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CBD Office Vacancy Nears Single-Digit Level

PHILADELPHIA-In a stunning rebound, the CBD office vacancy rate is hovering just above 10%. The uptick drives class A rental rates close to 2002's high-water mark.

By Marita Thomas | Updated on August 24, 2007

PHILADELPHIA-Contrary to dire predictions of two years ago, a buoyant Center City office market has tilted in owners’ favor. Despite the addition of the 1.2-million-sf Comcast Center, which had real estate brokers predicting a vacancy rate of as much as 17%, the CBD is now hovering near the single-digit level–and the Comcast headquarters building will open later this year more than 96% preleased.

A second-quarter report from the local office of Grubb & Ellis Co. puts the CBD office vacancy at 10.2% in the 38.6-million-sf inventory. H. Hetherington Smith, senior vice president and branch manager of Studley’s local office, says the overall availability rate in the CBD, which includes space available for sublease, posted at 11.2% at the end of the second quarter, down 1.5% in comparison to the previous quarter.

“Sublease space is steadily becoming absorbed or running out of term,” Studley researchers say in the report. Smith tells GlobeSt.com that “large contiguous blocks of space,” which are classified at 50,000 sf or larger, “continued to trend downward for the fifth consecutive quarter.” There were 13 such blocks available at the end of first quarter, she says, and 11 at the end of the second quarter.

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