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CBD Office Sector Recovery 'Unmistakable'

PHILADELPHIA-Two third-quarter reports confirm that the clouds that loomed during construction of Cira and Comcast Center have lifted. Since early 2005, overall vacancy has dropped to its lowest level in more than four years.

By Marita Thomas | Updated on October 20, 2006

PHILADELPHIA-Worries over the addition of approximately 1.9 million sf of new office construction in the CBD now seem unfounded. Since the office market recovery began in early 2005, vacancy has decreased more than 3% to its lowest level in more than four years, according to a third-quarter 2006 report from the local office of Grubb & Ellis.

Grubb puts the current vacancy at 11.3%. A report from the local office of GVA Smith Mack confirms that a CBD office recovery is underway. It puts direct vacancy at 10.9% and the total, including sublet space, at 12.5%.

“We projected the recovery of the CBD office market to have some legs and extend into 2006, continuing the positive momentum in 2005 where we saw tenants expanding, on average, by around 20%,” Matthew Wright, Grubb’s research services manager, tells GlobeSt.com. “Downtown, we expect further reductions in vacancy, a result of continued strong tenant demand, and, in part, due to the pending residential conversion of the upper portion of Two Liberty Place, which will remove a large block of vacant space from the competitive inventory.” He declares the recovery is “unmistakable.”

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