space is a hot commodity, with a marketwide vacancy of 10.8%, per Perry Brokerage Associates research. Transit-oriented pockets around North and South stations dip below 5% vacancy, and Cambridge is more in demand than Gillette Stadium when Taylor Swift is in town (Tom Brady, too). The city’s 11.1M SF of office space was only 2.4% vacant at the end of 2017.

Philadelphia: Greater Philadelphia’s average asking rent is at an all-time high as 2018 begins, thanks to new downtown deliveries in the trophy class and key suburban markets like Conshohocken, King of Prussia and the Main Line remaining exceedingly popular. In and out of the city, those top-of-the-market assets are driving a story of the haves and have-nots, as older assets struggle with tenants’ decreasing space demands and the new kids on the block. Even with the newest success stories, vacancy sits at 10.9% in the central business district and 13.4% in the suburbs.


A rendering of PMC Property Group and Gensler's River Walk dual tower development

Boston: Boston’s skyline is dotted by cranes, and many of them can be attributed to condo and apartment towers. The most notable, a 740-foot Four Seasons Hotel & Residences in the city’s Back Bay neighborhood, will be the tallest residential building in the city when complete. Boston Mayor Martin Walsh has made housing a top priority for his administration, with the goal of adding 53,000 units of housing by 2030.

Developers seem happy to oblige, but have been criticized for building out-of-reach luxury units instead of affordable housing. Boston is the fifth-most-expensive city in which to rent a one-bedroom apartment in the U.S., and Massachusetts housing costs are 24% higher than the national average. Mount Vernon Co. Chairman and founder Bruce Percelay said “the atmosphere is getting very thin” for high-end multifamily developments in Boston at a Bisnow event in December.

Philadelphia: Philadelphia remains one of the most affordable cities to rent on the East Coast, but the unprecedented number of new deliveries is bound to push rents higher, with mixed results. A good portion of Philly’s affordability rate is tied to deep poverty in the sprawling neighborhoods, while Center City, University City and inner neighborhoods like Northern Liberties and Old City see nearly all of that high-priced new construction.

Due to its massive geographical size made up of neighborhoods filled mostly with single-family houses, Philly has fewer apartments per capita than most major cities, and it will stay that way even with its current construction boom. Once this round of new deliveries come online, a construction pause will likely follow to ensure rents can keep growing — unless a certain company picks the city for its next headquarters.

Lab/Life Science

Kendall Square, pictured on the left side of the river, is the most expensive life sciences market in the country.

Boston: Greater Boston is the leading life science cluster in the country and the largest recipient of National Institutes of Health funding. That translates into a tight lab market. Available lab space in some of Greater Boston’s submarkets is about as rare as a smile across Bill Belichick’s face.

East Cambridge, which includes the region’s life science hub of Kendall Square, is extremely tight, with less than 1% of available lab space. While it has spawned new lab clusters in areas like New Balance’s Boston Landing development and near Fenway Park, the entire region has limited availability. Of the nearly 20M SF of lab space in Greater Boston, just over 3% was vacant at the end of 2017, according to Perry Brokerage Associates.

Philadelphia: While Philadelphia cannot yet hold a candle to Boston’s life science market, it is making impressive strides in the talent-heavy University City area. Incubation centers at the University City Science Center and Pennovation Works have birthed several companies in recent years, and the new multiphase developments Schuylkill Yards and uCity Square will have sizable portions set aside for lab space. With a culture beginning to establish itself and rents considerably lower than in the Boston area (for now), Philly is an excellent value play in the life science sector.


A rendering of a building in Dermody Properties' LogistiCenter development in Logan Township, N.J.

Boston: Not every sector of Boston CRE is jockeying for the Seaport. With limited elbow room, there is nowhere to go but up or out for Boston’s warehouse sector. Boston’s industrial rents are moving for the first time in decades, as supply is diminishing and demand is surging for manufacturing space and last-mile delivery.

Warehouse vacancy closed 2017 at 7% for the entire 85M SF Greater Boston market, with limited availability in the Route 128 core. Most of the region’s industrial space is outside Route 128, but increased focus on last-mile has developers looking for creative solutions to the urban core’s space constraints. It has caused area developers to say it is a matter of when, not if, Boston sees multistory warehouses like those getting built in Seattle and New York.

Philadelphia: Greater Philadelphia contains two of the hottest industrial markets in the country: South Jersey and the Lehigh Valley. Rapid construction in both areas still cannot keep up with the demand for space, and the Lehigh Valley’s biggest limiting factor is that there are not enough people to staff the number of warehouses that businesses want in the area.

Closer in, Philadelphia County’s industrial vacancy is pretty much as low as it can get, as the only buildings left on the market have no feasible use for today’s distribution needs. Philadelphia’s central location on the Eastern Seaboard means that shipping centers are not likely to go out of fashion anytime soon.


Rendering of Tremont Crossing, an approved mixed-use proposal in Boston’s Roxbury neighborhood

Boston: Retail, whether it is doomed or not, does not seem to be entirely down and out in the Hub of the Universe. In fact, some have even gone so far as to say Boston is under-retailed. Newbury Street, the city’s historic retail corridor, has ceded some of its control of tourist dollars, as podium-and-tower mixed-use developments are turning neighborhoods like Fenway, the Seaport and the West End by North Station into shopping hubs.

Philadelphia: Philly is among the hottest regions in the country for the food and beverage scene, but retail stores are a mixed bag in the area. The gargantuan King of Prussia Mall remains invulnerable to the shifting trends, and Center City has some corridors with great location and serious value that are attracting some national tenants — a trend led by new developments East Market and Fashion District Philadelphia. In most neighborhoods and suburban markets (with Cherry Hill, New Jersey, as the other key exception), retail beyond restaurants is just as dire as everywhere else.

Amazon HQ2

An early rendering of Drexel and Brandywine's Schuylkill Yards megadevelopment

Boston: Both cities advanced to the shortlist for Amazon HQ2, and Boston is feeling cautiously optimistic. While most reports have placed the city as a reliable second choice behind a variety of front-runners, Irish betting site Paddy Power gives the city the best odds of sealing the deal. The city’s culture fit, tech talent and numerous highly ranked universities are why many think Boston has a formidable bid. Its affordability (or lack thereof) is seen as its Achilles' heel, which is why many are pushing the city to use the bid as an opportunity to tackle much-needed transit upgrades and the affordable housing shortage.

Philadelphia: Philadelphia checks all the boxes that Amazon set out in its search for HQ2, with great tech talent, transit, affordability, diversity and location — both for the sites in the city and for the city’s geography. Where Philly loses out to other top contenders is in the secondary factors that could ultimately be more important, namely tax incentives and Jeff Bezos’ personal preference.

Neither of those favor Boston any more than Philly, due to Pennsylvania’s more business-friendly state government and closer proximity to Bezos’ second home in Washington, D.C. It could be said that Philadelphia’s affordability and efficient transit could evaporate the moment 50,000 high-income employees show up on its doorstep, but Mayor Jim Kenney has said he would be excited to solve that problem.