Jesse Serwer is associate editor of Real Estate New York

PHILADELPHIA-A handful of large tenants looking to renew or upgrade space downtown will energize the Philadelphia metro office leasing market this year, CB Richard Ellis analysts said at a presentation unveiling their 2006 market outlook and end-year 2005 numbers. Despite the fact that nearly 800,000 sf of space will become available at the 1.2-million-sf Two Liberty Place, things are looking up for the Philadelphia CBD.

Looking back, overall activity in the Philadelphia CBD did not experience any major shifts during 2005, despite the opening of Brandywine Realty Trust's 725,000-sf Cira Centre, the first new class A tower in the CBD since 1992, with the overall absorption rate showing signs of recovery as the year came to a close, brokers said. The Comcast Center, which will become the second new class A tower in over a decade when it opens in 2007, is already 70% leased, according to CBRE research.

In Philadelphia's suburbs, meanwhile, the demand for office space continues to rise, with more than 170 tenants in the market in search of approximately 3.6 million sf of space, compared with a need of only 2.4 million sf at the close of 2004. The suburbs should continue to post positive absorption, an increase in rental rates and a decrease in vacancy, according to CBRE's report, building on the momentum of two consecutive positive years in 2004 and 2005, but rates will likely increase as tenants' options become increasingly limited.