"The western suburbs continue to report lackluster absorption," says the report, echoing other third-quarter data, but this one goes on to say," according to a recent CBRE Torto Wheaton Research study, two submarkets, Horsham and Plymouth Meeting/Blue Bell, are expected to out-perform the region in the year ahead."
The Horsham/Willow Grove submarket's vacancy is now 14.7% and the average asking rental rate for class A properties is $19.96 per sf, which is about $3 per sf below the average for the region. The vacancy rate in Plymouth Meeting/Blue Bell is 13.3% according to the report, and the average asking rental rate for top properties is $22.94 per sf.
CBRE estimates that as many as 80 new and existing tenants covering an aggregate 1.7 million sf of office space are considering suburban locations.
While the suburbs currently have negative absorption, CBRE notes that both class A and class B space in Center City recorded positive absorption of 94,893 sf in third quarter, "making the Downtown market the strongest in the region." The report forecasts improved vacancy rates in the CBD throughout 2004, "particularly in the Independence Hall and Market Street East submarkets."
Asking rates in both of those submarkets are below the Downtown average of $25.49 per sf. In Market East, the average asking rate is $16.50 per sf, and in the Independence Hall area it is $20 per sf. "Center City rents have slowly declined in the past seven quarters," according to CBRE data.
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