Philadelphia, King Of Prussia Saw Positive Office Trends In Q2
A new report from Newmark Knight Frank contends that rather than having nowhere to go but down, more growth may be ahead for Philadelphia's office market.
In its Q2 2017 report, NKF reported 4,600 SF of positive net absorption in Philly's central business district, spurred by 106K SF of positive absorption in the West Market and East Market submarkets. The growth narrowly outweighed 89K SF of negative absorption near Independence Hall, mostly due to the General Services Administration departing from 600 Chestnut St.
Meanwhile, Philly's most notable suburban submarket, King of Prussia, saw 394K SF of positive absorption in the quarter, including the delivery of a new 110K SF building for Highway to Health and Hartford Funds moving into a 76K SF office. Both companies moved from Ardmore to KoP, reflecting that the expansion of the eponymous mall, as well as the King of Prussia Town Center, are on their way to creating a respectable live-work-play environment in the suburbs.
The CBD's average asking rent was $30.39 per SF in the second quarter, a record high dragged up by the $40 per SF average among trophy office buildings in the area.
"Rents have yet to reach peak levels within this real estate cycle," NKF Managing Director Wayne Fisher said in a press release. "But expect momentum to slow in non-trophy properties if landlords cannot shed some large blocks of space."