Philadelphia's Office Market Is Booming, If Only At The Top
Office sales in greater Philadelphia from Q1 2016 are well ahead of the pace of the previous few years, having already hit 50% of 2015's total.
From research shared by CBRE, it seems like that pace shows no signs of stopping in coming months either, with numerous other office spaces currently on the market.
Much of the movement is due to a flight to quality, wherein the largest office investors in the area are pursuing a strategy of exiting all non-core suburban office properties and focusing exclusively on well located, stabilized Class-A assets.
The biggest benefactor in that move is University City, which is due to see an influx of new office space, with the Schuylkill Yards project down the line and new buildings in the Science Center in the more immediate future. On the other side of the coin, Class-B office space has seen an increase in vacancy as a result of this trend. CBRE's researchers recommend that Class-B owners either "invest and upgrade to the higher tier of assets, or do nothing and attract tenants by offering a lower cost."
Overall, however, the growth is strong and steady, with construction still not matching its peak before the 2008 recession and jobs being consistently added by the "Eds and Meds" in University City. Although outside of those industries, jobs remain fairly stagnant. In an otherwise rosy projection, that does put a bit of a damper on things going forward.
