CBD 'Trophy' Availability Nudges Rental Rates Up in Q1

PHILADELPHIA-As existing Center City tenants ink leases for space in Brandywine’s Cira Centre, currently under construction, large blocks of space open up in class A properties. The increased amount of high-priced available space in two Downtown trophies, Bell Atlantic Tower and Mellon Bank Center, along with a “significant increase in leasing activity Downtown,” pushed up the average class A rental rate here, according to the first-quarter 2004 report from the local office of Studley.

The overall asking rates for office space increased 1.6% to $22.10 per sf, up from $21.74 per sf in fourth quarter 2003. “The rental rate was essentially driven by the class A market, which, though still down 50 cents compared to the same period last year, was up 80 cents to $24.02 (per sf), or nearly 3.5%, for the first quarter,” states the Studley report.

The report distinguishes between asking rates and effective rates, however. The overall availability rate for the Downtown submarket increased to 15.4% in first quarter, compared with 14.9% in the final quarter of 2003. With Cira Centre adding to the Center City inventory, the number of contiguous blocks of more than 50,000 sf jumped to 20.